The court upheld that the applicability of Rule 41D of the Bombay Sales Tax Rules mandates a 6% deduction on furnace oil purchases for set-off related to branch transfers, distinguishing such consumables from machinery.

JUDGMENT :(Per Advait M. Sethna, J.)

1. Heard Mr. Ishaan Patkar, learned counsel for the Applicant in STR No. 9 of 2011, and Ms. Jyoti Chavan, learned Addl. G.P for the Respondent.

A. PROLOGUE.

2. Learned counsel for the parties agreed that both the Sales Tax References i.e. STR No. 9 of 2011 [at behest of the Assessee] and STR No. 96 of 2009 [at behest of the Revenue] arise out of the common judgment and order dated 31 December 2007 of Reference passed by the Maharashtra Sales Tax Tribunal (“Tribunal” for short). The common question referred reads thus:-

“Whether on the facts and in the circumstances of the case, and on the correct interpretation of Rule 41-D of Bombay Sales Tax Rules, 1959 , the full set-off is available under Rule 41D main provision or the set off is available after reducing 6 per cent of purchase price under sub-rule 3(a) of Rule 41D on purchases of furnace oil used in manufacture of goods partly sold locally and partly transferred to branches outside the state?”

3. This Court is confronted with the above two Sales Tax References (“STR” for short) for adjudication/determination. STR No. 9 of 2011 arises from the proceedings preferred by the Assessee (“Borosil” for short) against the judgment and order dated 30 April 2002 (“Impugned Order” for short) passed by the Tribunal. The Tribunal, vide the said Impugned Order, has allowed set off to Borosil by reducing 6% of purchase price from the taxes paid on purchase of furnace oil, which is used in the manufacture of taxable goods transferred to the branches of Borosil, under Rule 41D of the Bombay Sales Tax Rules, 1959 (“Sales Tax Rules” for short).

4. On the other hand, STR No. 96 of 2009 arises from the proceedings preferred by the Revenue against the judgment and order of the Tribunal dated 31 December 1999 (“Impugned Order” for short). The Tribunal held that Borosil is entitled to complete set off under Rule 41D of the Sales Tax Rules on the purchase of furnace oil without any reduction in relation to branch transfers and thereby directed necessary computation and reworking of the set-off under the said Rules and in accordance with law.

5. As both the References arise from a common question of law and as parties before us, would agree that similar issues are involved we can dispose the STRs by a common judgment.

RIVAL CONTENTIONS:

B. SUBMISSIONS OF THE APPLICANT / ASSESSEE.

6. Mr. Ishaan Patkar learned counsel for the Applicant would first submit that the Tribunal in its Impugned Order dated 30 April 2002 has taken a view, which he would submit is contrary to law, without discussing the earlier catena of decisions. In this context, he would refer to the Larger Bench decision of the Tribunal in M/s. Pudumjee Pulp and Paper Mills Ltd. Vs State of Maharashtra , Second Appeal No. 1010 of 2000 decided on 30 September 2005, where it was held that provisions of Rule 41D(3)(a) of the Sales Tax Rules apply to furnace oil, contrary to 22 years of settled law on such issue. According to Mr Patkar, the Tribunal delivered an erroneous decision on 30 April 2002, when the Bombay Sales Tax Act was quite literally in the process of repeal, and the Larger Bench decision of the Tribunal in M/S. Pudumjee Pulp (Supra) came into existence in the year 2005, much after the said Act was repealed. At the time of passing the reference dated 31 December 2007, the La