Unserviceable machinery and spare parts purchased by the assessee fall under entry 3 of Schedule B, which includes iron scrap and steel scrap, and not under entry 22 of Schedule E of the Bombay Sales Tax Act, 1959.

MEHTA, J. - The Gujarat Sales Tax Tribunal has in this reference referred the following question to this court for opinion :

"Whether on the facts and in the circumstances of the case, unserviceable machinery and spare parts of such machinery purchased by the opponent fall under entry 22 of Schedule E or entry 3 of Schedule B to the Bombay Sales Tax Act, 1959 ?"

2. Following are the brief facts, which gave rise to this reference, which is preferred by the Commissioner of Sales Tax. The opponent M/s. Bharat Iron and Brass Foundries, Ahmedabad, is a firm which purchases materials such as unserviceable machinery, its spare parts, iron and steel scraps, pig iron, etc., for being melted and also for manufacturing castings after melting them. The opponent-assessee was assessed for the period from 1st April, 1963, to 31st March, 1964, for the purpose of levying sales tax. During the course of the said assessment, the assessee claimed set-off contemplated by rule 41 of the Bombay Sales Tax Rules (hereinafter referred to as the "Rules") on the ground that it has paid taxes on the purchase of unserviceable machinery and spare parts, which are used in melting and preparing castings. According to the assessee, the tax which it has paid on these purchases is at the rate of 3 per cent. under the Bombay Sales Tax Act, 1959 (hereinafter referred to as the "Act"), and general sales tax at the rate of 3 per cent. The Sales Tax Officer concerned rejected this claim of the assessee for the set-off with the result that the assessee preferred an appeal before the Assistant Commissioner of Sales Tax. It, however, failed even before the Assistant Commissioner of Sales Tax. It, therefore, preferred a second appeal before the Tribunal.

3. It is found that the set-off, which is claimed by the assessee, is for the amount of Rs. 2,785.61.

4. The set-off is claimed by the assessee under rule 41 which provides for drawback, set-off, etc. of tax paid by a manufacturer. It is not in dispute that the relevant clause of this rule, which applies to the facts of this case, is clause (e) which is in the following terms :

"(e) A sum recovered from the manufacturing dealer by another registered dealer by way of sales tax or general sales tax or both, as the case may be, on the purchase by him, of goods from such registered dealer, being goods specified in Schedule C to the Act other than in entries 1 to 11 (both inclusive) and 15 therein and in Schedule D other than in entries 1 to 4 (both inclusive) therein and in Schedule E other than in entries 1 and 2 therein, when the purchasing dealer did not hold a recognition, or when the dealer held a recognition but effected the purchase otherwise than against a certificate under section 12 of the Art, provided that such goods are used by him in the manufacture of taxable goods for sale or in the packing of taxable goods manufactured by him for sale."

5. It is apparent from the above clause of rule 41 that the set-off in question would be available to the assessee only if his case falls within any of the entries of different schedules specifically mentioned in the clause.

6. Now the case of the department is that the assessee would not be entitled to claim any set-off of the tax paid by it at the time of the purchase of the articles in question because these articles being iron and steel scraps, are covered by entry 3 of Schedule B of the Act. The contention of the department is that since clause (e) of rule 41 does not cover entry 3 of Schedule B, the assessee is not entitled to any set-off whatever.

7. So far as the assessee is concerned, its contention is that the goods, on which it has paid tax at the time of purchase, are not the goods covered by entry 3 of Schedule B but are the goods covered by entry 22 of Schedule E, which is the residuary entry, and since clause (e) of rule 41 covers the said entry of Schedule E, the set-off in question is available to it.

8. At this stage, it would be proper to make a re