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TMI Blog2016 (7) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... he ultimate tax liability which a dealer may stand faced with or is it liable to be adjusted only to the extent of the taxable turnover. The issue itself arises on account of the fact that the revisionist in this case had paid a tax of Rs. 5,72,182/- on raw material which was admittedly used in the manufacture and packing of goods. The case of the revisionist was that he had effected sales approximating to Rs. 2.05 crores on which he became liable to pay tax of Rs. 3.41 lacs in that year. Admittedly the revisionist had also effected sales of Rs. 61,56,650/- to certain units which enjoyed exemption from payment of tax by virtue of the provisions of Section 3-B of the U.P. Trade Act 1948. What the assessing authority has proceeded to do howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the State to the extent the tax has been paid on the purchase or sale of raw material or packing material from which the goods sold inside the State were manufactured or packed. (b) In the course of inter-state trade or commerce, to the extent the tax has been paid on the purchase or sale of raw material or packing material, from which the goods sold in the course of inter-state trade or commerce were manufactured or packed. Provided that the amount of tax to be deducted under clause (a) or clause (b) shall not exceed the amount of tax payable separately under this Act or the Central Sales Tax Act, 1956." Learned counsel for the revisionist has contended that section 4-BB does not envisage or mandate a proportionate reduction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guage of Section 4-BB, this Court finds no indication that set off which is claimed by the assessee is liable to be reduced and restricted only to such sales which have suffered or have been subjected to tax. The set off which is claimed is of all taxes that have been paid on the purchase of raw material. The set off is not restricted in any manner to only those sales upon which tax has been levied or collected. This becomes further evident from the language of sub clause (a) which while specifying the extent of set off relates it to solely to the tax paid on the packing or raw material "from which the goods sold within the State were manufactured and packed". Here also the emphasis of the legislative author as is evident is upon two factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to have been used for the manufacture of two commodities (viz. kerosene and acid sludge in the one case and cloth and cotton waste in the other), the set-off under the rules relied upon should be split up proportionately and allowed only to a proportionate extent, the proportion being decided on the basis of the respective turnovers of the taxable and non-taxable goods. He submits that though the rules do not specifically provide for such a bifurcation, an apportionment of such nature is almost invariably implicit in a tax law and is also consonant with the object and purpose of the rules........" Ultimately it held as under: - 17. Turning now to the main question, we are inclined to agree with respondents' counsel that they are e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l principle claimed to underlie the provision. As Sri Bobde rightly pointed out, the basis for the relief provided is not very clear cut. Various reliefs have been provided in a group of rules which come in for application in various situations. The relief may be based on the principle that the manufactured product is taxed either in the hands of the same assessee or in someone else's hands, or that the manufactured goods are exported which may yield no tax but earn foreign exchange, or even that the purchases are utilised for manufacture of goods in the State thus contributing to the industrial development of the State. It is, therefore difficult to read into the provision a quantitative correlation of the goods resulting in a taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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