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TMI Blog1964 (11) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... ched them to addressees outside the State of Bombay in the course of interState trade or commerce within a period of nine months from the dates of the respective purchases of raw tobacco made by them. In the assessment of the assessees to sales tax, the assessees claimed remission of the purchase tax paid by them on the purchase of raw tobacco under rule 12(1A) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954. The rule relied upon before the Revenue authorities as also before the Tribunal was in the form set out in the statement of the case, but it is not necessary to reproduce the same since, as we shall presently point out, no reliance has been placed upon it on behalf of the assessees in the present references. The claim for remission made by the assessees was rejected by the Sales Tax Officer and on appeal to the Assistant Commissioner of Sales Tax, the claim met with the same fate. The matter was then carried in revision by the assessees but the Deputy Commissioner of Sales Tax also negatived the claim put forward by the assessees. The assessees thereupon approached the Tribunal in revision. It was not disputed before the Tribunal that bidi pattis were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le was in force only from 1st March, 1957, there being no such rule at all prior to that date. Rule 12(1A) was, therefore, in force only during one month of the period of assessment relevant to Sales Tax Reference No. 31 of 1963, namely, 1st March, 1957, to 31st March, 1957, and that too not in the form set out in the statement of case but in the form reproduced above in this paragraph and so far as the other three references are concerned, the rule was not in force at all during any part of the assessment periods relevant to those references. When this position was pointed out by the learned Advocate-General on behalf of the Revenue at the commencement of the hearing of these references, Mr. I.M. Nanavati, learned Advocate appearing on behalf of the assessees in Sales Tax Reference No. 31 of 1963 agreed that rule 12(1A) which applied was not the rule as set out in the statement of case but the rules as set out here in this paragraph but he objected to our taking note of the fact that the rule was in force only during one month of the period of assessment and did not apply during the rest of the period. He urged that the case was argued before the Tribunal on the basis that the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that rule 12(1A) on which the claim of the assessees is based was not in force during any part of the relevant assessment period. The latter contention would be merely one more aspect of the question and would be clearly included within the ambit and coverage of the question. It is now well-settled as a result of the decision of the Supreme Court in Commissioner of Income-tax v. Scindia Steam Navigation Co., Ltd.[1961] 42 I.T.R. 589.-and the principle there laid down in regard to section 66 of the Incometax Act must apply equally in regard to section 34 of the Bombay Sales Tax Act, 1953-that once a question is in issue before the Tribunal and is referred to the Court for its opinion, there is no limitation that the reference should be limited to those aspects of the question which have been argued before the Tribunal. As observed by Venkatarama Aiyar, J., ".....it will be a over-refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of section 66(1) of the Act. " Where, therefore, a question involves more than one aspect requiring to be tackled from different standpoints, all aspects of the question can be agitated before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at so long as what was sold retained the basic essential properties of tobacco, the fact that it was the result of processing or cleaning did not make any difference to the applicability of rule 12(1A) and in support of this contention he relied on two decisions of the Supreme Court, one in Kailash Nath v. State of U.P.[1957] 8 S.T.C. 358. and the other in Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 S.T.C. 827. We shall presently examine these decisions, but we may point out straightway that in our opinion neither of these decisions supports the contention of Mr. I.M. Nanavati. Nor is the contention of Mr. I.M. Nanavati supportable on principle. On a plain grammatical construction rule 12(1A) grants remission of purchase tax paid by a registered dealer on goods purchased by him when "the goods so purchased" are sold and despatched by him to an address outside the State of Bombay within a period of nine months from the date of purchase. What the rule requires is that the goods purchased by a registered dealer on which purchase tax has been paid by him must be sold and despatched and not any goods into which the goods purchased are converted. The rule says that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut whether the basic essential properties of the goods were the same. He drew our attention to sub-section (a) of section 8 which provided for deduction from turnover of sales of goods (i) which were purchased from a registered dealer on or after the appointed day or (ii) on the purchase of which the dealer had paid or was liable to pay purchase tax and pointed out that the proviso to that sub-section prescribed the requirement that the goods must not have been processed or altered in any manner after such purchase. He urged that whereever the Legislature wanted a strict test to be satisfied, namely, that the identical goods which are purchased must be sold, the Legislature made a provision such as the proviso to sub-section (a) of section 8, but such a proviso was absent in sub-section (b) of section 8 and was not to be found either in the main part which provided for exclusion of sales of goods made to a dealer who held an authorization and furnished to the selling dealer a certificate in the prescribed form declaring inter alia that the goods so sold to him were intended for being despatched by him to an address outside the State of Bombay or in the second proviso which declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case if the purchasing dealer holds an authorization and furnishes to the selling dealer a certificate in the prescribed form declaring inter alia that the goods purchased by him are intended for being despatched by him to an address outside the State of Bombay, the selling dealer would not be liable to pay sales tax on the sale of the goods effected by him to the purchasing dealer and the purchasing dealer in his turn would not have to pay sales tax to the selling dealer. The purchasing dealer would also not be liable to pay purchase tax on the purchase since the purchase would be from a registered dealer. But if the purchasing dealer purchases goods from a selling dealer who is unregistered, though, the selling dealer being unregistered, there would be no question of the purchasing dealer being liable to pay any amount to the selling dealer by way of sales tax, the purchasing dealer would have to pay purchase tax to the State Government under section 10(a) and such a purchasing dealer would, therefore, be at a disadvantage compared to a purchasing dealer who purchases from a selling dealer who is registered. The State Government, therefore, with a view to placing on a par the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso is absent, the additional requirement would not be necessary to be fulfilled but from the absence of the proviso, it would not be right to infer that the Legislature in the one case and the State Government in the other also dispensed with the requirement that the goods sold must be commercially the same commodity as the goods purchased. To do so would be to ignore the plain language of the provision enacted in sub-section (b) of section 8 and rule 12(1A). The correct way of looking at the provision appears to be to see whether the goods sold are commercially the same commodity as the goods purchased and it is not relevant to consider whether the goods purchased have been processed or altered in any manner for producing the goods sold except in so far as such question might affect the character of the goods as a commercial commodity. The reason for this rule will become apparent if we examine the matter a little more closely. The Legislature obviously wanted to exempt from sales tax sales of goods in the course of inter-State trade or commerce or in the course of export outside India. Where a dealer, registered or unregistered, sold goods directly in the course of interState ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer incidence of tax before they reach the hands of the purchaser. This reason behind the rule clearly shows that the goods sold by the intermediate dealer must be the same as the goods purchased by the intermediate dealer from the original dealer, for it is only then that the entire transaction can be regarded as one single transaction. If this reason of the rule is borne in mind, it is clear that what it required by the rule is that the goods sold must be commercially the same commodity as the goods purchased, whether processing or alteration has been performed on the goods or not and it is not enough that merely the basic essential properties of the goods remain unchanged. This being the position, in order to determine whether the assessees, when they sold bidi pattis, could be said to have sold the goods purchased by them, namely, raw tobacco, we must ask ourselves the question whether raw tobacco and bidi pattis, could be said to be commercially the same commodity. Now there can be no doubt that raw tobacco and bidi pattis are commercially different commodities. This position was indeed so evident that Mr. I.M. Nanavati on behalf of the assessees actually found it difficult t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h were a commercially different commodity and which were produced as a result of consumption of raw tobacco. In view of this decision of the Supreme Court it is impossible to hold that when bidi pattis were sold by the assessees in the present case, what were sold were the goods purchased by the assessees, namely, raw tobacco. Turning now to the two decisions of the Supreme Court on which reliance was placed by Mr. I.M. Nanavati, the first decision to which we must refer is the decision in Tungabhadra Industries Ltd. v. Commercial Tax Officer[1960] 11 S.T.C. 827. In that case the assessee purchased groundnuts and prepared hydrogenated oil out of them. In the course of its assessment to sales tax, the assessee claimed a deduction of the purchase price of groundnuts from the proceeds of sale of all oil including hydrogenated oil relying on rule 5(1)(k) read with rules 18(1) and (2) of the Turnover and Assessment Rules made under the Madras General Sales Tax Act, 1939. The assessee was entitled to such deduction only if hydrogenated oil was covered by the expression "groundnut oil" in these rules. The Supreme Court held that hydrogenated oil was groundnut oil within the meaning of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the indentors were different from the goods sold by the petitioners. This contention of the Revenue was, however, rejected by the Supreme Court which took the view that by using the word "such" in the notification, the Legislature did not intend to lay down that the identical thing should be exported in bulk quantity or that any change in appearance should be crucial to alter it but that the words "such cloth or yarn" meant cloth or yarn manufactured in Uttar Pradesh and sold and thereafter exported and they had nothing to do with the transformation of the cloth by printing designs on it. The Supreme Court observed that the cloth exported was the same as the cloth sold with this variation or difference that the colour had changed by printing and processing. It will be seen from this summary of the decision which we have given, that the decision proceeded on the construction of the words "such cloth or yarn " which showed that what was required to be exported under the notification was the cloth or yarn manufactured in Uttar Pradesh and sold and not any other cloth or yarn. So long as the cloth or yarn which was exported was the same as the cloth or yarn manufactured in Uttar Prad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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