JUDGMENT
Dr. B.P. Saraf, J.
1. These five references arise out of a common order of the Tribunal and the question referred to this Court for opinion is also common. All these references are therefore taken up together for hearing and final disposal. The following question of law has been referred by the Maharashtra Sales Tax Tribunal (“the Tribunal”) in all these references under section 61(1) of the Bombay Sales Tax Act, 1959, at the instance of the Revenue :
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that for the purpose of reducing 3 per cent of the purchase price under the second proviso to rule 41A of the Bombay Sales Tax Rules, 1959, in case of the purchase wherein general sales tax is recovered separately the purchase price should be taken after reducing 1/10th and sales tax element ?”
2. The assessee in Sales Tax Reference Nos. 16 of 1985 and 17 of 1985 is M/s. National Plastic Industries and in S.T.R. Nos. 18 of 1985 to 20 of 1985 is M/s. Nilkamal Plastic & Allied Industries. The controversy in all these references relates to different periods between August 8, 1974 to August 9, 1977. Both the assessees are manufacturers of plastic household articles and the controversy pertains to quantification of the amount of set-off allowable under rule 41A of the Bombay Sales Tax Rules, 1959 (“the Rules”). As the facts of all the cases are identical, the Tribunal has only set out the facts of the case of Nilkamal Plastic & Allied Industries (hereinafter, for the sake of convenience, referred to as “the assessee”) in Appeal No. 83 of 1979 which pertains to period from November 14, 1974 to November 3, 1975. We shall, therefore, refer to those facts only. During the above period, the assessee had purchased goods amounting to Rs. 23,75,414 on which the vendor had charged general sales tax chargeable under the Bombay Sales Tax Act, 1959 (“the Act”) separately which amounted to Rs. 70,729. Certificate was also issued in form No. 32 by the vendor to the assessee covering the entire sales of Rs. 23,57,414. The assessee claimed set-off of tax, paid by it in respect of the above purchases, under rule 41A of the Rules. The amount of set-off calculated in terms of rule 41A, according to the assessee was Rs. 1,08,111. The Sales Tax Officer did not accept the calculation made by the assessee and determined the amount of set-off allowable to it under rule 41A at Rs. 1,01,032 and reduced the claim for set-off to that extent. The assessee appealed to the Assistant Commissioner of Sales Tax, who accepted the calculation of the assessee and allowed the appeal. The above order of the Assistant Commissioner was set aside and the order of the Sales Tax Officer determining the amount of set-off at Rs. 1,01,032 was restored by the Deputy Commissioner in exercise of his power of suo motu revision under section 57(1)(a) of the Act. The assessee appealed to the Tribunal against the above order of the Deputy Commissioner passed in revision under section 57(1)(a) of the Act. It was contended on behalf of the assessee before the Tribunal that the determination of the amount for set-off made by the assessee was in terms of rule 41A of the Rules and that the Deputy Commissioner was not justified in setting aside the order of the Assistant Commissioner, who had accepted the same, and restoring the order of the Sales Tax Officer who had reduced the same to Rs. 1,01,032. The case of the assessee before the Tribunal was that three per cent of the purchase price, which was required to be deducted from the aggregate of the sums specified in clauses (a), (b) and (c) of rule 41A, should be calculated not on the purchase price which includes in it the element of profit as well as sales tax but on the amount of purchase price arrived at after making a deduction of 10 per cent to take care of element of profit included therein, and the amount of sales tax. The Tribunal accepted the above contention of the assessee and held that for the purpose of determining the amount deductible under the second proviso to rule 41A, the purchase price should first be reduced by one-tenth, i.e., 10 per cent and thereafter further reduction should be made to take care of the element of tax included therein. Aggrieved by the above order of the Tribunal the Revenue is before us by way of these references.
3. We have heard the learned counsel for the parties at length. We have also perused the provisions of rule 41A of the Rules which, so far as relevant, read as follows :
“41A. (1) Drawback, set-off, etc., of tax paid by a manufacturer in respect of purchases made on or after the 15th July, 1962. – In assessing the amount of tax payable in respect of any period by a registered dealer who manufactures taxable goods for sale or export (hereinafter in this rule referred to as ‘the manufacturing dealer’), the Commissioner shall, in respect of the purchase made by such dealer on or after the 15th July, 1962 of any goods specified in Schedule B, C, D or E and used by him within the State in the manufacture of taxable goods for sale or export or in the packing of goods so manufactured for sale or export, grant him a drawback, set-off or, as the case may be, a refund of the aggregate of the following sums, that is to say –
(a) a sum recovered from the manufacturing dealer by other registered dealers by way of sales tax, or general sales tax or, as the case may be, both, on the purchase by him from such registered dealers, when the manufacturing dealer did not hold a recognition or when he held a recognition but effected the purchase otherwise than against a certificate under section 11 of the Act;
(b) a sum paid or payable as purchase tax under section 13 or 14;
(c) a sum calculated in accordance with the formula given in the table hereunder on the purchase price of any goods specified in Schedule B, C, D or E purchased by the manufacturing dealer from any other registered dealer otherwise than against a certificate under section 11 or 12 on the sale of which such registered dealer has not charged tax, other than retail sales tax separately and in respect of which the manufacturing dealer proves to the satisfaction of the Commissioner that the tax leviable under the Act has been paid or has become payable on an earlier transaction in the same goods and produces on demand a certificate in form 31 issued by the aforesaid registered dealer stating, inter alia, that the sale of the goods has been or will be included in the turnover of sales on which tax leviable under the Act will, if payable by him, be paid before furnishing the relevant return.
TABLE
The formula shall be as follows :
9P R
-- multiplied by -----
10 100+R
'P' means the purchase price of the goods, and 'R' means the rate of tax (other than retail sales tax) applicable to the sale of the goods :
Provided that, in the case of goods specified in Schedule E, for the purposes of clause (c), 'R' means the rate of sales tax, or general sales tax, or as the case may be both, not charged separately on the sale price, and for the purposes of clause (d), 'R' means the rate of sales tax :
Provided further that, the Commissioner may reduce the amount calculated in accordance with the formula given in the above table to an amount not less than one-third thereof, if after giving the manufacturing dealer a reasonable opportunity of being heard, the Commissioner is satisfied that the average price of similar goods sold by manufacturers, producers or importers thereof was less than the purchase price paid by the dealer by an amount more than 10 per cent of such purchase price or that there is any other adequate reason, to be recorded in writing, for so reducing the amount;
(d) a sum calculated in accordance with the formula given in the above table on the purchase price of any goods specified in Schedule E purchased by the manufacturing dealer from any other registered dealer (hereinafter in this clause referred to as ‘the said registered dealer’), on payment of general sales tax, or as the case may be, on payment of reduced rate of tax as was provided in sub-section (1A) of section 11 then existing by furnishing the certificate in form 15, if the manufacturing dealer shows to the satisfaction of the Commissioner –
(i) that the said goods were resold by the said registered dealer to him after purchasing them from another registered dealer on or after the 1st day of January, 1960.
(ii) that the sales tax leviable under section 10 has been paid or has become payable on an earlier transaction in respect of the same goods,
(iii) that the said registered dealer has not separately recovered sales tax in respect of the said goods from the manufacturing dealer, and
(iv) that the said goods have actually been used by the manufacturing dealer within the State in the manufacture of taxable goods which have in fact, been sold by him and not given away as samples or otherwise, or which have been exported by him or used by him in the packing of goods so manufactured and produces a certificate in form 31 in respect of purchases made on payment of general sales tax, or as the case may be, in form 31-A in respect of purchases made against the certificate in form 15, issued by the said registered dealer stating, inter alia, that the sales is or will be included by him in his turnover of sales :
Provided that, the Commissioner may reduce the amount calculated in accordance with the formula given in the above table to an amount not less than one-third thereof if after giving the manufacturing dealer a reasonable opportunity of being heard, the Commissioner is satisfied that the average price of similar goods sold by manufacturers, producers or importers thereof was less that the purchase price paid by the dealer by an amount more than 10 per cent of such purchase price or that there is any other adequate reason, to be recorded in writing, for so reducing the amount :
Provided further that, from the aggregate of the sums specified in clauses (a), (b) and (c) above there shall be deducted –
(i) one per cent of the purchase prices in respect of purchases made during the period from the 15th July, 1962 to 31st December, 1965 (both days inclusive), representing these sums,
(ii) two per cent, of the purchase prices in respect of purchases made during the period from the 1st January, 1966 to the 14th April, 1974 (both inclusive), representing these sums, and
(iii) three per cent of the purchase prices in respect of the purchases made during the period from the 15th April, 1974 to the day immediately preceding the notified day (both days inclusive) representing these sums.
……..”
This rule thus provides for drawback, set-off, etc., of the tax paid by a manufacturer in respect of purchases made by it in cases specified therein. The amount of drawback, set-off or refund is the aggregate of the amounts specified in clauses (a), (b), (c) and (d). The second proviso, with which we are concerned in the present case, requires a deduction to be made from the aggregate amount of refund calculated under clauses (a), (b) and (c) of an amount calculated at the rate of 3 per cent of the purchase price in respect of the purchases representing the above sums. The object appears to be to retain the tax equivalent to 3 per cent of the purchase price in all cases and not to allow refund of the same and to grant refund only of the amount in excess thereof. There is no controversy between the parties in regard to the above reading of rule 41A. The only controversy is regarding the true meaning and interpretation of the expression “3 per cent of the purchase price in respect of the purchases made representing these sums” appearing in the second proviso to the said rule. According to the Revenue, it means 3 per cent of the purchase price in respect of which the amount of drawback, set-off or refund has been calculated in clauses (a), (b) and (c). The contention of the Revenue, in other words, is that purchase price, for the purpose of rule 41A as also for the purpose of the second proviso thereto, means the purchase price as defined in clause (22) of section 2 of the Act. The contention of the counsel for the assessee, on the other hand, is that purchase price for the purpose of the second proviso to rule 41A would mean the “real purchase price” which can be arrived at only after reducing therefrom the element of profit and sales tax comprised therein. The case of the assessee in other words is that a deduction of 10 per cent should be made from the purchase price to take care of the element of profit comprised therein and thereafter a further deduction should be made to take out the element of sales tax therefrom and 3 per cent should be calculated on the amount so determined after making the above deductions.
4. We have carefully considered the rival submissions. We have also perused rule 41A in the light thereof. The expression “purchase price” appears in rule 41A at various places. It appears in clauses (c) and (d) as also in the second proviso. “Purchase price” has been defined in clause (22) of section 2 of the Act to mean “the amount of valuable consideration paid or payable by a person for any purchase made including any sum charged for anything done by the seller in respect of the goods at the time of or before delivery thereof, other than the cost of insurance for transit or of installation when such cost is separately charged”. It is well-settled that where a word is defined in the statute, wherever that word is used in the Act or the Rules, the definition given in the statute has to be applied and given effect to unless the context otherwise requires. We are, therefore, to find out whether the expression “purchase price” appearing in rule 41A or the second proviso thereto will bear the same meaning as contained in clause (22) of section 2 of the Act or there is something in the context to justify a departure therefrom. On a careful reading of rule 41A and the relevant proviso, we do not find any justification for such a departure. On the other hand, a perusal of the above rule clearly goes to show that the expression “purchase price” used in the above rule bears the same meaning as is given to it in the above definition. This opinion of ours gets full support from the formula given in the table below, clause (c) of rule 41A for calculation of the sum refundable under that clause. Here also, the formula is :
9P R
-- multiplied by -----
10 100+R
In the above formula the expression “P” means “purchase price” of the goods and “R” means the rate of tax (sales tax applicable to the sale of the goods). The purchase price for the purpose of this formula is the actual price paid by way of consideration for the purchase of the goods to the vendor which is to be reduced by 10 per cent. With that object in view, it is provided that the “purchase price” may be multiplied by 9 and divided by 10. The expression “purchase price” appears in the second proviso to clause (c) also. Here again it can be given no other meaning than the one contained in clause (22) of section 2 of the Act. Any attempt to give a different meaning to this expression than the one given in the definition clause is not only unwarranted but might make the rule itself unworkable. We do not find anything in the second proviso to the said rule, which in clear terms provides for deduction of 3 per cent of the purchase price, to suggest that the expression “purchase price” used therein means something different than the one defined for the purpose of the Act and the Rules in clause (22) of section 2 of the Act. This opinion of ours also gets support from the fact that wherever the rule-making authority intended that the purchase price should be reduced for any propose, it has specifically said so, as in clause (c) of rule 41A itself by introducing a formula which in effect reduces the purchase price to 9/10th thereof. So far as the question whether the definition of “purchase price” contained in clause (22) of section 2 of the Act would include sales tax or not is concerned, it is no more res integra in view of the decision of the Supreme Court in George Oakes (Private) Ltd. v. State of Madras [1961] 12 STC 476 and a catena of cases thereafter where it has been held that the sales tax payable by a dealer, whether included in the price or added to it as a separate item, forms part of the sale price, because it is payable by the purchaser to the dealer as part of the consideration for sale of the goods.
5. In view of the above discussion, we are of the clear opinion that “purchase price” for the purpose of the second proviso to rule 41A of the Rules means the purchase price as defined in clause (22) of section 2 of the Act. No artificial meaning can be given to the said definition even in the context in which it appears. We, therefore, do not find any basis or justification to accept the contention of the assessee that for the purpose of the second proviso to rule 41A “purchase price” should be construed as “purchase price” less the element of profit and sales tax comprised therein.
6. Mr. Jetly, learned counsel for the assessee, stated before us that if the expression purchase price is not interpreted as suggested by him, it would result in discrimination between dealers who hold recognition certificate and dealers who do not hold a recognition certificate. We do not find any such discrimination because the two categories of dealers form two different classes for the purpose of taxation. We, however, do not propose to discuss this aspect of the matter in detail in the present case, because the language of the rule itself being clear and unambiguous, it is not necessary to do so. The learned counsel for the Revenue strenuously urged before us that there is no discrimination as alleged. However, as indicated above, on the face of clear provisions of rule 41A and the definition of the expression “purchase price” contained in section 2(22) of the Act, and there being nothing in the context to justify any departure from the said definition, in our opinion, it is not open to us to give a different meaning to the said expression with a view to remove the supposed discrimination.
7. In view of the above discussion, the question referred to us in all the above references is answered in the negative and in favour of the Revenue.
8. Under the facts and circumstances of the case, there shall be no order as to costs.
Reference answered in the negative.