JUDGMENT Hon’ble Yashwant Varma, J.—Heard the learned counsel for the revisionist and Sri B.K. Pandey, learned standing counsel for the respondent. 2. The short and interesting issue involved in this revision is as to whether the tax which the assessee has paid on the purchase of raw material and packing material which is ultimately used in the manufacture and packing of goods is liable to be adjusted in full from the ultimate tax liability which a dealer may stand faced with or is it liable to be adjusted only to the extent of the taxable turnover. 3. The issue itself arises on account of the fact that the revisionist in this case had paid a tax of Rs. 5,72,182/- on raw material which was admittedly used in the manufacture and packing of goods. The case of the revisionist was that he had effected sales approximating to Rs. 2.05 crores on which he became liable to pay tax of Rs. 3.41 lacs in that year. Admittedly the revisionist had also effected sales of Rs. 61,56,650/- to certain units which enjoyed exemption from payment of tax by virtue of the provisions of Section 3-B of the U.P. Trade Act 1948. What the assessing authority has proceeded to do however is that while setting off the tax which had been pre-paid by the assessee on the raw material, it has reduced the set off amount to Rs. 4,21,406/- against what the assessee originally paid namely Rs. 5,72,182/-. The reasoning adopted by the assessing authority was that on sales of Rs. 61,56,650/-, the assessee had not levied or collected any tax. This because, these sales were made in favour of entities which were exempt from tax by virtue of Section 3-B. He has accordingly proportionately reduced the benefit of the tax paid by the dealer on raw material and restricted its offset to the taxable turnover only. It is the correctness of this action of the assessing authority which falls for consideration. 4. Admittedly the set off of taxes paid on raw material and packing material stands covered by the provisions of Section 4-BB of the U.P. Trade Tax Act 1948. It is the correctness of this action of the assessing authority which falls for consideration. 4. Admittedly the set off of taxes paid on raw material and packing material stands covered by the provisions of Section 4-BB of the U.P. Trade Tax Act 1948. The said provision reads as under: “Where tax has been paid on the purchases or sale of raw material or packing material inside the State and such raw material or packing material has been used in manufacture or packing of such goods as are notified by the State Government in this behalf and such goods are sold in the State or in the course of inter-state trade or commerce, the amount of tax paid on the purchase or sale of the raw material or packing material, subject to such conditions and restrictions as may be specified in the said notification, be deducted from the tax payable on the sale of such goods- (a) inside the State to the extent the tax has been paid on the purchase or sale of raw material or packing material from which the goods sold inside the State were manufactured or packed. (b) In the course of inter-state trade or commerce, to the extent the tax has been paid on the purchase or sale of raw material or packing material, from which the goods sold in the course of inter-state trade or commerce were manufactured or packed. Provided that the amount of tax to be deducted under clause (a) or clause (b) shall not exceed the amount of tax payable separately under this Act or the Central Sales Tax Act, 1956.” 5. Learned counsel for the revisionist has contended that Section 4-BB does not envisage or mandate a proportionate reduction of the set off amount. It is his submission that the entire amount of tax which has been paid on raw material or packing material as the case may be was liable to be set off against the tax liability of the revisionist. He has, in aid of his submission, also placed reliance upon the judgment rendered by the Supreme Court in Commissioner of Sales Tax v. Bharat Petroleum Corporation Ltd., (1992) 2 SCC 579 . 6. The learned standing counsel on the other hand has submitted that the set-off which was claimed by the assessee is directly connected with the tax payable on the sale of goods. 6. The learned standing counsel on the other hand has submitted that the set-off which was claimed by the assessee is directly connected with the tax payable on the sale of goods. He submits that the tax paid on raw or packing material to the extent used and utilized in the manufacture and sale of goods to tax exempted entities must necessarily be proportionately reduced. He submits therefore that to the extent that the raw material may have been used in the manufacture of goods valued at Rs. 61,56,650/- there has to necessarily be a reduction in the total set off claimed by the assessee. 7. The submission advanced by the learned standing counsel cannot be accepted for more than one reason. While it is true that the language of Section 4-BB does enjoin the set-off of the tax paid on purchase and sale of raw material from the tax payable on the sale of such goods, the section, as the learned counsel for the revisionist has rightly contended, does not make any distinction between tax exempted sales and sales on which taxes have been levied and collected. From the plain and unambiguous language of Section 4-BB, this Court finds no indication that set off which is claimed by the assessee is liable to be reduced and restricted only to such sales which have suffered or have been subjected to tax. The set off which is claimed is of all taxes that have been paid on the purchase of raw material. The set off is not restricted in any manner to only those sales upon which tax has been levied or collected. This becomes further evident from the language of sub clause (a) which while specifying the extent of set off relates it to solely to the tax paid on the packing or raw material “from which the goods sold within the State were manufactured and packed”. Here also the emphasis of the legislative author as is evident is upon two factors only (a) the pre-paid tax on raw or packing material and (b)their utilisation in the manufacture and packing of goods sold in the State. The words “tax payable on the sale of such goods” as used in the substantive part of 4BB firstly cannot be read in isolation. Secondly, they stand duly explained by sub clause (a) which follows. 8. The words “tax payable on the sale of such goods” as used in the substantive part of 4BB firstly cannot be read in isolation. Secondly, they stand duly explained by sub clause (a) which follows. 8. In order to appreciate the dictum laid down by the Supreme Court in Bharat Petroleum, it would first be apposite to consider what was actually urged from the side of the revenue therein. This is how the Supreme Court recorded the submission: “14. Shri Dholakia, learned counsel for the State of Maharashtra, submits that the issue in these appeals is a very simple one. Rules 41 and 41-A are intended to give relief to a dealer in respect of purchase of goods which are used in the manufacture of taxable goods for sale, the clear idea being that where the manufactured goods will also be liable to sales tax in the hands of the manufacturer there should be a relief of the taxes paid by him on the goods purchased by him for use in such manufacture, so as to avoid double taxation. In the Bharat Petroleum case [ The words “or export” were inserted by a notification dated August 31, 1970], the manufactured goods viz., pure kerosene were neither sold by the respondent so as to attract sales tax in his hands nor, indeed, liable to sales tax at all for the first three months. ..............Even assuming that the sulphuric acid or cotton purchased can be said to have been used for the manufacture of two commodities (viz. kerosene and acid sludge in the one case and cloth and cotton waste in the other), the set-off under the rules relied upon should be split up proportionately and allowed only to a proportionate extent, the proportion being decided on the basis of the respective turnovers of the taxable and non-taxable goods. He submits that though the rules do not specifically provide for such a bifurcation, an apportionment of such nature is almost invariably implicit in a tax law and is also consonant with the object and purpose of the rules........” Ultimately it held as under : 17. Turning now to the main question, we are inclined to agree with respondents’ counsel that they are entitled to a set-off of the entire tax paid by them on the purchases of sulphuric acid and cotton respectively. Turning now to the main question, we are inclined to agree with respondents’ counsel that they are entitled to a set-off of the entire tax paid by them on the purchases of sulphuric acid and cotton respectively. The only condition under the rule is that the goods purchased on payment of tax should have been used in the manufacture of taxable goods for sale. Their concurrent user for the manufacture of another item of goods which may or may not be taxable is immaterial though we may point out that in the Bharat Petroleum case, the kerosene was also taxable for nine months in the year and in the case of Phulgaon Cotton Mills, yarn was also manufactured and it was subject to tax. Sri Dholakia contends for an implicit principle of apportionment on the basis of turnovers of various items of goods manufactured and restriction of the quantum of set-off to a proportion based on the turnover of taxable goods to the total turnover. He cited certain decisions under the Income Tax and Sales Tax Acts in support of this contention: Anglo-French Textiles Co. Ltd. v. CIT [ (1954) 25 ITR 27 : AIR 1954 SC 198 ]; Tata Iron & Steel Co. v. State of Bihar [ AIR 1963 SC 577 : 1963 Supp (1) SCR 199 : (1963) 48 ITR 123] and CIT v. Best & Co. [ (1966) 60 ITR 11 : AIR 1966 SC 1325 : (1966) 2 SCR 480 ] We do not think these cases are of assistance............ The rules do not require that the purchased goods must have been used only for the manufacture of taxable goods for sale. In this situation, it is not possible to cut down the quantum of relief clearly outlined in the rule on the basis of some general principle claimed to underlie the provision. As Sri Bobde rightly pointed out, the basis for the relief provided is not very clear cut. Various reliefs have been provided in a group of rules which come in for application in various situations. As Sri Bobde rightly pointed out, the basis for the relief provided is not very clear cut. Various reliefs have been provided in a group of rules which come in for application in various situations. The relief may be based on the principle that the manufactured product is taxed either in the hands of the same assessee or in someone else’s hands, or that the manufactured goods are exported which may yield no tax but earn foreign exchange, or even that the purchases are utilised for manufacture of goods in the State thus contributing to the industrial development of the State. It is, therefore difficult to read into the provision a quantitative correlation of the goods resulting in a taxable turnover and the purchases of raw materials on which tax has been paid. In this background, the straightforward answer to the question raised lies in the literal interpretation of the language of the rules without straining to discover some doubtful principle for denying relief.” (emphasis supplied) 9. Applying the ratio of Bharat Petroleum to the facts of the present case and the language of Section 4BB, this Court finds the clear absence of a “quantitative correlation” to the total tax paid on the raw or packing material and their utilisation in the manufacture of taxable goods. 10. Secondly this Court notes that the tax free sales effected by the revisionist was not of its own accord. These were sales effected in favor of units which had been granted exemption from payment of tax under Section 4B. Surely the benefit of tax already paid by the revisionist could not be denied adjustment based upon the liability or otherwise of another dealer. 11. Thirdly, the Court notes that the revisionist has effected a sale of goods to entities within the State. However since these enjoyed exemption under Section 4-B, no tax was collected on these sales. The mere fact that tax has not been collected, does not detract from the position that a sale of goods took place. Lastly, the Court notes that the section itself provided a facility of set off of tax already paid by a dealer in respect of input goods. It was therefore in the nature of a beneficial provision. It must, therefore, be accorded an interpretation which is in favour of the assessee. 12. Lastly, the Court notes that the section itself provided a facility of set off of tax already paid by a dealer in respect of input goods. It was therefore in the nature of a beneficial provision. It must, therefore, be accorded an interpretation which is in favour of the assessee. 12. For the aforesaid reasons, this Court finds the action of the assessing authority in reducing the set off which was claimed by the revisionist to be unsustainable. The answer is thus entered in favour of the assessee and against the Department. 13. This revision stands allowed. The assessee shall be entitled to all consequential reliefs as permissible in law.