Karnataka High Court
M/S Wep Peripherals Ltd vs The Deputy Commissioner Ofcommercial ... on 4 June, 2010
Bench: K.L.Manjunath, B.V.Nagarathna
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 04TH DAY OF' JUNE, 20IeV.,A'
PRESENT A T S. V »
THE HONBLE MRJUSTICE S
THE HON'BLE MRS.JUSTf:_OE E;I.AN_AGARA1jII%ArA S
SIRp.NO.%"5«g_2__Q+9mz '
BETWEEN:
M/S WE? PERIPHERALS LTD., _
40/1A, BAsAi§PA;;:Ir:OM'pLEX"" "
LAVELLE ROAD ' v »
BANGALORE-560 001» _ I ~
(REPRESENTE_D DI_T3ASS£S'RANT MANAGER
OF FIIE;{ANCE; SRI C"t_S HEMACHANDRA,
AGED "ABOUT SR; 0 SHIVANNA)
.. . PETITIONER
(By RAGHURAMAR WITH SR1 K K CHYTHANYA, ADV.)
THE..DEI>U:Wk COMMISSIONER OF
4 COMMERCIAL TAXES (ASSESSMENT114)
" fI3ANGAI.--ORE--560 009
... RESPONDENT I
.,_(Sy Srnt: GEETHA MENON GA, ADV.) STRP FILED U/ S 23 (1) OF KST ACT, 1957 AGAINST THE JUDGMENT «SI ORDER DT.6.8.07 PASSED IN STA NO2582/2004 ON THE FILE OF THE KARNATAKA ,% APPELLATE TRIBUNAL, BANGALORE, D1sM1ssINo___ THE APPEAL. ' This STRP having been heard and reserved on this day. NAGARATHNA J, pronounced the__foii.oW--i.rig:; This revision petition is ..petiAti_"onSer,wvvhich is it a public limited company, b_v-"challenging the-order dated 6.8.2007 passed in ff:or--.the assessment year 2001-02. H A A
2. The ipeti-ti'oner"' co'r£:pany..i' is} a manufacturing unit I engaged iVn"«.ti*1e business of . riianufacture and sale of ' computer peripherals._:i;e.:.""printers, ribbons, UPS etc. For the assessrflenvt .yeVarA"20'0'i--02 the petitioner declared his '~ _gro.s's"~as_._we11 as net'tui'n over under the Karnataka Sales Tax Ehei*einaj'ter,*'.referred to as "KST Act") as well as under
the Centraifiaies Act ([hereinafter, referred to as "CST Act") and alsofiled revised Form No.4 on 1.12.2003 by declaring .:1ieiig.z:;;ss and net turn over under the KST and CST Act.
" H3. The respondent passed an order under Section 12(3) of the KST Act read with Rule 18(3) of the Rules and under Section 9(2) of the CST Act and also issued notice in Form Ex No.6 under Rule 17--A{2), 37 & 38 of the KST Rules on
3.3.2004. The respondent assessed the total over and disallowed re--imbursernent of ~ claimed under Section 5--A of the Act b_y'h'1s 'S 3' 3.3.2004. The petitioner also filed Ia.' reetifi:::ation'~1etter iiindeflf Section 25--~A of the KS}? Act .o'n...__17.3'.'2.oo4.V Bei'rigva.ggrieved by the order of the respondent, appeal before the Joint l'..nTConmmercial Taxes [Appeals], City i3_ivision_,_ inter--alia dis--allowance of Section 5A as urljustifiedi definition of "sale" encompasses per Explanation 4 of SectionSx2.[Vi]{t)lof Joint Commissioner however dismissed appeal by order dated 3.9.2004 against Which, ~._an was p'refei"red before the Appellate Tribunal in which was also dismissed by order dated 6.8.200'? aggrieved by the said order the petitioner Cpnhas tiLed'«:_ this revision petition by raising the following A ..j"ques'li.ons of law:
"1. Whether, on facts and in the circumstances of the case, the Hon'ble Kamataka Appellate Tribunal was right in law in holding that petitioner is not entitled to the benefit of reimbursement of purchase tax under Section 5-A of the KST Act even though the petitioner has é/.
Anna 5 _ only stock transfer which is not a sale. He has also submitted that the petitioner had fulfilled the conditions stipulated under Section 5-A of the KST Act and that what is relevant is manufacture of goods inside the State' and it does not require that the sale should take' place. ' the State. According to Counsel for Petifioner;inithexinéstant if A case there was a sale by the petitionei'/icornpany a13.Vd--~_the:
said sale is not restricted wi.thi.n theVState, goods v A' were transferred to another in otherustlatesi only for the purpose of sale. V'iTl_i:erefojre,;ye_rthelaulthorities concerned ought to have given theibene-fit't1nder'Sec'tion 5--A of the Act as the; intention oi7'the71.egislature was to extend certain benefitsxlwith. regard parts and consumables.
-c.ontra,l""ieamed Government Advocate has the instant case, the manufactured goods wterefsold vttithin the State but to the purchasers outside lathe State and that as between the petitioner/company in A rfifiiarnataka and its other branches there was no sale as such only stock transfer and therefore there was no if "compliance of the conditions mentioned under Section 5A of the KST Act and the Tribunal therefore, rightly dis--a1lowed reimbursement under the said Section which order does not call for any interference in this revision petition. She has also relied upon the decisions of this court rendere"di_i'nthe case of Sipani Fibres Vs. State of Kamataka; (1993) 91 STC 0261 and the cas_e....0_fB,V.Ashi£fathaiah 'raid' Borthers Vs. State of Karnataka, referred to the decision in Hotei'--.SaIaji's. case the . S' Apex Court to contend that since"-fiiere has noiaeeri no sale, the re--in:1bursement 'f.be;granted'*ito the petitioner-
assessee under ASection...5.~}Ai.of--.the therefore, the revision petitifonfitloesyvnotieall any""interference by this court.
7. Hvavingheard both sides and on perusal of the material' yoni..recordf,": the points that arise for our "'~..._Cons_ideration are: """
S in the instant case, the transaction "Fin is a sale or a mere stock transfer? answer to point No.1 is that the transaction if 'fin question is a sale, whether under Section 5-A "of the KST Act any industrial input which is used to manufacture any goods inside the State has to be sold within the State only'? ;'/.
8. Before answering the said questions it is necessary to extract Section 5~A of the KST Act prior to the amendment of 1.4.2002, which reads as foliowsz ' "5-A. Reimbursement of -I~ industrial inputs.-- (1) Where a registered purchases any industrial inputtiable to Section 5 from another regis'tere'.d dealer in by the former as a,»'co_rr1ponent" Apart~"'or:
material or packing rriateszriai. of any_Vother which he intends to mant;,*"a"gct1.tre_inside'the State for sale or purchases' liable to tax under Section 5 forase he shall be,.eiigible reir_rfbu.rseraent in «declared goods mentioned in "Fourth Schedule, paid at a rateh exceeding 'three per cent on the turnover ' it relatingtogsuch purchase; _ i respect any other goods, paid at a rate it e. two per cent on the turnover relating A togjsueh purchase."
{2} Suchnmount shall be reimbursed to the registered A f deaier making such purchase.-
(i) by adjustment towards tax payable by him for any month or year as the case may be, under the Act or the Centrai Sales Tax Act, 1956 (Central Act 74 of 1956} or the Karnataka Tax on Entry of Goods Act, 1979 (Karnataka Act 27 of 1979), in such ,u§ JV manner and subject to such condition as may be prescribed;
(ii) by refund in such manner and subject to.__ such condition as may be prescribed:
Provided further that such reiniburserrient l"
be made only against a bill or cash issued by the seller showing separaltely theg collected by way of tax:
Provided also that if dealer, 'after --clainiing reimbursement of tax oi2...purcyhrise'¥Q,"' any inpéuisi under the first proviso to this si:b----secltio§n} tomake use of the whole or part of of other goods be'f?3re- the expiiy 'of"'the.,ac_:counting year immediately _the__ one in which such inputs are purchased,.VV."eithei'~..«__A"d:ie to cessation of his manufaciuring'icictivity.Vorfar any other reason, but has notawaynsuch inputs, he shall be liable to pay the " betiueen the tax payable at the rate specified under and the tax computed at the rate of two orhthree as the case may be, on the turnover relating._':to'vthe sale of such quantity of these inputs to him have remained unutilised with him for the A C' declared purpose at the end of the period specified above.
V Hi3) if any person.-
{i) not having his manufacturing unit inside the State, purchases any inputs and claims reimbursernent under sub-section [2], or £37 {ii} having his manufacturing unit inside the State and claiming reimbursement'...oI1,,_:'i~. purchase of any inputs under A' [2], sells away such inputs contraryftlo it . claim, J _ the Assessing Authority, after gioirIg:"s_uch reasonable opportunity of ~heard," shal.l,AVby""ora'e1' in writing, impose upon him byélway -of penalty, a slum, which shall not be less': ._amountA of tax leviabte under Section ttiebsialelgiinputs so purchased, but which shail not'ex:ceed'. times the amount of g g V. J .... ..
(iii) unit inside the .... _'State':*1:;,and.,t clainiirig...v"reimbursement on _ ofyany -inputs under sub--section S '-{.25}, inputs contrary to such the}Assessing Authority, after giving sucnpverson a reasonable opportunity of being shall, by order in writing, upon him by way of penalty a sum shall not be less than twice the ' -. amount of tax leviable under Section 5 but not exceeding thrice the amount of such tax ' on the inputs so purchased.
i {9} Every dealer who, during the course of the year, it claims reimbursement of tax on purchase of any inputs under subsection (2), shall maintain in the prescribed manner a day-to--day account of the opening balance, 52%
-10..
purchases, consumption and closing balance of euery.__ input, which is purchased by him under subwsection{_2,1,b'b {b} if any dealer fails to maintain in the prescribedb' manner, true and complete accounts regbubirekjz. clause {a} of this subsection, the it shall, after giving such dealer _a reasonable opportunity of being heard pass an order}
(i) disentitling use of reirribursement_r_specy;*'ied uni:IZerb"sz__ib--seciion {ii} iipon a4'penaIty"'not exceeding the ieoiable under the _ ____ _ .S.ection..5..0n the sale value of _ purchased by him on which clairned reimbursement.
{C} zdealer', respect of whom an order has been 'b it passed izinderyyclausewlbb} of this subsection, pays the penaity"£1nd.V4'c-Qxmplies with other terms of such order, it b _ b ' inputs in the State.
tneC"~!.ssessing Authority may, in his discretion, permit such«.._dealerV to claim reimbursement on purchase of '23§'--
i.bEq_tplanation 1.- {1} For the purpose of this section, the expressions "industrial inputs", mean either a "component it part" of "raw material", or "packing materials" but do not it include cement, wood, bamboo, timber other than veneer, casuanna, eucalyptus, pulpwood and packing shocks and / _11.w inputs falling under Serial Number 12 of Part 'S' and Serial Number 1 O of Part 'M' of the Second Schedule. S (2) The expression "component part" rriearls which forms an identifiable constituent of the' V. 'S and which, along with others, goes up product.
(3) The expression "raw
(a) from ulhich a.:'io'iher productb carube made, throilghthe ofVrnanu_facture, either by itself or... corr:bincitsforiVs~.u5ith other raw '(B)' ._._:; orb __other chemical solvent .... '(':fie;.1:eua;g cihelmioalsused for testing, analysis 1__ used in the solvent extraction V "a catalyst required in the S -rnanufactu«.ring process, but it does not include fuels consumable stores of similar type. i expression "consumables" does not include petrovlefuii-ibproducts falling under Serial Number ll--A of pert Serial Number 12 of Part 'M' and Serial Number Part 'P' of the Second Schedule.
Explanation I 1.-- For the purpose of this section, the expression "tax payable" shall not include the tax payable under Section 6--B of the Act. I Ml2_.
9. Chapter 3 of the KS!' Act deals with incidence and levy of tax. Section 5 as it then stood states that everydealer shall pay for each year, tax on his taxable the rate of 10% at the point of first sale. Sectioriii';3e}X'i.speal;sl'"
about the reimbursement of taieaon ;_-indusitigiaill :;it states that if a registered dealer purchases iiiVd'u§;.trial liable to tax under Section 5 another dealer for use by the former or raiiv material or packing material of he intends to manufacture Ethea: or purchases consumabliee election 5 for use in such manufacturei reimbursement of tax at a particular ratetjll speaks of reimbursement undertwo lcircVumstana:es';" namely when a registered dealer '~ ggpufpliagfls any ind'u'sti*iVal input or the other dealer for use as part or raw material or packing material of any othe1'lwhicuh'jp intends to manufacture inside the state for salelandasecondly, when he purchase consumables liable to ' v.taXlL1nder Section 5 for use in such manufacture. Therefore, in the first instance the industrial input is used as a if "component part or raw material or packing material of any other goods which is intended to be manufactured inside the state for sale and in the second instance, consumables are g1/v g W13- purchased for use in such manufacture. The significant Words are 'to manufacture inside the state for sale';v.ine.the first instance, and in the second instance. for__iis'e--«'iri..:s'u:.;;h« _ manufacture with regard to consumables,~«--in':'Vthe.::in_stant--«.. case, We are not deaiing with corl1psun_1ables.sgb'ut '-cornpconecnt parts intended to be used in the mariufactureofiother goodsi' , inside the state for sale. the lcritefia that the manufacture must be inside thelflmlanufacture must be for sale and not a11:3}" purpose and incidentally to whether goods manufactuiredl:i;ns'ide._ be sold within the state of the Act.
if). g_'l'he saidfproirisionfclame up for consideration before a «.,_ADivision--a.Be»nch oflthislcourt in the case of Sipani Fibres Vs. State reported in (1993) 91 src 261, wherein Bench held that the manufacture must be held inside» the state and the said goods have to be manufactured A a.:lj"forlth¢e purpose of sale. According to the Division Bench, if taxable goods are manufactured inside the state, though the "said goods are not sold inside the state, but meant for sale anywhere, the benefit of Section 5~A(l] can be availed of by the dealer. If the purchaser of the industrial input had no ___}_4___ intention at all to manufacture taxable goods "for sale", the furnishing of declaration in Form No.37 by hiIi1l:».}iRllO_l.1l(?l amount to circumventing the provisions of Sectiofi'5éA.'..l):. ;_..In« % the said case it was held that the buyer ».
input had no intention to manufac;ture:lfl}}P'1"?3_ as the buyer never "sold"_. _any manufacture of tapes by the buyer'ldealerjwasjhnotlrneant for sale to anyone as at vmost an intennediate product in in the manufacture of further held as follows:
benefit of Section 5--A(1) to the leant to be used in the fnanufactvureg of, goods in the State; the be inside the State; but said bite to be manufactured for sale. 5' the n is not for sale then Section 5--A(1} availed of at all by the purchaser of If taxable goods are manufactured A _ inside the State, though the said goods need not V ufbe sold inside the State, but meant for sale H anywhere, benefit of Section 5--A(1} can be availed of, by the dealers. "Intention to manufacture inside the State for sale" are the crucial words, which cannot be ignored while construing Section 5--A{1). Q' the purchaser of the industrial input 9 .,/7 W15- had no intention at all to manufacture taxable goods 'for sale". furnishing of a declaration Form No.37 by him would be circumventing. provisions of Section 5--A(1)."
11. The aforesaid ruling was the .."levy°Of penalty under Section 5--A'[2;,_ forth'-not Vadheririg.o_Vto3 declared object of purchasin::g"'*.',Va11oV_» input for manufacturing a and not a case concerning reimbursement inputs.
12. in the business of manufacture peripherals and raw material components in the manufacture of finished products an'ci_Vitv.s.1;ocl'%;. transfers its products to its other V' .Abranc'hes. as zfinish.ed"products and for the raw materials and _ cem'pon'ents"usve'd reimbursement was claimed. The question f§trhetherv's:'i.th:e disallowance of the reimbursement with regard stock transfer of goods on the ground that there A r~:lj"1xras"'no sale as held by the authorities and the tribunal is ' correct or not. In order to answer this question definition of has to be considered. Section 2(1){t) of the KS1' Act defines sale which reads as follows:
_1gw "2 {1)(t) 'Sale' with all its grammatical variation and cognate expressions means every transfer the property in goods [other than by way._oflta mortgage, hypothecation, charge or ple-'dye,l one person to another in the,Aco_urse_.'of'"tracle"or", business for cash or for deferred.
other valuable consideration [and"in.cludes»,A~A"' if K {i} a transfer othenvisie' in contract of property ink goods deferred payrfrient 'Ila other valuable consideration,'] l i V .
{ii} a transfer Zofproperiyjin ltvhether as goods sonve fonn}"'in'volved in the executionalivorks-- V v{Viii)~- _l"acdel'ivery -on hire purchase or any i_5yS_f€ITl payment "by_ installments;
(iv) = a ;the='nght to use any goods for anyhpgurpose Aiivhether or not for a specified period) cash, deferred payment or other valuable consiclerationj
1.- A transfer of property involved in the or distribution of goods by a society {including a " 4_ cooperative society), club, firm or any association to its members, for cash or for deferred payment or other valuable consideration, whether or not in the course of business, shall be deemed to be a sale for the purposes of this Act.
-17".
[Explanation 2 x x x x x x ] Explanation 3. «~ (a) The sale or purchase..:Q-{goods [(other than in the course of inter--st_ate"
commerce or in the course of import of' be 'A V' deemed, for the purposes thtsr place in the State whiereper the 'contI'a:ctgor_,,sa,te or,"
purchase might have if the within the State,-- A it A (1') in case of goods, at the pm:-h¢»hase is made; and
(ii) or future goods, at .... .. appropriation to the contract of 'sale by the seller or by the Al4purchaser,"v.iuhether the assent of the other party priorlofsubsequent to such appropriation.
"there is a single contract of sale or purchase situated at more places than one, the A .. provisions of clause (a) shall apply as if there were separate contracts in respect of the goods at each of such places.
(C) Notwithstanding anything contained in the Sale of Goods Act, 1930 [Centrat Act 3 of 1930], for the purpose of this Act, the transfer of property in goods 3/, M18"
(whether as goods or in some other form) involved in the execution of a works contract shall be to have taken place in the State, if the the State at the time of such. tran.<3_fe"r,' he "
the place where "the agreemen'tfo'r its made, whether the assent ofthe ls5prior--. "
or subsequent to such.ttansJ'er; ' V {d}Notwtthstandiegh:"any:tht;_1g" con.tained in the Sale of Goods Act, 1930), for the purpose':A:'.;g"_tht:¥;AA?;t; of the night to use lwhether or not for a H be deemed to have taken such goods are for use within _ _V the"State,. "irrespective of the place where the contract of 'vtraI1s_fer"of"the right to use the goods is made. 3-A-- Every transaction of supply by way of or*ae7a part of any service or in any other manner whatsoever, of goods, being food or any other article for A consumption or any drink [whether or not intoxicating} where such supply or service is for cash, deferred payment or other valuable consideration, shall be deemed to be a sale of those goods by the person i _.2OM 13, A reading of the said definition makes it clear that in a sale, the following component are essential.
i) Transfer of property in goods by one another person; _ _ V A g_
ii) To whom supply or delivery of gQ0ic':s__is-- the course of trade or business;
iii) For cash or foe 'deferred if pay1n:erit.~.pQrVp Valuable eonsiderationl.'
14. The Apex Court has held that to constitute a there must be a consensus thelllidentity of goods; a transferuof. gojodsllanclvfolllowed by delivery of goods by transferorltollv "l Consequently, the transferor would lose' right., title interest in the goods. there has to be a delivery of goods by the ll"sell?3_1f«lto'the.p_p'ii'I-'ehaser pursuant to the transfer of ownership ' of the goodslll which has to take place during the course of pltraade or business and for which there is a consideration
16. In the instant case, the authorities including the tribunal has held that there is stock transfer of the goods manufactured by the petitioner to its branches ang that Wggw
17. In the case of ICI INDIA LTD. AND ANOTHER --Vs- STATE OF omssa AND ormsns reported in I(20af7jg"'1Ao ( VST 1 (SC]] while interpreting the 5"" proviso E} "
of the Orissa Sales Tax Act, 1947, the .epexeeettttee state-d if "
that where a registered dealer purc4ha:§_es..9goods"of or classes specified in its certificate ofv.registr'atien~»as beingv. ' for use within the State of Orissat hind 'thevlrnanufacture or processing of goods concessional rate of tax, but utilises the same forariy or outside the State he shall or the tax payable if he had
18. Tf'he = affirmed that materiais purchased' manufacture of goods in the Stateffor. saIe"V"an.d__tha#; in the said case, the manufactured "bu1i{'~..premi:<", had not been sold by the appellant f'but'f..had"bVee.n'trarlsferred to other branches of the assessee situa~tedv--._'inside as well outside the State and that the word . _H"tra nsfer" fell within the expression "any other purpose" in ,"aVt_'h 'proviso to Section 5(1) of the said Act. As the goods had been sold but had been transferred there Vwas a violation of the terms of the declaration and the assessee was held liable to pay the
-23"
differential sales tax on the raw materials purchased ___at the concessional rate.
19. In this context, it is apposite to cite"--the'V"'ca'se of"
M/s.B.V.Ashwathaiah & Bros. I\?os,i3'E'i 57' 'A to which one of us is a party»,'e§.i_sposed:_ of on by Division Bench of this Courttvtvtéwherein theldv} that the revision petitioner therein to Shane sold by consignment sales as if the consignment sat-3ts:VZ"were to be the definition of Section 2[ have constituted a part the said decision, the judgment of the in Hotel Balajfs case (1993]88 STC as) iscited as ibiicwst .:'"i'he ievg"cr'reated by the said provision is a levy, purchase of raw material purchased _ State which is consumed in the of other goods within the State. if, S hougever, the manufactured goods are sold within S " 4_ the State, no purchase tax is collected on the raw itmaterial, evidently because the State gets larger revenue by taxing the sale of such goods (The value of manufactured goods is bound to be higher than the value of the raw material}. The State Legislature does not wish tom the interest of-trade and general publiotax both the raw material and Ex ._24M the finished (manufactured product. This is a well- known policy in the field of taxation. But where_thel~.,_ manufactured goods are not sold within "
but are yet disposed of or where the . V' goods are sent outside the State [otherwis'e--than"byt.V way of inter----State sale or ej;port..sa£e')Lthe.'to.£has f to be paid on the purchase, oalue of 'raz;.:~r"* material. The reason is sirnpie: the goods are disposed of _'oVth,er'w_ise 'titan. by} sale within the Statearellilseni .oi.it'o_f the State(i.e., consigned to dealers" agents), the State doesnot ge-t"'ar1yf'reI}en2ie no sale of goods" taken" place within Hargano;"'v.lnV"such'=.a.sitsiationg'the State says, it would "re_tainI:;;t.he 'levy landcallect it since there is no ' reason forvw_aizJing_V'the purchase tax in these two situations. 'c.qm::rig to inter--State sale and export.,saIe,g rnaywiae noticed that in the case of inter-Sta'teV._saie, the State of Haryana does get the rei:.enu,e-may not be to the full extent. Though : .. sales tax is levied and collected by the H " Gouémnaent of India, article 269 of the Constitution provides for making over the tax collected to the "S.t_a'tes in accordance with certain principles. A Where, of course. the sale is an export sale within 'S the meaning of section 5(1) of the Central Sales Tax Act (export sale} the State may not get any revenue but large national interest is served thereby . It is for these reasons that tax on the purchase of raw material is waived in these two situations. Thus, there is a very sound and in W25_.
consistent policy underlying the provision. The object is to tax the purchase by a rrranufaciiwreraf goods whose existence as such goods is V' V to by him by using them in the be".
different goods in certain circurnstances'. " tax. is _ levied upon the purchase price of raw emaiteiigfygyzqte S _ upon the sale price -- or consig}'1_rnentevalue we manufactured goods. it be right to that the levy is upon consignrnent of emanufacfiured goods in such case thatthe levy materialises only goods (raw material) con:s'u:'ned '_ njtanufacmre of dfiferent ghthose' disposed of within by way of sale or are-. ------maenufaciuring dealer's Zdepotsx/uagenvts» .outside the State of Haryana. "
20. In .case'v.thé'.Apex Court Wasgnter a1ia}:1eaiing 42 the Gujarat Sales Tax Rules and went 'on to as fqiiowsz ' V ij" we agree with the appellants and read V along with section 1543, they cannot as succeed. Rule 42-E provides for set--off, etc., in case jffthe manufactured goods are sold within the State of Gujarat. It no doubt means the set-off, etc., is not available if the manufactured goods are disposed of otherwise than by way of sale or are consigned to manufacturers own depotsl or to the depots of his agents) outside the State of Gujarat. What igeffect f
-26".
the State says is this: 'Raw material when purchased is taxable but I won't tax the raw material if uou sell the qoods manufactured out of such raw materia_l7_ within the State because I derive larqer ~ there; I do not want to tax both the raw the manufactured goods. in the interest and _ public. But if you dispose of the x_ in some other manner, I will taxvlthe'-purchaggg cf :raur'~.. material because there _reas'c;n_ forego the purchase tax duekto; raw when I am not getting an;;r"~revejnuel'f.,;our of disposal or dispatch -products.' . There is nothing ol3_,iectionahle_in_ saying so.
It can ofjthe decision of this Boyce Mfg. Co. v. reported in [1 9921 87 STC
21. the ugéocirej and Boyce Mfg. Co.Pvt. Ltd., V/ s. Sales Tax reported in (1992) 87 STC 186 the Vrjhlle dealing with Rule 41 and 41A of the BoIltibay*--l:S.a}es Tax Rules and Section 18--B of the Bombay ._Sa.'e.e_s {I954} dealing with exemptions, set--off and 'compensation held that a manufacturing dealer pays tax it -"when he purchases raw material and he is again obliged to pay the sales tax when he sells the goods manufactured by him out of the said raw material. Tax on both the 3/ m27_ transactions has the inevitable effect of increasing the price to the consumers besides adversely affecting the trade. It is for this reason that the aforesaid rules enableatlthe manufacturing dealer to claim set--~off of the tax paid on the purchase of raw materials from out of y:{g3r3bl.e' "
by him on the sale of goods lfroinoiut. tax payable by him on the saleof ra:v"materiall..':The 'rule V' further provides that in respleetyof manufactlurezgl goods despatched by the manufactur_ing_ his place of business or to his agent actually sold there, the amouniig.o;f_'--setsoffgshall~be by one per cent of the Sowdespatched. This is the result flowxingpfrorn"a:'corn.b'ine'd reading of clause (e) of rule 41 read theveiiplanation and the proviso appended to 'T if"Vthe":re3{pi,anation. 'Same is the position flowing from the rule 41A of the Bombay Sales Tax Rules made unvdereithe Bombay Sales Tax Act. the aforesaid case, the facts were that the T manufacturing dealer purchased raw material both outside .4 the state of Maharashtra as well as within the state. The State of Maharashtra could collect tax only in respect of purchases made within the state. So far as sales tax was 9 J24 M33-
24. If the aforesaid principle as stated by the Apex Court is H applied to the present case, then, not only the manufacture"..,_S~.,_ has to be within the state, but manufactured goods -1- also sold within the state. This proposition is coritrarypllto what is stated in the case of Sipani Bench of this court, wherein it is it manufactured within the state be sold state. Therefore, by fo1loWin_g'-- the Apex Court, we have to hold thatprlot but also sale of goods inbrder to claim reimbursement Act.
25. 'for of Section 5--A of the Act, the industrial inputse have'. tofbe used in the manufacture of ..,_gQo'ds€'within,.thexStateVand the said goods have to be sold and further, at the time of the sale of such under Section 5 of the Act is leviable. it is lyonly 'under the aforesaid circumstances that reimbursement I paid on the raw materials or industrial inputs can be S claimed under Section 5A of the Act. Hence, any disposal of ' it goods otherwise than by way of sale Witliin the State namely, by way of stock transfer which do not amount to sale cannot be reckoned for the purpose of Secti%n 5~A of the
-33."
Company Ltd., referred to supra which decisions are bending on this court.
28. in the result, the revision petition is answering the question of law raised irigthisrevisionipetition .' in favour of the revenue and against-..the pef.itioner.a'"
d/fl 3UDGE KVN*