1964 (12) TMI 33 - HC - VAT and Sales Tax

Issues Involved:
1. Applicability of Rule 12(1A) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, for transactions prior to its enactment.
2. Whether the dealer is entitled to remission or refund of purchase tax under Rule 12(1A) for transactions completed before the rule came into force.

Issue-Wise Detailed Analysis:

1. Applicability of Rule 12(1A) for Transactions Prior to Its Enactment:
The primary issue was whether Rule 12(1A) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, which came into force on 1st March 1957, could be applied retrospectively to transactions that occurred before this date. The assessee argued that Rule 12(1A) should be construed to apply to purchases and subsequent sales that took place prior to its enactment, provided the other requirements of the rule were met. The Revenue, however, contended that the rule was prospective and only applied to transactions occurring after its enactment date.

The court examined the language of Rule 12(1A), noting that it required two conditions to be satisfied for a dealer to claim remission or refund of purchase tax: (1) the dealer must have become liable to pay purchase tax under section 10(a), and (2) the goods purchased must have been despatched to an address outside the State of Bombay within nine months from the date of purchase. The court emphasized that the right to remission or refund arises upon the fulfilment of the second condition, which must occur after the rule came into force.

The court applied a fundamental rule of statutory interpretation, stating that unless explicitly provided or necessarily implied, a statute should not be given retrospective operation. The court found no express language or necessary implication in Rule 12(1A) that would allow it to apply retrospectively to transactions completed before its enactment.

2. Entitlement to Remission or Refund of Purchase Tax:
The court further analyzed whether the dealer was entitled to remission or refund of purchase tax under Rule 12(1A) for transactions completed before the rule came into force. The assessee argued that the rule should be interpreted to allow remission or refund even if the purchases and subsequent sales were made before 1st March 1957. The Revenue disputed this, asserting that such an interpretation would give the rule retrospective effect, which was not supported by its language.

The court reiterated that the rule's language did not support a retrospective application. It noted that the rule speaks from the date it was made, and for the right to remission or refund to arise, the second condition (despatch of goods outside the State within nine months) must be fulfilled after the rule's commencement. The court concluded that applying the rule retrospectively would affect the State's right to charge and retain purchase tax for transactions completed before the rule's enactment and would create a new obligation for the State to remit or refund tax for past transactions.

The court also addressed the assessee's reliance on the rule's provision for refund of purchase tax already paid, clarifying that this provision could be fully realized by interpreting the rule as prospectively operating on situations where the subsequent sale occurs after the rule's commencement.

Conclusion:
The court held that Rule 12(1A) applies only to subsequent sales complying with the second condition that occur after the rule came into force. Since both the purchases and subsequent sales in the present case were completed before the rule's enactment, the assessees were not entitled to claim remission or refund of purchase tax under Rule 12(1A).

Reference answered in the negative. The assessee was ordered to pay the costs of the reference to the State.

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