Purchase price under sales tax law is confined to intra-State purchases; customs duty on imports is excluded for set-off.

Customs duty paid on imported goods was held not to form part of "purchase price" for set-off under Rule 41D because the deeming language in Explanation I operates only within the Act's own scheme of taxable purchases. The Act confines "sale" and the corresponding purchase concept to intra-State transactions, and section 75 excludes sales or purchases in the course of import from tax. On that construction, "purchase price" cannot be extended to import purchases outside the State tax net, and the reference was answered against the Revenue and in favour of the assessee.

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Issues: (i) Whether customs duty paid on imported goods forms part of "purchase price" under section 2(22) read with Explanation I of the Bombay Sales Tax Act, 1959 for the purpose of set-off under Rule 41D. (ii) Whether "purchase price" under the Act applies only to purchases effected within the State and not to purchases in the course of import covered by section 75.

Issue (i): Whether customs duty paid on imported goods forms part of "purchase price" under section 2(22) read with Explanation I of the Bombay Sales Tax Act, 1959 for the purpose of set-off under Rule 41D.

Analysis: The definition of "purchase price" in section 2(22) is controlled by the scheme of the Act. Although Explanation I deems customs duty to be part of purchase price, that deeming provision operates only in relation to a purchase recognised by the Act. The Act treats "sale" and corresponding "purchase" as transactions within the State, and section 75 excludes from tax sales or purchases taking place in the course of import. On that construction, imported goods do not attract the same treatment as intra-State purchases for purposes of purchase price under Rule 41D.

Conclusion: Customs duty paid on imported goods does not form part of the purchase price for set-off under Rule 41D.

Issue (ii): Whether "purchase price" under the Act applies only to purchases effected within the State and not to purchases in the course of import covered by section 75.

Analysis: Section 2(28) defines "sale" by reference to a sale within the State, and the corresponding concept of purchase is similarly confined. Section 75 expressly provides that nothing in the Act or the Rules authorises tax on sales or purchases in the course of import and requires the Act to be read accordingly. The Act is also a State legislation with territorial limits. Therefore, the expression "purchase price" cannot be extended to import purchases falling outside the State tax net.

Conclusion: "Purchase price" applies only to purchases effected within the State and not to purchases in the course of import under section 75.

Final Conclusion: The reference was answered against the Revenue and in favour of the assessee, holding that customs duty on imported goods is not includible in purchase price for Rule 41D purposes and that the term applies only to intra-State purchases within the Act's territorial scheme.

Ratio Decidendi: Under a State sales tax statute, a deeming provision on purchase price cannot enlarge the tax base beyond the statute's territorial and definitional limits, and import purchases excluded by the non-taxability clause are outside the scope of purchase price for set-off.

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