GODREJ & BOYCE MFG. CO. PVT. LTD. AND ORS. ETC. ETC. versus COMMISSIONER OF SALES TAX AND ORS. ETC. ETC.

Citation: [1992] 3 S.C.R. 683 · Decided: 30-07-1992 · Supreme Court of India · Bench: S. RANGANATHAN · Disposal: Dismissed
Cited by 3 judgment(s) · see the full citation network in Lexace
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

GODREJ & BOYCE MFG. CO. PVT. LTD. AND ORS. ETC. ETC. 
I A 
-----1, 
v. 
COMMISSIONER OF SALES TAX AND ORS. ETC. ETC. 
JULY 30, 1992 
[S. RANGANATHAN AND B.P. JEEVAN REDDY, JJ.] 
', B 
Bombay Sales Tax Rules, 1959-Rules 41, 41-A-Set off-Claim by 
assessee--Legislative intention of. 
Bombay Sales Tax Rules, 1959-Rule 4l(iii) Explanation, Proviso and c 
Rule 41-A(y}-Set off under-One per cent-Calculation of. 
-
Bombay Sales Tax Act, 195~Section 61(2}-Reference--Whether con-
stitutionality of a rule can be questioned-Rules, 41, 41A of the Bombay Sales 
Tax Rules, 195~Validity of. 
D 
The facts in all the appeals-(C.A.No. 803/1971-~.A.Nos.800-0l of 
1977; 3843-47/1983; and 3849-50/1988 were identical and common question 
arose. 
CA.No.803 of 1977 
E 
- -f 
The appellant was a registered dealer under the Bombay Sales Tax 
Act, 1959 and it engaged in the manufacture of products, like chocolate, 
drinking chocolate, cocoa etc. During the assessment years it purchsed raw 
material, packing material and containers both within the State as well as 
outside. In respect of the raw material, packing material etc. purchased F 
from registered dealers the appellant paid purchase tax to them. On the 
.... 
~-. 
raw material etc. puchased from un-registere~ dealers, the appellant paid 
the purchase tax directly to the Governnient. The goods manufactured by 
the appellant were liable to sales tax, when sold within the State. 
Rule 41 and Rule 41A of the Bombay Sales Tax Rules, 1959 enable G 
the manufacturing dealer to claim set-off of the tax paid by him on the 
purchase of raw materials from out of the tax payable by him on the sale 
~ 
of goods manufactured from out of the said raw material. The rules further 
provide that in respect of manufactured goods despatched by the manufac-
turing dealer to his own place of business or to his agent outside the State H, 
683 
684 
SUPREME COURT REPORTS 
[1992) 3 S.C.R. 
A and actually sold there, the amount of set-off shall be reduced by one per 
cent of the sale price of the goods so despatached. Applying said rule the 
assessing authorities made a deduction of one per cent of the sale price of 
the goods despatched and sold outside the State of Maharashtra. 
B 
The petitioners' case was that Loe raw material, out or which he 
manufactured the goods, was purchased not only within the State of 
Maharashtra but also outside the State of Maharashtra. Similarly the 
goods manufactured by him wtre sold not only within the State of 
Maharashtra but also outside of the State of Maharashtra. In such a 
situation, making a deduction of one per cent of the sale price of the 
C manufactured goods despatched and sold outside the State of 
Maharashtra amounts in effect to levy of sales tax on purchase of raw 
material effected outside the State of Maharashtra. He also contended that 
it also amounts the levy of sales tax on goods sold outside the State of 
Maharashtra. He pleaded for allocation of sale price in proportion in 
D which raw material was purchased within and outside the State. 
Under section 61(2) of the Bombay Sales Tax Act the following two 
questions were referred to the High Court: 
(1) Whether on the facts and in the circumstances of the case, the 
E Tribunal was correct in law in holding that for the purpose of reducing 
set-off under clause (iii) of the Proviso to Explanation to Rule 41 of the 
Bombay Sales Tax Rules, 1959, one per cent, should be calculated not on 
the entire sale price of the goods despatched by the appellants to their 
branches, but only on that part of the sale price of the goods sold outside 
F the State which is attributable to the locally purchased raw material on 
whicit the appellants were claiming set oft'? 
(ii) Whether on the facts and in the circumstances of the case, the 
Tribunal was correct in law in holding that for the purpose of reducing 
G set-off under dause (iii) of the Proviso to . Explanation to Rule 41 and 
clause (y) of the proviso tO the Explanation to Rule 41A of the Bombay 
Sales Tax Rules, 1959, one per cent shall be calculated not on the entire 
sale price of the goods despatehed by the appellants to his branches, but 
only on the part of the sale price of the goods sold outside, the State whkh 
is. a~ributable to the locally purchased raw material on which the appel-
H lants were claiming set oft'? 
-
_...ol. ... 
-
~' 
-
-- f 
GODREJ MFG. CO. v. COMMISSIONER 
685 
The High Court answered the reference against the assessee-appel· A 
lan
Excerpt shown. Read the full judgment & AI analysis in Lexace.