TMI Blog1976 (2) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of reducing set-off under clause (iii) of the proviso to the explanation to rule 41 and clause (y) of the proviso to the explanation to rule 41A of the Bombay Sales Tax Rules, 1959, one per cent should be calculated not on the entire sale price of the goods despatched by the appellants to their branches, but only on the part of the sale price of goods sold outside the State which is attributable to the locally purchased raw material on which the appellants were claiming set-off?" The brief facts necessary to be set out in order to know how this reference came to be made are that the respondents are registered as a dealer under the said Act. The respondents manufacture various products such as chocolates, drinking chocolate, cocoa and other similar products. For the purpose of manufacturing these goods the respondents purchased within the State raw materials as also packing materials and containers for marketing the finished goods. These raw materials, packing materials and containers were purchased by the respondents not only from registered dealers but also from unregistered dealers. In respect of the goods so sold by the registered dealers to the respondents, such register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h raw materials, packing materials and containers bore to the sale price of the finished goods. According to the department, one per cent of the sale price that was to be deducted from the amount allowed to the respondents by way of set-off was one per cent of the sale price of the finished goods so despatched outside the State but within India and sold there. The Sales Tax Officer allowed the set-off to the respondents in accordance with the contention of the department adumbrated above. In appeal, the Assistant Commissioner of Sales Tax upheld the view taken by the Sales Tax Officer. In second appeal, the Tribunal took a contrary view and held that what ought to have been deducted from the amount of set-off due to the respondents was an amount equal to one per cent of that part of the sale price which was attributable to locally purchased raw materials on which the respondents were claiming such set-off. In arriving at this decision, the Tribunal relied upon an earlier decision of a Special Bench of the Tribunal in Bharat Pulverising Mills Pvt. Ltd. v. State of Maharashtra, in which the Tribunal has placed a similar interpretation upon rule 11(1A) of the Bombay Sales Tax (Exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spatched was comprised of goods in respect of which the drawback, set-off or refund is claimed, the Commissioner shall not so reduce the amount of drawback, set-off or refund." It may be mentioned that up to 21st February, 1961, the concluding words of the explanation were "despatched by the dealer to his place of business outside the State and sold there". Those words were substituted by the present words: "despatched by the dealer to his own place of business or to his agent outside the State and actually resold there" by Government Notification in the Finance Department No. STR. 1060-XIII dated 21st February, 1961. Similarly, the opening words of the first proviso until 21st February, 1961, were "Provided that" and these were substituted by the present words "Provided that where such despatch has been made to his own place of business or to his agent outside the State but within India" by the aforesaid notification. So far as we are concerned, these amendments make no difference to the questions to be determined by us in this reference. The relevant provisions of rule 41A of the said Rules are as follows: "41A. Drawback, set-off, etc., of tax paid by a manufacturer in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds "the sale price of the goods so despatched" in the said clause (iii). We must first try to understand what the explanation sought to achieve. In Commissioner of Sales Tax v. Jai Hind Oil Mills Co.[1977] 40 S.T.C. 60.(S.T.R. No. 20 of 1972 decided on February 11/12, 1976), we have considered this explanation and the effect of the first proviso thereto. We have there held that one per cent of the sale price of the goods so despatched meant of the finished goods despatched by the manufacturing dealer to his branches and agents outside the State but within India and sold by such branches and agents. Learned counsel on both sides have, however, informed us that the case of Jai Hind Oil Mills Co. v. State of Maharashtra, which has been referred to and relied upon by the Tribunal in its judgment in this case, proceeded upon a common basis and a concession made by the assessees that in clause (iii) of the said proviso one per cent of the sale price, which was to be deducted, was of the finished goods. Learned counsel have further informed us that this fact was mentioned to us at the time of hearing of the said S.T.R. No. 20 of 1972 (Commissioner of Sales Tax v. Jai Hind Oil Mills Co.[1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing dealer for the purpose of sale to his branches and agents outside the State but within India. Clause (ii) to the first proviso prescribes a condition that before any set-off can be allowed, the dealer or his manager or agent, as the case may be, must be registered under the Central Sales Tax Act, 1956, in respect of the place of business to which the goods are so despatched. We have seen that so far the words "despatched" or "such despatch" have been used only with reference to the manufactured goods and the registration under the Central Sales Tax Act, 1956, which clause (ii) requires can only be for the purposes of sale of such manufactured goods by the manufacturing dealer's branches and agents outside the State. Clause (iii) to the said first proviso uses the words "I per cent of the sale price of the goods so despatched". Were the contention advanced before us by the respondents, which has found favour with the Tribunal, correct, the words used in clause (iii) would have been "sale price of the goods so used" repeating the phraseology or part phraseology of the concluding portion of clause (i) of the first proviso. Thus, on a plain reading of the explanation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... off in respect of goods sent to their outside State branches and agents and sold by them. The only question is, what is the exact amount which should be refunded to them or should be set-off against the tax payable by them. It is not as if the entire amount of set-off available to them is being wiped out. We are, therefore, unable to accept the submission of Mr. Patil based on the second proviso to the explanation. Both learned counsel are agreed that so far as the explanation to rule 41A of the said Rules is concerned, there is, for the purpose of the present reference, no such material difference or variation as would necessitate a separate examination of the scheme of the explanation to that rule and that the construction which we have placed upon the explanation to rule 41 would also govern the explanation to rule 41A of the said Rules. For the reasons set out above, we answer both the questions submitted to us by the Tribunal in the case stated by it in the negative. In computing the actual amount of drawback, set-off or refund, as the case may be, to be granted to the respondents, the Tribunal will do so applying the principles laid down by us in this judgment and in our ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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