TaxTMI 
TaxTMI 
1976 (2) TMI 164
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....is reference is the amount of set-off under the relevant rule of the Bombay Sales Tax Rules, 1959 (hereinafter referred to as "the said Rules"), to which the respondents were entitled in respect of the purchase tax so paid by them. This question before us relates to two assessment periods, namely, from 1st January, 1960, to 31st March, 1960, and from 1st April, 1960, to 31st March, 1961. In respect of the first period, namely, 1st January, 1960, to 31st March, 1960, the respondents purchased drums and tins of the value of Rs. 56,612.63 from unregistered dealers and on the purchase thereof they paid purchase tax at the rate of 3 per cent, aggregating to Rs. 1,698.33. Out of the oil manufactured by the respondents a certain part of stock was despatched by them in drums to their branches outside the State and these branches in their turn sold from the stock so despatched drums of oil of the aggregate value of Rs. 50,518.34. In the second period of assessment also, namely, from 1st April, 1960, to 31st March, 1961, the respondents purchased empty drums and tins from unregistered dealers and in respect of such purchases paid purchase tax along with their returns, aggregating to Rs. 6,54....
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....the two periods of assessment in question the set-off was claimed by the respondents under clause (d) of rule 41. It is unnecessary to set out the whole of rule 41 of the said Rules, because that would only confuse the matter. We, therefore, content ourselves with setting out of the relevant provisions of that rule only. During the periods of assessment in question the relevant provisions of the said rule were amended on more than one occasion. Both the sides have, however, agreed that these amendments do not in any way have any bearing on the question to be decided by us and that the said provisions as amended up to 1st June, 1961, would be equally appropriate for the decision of this matter. The relevant provisions of the said rule as on 1st June, 1961, were as follows: "41. Drawback, set-off, etc., of tax paid by a manufacturer.-In assessing the amount of tax payable in respect of any period by a registered dealer, who manufactures taxable goods for sale (hereinafter in this rule referred to as the 'manufacturing dealer'), the Commissioner shall grant him a drawback, set-off or, as the case may be, a refund of the aggregate of the following sums, that is to say ............
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....under clause (iii) of the first proviso to the explanation to rule 41 of the said Rules one per cent of the sale price of oil despatched in drums by the respondents to their branches and sold by such branches, namely, the sum of Rs. 505.18, was to be deducted from the set-off in respect of purchase tax to be granted to the respondents only in respect of drums in which oil was despatched to the outside State branches and not in respect of the drums and tins purchased by the respondents, irrespective of the fact whether these drums and tins were used in making inside State sales or outside State sales through their branches. The purchase tax payable in respect of the drums despatched to outside State branches was Rs. 73.90. According to the department, the sum of Rs. 505.18 was to be deducted from the said sum of Rs. 73.90, which would give a minus figure of Rs. 431.28. This minus figure has been referred to by the Tribunal as an adverse balance. The State of Maharashtra has no power to levy tax on a sale taking place outside the State. Therefore, according to the Tribunal, this adverse balance of Rs. 431.28 cannot be recovered by the department from the respondents nor can the respo....
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....ducted from the plus figures. For instance, this would be the case where one per cent of the sale price of sales made by outside State branches of a dealer, which had fulfilled the conditions prescribed in clauses (i) and (ii) of the first proviso to the explanation, under any particular clause exceeded the total set-off of the purchase tax under that clause both in respect of the local sales and such outside State sales. This would also be the case where there were only outside State sales and one per cent of the sale price of such outside State sales exceeds the purchase tax paid on materials which have gone into the manufacture of such goods or have been used as containers or as packing materials for such goods. According to Mr. Cooper, this position is made abundantly clear by the use of the phrase "the aggregate of the following sums" in the opening paragraph of rule 41 of the said Rules. According to Mr. Cooper, it was a fallacy to consider an aggregate as merely an aggregate of plus figures. It could, according to him, be both an aggregate of plus figures and of minus figures. We are unable to accept these submissions. The word "aggregate" as used here is in the sense of ....
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....n the manner provided for by clause (iii) of the first proviso to the explanation. According to Mr. Cooper, the explanation was not introduced into rule 41 for the benefit of a dealer alone but for the benefit of both, the dealer and the Government. According to Mr. Cooper, the State was not bound to give any set-off or refund at all. He further pointed out that if a manufacturing dealer sold goods through his branches and agents outside the State instead of as inter-State sales which would have been liable to Central sales tax at least at the minimum rate of one per cent and which under the Central Sales Tax Act, 1956, would have been allocated to the State. In Mr. Cooper's submission the intention of the State Government was to make up for the Central sales tax which it had thus lost by adjusting it against the set-off due to such dealer. We are unable to accept these submissions. Section 42 of the said Act provides as follows: "42. Drawback, set-off, refund, etc.-The State Government may by rules provide that- (a) in such circumstances and subject to such conditions as may be specified in the rules a drawback, set-off or refund of the whole or any part of the tax- (i....
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....ealer in respect of taxable goods manufactured for sale by him in the circumstances set out in those clauses, when he sells the manufactured goods. Clause (28) of section 2 of the said Act defines the term "sale" as meaning "a sale of goods made within the State, for cash or deferred payment or other valuable consideration......" It further provides that "the words 'sell', 'buy' and 'purchase', with all their grammatical variations and cognate expressions, shall be construed accordingly". Under section 20 of the Bombay General Clauses Act, 1904, the expressions used in any Rules made under an Act have the same respective meanings as in the Act conferring the rule-making power. Thus, the words "sell", "sale", "buy" and "purchase" wherever they occur in rule 41 up to clause (e) of that rule must bear the meaning assigned to these words by the said clause (28) of section 2 of the said Act. By reason of this definition, a manufacturing dealer would thus be entitled to a set-off in respect of purchase tax paid by him or tax collected from him by dealers selling to him only when he sells the manufactured goods within the State of Maharashtra and not outside the State of Maharashtra. A....
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....h the goods are so despatched, and (3) the amount of drawback, set-off or refund, as the case may be, shall be reduced by one per cent of the sale price of the goods so despatched. We will now examine the department's contention that the third clause of the first proviso to the explanation to rule 41 applies to all types of sales, while the first two clauses of the first proviso apply only when manufactured goods are despatched by a dealer to his branch or agent outside the State but within India and sold by such branch or agent. In our view, this contention is not sound. All the clauses of rule 41 have to be read together with the explanation, but they have to be read with the explanation taken as a whole. There is not just one category of sale under rule 41. By reason of the extension of the definition of the term "sale" by the explanation, sales have to be divided into three categories: (1) sales within the State, (2) sales outside India effected by the dealer's place of business or his agent residing at that place outside India, and (3) sales effected by the dealer's place of business or his agent outside the State but within India to whom the goods were despatched. The thir....
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....refund" instead of the words "aggregate of the sums" under clauses (a) to (e), as being the amount of drawback, set-off or refund to which a dealer is entitled under each of these clauses when read with the explanation. It was further submitted on behalf of the department that the fact that the State Government intended in such circumstances to reimburse itself for the amount of Central sales tax it lost is shown by the fact that when originally made, clause (iii) of the proviso provided for reduction at the rate of one per cent of the sale price of the goods despatched, which was the minimum rate of the Central sales tax at that time, and that as the rates of Central sales tax increased the percentage of reduction under the third clause was also correspondingly increased by amendments. Therefore, the intention was that if the State Government could not reimburse itself for full one per cent, it would do so from other amounts due to a dealer. We have in part already dealt with this submission earlier. We are unable, on a clear language of this clause and the use of the words "the amount of drawback, set-off or refund" therein coupled with the fact that only such amount is direct....