1977 (1) TMI 131 - HC - VAT and Sales Tax

Summary

Issues Involved: Deduction under Section 10(2)(i) of the Bombay Sales Tax Act, 1959; Set-off under Rule 42 of the Bombay Sales Tax Rules, 1959; Interpretation of Rule 45 of the Bombay Sales Tax Rules, 1959.

Issue-wise Detailed Analysis:

1. Deduction under Section 10(2)(i) of the Bombay Sales Tax Act, 1959:
The applicants initially claimed a deduction as resales under section 10(2)(i) of the Bombay Sales Tax Act, 1959, for sales amounting to Rs. 3,42,208. This claim was rejected by the Sales Tax Officer, and subsequent appeals to the Assistant Commissioner of Sales Tax and the Tribunal were also dismissed. However, during the hearing, the applicants' counsel stated they did not wish to pursue this issue, leading the court to not address or answer this question.

2. Set-off under Rule 42 of the Bombay Sales Tax Rules, 1959:
The applicants claimed a set-off under Rule 42 for the general sales tax amounting to Rs. 7,568.52 recovered by Aurobrite (India) Private Limited. The Sales Tax Officer and the Assistant Commissioner of Sales Tax rejected this claim because the tax amount was not separately shown in the invoices. The Tribunal upheld this decision, referencing a Special Bench decision in Ramprasad Murlidhar v. State of Maharashtra, which interpreted Rule 42 together with Rule 45, emphasizing that the tax amount must be shown separately in the invoice.

3. Interpretation of Rule 45 of the Bombay Sales Tax Rules, 1959:
The core issue revolved around the interpretation of Rule 45, specifically whether sub-clause (c) is an independent condition or part of clause (iii) of condition (B). The Tribunal had treated sub-clause (c) as an independent condition, requiring the tax amount to be separately shown in the invoice for set-off eligibility. The court, however, found that sub-clause (c) is part of clause (iii) of condition (B). The court noted that Rule 42 uses the term "recovered" without specifying "recovered separately," unlike other rules which explicitly differentiate between tax recovered separately and not separately. The court concluded that the general intention of the rules is to grant set-off for taxes recovered, and specific exceptions for lesser amounts when not separately shown are explicitly provided in certain rules but not in Rule 42.

Conclusion:
The court held that the applicants were entitled to the set-off under Rule 42, as the tax was indeed recovered from them, even though not shown separately in the invoices. The interpretation of Rule 45 by the taxing authorities and the Tribunal was incorrect. Consequently, the court answered the second question in the negative, entitling the applicants to the set-off claimed.

Costs and Refund:
The respondents were ordered to pay the applicants' costs of the reference, fixed at Rs. 300, and the fee of Rs. 100 paid by the applicants was to be refunded. The reference was answered accordingly.