The judgment of the Court was delivered by

KANIA, J. - This is a reference under section 34(3) of the Bombay Sales Tax Act, 1953 (hereinafter referred to as "the said Act"), made at the instance of the Commissioner of Sales Tax.

The facts giving rise to this reference are as follows : In respect of the assessment period from 1st April, 1954, to 31st March, 1955, the assessees (respondents) claimed a set-off in respect of an amount of Rs. 2,761-4-9, which included, inter alia, an amount of Rs. 437-8-6, being the amount of general sales tax paid by the assessees on the purchase of certain electric meters, which were given by the assessees on rent to the consumers to whom the electricity produced by the assessees was supplied. It may be mentioned that the assessees were registered dealers under the said Act and were engaged in the generation and distribution of electricity. The claim of the assessees for set-off in respect of the said amount of Rs. 437-8-6 (hereinafter referred to as "the said amount") was disallowed by the sales tax authorities on the ground that such a set-off was not admissible under rule 11(2)(c) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954 (hereinafter referred to as "the said Rules"). The assessee then approached the Sales Tax Tribunal. The Tribunal took the view that electric meters were undoubtedly machinery or tools or equipment and that the electrical energy generated or sold by the assessees could not have been supplied to the consumers without such meters. The Tribunal held that the phraseology of clause (c) of sub-rule (2) of rule 11 of the said Rules was wide enough to include within its scope electric meters purchased by the assessees and used as aforesaid in respect of which a set-off was claimed by the assessees. On the basis of these conclusions, the Tribunal set aside the orders passed by the sales tax authorities and allowed the set-off as claimed by the assessees. The applicant, the Commissioner of Sales Tax, filed an application under section 34(1) of the said Act before the Tribunal to state a case and refer certain questions of law as arising from the judgment and order of the Tribunal. The Tribunal by its order dated 29th April, 1966, held that no question of law arose out of their order and declined to state a case and refer any question of law to this court. The applicant then made a reference application, being Sales Tax Application No. 16 of 1966, in this court under section 34(2) of the said Act for directing the Tribunal to state a case and refer to this court certain questions of law, which, according to the applicant, arose from the judgment and order of the Tribunal. A Division Bench of this Court consisting of Kotval, C.J., and V. S. Desai, J., by an order dated 31st August, 1967, directed the Tribunal to draw up a statement of the case and raise and refer to this court for its determination three questions of law, which are as follows :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the meters were used by the respondents in the manufacture or processing of electrical energy for sale ?

(2) Whether, on a true and proper construction of the provisions contained in clause (c) of sub-rule (2) of rule 11 of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, and, on the facts and in the circumstances of the case, the Tribunal has erred in holding that electric meters are machinery or equipment or tool used in the manufacture or processing of electrical energy for sale ?

(3) Whether the Tribunal erred in holding that the respondents are entitled under rule 11(2)(c) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, to set-off of general sales tax paid on purchases of meters given on hire to the consumers ?"

Pursuant to this order, a statement of case was prepared and submitted by the Tribunal but no questions were framed or referred to this court. The