STATE OF GUJARAT Vs. PATEL KALIDAS NARANBHAI

JUDGEMENT

(1.) A question of some nicety and importance arises on this reference. The question is whether on a true construction rule 12(1-A) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, entitles a dealer to claim remission or refund of purchase tax paid by him on purchase of goods where both the purchase and the subsequent sale took place prior to the coming into force of the rule. The facts giving rise to the reference are few and may be briefly stated as follows. The assessees at all material times carried on business as dealers in raw tobacco and were registered under the Bombay Sales Tax Act, 1953. The assesses elected to pay sales tax under section 10A of the Act. In the assessment year 1955-56 commencing on 1st April, 1955, and ending on 31st March, 1956, the assessees purchased different varieties of raw tobacco from unregistered dealers for the price of Rs. 46,932 and these purchases being from unregistered dealers, the assessees became liable to pay purchase tax on them under section 10(a) of the Act. The assessee thereafter mixed the different varieties of raw tobacco purchased by them and graded the mixture by passing it through sieves and sold the resultant mixture to various dealers outside the State of Bombay. These sales were also effected in the assessment year 1955-56 and they were within a period of nine months from the dates of the respective purchases. In the assessment of the assessees to sales tax for the assessment year 1955-56, the assessees claimed exemption from payment of purchase tax on the purchases effected by them on the ground that having elected to pay sales tax they were not liable to pay purchase tax by reason of section 10A. The assessees also claimed in the alternative remission of purchase tax under rule 12(1A) on the ground that they had despatched the goods purchased by them to an address outside the State of Bombay within a period of nine months from the date of the respective purchases. The claims under both heads were negatived by the Sales Tax Officer and on appeal, the order of the Sales Tax Officer was confirmed by the Assistant Commissioner of Sales Tax. A revision application was preferred to the Deputy Commissioner or Sales Tax but the revision application also met with the same fate and the assessees thereupon approached the Tribunal in further revision. Now the claim of the assessees based on section 10A could succeed only if it could be shown that raw tobacco purchased by the assessees was sold without being processed or altered in any manner but the Tribunal held that there was processing of raw tobacco when the assessees passed it through sieves for the purpose of grading and the condition requisite for the applicability of section 10A was, therefore, not satisfied. The claim for exemption under section 10A was thus negatived by the Tribunal and since there is no question before us in regard to that claim, the decision of the Tribunal on that point must be regarded as final and binding. So far as the claim based on rule 12(1A) was concerned, the Revenue did not contend before the Tribunal that that rule was not in force during the assessment year 1955-56 and that the assessees were, therefore, not entitled to claim remission under that rule. The only question debated before the Tribunal was whether the terms of the rule were satisfied and the argument of the Revenue was that the terms of the rule were not satisfied because what were sold by the assessees were not the same goods which were purchased but different goods into which the goods purchased had been converted by the assesses. This argument was rejected by the Tribunal which held that though it was undoubtedly true that when the assessees mixed the different varieties of raw tobacco purchased by them and passed the resultant mixture through sieves for the purpose of grading, some process was performed but the resultant mixture was still the same commercial commodity as raw tobacco and the goods sold by the assessees were, therefore, the same as the goods purchased as required by rule 12(1A). The Tribunal accordingly upheld the claim of the assessees to remission under rule 12(1A). This view of the Tribunal is now challenged before us on behalf of the State in the present reference.

(2.) WHEN the hearing of the reference opened before us, Mr. B. R. Sompura, learned Assistant Government Pleader appearing on behalf of the Revenue raised a new contention which had not been urged before any of the authorities below and that contention was that rule 12(1A) which constituted the very foundation of the claim for remission was not in force during the assessment year 1955-56 and the assessee were, therefore, not entitled to claim remission under that rule. Now there can be no doubt that rule 12(1A) was not in force during the assessment year 1955-56 and it came into force only from 1st March, 1957, and consequently unless the rule in construed as conferring a right to claim remission or refund of purchase tax even in cases where purchase and subsequent sale were effected prior to 1st March, 1957, the claim of the assessees to remission would be liable to be rejected. But a preliminary objection to our entertaining this connection was raised by Mr. S. L. Mody, learned Advocate appearing on behalf of the assessees. He urged that the case was argued before the Tribunal on the basis that the claim for remission made by the assessees was governed by rule 12(1A) and the only ground on which the claim was sought to be negatived was that the requirements of rule 12(1A) were not fulfilled. He pointed out that at no stage was it contended on behalf of the Revenue that rule 12(1A) did not govern the determination of the claim of the assessees and that the claim was liable to fall on the ground that the rule was not in force during the assessment year 1955-56 nor was any question raising such contention submitted for the opinion of the Court. He contended that under these circumstances it was not competent to the Revenue to raise the plea that rule 12(1A) was not in force during any part of the assessment year 1955-56 and that the claim of the assessees was, therefore, unsustainable. This contention thought at first blush attractive since it has an emotive appeal, namely, why should the Revenue be allowed to challenge the applicability of rule 12(1A) for the first time at the hearing of the Reference before the High Court when it permitted the assessees to proceed throughout on the basis that rule 12(1A) applied and the validity of the claim made by the assessees fell to be governed by the terms of rule 12(1A) is in our opinion entirely devoid of merit. The question referred to us for our opinion is in following terms :- "Where on the facts and in the circumstances of the case, the opponents were entitled to a remission under rule 12(1A) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, of the purchase tax paid under section 10(a) of the Bombay Sales Tax Act, 1953, in respect of the purchases by the opponents of raw tobacco at the price of Rs. 46,932 ?"

(3.) LET us first examine the language of rule 12(1A). That rule as it stood on 1st March, 1957, when it came into force was in the following terms :- "12. (1A) Where a dealer, who has become liable to pay purchase tax under clause (a) of section 10 on his purchase of goods, shows to the satisfaction of the Collector that the goods so purchased have, within a period of nine months from the date of their purchase by him, been despatched : (i) by him, or (ii) by a registered dealer to whom he sold the goods on his furnishing a certificate in Form N prescribed under the Bombay Sales Tax (Registration, Licensing and Authorisation) Rules, 1954, to an address outside the pre-reorganisation State of Bombay, excluding the transferred territories, then the Collector shall by order remit the amount of purchase tax payable by such dealer on his purchase of goods or where such dealer has already paid such amount, the Collector shall, on an application for refund made by such dealer in the manner specified in rule 25 of the Bombay Sales Tax (Procedure) Rules, 1954, refund to such dealer the amount so paid ......"