On appeal the Court held that  the law permitted the assessee to set off or adjust the sales tax already paid at the time of purchase of raw materials against the sales tax collected at the time of sale of finished goods, and the assessee had retained the sales tax amount which had already been paid and claimed a set off. To the extent of the sales tax paid on the raw materials, the assessee had actually been reimbursed by the sales tax collected at the sale of the finished product. Adjustment, by legal fiction, was deemed to be an actual payment of the tax liability and was deductible under section 43B. (AY. 1988-89)