The deduction under rule 18(2) of the Turnover and Assessment Rules was in the nature of a rebate on the tax paid by a miller on the sale of oil and that no claim could be made for rebate on that portion of the turnover on which no tax had been paid.

RAJAGOPALA AYYANGAR, J.

The decision in this batch of tax revision cases involves the construction of rule 18(2) of the Turnover and Assessment Rules framed under the Madras General Tax Act. The material portion of rule 18 of the Turnover and Assessment Rules whose construction we are called on to decide runs thus :

"18(1). Any dealer who manufactures groundnut oil and cake from groundnut and/or kernel purchased by him may, on application to the assessing authority having jurisdiction over the area in which he carries on his business, be registered as a manufacturer of groundnut oil and cake.

(2) Every such manufacturer shall be entitled to a deduction under clause (k) of sub-rule (1) of rule 5 equal to the value of the groundnut and/or kernel purchased and converted by him into oil and cake provided that the amount for which the oil is sold is included in his turnover.

Explanation. - For the purpose of this sub-rule -

(a) 143 lb. of groundnut shall be taken to be equivalent to 100 lb. of kernel;

(b) 143 lb. of groundnut or 100 lb. of kernel shall, when converted into oil, be taken to yield 40 lb. of oil; and

(c) one candy of oil shall be taken to be equivalent to 500 lb. of oil.

(3) Every such manufacturer shall submit so as to reach the registering authority not later than the 25th day of every month, a statement in form A-9 in respect of the transactions relating to the previous month.

(4) For the purpose of sub-rule (2), the value of the groundnut and/or kernel shall be calculated on the price for which the manufacturer purchased the groundnut and/or kernel in the month to which this application for deduction relates or, if no purchase was made in that month, in the last preceding month in which the manufacturer made the purchase." *

(5) ...............................

(6) No deduction under clause (k) of sub-rule (1) of rule 5 shall be allowed in connection with the sale of groundnut cake."

Rule 5(1)(k) referred to runs :

"All amounts which a registered manufacturer of groundnut oil (other than refined groundnut oil) and cake may be entitled to deduct from his gross turnover under rule 18 subject to the conditions specified in that rule." *

The short question that is raised on the construction of rule 18(2) is, whether the value of the oil sold by the dealers which is exempt from taxation by reason of these being sales in the course of inter-State trade or commerce within Article 286 of the Constitution, should be taken into account for the purpose of computing the turnover entitled to deduction under the rules. The departmental authorities decided against the assessee and the Tribunal upheld this construction of rule 18(2), based on the decision of this Court in Sri Chandramouleswara Oil Co., Kurnool, In re That decision was rendered at the stage of admission, and when learned counsel appearing for the several assessees who have preferred the above tax revision cases requested an opportunity to reargue the point, we acceded to the request in view of the importance of the questions and the amounts involved. Virtually, therefore, the question we have to consider is the correctness of the decision in the case we have just now referred to.

We must, however, add that a great deal of learning and a considerable amount of ingenuity have been brought to bear on the problem and the arguments addressed to us have not been confined merely to the interpretation of this and the relevant rules, but have included an attack on the validity of the entire set of rules, as also upon the constitutionality of the tax on the purchase of groundnuts imposed by the Madras General Sales Tax Act.Merely to illustrate the problem which arises, we shall refer to the facts of one of these cases as these are typical of those in the others. T.R.C. No. 108 of 1955 relates to an assessee by name Swami Oil Mills, Madras. The assessment is in relation to the year 1950-51. The assessee returned a turnover of Rs. 1, 20, 78, 476-9-2 and claimed an exemption in