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TMI Blog2015 (7) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... aste or scrap goods. The words “consists principally of sales of waste or scrap goods” are completely ignored by both the Revisional Authority and the Tribunal. The dealer in this case has not been found to have principally dealt with waste or scrap goods. The exported goods were manufactured with the purchases of goods styled as raw materials that have been made by the dealer. In such circumstances, we do not see how the dealer was ineligible or not qualified for the refund under the Rule. A finding of fact, therefore, should have been rendered and in terms of this proviso. Equally, on the second aspect, the disentitlement comes in the case of a dealer in respect of purchase of goods which are used by him in the manufacture of goods treated as capital assets by him or parts and components of such capital assets. The Sales Tax Officer found that the dealer has not treated them as purchases of capital goods. - there is no discussion at all in both the orders as to why goods or assets were indeed not treated as capital assets by the dealer. The authorities ought to have indicated with clarity and precision as to what is meant by capital goods and which capital goods and of wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asik noticed an illegality and irregularity in the order of the Sales Tax Officer and, therefore, decided to exercise his powers of revision under the Bombay Act. He passed an order on 8th May 2002, holding that the exports ought to be worked out at 96.1% instead of 97.6%. Therefore, he came to the conclusion that there was an excess set-off. He, therefore, revised that order by withdrawing the set-off in the sum of ₹ 34,501/- and consequential interest under section 36(3)(b) of the Bombay Act in the sum of ₹ 52,776/- also came to be computed. 4. It was also held by him that instead of deducting the set-off under Rule 41-D(3)(b) of the Bombay Rules, on the purchases of component parts and accessories at 4%, the set off was deducted at 3%. He, therefore, withdrew the set-off in the sum of ₹ 1,22,267/- granted in excess by 1% being the purchases of capital nature. The total set-off disallowed thus was arrived at ₹ 1,46,768/-. Against this revisional order, an appeal was preferred by the assessee before the Tribunal which came to be numbered as Appeal No.109 of 2002. It was subsequently decided by the First Bench of the Tribunal on 25th April, 2003. The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat cannot change the nature of the same and even on the second question, this Court must confirm the concurrent findings and give its answer and opinion accordingly. 8. With the assistance of both counsel, we have perused the paper book and the orders passed by the Sales Tax Officer, the Revisional Authority and the Tribunal. At the relevant time, the subject Rule read as under : R. 41D. Drawback, set-off, etc., of tax paid by a manufacturer in respect of purchases made on or after the notified day. - (1) In assessing the amount of tax payable in respect of any period by a Registered dealer who manufactures goods for sale or export (hereinafter in this rule referred to as the claimant dealer ) the Commissioner shall, in respect of purchases made by the claimant dealer on or after the notified day, of any goods specified in entry 6 of Schedule B and in Schedule C and used by him within the State; (i) in the manufacture of goods not being kerosene, for sale, which manufactured goods have in fact been sold by him or exported by him, or (ii) in the packing of goods so manufactured, grant him subject to the reduction specified in sub-rule (3), a draw-back, set-off, or as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form 31C issued by his manager, or as the case may be, his agent declaring inter alia that the goods which will in fact be sold by him or will be used by him in the manufacture of goods which will in fact be sold by him and that he, his manager or, as the case may be, his agent is registered under the Central Sales Tax Act, 1956 (LXXIV of 1956) in respect of that place of business. (3) The aggregate of the sums referred to in subrule (1) shall be in respect of purchases made on or after the 1st April 1999 reduced by, - (a) 6 per cent of the purchase price representing the sums in respect of the goods which are despatched in a manner referred to in clause (iii) of sub-rule (2); (b) 4 per cent of the purchase price representing the sums in respect of goods which are treated as capital assets by the claimant dealer and parts components and accessories of such capital assets; (c) 3 per cent of the purchase price representing the said sums in all other cases: Provided that, no reduction under clause (c) shall be made, - (i) if the claimant dealer was holding a Certificate of Registration as required by section 22 on the 30th September 1995, then as regards the first t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claimant dealer where on an earlier transaction of purchases of these goods for use in the manufacture of goods for sale a drawback, set-off or, as the case may be, a refund has been granted or where the goods manufactured by the claimant dealer out of such purchases have been sold by him in section (1) of section 7, or where the said manufactured goods, being food or drinks as defined in sub-clause (f) of clause (29- A) of Article 366 of the Constitution, have been sold at any time, - (a) during the period on or after the 7th September 1978 upto the 2nd February 1983 by any restaurant or eating house (by whatever name called); or (b) during the period on or after the 4th January 1972 upto the 2nd February 1983 by any manufacturing dealer other than any restaurant or eating house (by whatever name called), and the same sales are claimed as exempt under the provisions of sub-section (2) of section 6 of the Constitution (Forth-sixth Amendment) Act, 1982. 9. A bare perusal of this Rule would indicate that it deals with drawback, set-off etc. of tax paid by manufacturer in respect of purchases made on or after the notified date. Sub-rule (1) of Rule 41-D clarifies that in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.4% of the total sales effected during the period. Therefore, set-off under Rule 41-D was worked out by him. Then, he also arrived at the figure and for the purposes of Rule 41-D (3)(c). There, purchases of raw materials were referred to and he specifically termed them as hardware, packaging material, bearing etc. and full set-off was allowed by him. It is the Revisional Authority which reduced it in terms referred by us hereinabove. 12. The said reasoning of the Revisional Authority has been upheld by the Tribunal. The Tribunal referred to the rival contentions and in paragraph 12 concluded that the Assessing Authority allowed set-off to the extent of 96.10%. The finished goods manufactured for export also generate some scrap during the process of manufacture and the assessee urged that as such it should be considered for the purpose of export. If this scrap amounting to ₹ 1,36,462/- is considered as export sale, then, the percentage goes upto 97.6%. The Tribunal concluded that if the goods are actually exported, then, the set-off has to be worked out inasmuch as export ought to be of finished goods. The percentage cannot be worked out on the basis of the material used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd intended for export and in fact exported consisted principally of sale of waste or scrap goods. The words consists principally of sales of waste or scrap goods are completely ignored by both the Revisional Authority and the Tribunal. The dealer in this case has not been found to have principally dealt with waste or scrap goods. The exported goods were manufactured with the purchases of goods styled as raw materials that have been made by the dealer. In such circumstances, we do not see how the dealer was ineligible or not qualified for the refund under the Rule. A finding of fact, therefore, should have been rendered and in terms of this proviso. 14. Equally, on the second aspect, the disentitlement comes in the case of a dealer in respect of purchase of goods which are used by him in the manufacture of goods treated as capital assets by him or parts and components of such capital assets. The Sales Tax Officer found that the dealer has not treated them as purchases of capital goods. The Revisional Authority has in fact noted the dealer's submission and stand in paragraph 8 of its order at running page 8. There the dealer contended that during the course of manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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