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TMI Blog1996 (1) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... 87 for our opinion: (1) Reference No. 2-I/87: (i) Whether, on the facts and in the circumstances of the case, the Board of Revenue was justified in holding that the applicant was not entitled to the benefit of set-off under section 8(1)(a) of the Act on the grounds and reasoning contained in his order? (ii) Whether, on the facts and in the circumstances of the case, the Board of Revenue was justified in law in holding that the applicant was not entitled to the benefit of set-off under section 8(1) because he was manufacturing taxfree goods particularly when on facts it is admitted that he was manufacturing the taxable goods in respect of which he was entitled to immunity from taxation because of the nature of the industry as a dealer? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the applicant's products having been declared tax-free under section 12 of the Act in terms of the provisions of section 8(1)(a) of the Act, the applicant was not entitled to claim set-off. By the order of re-assessment dated May 29, 1985 passed by the Assistant Sales Tax Officer, under section 19(1) of the Act, the set-off, allowed previously was withdrawn (annexures "B" and "C"). For the period from November 16, 1982 to November 4, 1983 also the applicant's claim of set-off was similarly disallowed on the same grounds vide order dated September 30, 1985 passed in Assessment Case No. 327 of 1983 (Provincial) (annexure "D"). First appeals against the aforesaid orders were dismissed vide appellate order dated August 29, 1985 passed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (annexure "H") the applicant filed applications registered as 2-I/87 and 5-I/87 for reference of the questions. On these applications, the Tribunal stated the cases and referred the aforesaid questions of law for our opinion. 3.. We have heard Shri P.M. Choudhary, learned counsel for the applicant/ assessee and Shri Piyush Mathur, learned Deputy Government Advocate for the non-applicant/department in both these reference applications. 4.. The scheme of section 8(1)(a) of the Act is that in case a dealer purchases goods in the shape of raw material at full rate of tax and pays the tax to the seller over and above the concessional rate, then he becomes entitled to get set-off equal to the difference between the full rate of tax and conces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent matter that eventually relief was refused on the conjectural approach that applicant could have purchased the raw materials and incidental goods without paying any tax in terms of notification dated May 1, 1982. 6.. It is brought to our notice that the Full Bench of the Tribunal in [1991] 7 TLD 13 (Mohini Plastic Industries v. Commissioner of Sales Tax) held that when the assessee was a new industry, it was entitled to exemption from sales tax and such assessee was entitled to set-off on tax-paid purchases of raw materials as the goods were not exempt but the class of dealers was exempted. In this decision, it is held as under: "Held, it is admitted that sales tax was paid by the assessee on the raw material purchased in question, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion cannot be denied on the supposed grounds that such a assessee could have purchased tax-free goods as raw materials in view of the later notification. The reasonings and the grounds contained in the orders passed by the Tribunal do not appear to be correct and sound. 10.. Now the Full Bench of the Tribunal itself has taken the view supporting the stand of the applicant. It is thus clear that the applicant has been erroneously denied the benefit of set-off under section 8(1)(a) of the Act. 11.. Here are cases in which the assessee was allowed the benefit of setoff initially but was made to lose it on reopening of assessment under section 19(1) of the Act despite the fact that the assessee was found purchaser of raw material on payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) Answer to Question No. (ii) is in the negative, i.e., in favour of the assessee and against the department. (II) Reference No. 5-I/87: (i) Answer to Question No. (i) is in the negative, i.e., in favour of the assessee and against the department. (ii) Answer to Question No. (ii) is in the negative, i.e., in favour of the assessee and against the department. 14.. These reference applications are thus disposed of with answers as indicated above but without any order as to costs. 15.. A copy of the order be forwarded immediately to the Tribunal for further action as may be necessary. 16.. Retain this order in Misc. Civil Case No. 181 of 1991 and place its copy in the connected Misc. civil case for ready reference. Reference answe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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