M FRAMROSE AND COMPANY Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) In both these references under section 61(1) of the Bombay Sales Tax Act, 1959, the same question of law has been referred to us, namely :

(2.) During the relevant period the applicants were registered as a dealer both under the Central Sales Tax Act, 1956, and the Bombay Sales Tax Act, 1959, and were acting as distributors for George Salter India Limited of Titaghar in West Bengal, a company which manufactured spring balances. During the year 1964-65, the said George Salter India Limited supplied to the applicants certain spring balances. The applicants in their turn sold these machines to their own customers. Some of these customers found the machines sold to them to be defective, and these defective machines were returned by the applicants to the manufacturers, the said George Salter India Limited. These machines were returned between 21st September, 1966, and 30th December, 1966. The accounting period of the applicants was the calendar year, and at the end of this accounting period for 1966, the applicants made a journal entry debiting the said George Salter India Limited with the value of the machines so returned and crediting it to the purchase account. The description given in the said journal entry was "being the value of unsalable machines returned to supplier".

(3.) In the applicants' assessment for the assessment year 1st January, 1966, to 31st December, 1966, the Sales Tax Officer considered the return of the said defective machines to be sales made by the applicants to the said George Salter India Limited, and since the said manufacturers were in West Bengal he treated them as sales made in the course of inter-State trade and commerce. He, therefore, added a sum of Rs. 86,715 to the turnover of sales of the applicants and then deducted the said sum of Rs. 86,715 from the total turnover so arrived at as being sales not liable to tax under section 75 of the Bombay Sales Tax Act, 1959, that is, as being inter-State sales. In the assessment of the applicants under the Central Sales Tax Act, 1956, in respect of the said period the Sales Tax Officer added to the taxable turnover of the applicants the said sum of Rs. 86,715 as being sales made in the course of inter-State trade and commerce. The applicants filed appeals against these two orders of assessment to the Assistant Commissioner of Sales Tax, who dismissed both there appeals. Against the orders of the Assistant Commissioner of Sales Tax the applicants filed second appeals to the Tribunal, which also rejected both these appeals. It is from these orders of the Tribunal that the present two references are made, Sales Tax Reference No. 2 of 1976, being in respect of the assessment under the Bombay Sales Tax Act, 1959, and Sales Tax Reference No. 3 of 1976, being in respect of the assessment under the Central Sales Tax Act, 1956.