1964 (11) TMI 93 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Entitlement to remission of purchase tax under rule 12(1A) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954.
2. Applicability of rule 12(1A) during the assessment periods.
3. Whether bidi pattis are commercially the same commodity as raw tobacco.
4. Retrospective operation of rule 12(1A).

Detailed Analysis:

1. Entitlement to Remission of Purchase Tax:
The primary issue is whether the assessees are entitled to remission of purchase tax paid on raw tobacco under rule 12(1A). The assessees purchased raw tobacco from unregistered dealers, processed it into bidi pattis, and sold the bidi pattis in inter-State trade within nine months. The Sales Tax Officer, Assistant Commissioner of Sales Tax, and Deputy Commissioner of Sales Tax all rejected the assessees' claim for remission. The Tribunal upheld this decision, stating that bidi pattis were a different commercial commodity from raw tobacco, thus not satisfying the conditions of rule 12(1A).

2. Applicability of Rule 12(1A) During Assessment Periods:
Rule 12(1A) was in force only from 1st March 1957 to 31st March 1957, and not during the entire assessment periods relevant to the references. The assessees argued that the case was argued before the Tribunal based on the applicability of rule 12(1A) without contesting its period of applicability. The court held that the question referred for opinion covered the contention that rule 12(1A) was not in force during the relevant period, allowing the Revenue to raise this argument.

3. Whether Bidi Pattis Are Commercially the Same Commodity as Raw Tobacco:
The court examined whether the processed bidi pattis could be considered the same as raw tobacco. The assessees argued that the basic essential properties of tobacco remained unchanged despite processing. However, the court emphasized that rule 12(1A) required the goods sold to be the same as the goods purchased, not merely retaining the same basic properties. The court concluded that bidi pattis and raw tobacco are commercially different commodities, supported by the Supreme Court decision in Anwarkhan Mehboob Co. v. State of Bombay, which held that raw tobacco is consumed when converted into bidi pattis, making them distinct commercial commodities.

4. Retrospective Operation of Rule 12(1A):
The assessees contended that rule 12(1A) should be applied retrospectively to cover transactions before its effective date. The court found it unnecessary to decide on the retrospective operation of rule 12(1A) since, even if it applied throughout the assessment periods, the assessees would not succeed because bidi pattis were not the same as raw tobacco.

Conclusion:
The court concluded that the assessees were not entitled to remission of purchase tax under rule 12(1A) because bidi pattis were commercially different from raw tobacco. Thus, the condition for the applicability of rule 12(1A) was not fulfilled. The references were answered in the negative, and the assessees were ordered to pay the costs of the State.