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TMI Blog1976 (2) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... hased by the said firm both from registered dealers and unregistered dealers. In respect of the goods so purchased from registered dealers, the said firm had paid to the vendors of the said goods the amount which the said vendors would have to pay to the Govt. by way of sales tax and general sales tax, and in the case of goods purchased from unregistered dealers, the said firm had paid purchase tax to the Government. The 1953 Act, levied sales tax, general sales tax and purchase tax, the levy of sales tax being provided for by S. 8, of general sales tax by S. 9 and of purchase tax by S. 10 thereof. Under S. 8 a dealer became liable to pay sales tax on his turnover of sales of goods after deducting from such turnover certain sales of goods specified in that section. The relevant portion of S. 8 of the 1953 Act read as follows :- "8. Levy of sales tax : Subject to the provisions of S. 7, there shall be levied a sales tax on the turnover of sales of goods specified in column 1 of Schedule B at the rate, if any, specified against them in column 2 of the said Schedule, after deducting from such turnover - (a) sales of goods - (i) which have been purchased from a registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eductions allowed under S. 8 of the 1953 Act by reason of the said R. 16(2) of the 1954, Rules, R. 11AA was made. This Rule provided as follows :- "11AA. Grant of drawback, of drawback, set-off or refund to transferee : Where any dealer, who is required to maintain a register in Form (10) under sub-R. 11 or sub-R. (3) of R. 11A, transfers the ownership of his entire business and where the provisions of S. 26 of the Act apply to such transfer then in respect of the purchases of such goods as have been entered in the register in Form (10) and transferred to the transferee on the date of such transfer a drawback, set-off or refund under sub-Rr. (1) and (2) of R. 11 and sub-R. (1) of R. 11A shall be granted to the transferee in the same manner in which if would have been granted to such dealer in the absence of such transfer; Provided that such transferee is a registered dealer on the date of such transfer or has applied for registration or obtained a certificate of registration Within the time specified in sub-S. (1) or prescribed under sub-S. (2) of S. 26 of the, as the case may be". Under R. 11AA a transferee of the business of a registered dealer became entitled to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maining on hand as of 1-1-1960 and therefore, he is entitled he is entitled to the benefit of drawback set-off of the tax paid in respect of stock of goods held on 1-1-1960". In our opinion, this question does not bring out the real controversy the parties and the question of law which really arose for determination of the Tribunal and was determined by it. We accordingly reframe the question submitted to us as follows :- "Whether on the facts and in the circumstances of the case the Tribunal was justified in law in holding that for the purpose of clauses (a) and (b) of sub-R. (2) of R. 40 of the Bombay Sales Tax Rules, 1959, by reason of the legal fiction created by R. 11AA and sub-R. (2) of R. 16 of the Bombay Sales Tax (Exemption. Set-off and Composition) Rules, 1954, the respondents should be deemed to have paid the tax on the purchase of goods remaining in stock in with them on January 1, 1960 as also should be deemed to have paid to the vendors of goods the amounts by way of tax payable by the vendors to the Government on other goods also remaining in stock on January 1, 1960 and had, therefore, become entitled to a drawback, set-off or refund in respect of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid". 8. There is no dispute that for the purpose of the said sub-R. (2) the respondents are the assessees as defined in the said sub-R. (1) or that they had complied with the other conditions specified in the said sub-R. (1) and that the goods in question were of the description specified in the said sub-R. (1). What was, however, submitted before us by Mr. Dada, learned counsel for the Department, was that the respondents were not the purchases of the said goods, because the said firm and though under S. 8 of the 1953 Act read with R. 16(2) of the 1954 Rules the respondents might have been entitled to a deduction in respect of resales of these goods and under R. 11(2) read with R. 11A of the 1954 Rules entitled to a drawback, set-off or refund in respect of these resales, the same position did not continue after the coming into being of the 1959 Act, and thus they could not avail themselves of the benefit of the character with which they were invested by R. 11AA and 16(2) of the 1954 Rules. Mr. Dada further submitted that the benefit of the artificial character of the respondents as the purchasers of the side goods by reason of the provisions of R, 11AA of the 1954 Rules w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is created and should not be extended beyond that legitimate field. Mr. Dada urged that to permit the respondents on the basis of this legal fiction to get a set-off under the 1959 Rules was to extend this fiction beyond its legitimate field. We are unable to accept this submission. The purpose of S. 8 of the 1953 Act for which the legal fiction was created in R. 16(2) the 1954 Rules was to enable a transferee to get a deduction in respect of re-sales made by him of goods purchased by his transferor. Thus, the purpose was to grant relief to a transferee in his assessment to sales-tax by way of deduction from his turnover. Dated the 3rd February 1976 :- 10. At this stage it will also be convenient to consider further submission of Mr. Dada that though R. 16(2) of the 1954 Rules might have created a legal fiction, the provisions of R. 11AA thereof did not have that effect, and also to deal with the purpose for which R. 11AA was made. In support of this submission Mr. Dada relied upon the difference in the language used in R. 16(2) and 11AA of the 1954 Rules. In particular, Mr. Dada placed emphasis upon the absence of the words "..... shall ..... be deemed to be the purchase m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds emphasized by us really mean nothing else than in the same manner as if he was the transferor, that is, the actual purchaser. We must next consider the purpose for which the legal fiction in R. 11AA was created. The purpose was to enable the transferee of a business to obtain the same reliefs by way of drawback, set-off or refund provided for by sub-Rr. (1) and (2) of R. 11 and sub-R. (1) R. 11A of the 1954 Rules in his assessment as the transferor would have been entitled to had he not transferred his business. The drawback set-off or refund provided for by the said R. 11(1) and (2) and 11A(1) are reliefs in taxation. The relief is of the same type as that granted in respect of assessment to sales tax in very much the same way as relief granted by R. 16(2) of the 1954 Rules. The purpose, therefore, of both R. 11AA and R. 16(2) of the 1954 Rules was the same, namely, to give relief by way of drawback, set-off or refund or deduction to dealers in their assessments to sales tax, general sales tax and purchase tax which they would otherwise be liable to pay under the 1953 Act. 11. The next question which falls to be considered is whether this purpose became extinguished on the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the previous laws. That the Legislature intended to give continuity to the benefits which were enjoyed under the Acts repealed by the 1959 Act referred to in the 1959 Act and the 1959 Rules as the earlier laws, is shown by S. 76 to 79 by the 1959 Act, s. 76 repeals all the earlier Sales Tax laws in force in the Reorganised State of Bombay which we have enumerated above S. 77 is a saving Section and provides for continuance of certain provisions of the earlier laws and registration certificates etc., issued thereunder. Under Section 77 (1) (b) of the 1959 Act, registration certificates issued under any of the earlier laws and in force before the date on which the 1959 Act came into force, viz. January 1, 1960, continued in force after that date and were to be deemed to be certificates of registration under the 1959 Act, and where a registered dealer had already made an application before January 1, 1960 for a Licence, Authorization could have been granted to him under the provisions of the 1959 Act, the registration certificate was also to be deemed on January 1,1960 to be a Licence Authorization or Recognition issued under the 1959 Act. This validity of the registration certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him by reason of the addition of the purchase price of the said goods to his turnover of purchases or his taxable turnover under such law. The important words in the said sub-R. (2) of R. 40 are the opening words of clause (a) thereof. They show that what is required under R. 40(a) of the 1959 Rules is a purchase made while an earlier law was in force and that an amount was paid. by the way of tax by the purchaser under the earlier law or was paid by him to his vendor by way of tax collected from him by his vendor. Thus transaction to be looked at for purpose of granting to an assessee relife by way of a drawback, set-off or refund in his assessment under the 1959 Act is the transaction which had been effected and completed under an earlier law. If the transaction is to be considered from the point of the earlier law, then it can be considered in this light in all its aspects. It, therefore, follows that the purchase, which is referred to in sub-R. (2) of R. 40 of the 1959 Rules, must be a purchase within meaning of the earlier law. Now, what would be a purchase under the earlier law ? When B purchases goods from A, it certainly would be a purchase, because it is a purchase of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been granted to the original dealer had he continued in the business" are in pari materia with those used in R. 11AA of the 1954 Rules. 12. Mr. Dada also relied upon our judgment in Commissioner of Sale Tax vs. Mahendra Owen Ltd. to show that no set-off under the 1959 Act would be allowed to the respondents. This judgment is reported in 1975 Current Tax Reporter 52. Even though it is so reported, we have thought it advisable to give reference to the number of this case and the dates on which it was decided, inasmuch as on a perusal of the judgment as reported we have found a number of in inaccuracies, omissions and mistakes some of them material. We are, therefore, unable to place any reliance upon the text of the judgment as reported, but preferred to look at our own original judgment, relying upon this decision, Mr. Dada submitted that the right of set-off under the 1953 Act or the Rules thereunder was not a vested right did not survive the repeal of that Act. We are unable to see any relevance of what we have decided in that case to the question before us . In that case, the admitted position was that a particular set-off to which the assessee was entitled under the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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