Cumulative quantum of benefits under sales tax rules excludes notional tax where invoices show no tax component.

While computing the cumulative quantum of benefits under Rule 31AA of the Bombay Sales Tax Rules, 1959, the tax element was not required to be separately excluded through Rule 46A. Clause (e) of Rule 31AA refers to the amount of tax that would have been payable on sales of products manufactured in the eligible unit if the dealer did not hold the Certificate of Entitlement, and Rule 46A was relevant only to determine whether the invoice sale price actually included any tax component. On the facts found, the dealer's sale price contained no tax element because the sales were exempt. The Tribunal's view that no notional tax could be added to alter the CQB calculation was upheld, and the issue was answered against the dealer and in favour of the Revenue.

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Issues: Whether, while calculating the cumulative quantum of benefits under Rule 31AA of the Bombay Sales Tax Rules, 1959, the tax element was required to be excluded by applying Rule 46A of the Bombay Sales Tax Rules, 1959.

Analysis: Rule 31AA requires calculation of the cumulative quantum of benefits in the manner prescribed therein, and clause (e) speaks of a sum equal to the amount of tax which would have been payable on sales of products manufactured in the eligible unit if the dealer was not holding the Certificate of Entitlement. The reference to Rule 46A was used only to understand whether the sale price in the dealer's invoices included any tax component. On the facts found, the dealer enjoyed exemption and the sale price did not include any tax element. The Tribunal's view that clause (e) could not be applied to add a notional tax component, and that the CQB calculation need not be altered, was held to be in accord with the plain language of the rules.

Conclusion: The question was answered against the dealer and in favour of the Revenue.

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