Exemption notification cannot override a special purchase tax levy on branch transfers of manufactured goods.

A notification under section 41 of the Bombay Sales Tax Act, 1959 was construed as not overriding the fixed purchase tax under section 13AA on raw materials used in manufacture where the finished goods were despatched to branches outside the State. Section 13AA was treated as a special charging provision imposing an additional two per cent purchase tax in specified cases, enacted to protect revenue where concessional raw material purchases were followed by branch transfers rather than local sales. Applying harmonious construction and the mischief rule, the exemption notification was held to operate within the general rate structure but not to displace the specific levy under section 13AA. The dealer therefore remained liable to purchase tax at the fixed rate, not the reduced rate.

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Issues: Whether the exemption notification issued under section 41 of the Bombay Sales Tax Act, 1959 could reduce or override the fixed purchase tax leviable under section 13AA on goods used in manufacture and despatched to branches outside the State.

Analysis: Section 13AA was treated as a special charging provision intended to levy an additional purchase tax at a fixed rate of two per cent. in specified circumstances, namely where raw materials in Part I of Schedule C were used in manufacture and the finished goods were despatched outside the State. The legislative history and objects and reasons showed that the provision was enacted to cure revenue loss caused by concessional raw material purchases followed by branch transfers rather than local sale. The notification under section 41 was construed with reference to the scheme of the Act and the specific rate structure in Schedule C. On a harmonious construction, the exemption notification was held to operate in relation to the general rate structure but not to displace the specific levy under section 13AA. The Court also applied the mischief rule and held that accepting the assessee's construction would frustrate the very object of section 13AA and defeat revenue protection.

Conclusion: The exemption notification did not reduce or override the purchase tax payable under section 13AA, and the dealer remained liable to tax at the rate of two per cent., not at the reduced rates under entry A-47.

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