TMI Blog2010 (4) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... N. Inbarajan, A.R. Jayapratap for Kanniah Naidu For the Respondents : Haja Naziruddin, Special Government Pleader (Taxes), The judgment of the court was delivered by K.K. SASIDHARAN J. Writ appeal in W.A. No. 1152 of 2008 is directed against the order dated April 29, 2008 in W.P. No. 11130 of 2008 whereby and whereunder, the writ petition filed by the appellant to quash the circular dated March 25, 2008 cancelling the earlier circular dated May 31, 2007, was dismissed. The prayer in W.P. No. 10011 of 2008 is again to quash the very same circular dated March 25, 2008 which was the subject-matter in W.P. No. 11130 of 2008. The other writ petitions relate to the assessment order passed by the Commercial Tax Officer in respect of SRF Limited in accordance with the impugned circular dated March 25, 2008. Since the main issue to be decided in the writ appeal as well as in the writ petition pertains to the circular issued by the Commissioner of Commercial Taxes dated March 25, 2008, the facts as noted in W.P. No. 10011 of 2008 is taken to narrate the background facts. W.P. No. 10011 of 2008: The facts: The petitioner challenges the circular dated March 25, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptember 2007. When such a demand was made, the petitioner took up the matter with the second respondent and sought fresh clarification as to whether synthetic tarpaulin was an exempted commodity as clarified in circular dated May 31, 2007. (d) The second respondent issued a circular dated March 25, 2008 clarifying that synthetic tarpaulin sold by the petitioner would be taxable at 12.5 per cent under the residuary entry No. 69 of Part C of the First Schedule to the TNVAT Act, 2006. The said clarification contains a further statement that earlier circular dated May 31, 2007 stood cancelled retrospectively. (e) The assessing authority as per proceeding dated March 26, 2008, confirmed the earlier proposal and has provisionally assessed the petitioner for the period from June 2007 to February 2008. The assessing authority has taxed the sales of synthetic tarpaulin at 12.5 per cent in accordance with the clarification issued by the second respondent on March 25, 2008. Since the assessment order was made only on the basis of the circular dated March 25, 2008, the petitioner has challenged the said circular. In the connected writ petitions, the challenge was to the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the circular issued under the provisions of the Tamil Nadu General Sales Tax Act, 1959 are saved as per section 88 of the Tamil Nadu Value Added Tax Act, 2006, the earlier circular has got statutory force and as such, the first respondent was not justified in withdrawing such circular. The learned Special Government Pleader (Taxes) would submit that the circular has no statutory force and as such, the second respondent was fully justified in withdrawing the said circular. According to the learned Government Pleader, the first respondent is a quasi-judicial authority and the entire issue can be agitated before the said authority. The learned Government Pleader would further submit that the assessing authority will consider the matter and pass final assessment order as per law, without reference to the impugned circular dated March, 25, 2008. Analysis: The petitioner is a manufacturer of tipped nylon tyre cord fabric, coated fabric and synthetic tarpaulin. The petitioner has classified the synthetic tarpaulin sold by them as falling under Part C of the First Schedule to the TNVAT Act and accordingly, they have been collecting tax at 12.5 per cent. The said position contin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. However, the earlier circular dated May 31, 2007 was a general circular without reference to the product manufactured by the petitioner. The question regarding the tax rate in respect of the tarpaulin manufacture by the petitioner was considered by the Commissioner in the light of the report submitted by the Commercial Tax Officer. The nature of product manufactured by the petitioner and as to whether it would come under Part A or B of the Fourth Schedule to the TNVAT Act, 2006 was also considered by the Commissioner. The Commissioner found that tarpaulin falls under heading 6306 of the Central Excise Tariff. It does not fall either under Part A or Part B of the Fourth Schedule to the Tamil Nadu Value Added Tax Act, 2006. It was also not enumerated under Part B of the First Schedule to the Act. It was also found that rate of tarpaulin was not reduced by Government by G.O. Ms. No. 79, CT R (B2) Department dated March 23, 2007. It was only in such circumstances, the Commissioner clarified the position that tarpaulin made of synthetic fibre was liable to tax at 12.5 per cent under the residuary entry No. 69 in Part C of the First Schedule to TNVAT Act, 2006. It is true that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent from the consumers. The circular dated May 31, 2007 was not issued to the petitioner and it has no reference to their product and as such, there was no question of acting on the basis of the said circular. The petitioner being a large scale manufacturer of tarpaulin should have approached the statutory authority before placing reliance on a circular issued in respect of an Association of Merchants. However, for the reasons best known to the petitioner, they have not chosen to consult the authority concerned for issuance of a clarification. Therefore, the respondents were not responsible for the situation and it was the creation of the petitioner themselves. The next question is as to whether the Commissioner of Commercial Tax was having statutory powers to issue the circular dated May 31, 2007. There is no dispute that section 28A of the Tamil Nadu General Sales Tax Act permits the Commissioner to issue a clarification in respect of any point concerning the rate of tax under the Act. Therefore, the circular issued under section 28 of the Tamil Nadu General Sales Tax Act has got statutory force. However, there is no corresponding provision in the Tamil Nadu Value A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities. In Mohan Breweries case [2005] 139 STC 477 (Mad), the Commissioner originally issued a circular clarifying the position regarding purchase of empty bottles for manufacture of beer and IMFL products from unregistered dealers. It was only when the Sales Tax Department claimed tax from the very same assessee, the Division Bench held that the circular issued by the Department in respect of the very same assessee was binding on the authorities, though it was executive in nature. Since the facts of the present case are entirely different, the decision in Mohan Breweries case [2005] 139 STC 477 (Mad) has no application. There is no doubt that circulars and instructions issued in exercise of statutory powers are binding on the authorities under the respective statutes. Before deciding the binding nature of such circulars, the power derived from the statute for issuing such circulars has also to be considered. The Supreme Court in Commissioner of Central Excise, Bolpur v. Ratan Melting Wire Industries [2008] 13 SCALE 353, held that a circular which is contrary to the statutory provisions has really no existence in law. Since the Commissioner has not issued any c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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