TMI Blog2016 (7) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... cking material and their utilisation in the manufacture of taxable goods. Secondly this Court notes that the tax free sales effected by the revisionist was not of its own accord. These were sales effected in favor of units which had been granted exemption from payment of tax under section 4B. Surely the benefit of tax already paid by the revisionist could not be denied adjustment based upon the liability or otherwise of another dealer. Thirdly, the Court notes that the revisionist has effected a sale of goods to entities within the State. However since these enjoyed exemption under Section 4-B, no tax was collected on these sales. The mere fact that tax has not been collected, does not detract from the position that a sale of goods to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffected sales approximating to ₹ 2.05 crores on which he became liable to pay tax of ₹ 3.41 lacs in that year. Admittedly the revisionist had also effected sales of ₹ 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 however is that while setting off the tax which had been pre-paid by the assessee on the raw material, it has reduced the set off amount to ₹ 4,21,406/- against what the assessee originally paid namely ₹ 5,72,182/-. The reasoning adopted by the assessing authority was that on sales of ₹ 61,56,650/-, the assessee had not levied or collected any tax. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 set off amount. It is his submission that the entire amount of tax which has been paid on raw material or packing material as the case may be was liable to be set off against the tax liability of the revisionist. He has, in aid of his submission, also placed reliance upon the judgment rendered by the Supreme Court in Commissioner of Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted 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 factors only (a) the pre-paid tax on raw or packing material and (b)their utilisation in the manufacture and packing of goods sold in the State. The words tax payable on the sale of such goods as used in the substantive part of 4BB firstly cannot be read in isolation. Secondly, they stand duly explained by sub clause (a) which follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 entitled to a set-off of the entire tax paid by them on the purchases of sulphuric acid and cotton respectively. The only condition under the rule is that the goods purchased on payment of tax should have been used in the manufacture of taxable goods for sale. Their concurrent user for the manufacture of another item of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 turnover and the purchases of raw materials on which tax has been paid. In this background, the straightforward answer to the question raised lies in the literal interpretation of the language of the rules without straining to discover some doubtful principle for denying relief. (emphasis supplied) Applying the ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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