The judgment of Court was delivered by

KANIA, J. - This is a reference under section 61(1) of the Bombay Sales Tax Act, 1959 (hereinafter referred to as "the said Act"). The questions referred to us for our determination are as follows :

"(1) Whether the Tribunal was correct in law in holding that the printer wrappers sold by the applicants could be said to be covered by the words 'paper adapted for use in packing goods' within the meaning of entry 6 of Schedule C to the said Act ?

(2) Whether the Tribunal was justified in disallowing the sales of Rs. 2,86,061 even though the applicant satisfied that the buyer is a recognised dealer and has issued the required certificate in form 15 and that the goods purchased by him were specified in his recognition certificate ?"

The relevant facts giving rise to this question are as follows : The applicants are registered dealers and are running a printing press. They supplied packing labels to Parle Products Private Limited (hereinafter referred to as "Parle Products") against certificate in form 15. Parle Products are also registered dealers and had obtained a recognition certificate as provided under section 25 of the said Act, as it stood at the relevant time, in which one of the items specified in the list appended was packing labels. The Assistant Commissioner of Sales tax issued a notice in form 40 to the Parle Products alleging that certain inadmissible items were included in the recognition certificate of the Parle Products and stated therein that it was proposed to delete those items. One of these items referred to in this notice was packing labels. After hearing the Parle Products, the Assistant Commissioner of Sales Tax by his order dated 25th April, 1961, directed that the said packing labels, which were said to be actually printed wrappers, were to be retained in the recognition certificate. In the assessment of the applicants for the period from 1st July, 1961, to 30th June, 1962, the Sales Tax Officer assessing the applicants did not allow as deduction from the turnover of sales of the applicants a sum of Rs. 2,86,061 being the amount representing the price of the packing labels sold by the applicants to the Parle Products during the relevant period. This deduction was disallowed by the Sales Tax Officer on the ground that the goods in question were covered by entry 6 of the Schedule C to the said Act as it then stood, and hence could not be sold against form 15. The appeal preferred by the applicants against this order of the Sales Tax Officer was dismissed by the Assistant Commissioner of Sales Tax. The applicants then went by way of second appeal to the Sales Tax Tribunal. The said appeal was dismissed by the Tribunal on the ground that once it is held that the articles in question are covered by entry 6 of Schedule C the fact that they were mentioned in the recognition certificate would not entitle the purchasing dealer to issue a certificate in respect of such goods, which were clearly prohibited from being purchased on the strength of the recognition certificate. It may be mentioned that the Tribunal held that the said articles were covered by entry 6 of Schedule C to the said Act, as it stood at the relevant time. It is the correctness of this decision of the Tribunal which is sought to be tested by way of the questions raised before us.

We propose to consider first the second question which has been set out earlier. Under the provisions of section 12 of the said Act, as it stood at the relevant time, to obtain a deduction from the turnover of sales a selling dealer had to produce a certificate from the purchasing dealer, who must be a recognised dealer certifying in the prescribed form that the goods not being goods described in Schedule B, or at entries 1 to 11 (both inclusive) and 15 in Schedule C or at entries 1 to 4 (both inclusive) in Schedule D and at entries 1 and 2 in Schedule E or specified in the notification issued under section 25 sold to him we