Set-off on tax-paid goods denied where raw materials were bought from exempt industries without tax payment.

Set-off under section 8(1)(a) of the M.P. General Sales Tax Act, 1958 is available only when the dealer purchases tax-paid goods and proves that fact through the prescribed documents under rule 20-C. The statutory scheme treats payment of tax on the raw material as a condition precedent to allowance of set-off. Where raw materials were bought from exempt industries without tax being paid, the essential requirement for set-off was not met, and the claim failed. The earlier case relied on was distinguishable because the goods there had been purchased at full tax rate.

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Issues: Whether a registered dealer was entitled to claim set-off under section 8 of the M.P. General Sales Tax Act, 1958 in respect of raw materials purchased from exempt industries without payment of tax.

Analysis: Set-off under section 8(1)(a) is available only when the dealer purchases tax-paid goods and establishes that fact through the prescribed documents under rule 20-C. The statutory scheme makes payment of tax on the raw material a condition precedent to the allowance of set-off. Where the purchaser did not pay tax on the raw material because the selling industries were exempt from tax, the essential requirement for set-off is not satisfied. The earlier decision relied upon by the petitioner was distinguishable because, in that case, the goods had been purchased at full rate of tax.

Conclusion: The petitioner was not entitled to claim set-off, and the rejection of the claim was upheld.

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