TMI Blog1995 (2) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... ble? 2.. Whether, on the facts and circumstances of the case and on a proper interpretation of section 8A(1)(b) of the Central Sales Tax Act, 1956, the Tribunal was right in concluding that as in pursuance of clause 4 of Part C of the distributorship agreement executed by the applicants with Muller Phillips (India) Pvt. Ltd. in which parties have consciously provided for repurchase of the goods and not return of goods, the applicants have repurchased the goods, it was a case of resale by the buyer to the seller the sale price being the very same amount which the buyer had paid to the seller and, therefore, the claim of return of goods made by the applicants before the Sales Tax Officer was not sustainable?" 2.. The first question which arises out of Reference Application No. 346 of 1985 filed by the assessee pertains to the rejection of the claim of the assessee for deduction under section 2(36) of the Bombay Sales Tax Act, 1959 ("the Bombay Act" or "the Act") read with rule 4 of the Bombay Sales Tax Rules ("the Bombay Rules" or "the Rules") of the amount of the purchase price refunded by the assessee-dealer to the purchasers in respect of goods purchased and returned by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the said agreement, the distributors had in their possession some unsold stock of the products of the assessee which had been sold to them by the assessee during the above periods. In terms of clause 4 of Part C of the distributorship agreement, the assesseecompany was required to repurchase from the distributors the stock of its products remaining unsold with them at the price at which it had been purchased by them from the assessee. In terms of the above clause the assessee took back the unsold stock of its products lying with the distributors at the time of the termination of the distributorship agreement in the State of Maharashtra as well as at their places of business situated outside Maharashtra. The assessee claimed deduction for the amount of sale price refunded by it to the distributors on termination of the agreement. The claim of the assessee both under the Bombay Act as well as the Central Act was rejected by the Sales Tax Officer on the ground that the assessee had repurchased the goods from the distributors which did not amount to return of the goods within the meaning of section 2(36) of the Bombay Act and section 8A(1)(b) of the Central Act. The assessee appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds made during a given period after deducting the amount of sale price, if any, refunded by the dealer to a purchaser, in respect of any goods purchased and returned by the purchaser within the prescribed period." The period referred to in the above clause has been prescribed by rule 4 of the Rules which reads as follows: "4. Goods returned to a dealer.-The period for return of goods for the purposes of clauses (35) and (36) of section 2 shall be twelve months from the date of their purchase: Provided that, if in any particular case the Commissioner is satisfied that the purchaser could not return the goods within the said period on account of circumstances beyond his control, the Commissioner may, in such case, extend the said period by a further period not exceeding three months." 5.. On a conjoint reading of clause (36) of section 2 and rule 4, it is clear that while computing the turnover of sales for the purpose of assessment under the Bombay Act, the assessee is entitled to claim deduction of the amount of sale price of the goods refunded by the dealer to the purchaser in respect of any goods purchased and returned by the purchaser within a period of 12 months from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod, the assessee is entitled to get a deduction of amount refunded by him from "the aggregate amount of sale price received by it during a given period" for computation of his turnover of sales of such period for levy of sales tax under the Act. The nomenclature given by the parties to such transaction of return of goods, viz., "return of goods" or "repurchase of goods", would be of no relevance because return of goods falling under section 2(36) of the Act envisages purchase of the goods earlier sold by the assessee-dealer to the purchaser. On return of goods, the purchaser would naturally be entitled to the refund of the price of the goods, if already paid, or to credit for the same, if it had been debited for the price thereof at the time of sale. The return of goods envisaged by clause (36) of section 2 of the Act, therefore, in all cases will be preceded by a sale of goods and in effect, would be repurchase of the goods by the dealer. The Tribunal was therefore not justified in rejecting the claim of the assessee on the ground that the return of the goods amounted to repurchase of the goods by the assessee-dealer. In that view of the matter, we are of the clear opinion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the decision of the Tribunal against the assessee on the question of allowability of deduction, it became academic. However, to avoid further litigation on that count, we perused the provisions of section 14 of the Act with a view to ascertaining whether it can be applied to cases of return of goods by the purchaser. Section 14 deals with liability of a dealer to purchase tax for contravention of the terms of declaration. In the instant case, the goods had been purchased by the assessee on furnishing of declaration to the effect that they would be used by him for use in manufacture for sale. There is no controversy about the fact that the goods purchased by the assessee were used in manufacture. It is also evident that the goods were sold. The return of the goods by the purchaser per se cannot in any way amount to violation of the terms of the declaration because the goods, on return, are still intended for sale and in the usual course of business, in fact, might have been sold by the assessee to some other purchaser. However, we do not want to go into the factual part of that controversy. Suffice it to say that the return of goods by purchaser by itself cannot and would no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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