Set-off under Bombay Sales Tax Rules treated branch despatches as export, so later works-contract use could not defeat relief.

Rule 41D of the Bombay Sales Tax Rules, 1959 allowed drawback, set-off or refund on specified purchases used in manufacture for sale or export, and its inclusive meaning of "export" covered despatches to the dealer's own place of business or agent outside the State when supported by form 31C. The Revenue could not go behind that certificate to deny relief merely because the goods were later used in works contracts in other States. The wider question whether the other States' works contract law affected the meaning of "sale" was unnecessary to decide. On that footing, set-off was held to be admissible.

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Issues: Whether set-off under rule 41D of the Bombay Sales Tax Rules, 1959 was admissible where goods were despatched to the dealer's own place of business or agent outside the State, supported by a certificate in form 31C, but were ultimately used in works contracts in the other States.

Analysis: Rule 41D allowed drawback, set-off or refund to a manufacturer in respect of specified purchases used within the State in the manufacture of goods for sale or export. The expression "export" was given an inclusive meaning and covered despatches to the dealer's own place of business or agent outside the State where a certificate in form 31C was produced. The certificate recorded that the goods would be sold or used in the manufacture of goods which would in fact be sold, and the rule did not permit the Revenue to go behind that certificate to disallow relief merely because the goods were subsequently used in works contract in the other States. The broader controversy about the impact of the other States' works contract law on the definition of "sale" was held unnecessary for decision in the reference.

Conclusion: The set-off was rightly granted under rule 41D and the reference was answered against the Revenue and in favour of the assessee.

Ratio Decidendi: Where rule 41D expressly treats despatch to a branch or agent outside the State, supported by form 31C, as "export", the entitlement to set-off must be determined on that statutory footing and cannot be defeated by examining the subsequent use of the goods beyond the terms of the rule.

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