V.S. Desai, J.
1. The opponents are dealers carrying on business of selling and supplying textile cloth within the State of Bombay. During the period 1st April, 1954, to 13th July, 1955, their turnover had exceeded the limit prescribed by section 5 of the Bombay Sales Tax Act, 1953, but they had not, till that date, applied for registration. On the 14th July, 1955, they made an application for registration, and were granted the registration certificate with effect from the said date. Thereafter on the 1st September, 1955, the opponents filed four statements under the rules claiming set-off in respect of the general sales tax paid by them on their purchases during the four periods, viz., (1) 1st July, 1954, to 30th September, 1954, and (2) 1st October, 1954, to 30th December, 1954, (3) 1st January, 1955, to 31st March, 1955, and (4) 1st April, 1955, to 30th June, 1955. The total set-off claimed by them under these four statements was Rs. 6,087. Thereafter the opponents were assessed for the period 1st April, 1954, to 13th July, 1955, and the general sales tax assessed was Rs. 6,208. There were also penalties imposed upon them, but these penalties having been set aside, we are not concerned with them in the present reference. In assessing the general sales tax, the claim made by the opponents for refund of the purchase tax in accordance with the statements submitted by them on 1st September, 1955, was disallowed. The opponents preferred an appeal from the said order of assessment to the Assistant Collector of Sales Tax, but the appeal was rejected on 29th April, 1957. The opponents then made a revision application to the Additional Collector of Sales Tax, but it was also rejected on 26th May, 1958. In the revision application which was subsequently made by the opponents to the Sales Tax Tribunal, the Tribunal by a majority decision of 2 to 1, allowed the set-off claimed by the opponents. Thereafter, at the instance of the Collector of Sales Tax, the Tribunal referred the following two questions to this Court under section 34 of the Sales Tax Act, 1953 :
'(1) Whether on the facts and in the circumstances of this case the registration certificate issued to the opponents can be deemed to be a certificate issued under sub-section (3) of section 11 of the Act with effect from 1st April, 1954.
(2) Whether on the facts and in the circumstances of this case the opponents are entitled to a set-off under sub-rule (2) of rule 11 of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, in respect of an amount equal to the aggregate sums recovered from them by registered dealers by way of general sales tax on the purchases of goods made by them during the relevant period.'
2. Now, on the 13th September, 1956, proceedings had been instituted against the opponents for having committed an offence under section 36 of the Bombay Sales Tax Act, inasmuch as they had carried on business as a dealer without applying for registration in contravention of section 11 of the Act. The offence in respect of which these proceedings were commenced was, however, compounded by the Collector under section 39 of the Act on payment of Rs. 250 by the opponents. It was argued by the opponents that under section 11(5) of the Act, since they had paid the composition money under section 39 in respect of their contravention of sub-section (1) of section 11 of the Act, the Collector was bound to register the opponents as dealers, and grant them a certificate of registration which was to have effect as if it had been made on their application under sub-section (3) of section 11. It was contended on their behalf that the effect of the provisions of section 11(5) was that they must be deemed to have been registered dealers with effect from 1st April, 1954, as a result of the said composition; and therefore in their assessment for this period from 1st April, 1954, to 13th July, 1955, they were entitled to the set-off as provided in rule 11 of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954. As against this claim of the opponents, it was contended on behalf of the Sales Tax Authorities that the legal fiction in section 11(5) only enabled the opponents to be regarded as registered dealers from the date of composition, and not from any earlier date. Since the composition was on 26th October, 1956, registration by reason of the fiction could not avail the opponents for the period of assessment with which we are concerned in the present case, namely, the period from 1st April, 1954, to 13th July, 1955. It was also further contended that even if the fiction were to extend from the period 1st April, 1954, onwards as contended by the opponents, they would still not be entitled to the set-off claimed by them, inasmuch as they had not fulfilled the requirements of rule 11(4) of the Rules. The Tribunal by its majority judgment accepted the submissions which were urged on behalf of the opponents, and took the view that the legal fiction in section 11(5) must be deemed to take effect from the very commencement, i.e., from 1st April, 1954, onwards, and since a legal fiction had been created, the opponents must be given benefit of the fiction created in their favour, although they had not complied with the requirements of rule 11(4) of the Rules. The majority view of the Tribunal was that in the circumstances of the case, it was impossible for the opponents to comply with the provisions of rule 11(4), and a strict compliance with the provisions of the said rule, which would disentitle the opponents from obtaining the benefit of the fiction which law had created in their favour, was not called for in the case. In the opinion of the majority of the learned Members of the Tribunal, having regard to the purpose of the provisions of section 11(5) and the rules made for allowing the set-off, refund etc., it would be fair to hold that benefit of rule 11(2) could be allowed to the opponents in the circumstances of the case.
3. Mr. Patel, the learned Advocate appearing for the opponents, had raised a preliminary point that the present reference is not maintainable since it does not fall within the ambit of section 34 of the Bombay Sales Tax Act, 1953. The reference which can be made under the said section is one with regard to any question of law which arises out of the Tribunal's order under section 30(2) or section 31(1) affecting any liability of any person to pay the tax. According to Mr. Patel the Tribunal's decision and order in the present case was not with regard to the liability of the opponents in respect of the tax to be paid by them, but with regard to the set-off claimed by them. 'Tax' is defined in section 2(13) of the Act as 'the sales tax, general sales tax or the purchase tax payable under this Act' and these taxes have been defined as meaning respectively the taxes leviable under sections 8, 9 and 10 of the Act. Mr. Patel argued that the set-off which is allowed under the rules made under section 18-B of the Act is not a tax leviable under the Act. It may be, says Mr. Patel, that the set-off which is allowable is considered in assessing the tax payable by a registered dealer and the assessment order may deal with the claim as to set-off but since the set-off is not a tax as defined under the Act, the assessment order in so far as it relates to the claim of set-off is not an order relating to the liability of the registered dealer to pay the tax. According to Mr. Patel therefore no question of law arising from the assessment order in so far as it relates to the claim of set-off can be said to arise out of an order affecting the liability to pay tax within the meaning of section 34 of the Act. This preliminary point which Mr. Patel has raised before us was also raised by him before the Tribunal in opposing the application which the Collector of Sales Tax had made to the Tribunal for making the present reference, but the Tribunal had overruled the same. In our opinion, the point raised by Mr. Patel has no substance and the Tribunal was right in rejecting it. The expression used in section 34, namely, 'any order affecting any liability of any person to pay the tax' is wide enough to include within its ambit any order which determines any question which bears on the existence, ascertainment and quantification of the liability to pay the tax and results in increasing or reducing the said liability. The set-off claimed by the opponents was in respect of their tax liability which was to be either reduced or increased according as the claim was either allowed or disallowed. The order therefore determining the said claim was an order which affected the liability of the opponents to pay the tax and questions of law arising out of the order could be referred under section 34 of the Act. The preliminary point raised by Mr. Patel, therefore, must be rejected.
4. Proceeding to the questions referred to us in the present reference, in the view that we are taking of the matter of the two questions, it would not be necessary to give an answer to the first question. Under section 18-B of the Bombay Sales Tax Act, 1953, power is given to the State Government to make rule providing for drawback, set-off, refund etc. That section provides that 'the State Government may by rules provide that
(b) drawback, set-off or refund of the whole or part of the tax leviable on any class of sales or purchases under section 7-A, 8, 9, 10 or 10-A shall be granted to the purchasing dealer in such circumstances and subject to such conditions as may be specified.'
5. Rule 11 of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954, framed under the provision, deals with set-off, refund etc. Sub-rule (2) of rule 11 states :
'In assessing the general sales tax payable by a registered dealer in respect of any period, the Collector shall grant him a drawback, set-off or refund, as the case may be, for an amount equal to the aggregate of the sums recovered from him by registered dealers by way of general sales tax on his purchase of any goods on or after 1st April, 1954, at a time when he was a registered dealer, where -
(a) (i) such purchases were made by him at a time when he was a registered dealer but did not hold a licence under section 12, or
(ii) such purchases were made by him when he was not a registered dealer but were made between the date on which he applied for registration under rule 3 of the Bombay Sales Tax (Registration, Licensing and Authorization) Rules, 1954, and the date on which he was registered, and
(b) such goods have during the period in respect of which he is being assessed, been re-sold by him, or
(c) such goods being other than those specified in entries 1 to 18 (both inclusive) of Schedule B to the Act have been used by him as raw materials, processing materials, machinery, tools, plant, equipment, fuel, lubricants, containers or packing materials in the manufacture or processing of any goods or for sale, .......'
6. Sub-rule (4) of rule 11, so far as is material, states :
'No drawback, set-off or refund under sub-rule (2) of this rule shall be granted to a dealer in respect of any amount of tax recovered from him by another dealer on any purchase of goods, unless such a dealer has maintained in respect of purchases to which sub-rule (2) of rule 11 applies, a register in Form (10) in which the particulars of such purchases and the amount recovered from the dealer by way of tax have been included in chronological order and has furnished the Collector with a quarterly statement in Form (12) in respect of the purchases register in Form (10) before the expiry of the month succeeding the quarter to which the statement relates.'
7. It will thus be seen from sub-rule (2) and sub-rule (4) of rule 11 that in order to be entitled to a set-off, the purchases in respect of which the set-off is claimed, must have been made at a time subsequent to the 1st April, 1954, when the purchaser was a registered dealer, and further, the said registered dealer must have maintained a register in Form (10), in which the necessary particulars must have been entered, and he must further have submitted quarterly statements to the Collector in Form (12) in respect of the said purchases within the prescribed period. It is undisputed that in the present case, quarterly statements in Form (12) have not been submitted by the opponents. Even if the fiction in section 11(5) is deemed to have taken effect from 1st April, 1954, so that by reason of the said fiction, the dealer could be deemed to be a registered dealer as from that date, that alone will not entitle him to claim a set-off unless he has further satisfied the requirements of rule 11(4). A registered dealer who has properly and in time taken out a registration certificate will not be entitled to claim set-off unless he has complied with the requirements of rule 11(4). A defaulting dealer who had not taken out a registration certificate in due time and was therefore prosecuted and either convicted or whose offence was compounded, could not be in a better position than a dealer who has taken out a registration certificate in proper time. Under section 11 of the Sales Tax Act, there is a prohibition for a dealer to carry on the business without obtaining the registration certificate within the prescribed period. That prescribed period is 30 days after the turnover of the dealer exceeds the limits specified in section 5. Under section 11(3), the Collector on satisfaction that the application made by the dealer for registration is in order is required to grant him (dealer) a certificate of registration. The Collector's power to grant a registration certificate is on a satisfaction that the application made to him for registration is in order, and in order that the application should be in order, it must have been made within 30 days of the turnover exceeding the limits specified in section 5. The effect of this provision is that there would not be any power in the Collector to grant the registration certificate if the application for the registration certificate is made by a dealer beyond 30 days after his turnover has exceeded Rs. 30,000. The fiction in section 11(5) provides that on conviction or composition of the offence committed by the dealer in carrying on business in contravention of section 11(1), the Collector will treat the case of the dealer as if there is an application made by him in proper form, and grant him the registration certificate. It may therefore be that the object in creating the legal fiction in section 11(5) is merely to enable the Collector to grant the registration certificate to the dealer who has failed to make an application in proper form and thus enable him to continue business without contravention of section 11(1) of the Act. In that view of the matter, it would be possible to urge that the registration granted under section 11(5) need not relate back to the commencement of the period in respect of which proceedings were instituted against the dealer under section 36 of the Act. It is unnecessary however in the present case to enter into that question because even if the fiction created by section 11(5) were to clothe the dealer with the status of a registered dealer from the very commencement of the period, it would not extend to giving him the benefits to which a registered dealer would not be entitled unless he had complied with the requirements of rule 11(4). In our opinion, therefore, even if it were assumed that the fiction created by section 11(5) would extend from the very commencement, i.e., from 1st April, 1954, it would still not entitle the opponents to obtain a set-off since they had admittedly not complied with sub-rule (4) of rule 11. In the view that we are taking, it is not necessary to go into question No. 1 referred to us by the Tribunal. We therefore do not answer question No. 1 as being unnecessary to be answered. Our answer to question No. 2 is in the negative. The opponents will pay the costs of the Collector of Sales Tax.
8. Reference answered accordingly.