Case Note & Summary
The High Court of Judicature at Bombay was seized of two Sales Tax References arising from a common order of the Maharashtra Sales Tax Tribunal. Both references concerned the interpretation of Rule 41D of the Bombay Sales Tax Rules, 1959, regarding set-off on purchases of furnace oil used in the manufacture of goods that were partly sold locally and partly transferred to branches outside the state. The assessee, M/s. Borosil Glass Works Ltd., contended that full set-off should be available under the main provision of Rule 41D, while the Revenue argued that the set-off should be reduced by six per cent of the purchase price as per sub-rule 3(a) of Rule 41D. The Tribunal had rendered conflicting decisions: one order dated 31 December 1999 granted full set-off, while another dated 30 April 2002 allowed only reduced set-off. The assessee submitted that furnace oil is a consumable that does not become part of the finished goods and cannot be considered 'goods which are dispatched' under sub-rule 3(a). It was argued that a strict construction of the taxing provision was required and that accounting for apportionment was impossible. Precedents including The State of Madras v. Swasthik Tobacco Factory, Mathuram Agrawal v. State of Madhya Pradesh, Commissioner of Sales Tax v. Berar Oil Industries, and Amar Dye Chem Ltd. v. State of Maharashtra were cited. The High Court reserved judgment on 15 October 2025 and pronounced it on 12 November 2025. The judgment text provided is incomplete; thus, the court’s final analysis and decision are not available in this excerpt.
Issue of Consideration
Whether full set-off is available under main provision of Rule 41D or set-off is available after reducing 6% 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.
Law Points
- interpretation of Rule 41D of Bombay Sales Tax Rules
- 1959
- set-off for furnace oil
- strict construction of taxing statutes
- distinction between goods dispatched and raw materials used in manufacture
Case Details
2025 LawText (BOM) (11) 140
Sales Tax Reference No. 9 of 2011 and Sales Tax Reference No. 96 of 2009
M.S. Sonak, Advait M. Sethna
Mr. Ishaan V. Patkar, Mr. Vinit V. Raje, Ms. Roshni Naik for Borosil; Ms. Jyoti Chavan, Mr. Himanshu Takke for Revenue
M/s. Borosil Glass Works Ltd. (in STR No. 9 of 2011) and The Commissioner of Sales Tax, Maharashtra State (in STR No. 96 of 2009)
The Commissioner of Sales Tax, Maharashtra State (in STR No. 9 of 2011) and M/s. Borosil Glass Works Ltd. (in STR No. 96 of 2009)
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Nature of Litigation
Sales Tax Reference regarding availability of set-off on purchases of furnace oil used in manufacture under Rule 41D of Bombay Sales Tax Rules, 1959.
Remedy Sought
Assessee sought full set-off without reduction; Revenue sought reduction of 6% of purchase price.
Filing Reason
Conflicting decisions of the Maharashtra Sales Tax Tribunal: one order dated 31 December 1999 allowed full set-off, while another dated 30 April 2002 allowed only reduced set-off under Rule 41D(3)(a).
Previous Decisions
Tribunal order dated 30 April 2002 (in assessment leading to STR No. 9 of 2011) allowed reduced set-off by reducing 6% of purchase price; Tribunal order dated 31 December 1999 (in assessment leading to STR No. 96 of 2009) allowed full set-off under main provision of Rule 41D.
Issues
Whether full set-off is available under main provision of Rule 41D or set-off is available after reducing 6% 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.
Submissions/Arguments
Assessee argued that furnace oil is a consumable not forming part of finished goods and cannot be considered 'goods which are dispatched' under Rule 41D(3)(a); the term 'export' includes branch transfer but furnace oil is not dispatched.
Reliance placed on strict construction of taxing statutes and decisions in Swasthik Tobacco Factory and Mathuram Agrawal.
Contended that accounting impossibility of apportioning furnace oil existed and that pro-rata apportionment under Berar Oil Industries and Amar Dye Chem would not apply if full set-off is available.
Assessee also argued that the Tribunal's Larger Bench decision in Pudumjee Pulp was erroneous and contrary to settled law.
Judgment Excerpts
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?
Procedural History
Sales Tax Reference No. 9 of 2011 and Sales Tax Reference No. 96 of 2009 were filed before the High Court against the Maharashtra Sales Tax Tribunal's orders dated 30 April 2002 and 31 December 1999, respectively. Both references were heard together. The High Court reserved judgment on 15 October 2025 and pronounced it on 12 November 2025.
Acts & Sections
- Bombay Sales Tax Rules, 1959: Rule 41D, sub-rule 3(a)
