TMI Blog1978 (11) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... already issued certificates?" In order to answer the question, it would be necessary to set out a few facts. The assessee is a company dealing in automobile parts and automobile batteries and accessories on wholesale and retail basis. At the material time, the assessee was a registered dealer under the provisions of the Act. During the assessment period from 1st July, 1965, to 30th September, 1966, the assessee had purchased scrap batteries from certain dealers within the State of Gujarat and it had sold them outside the State of Gujarat. According to the assessee, the dealers from whom it had purchased the scrap batteries had charged sales tax at the rate of 10 per cent on the sales effected in favour of the assessee on the basis that the goods in question were liable to tax at the said rate under entry 42B of Schedule C. The total price of the batteries purchased by the assessee was Rs. 35,342 and, on the aforesaid basis, the assessee was charged Rs. 3,534 by way of sales tax. At the time of its assessment for the relevant period, the assessee claimed a set-off of the sales tax recovered as aforesaid on the sales of scrap batteries effected in its favour. The set-off was cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4). The reference came up for hearing before a Division Bench of this Court consisting of J.B. Mehta and T.U. Mehta, JJ., on 13th August, 1974, and the Division Bench found in the course of its judgment delivered on the same day that the Tribunal had posed a hypothetical question. The observations which the Division Bench made in this context are as follows: "The whole reference would have been unnecessary if the Tribunal had gone into the relevant question which arose before the Tribunal. If 10 per cent rate was the legal rate of sales tax chargeable for this item, the entire amount would have been claimed as legal set-off as well...................... It is only on a hypothetical assumption that the Tribunal has posed this hypothetical question which would not arise if the Tribunal had first disposed of the legal question which arose before it as to the interpretation of the tax entry. It is only if the tax entry is interpreted as giving the correct rate of tax of 6 per cent under residuary entry 22 of Schedule E that this hypothetical question would arise in the present reference to be answered by this Court............... Therefore, the Tribunal must decide the question lef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered these rival submissions made before it and recorded its finding thereon in the following words: "In our view, this submission of the learned Government agent cannot be accepted. While deciding the question as to whether the scrap batteries in the present case were liable to tax at the rate of 10 per cent or 6 per cent, we cannot ignore the fact that the concerned Sales Tax Officers have imposed sales tax at the rate of 10 per cent on the sales made to the appellant by the vendors while making the assessment thereof, because that fact, in our view, would preclude the department from contending that the rate of tax on scrap batteries should be 6 per cent and not 10 per cent. When at the sale side, the tax has been imposed and realised at the rate of 10 per cent, it is not open for the department to say when set-off is claimed by the purchaser that the tax leviable is at 6 per cent and not 10 per cent......Here, the position was that, at the time of assessments of the vendors of the appellant, the concerned Sales Tax Officers had held that the scrap batteries would fall under entry 42B of Schedule C liable to tax at the rate of 10 per cent and it is at the time when the set- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue was precluded from contending that such scrap batteries were covered by entry 22 of Schedule E and were, therefore, liable to be taxed at the rate of 6 per cent?" It is this question reframed as above which we shall proceed to answer. Now, there is no manner of doubt that the Tribunal was directed by the decision rendered by this Court in Sales Tax Reference No. 5 of 1974 to precisely determine the question as to what was the correct rate of sales tax chargeable in respect of sales of scrap batteries effected in favour of the assessee by its vendors. In terms, this Court had observed that it is only if the tax entry was interpreted as giving the correct rate of tax at 6 per cent under residuary entry 22 of Schedule E, that the question, which was referred by the Tribunal in the said sales tax reference, would arise and require to be answered by this Court. These observations have to be read against the background that, when the said reference was made, the Tribunal had left open the question as to what was the tax legally recoverable on the sales of scrap batteries effected in favour of the assessee by its vendors. When so read, the observations leave no scope for any doubt or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er its losses suffered during subsequent assessment years were allowed to be set-off against profits for the preceding years on the condition that any subsequent recoveries relatable to such losses would be taxable income and, the assessee having derived benefit thereunder, it was precluded, on the principle of "approbate and reprobate", from pleading that the income it derived subsequently by realisation of the revived debts was not taxable income. The Supreme Court repelled this contention in the following words: "The doctrine of 'approbate and reprobate' is only a species of estoppel; it applies only to the conduct of parties. As in the case of estoppel, it cannot operate against the provisions of a statute. If a particular income is not taxable under the Income-tax Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law; a particular income is either exigible to tax under the taxing statute or it is not. If it is not, the Income-tax Officer has no power to impose tax on the said income." To the similar effect are the observations in Commissioner of Income-tax v. Durga Prasad More[1971] 82 I.T.R. 540 (S.C.). , wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X
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