TMI Blog2016 (9) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... s a direct relation to the main body of the rule which provides that in assessing the tax payable by a manufacturer, the Commissioner shall subject to conditions grant him drawback, set off or refund of the whole or any part of the tax in respect of purchase of goods used by him in manufacture. The moment therefore the raw material is used for manufacture by an assessee and subject to other conditions being fulfilled, has been sold in the State of Gujarat or in the course of inter-State trade etc., Rule 42 would enable him to claim drawback, set off or refund as the case may be at prescribed rate on the tax paid on such purchases - appeal dismissed - decided against appellant. - Tax Appeal No. 727, 731 of 2015 - - - Dated:- 1-9-2016 - A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s such on which the department had no dispute about the set-off under Rule 42 of the Rules. The assessee s appeal before the revenue authorities failed, upon which further appeal was filed before the Tribunal. The Tribunal by the impugned judgment allowed the appeal and held that the assessee was entitled to set-off on taxes paid for purchase of spare parts used in manufacturing the motors which, in turn, were fitted in the pump sets. The Tribunal observed that when there is sale of pump sets, there is sale of electric motors also and hence, the appellant is entitled to set-off under Rule 42 of the Rules. This particular observation of the Tribunal was criticized by the counsel for the State, who contended that what the Rule requires is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 2 of the Act; Provided that this condition shall not apply in respect of the purchase of any of the goods as described in entry 16 in Schedule II Part A, where any such goods are used by the assessee in the manufacture of any goods as described in the said entry 16, Provided further that the condition shall not apply in respect of purchases of spare parts and accessories exempted from payment of part of the tax under entry 36 in the schedule to the Government Notification Finance Department No.(GHN 627) GST-1070 (S.49)-TH dated 29th April,1970, (hereinafter referred to as 'such goods') where any such goods are used by the assessee in the manufacture of machinery falling under sub-entry (1) of entry 16 in Part A in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urer in the manufacture of any of the goods described in the said entries by virtue of the proviso, condition No.2 itself would not apply. In other words, in respect of the purchase of goods falling in entries 26, 39 and 43 which are used by the assessee for manufacture of goods described under the said entries, though the goods happened to be prohibited goods, condition No.2 itself would be rendered inapplicable. Subtle distinction therefore would be in such a case, it would not be a case of fulfillment of condition No.2 but, its non-applicability altogether. 7. With this background, we may refer to the 4th condition which requires that the goods so manufactured have been sold by the assessee in the State or in course of inter-State tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter manufacturing pump sets, would not be valid. Had we been called upon to interpret the second condition alone, perhaps, we would concur the suggestion of the learned AGP that this condition would require manufacture and sale of the same product since the concession is entry specific. However, no such restriction can be read in condition No.4. If find that the moment as per the proviso to the second condition, the assessee used the raw material which was otherwise prohibited but fell within the entry 26 for manufacture of a product, namely, electric motor which also fell within entry 26, applicability of condition No.2 stood ousted, it was thereafter only required to be seen whether condition No.4 was satisfied, which in our opinion, was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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