Set-off for purchase tax on manufacturing inputs applies even when the process also yields incidental waste or another product.

Set-off under Rule 41A was treated as available where purchase tax had been paid under Section 13 on unginned cotton bought from unregistered dealers and the cotton was used in manufacturing taxable goods. The governing principle applied was that the set-off condition is satisfied when the purchased goods are used in manufacture for sale, even if the process also produces incidental waste or another article. On that basis, no apportionment of the purchase tax was required merely because the manufacturing process yielded more than one result, and the assessee was entitled to the set-off.

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Issues: Whether set-off under Rule 41A of the Bombay Sales Tax Rules, 1959 was available in respect of purchase tax paid under Section 13 of the Bombay Sales Tax Act on purchase of unginned cotton from unregistered dealers.

Analysis: The claim for set-off was held to be covered by the binding decisions relied upon by the Court. The raw cotton purchased on payment of purchase tax was used in manufacture, and the process yielded taxable goods as well as incidental wastes. The governing principle applied was that, where the goods purchased are used in the manufacture of taxable goods for sale, the condition for set-off is satisfied and no apportionment of the purchase tax is required merely because the manufacturing process also produces another article.

Conclusion: The applicant was entitled to claim set-off under Rule 41A for the tax paid under Section 13 while purchasing unginned cotton from unregistered dealers.

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