Statutory tribunal cannot strike down a rule; set-off under Rule 41E must be tested on its plain terms.

A statutory tribunal cannot disregard an express rule or treat it as unconstitutional or ultra vires when deciding a set-off claim under the Bombay Sales Tax Rules. The Tribunal must apply Rule 41E as enacted and cannot finally adjudicate its legality or constitutional validity in second appeal; that question lies with a competent constitutional court. The High Court therefore held that the Tribunal erred in ignoring the territorial condition in the rule, and the set-off claim had to be examined on the plain terms of Rule 41E, leaving constitutional validity open for appropriate proceedings.

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Issues: Whether the Tribunal, while deciding the assessee's claim for set-off under Rule 41E of the Bombay Sales Tax Rules, 1959, could ignore the express territorial condition in the Rule and treat it as unconstitutional or ultra vires Article 304(a) of the Constitution of India.

Analysis: The Reference arose from the Tribunal's decision that the condition requiring use within Maharashtra could be ignored on the footing that a similar restriction had been struck down in another case. The High Court held that, even assuming the other decision was relevant on principle, the Tribunal could not travel beyond its statutory authority under the Bombay Sales Taxes Act, 1959 and itself declare Rule 41E unconstitutional or ultra vires. The Tribunal was bound to apply the Rule as it stood unless a competent constitutional court invalidated it. The correctness, legality, or constitutional validity of the Rule could not be finally adjudicated by the Tribunal in second appeal.

Conclusion: The Tribunal erred in law in ignoring Rule 41E and in deciding its constitutionality and legality. The set-off claim had to be examined on the plain terms of the Rule, and the Reference was answered in favour of the Revenue.

Final Conclusion: The Reference was disposed of by holding that the Tribunal lacked jurisdiction to strike down or disregard the statutory rule, while leaving the question of the Rule's constitutional validity open for decision in appropriate proceedings.

Ratio Decidendi: A statutory tribunal cannot declare the provisions of the statute or the rules made under it unconstitutional or ultra vires and must decide the dispute by applying the provision as enacted unless it is set aside by a competent constitutional court.

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