TMI Blog1999 (6) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... ssess that turnover of Rs. 1,89,60,195 representing flax fibre at 8 per cent instead of 3 per cent by stating as follows: On a further scrutiny of assessment for the year 1993-94 it was noticed that the sales turnover amounting to Rs. 1,89,60,195 representing flax fibre was assessed at 3 per cent instead of higher rate of tax at 8 per cent. As per the clarification issued by the Commissioner of Commercial Taxes, Madras in D. Dis. Acts Cell II/132565/93 dated May 10, 1994 vide ([1995] 97 STC (Circulars Clarifications), page 6) the viscose staple fibre falling under Central Excise Tariff No. 56.03 is liable to tax at 8 per cent under Part D, item 63 of the First Schedule. 2.. Time was granted till March 26, 1999 to file objections. The petitioner filed objections on March 26, 1999 by stating that the assessment originally made was in accordance with the clarification of the Special Commissioner and Commissioner of Commercial Taxes in D. Dis. Acts Cell II/752/94 dated May 30, 1994 and that flax fibre is produced from the plant just like cotton or jute and that it falls under item 5 of the Second Schedule to the Act whereas viscose staple fibre is a fibre extracted from tree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the clarification of the Special Commissioner and Commissioner of Commercial Taxes in Acts Cell II/132565/93 dated May 10, 1994 which reads as follows: Viscose staple fibre falling under Central Excise Tariff No. 56.03 is liable to tax at 8 per cent under entry 63 of Part D. Though it was explained in the objection letter filed that flax fibre obtained from plants is different from viscose extracted from soft wood trees by chemical process and material evidence was produced seeking a personal hearing on March 30, 1999 still the assessing authority without affording an effective hearing as prayed for has passed the impugned order. Thus, the reassessment made by relying on the circular of the Special Commissioner and Commissioner of Commercial Taxes in Acts Cell II/85058/97 dated June 11, 1998 which was not disclosed in the original pre-assessment notice obviously shows that there is violation of the principles of natural justice. The circular dated June 11, 1998 reads as follows: Flax fibre does not find a place in any of the entries in the Schedule to the TNGST Act and therefore it is classified as a residuary item under entry 67 of Part D of the First Schedule liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ jurisdiction and in this connection, he referred to the decision of the Supreme Court reported in State of Goa v. Leukoplast (India) Ltd. [1997] 105 STC 318. 8.. I have considered the rival contentions. In the original assessment, the assessing authority proposed to levy tax on the sale of flax fibre under item 69(ii) of Part B of the First Schedule. However, while passing the assessment order, though no objections has been filed, the assessing authority stated that the item flax fibre would fall under the Second Schedule to the Act taxable at 3 per cent. Later, while proposing to revise the assessment on the ground that the commodity namely flax fibre was assessed at lower rate of tax, the assessing authority stated that the commodity flax fibre is assessable at 8 per cent instead of 3 per cent assessed originally and this is on the basis of the understanding as per the clarification of the Commissioner of Commercial Taxes dated May 10, 1994. When objections were filed apart from referring to the basis for the revision as stated in the notice, the assessing authority further stated that the clarification issued subsequently by the Commissioner of Commercial Taxes dated June ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound for interpreting entries in favour of the assessee. On the other hand, I have interpreted the entries first and I have found that the interpretation sought to be placed by the petitioners is justified. 9.. Thus only after interpreting the relevant entry in regard to the rate of tax on the commodity in question reference was made to the clarification of the Commissioner of Commercial Taxes. In this connection, it is relevant to refer to the observation of the Supreme Court in the case of Bengal Iron Corporation v. Commercial Tax Officer [1993] 90 STC 47 wherein the following observations have been made in regard to the clarifications/circulars: Clarifications/circulars issued by the Central Government and/or the State Government represent merely their understanding of the statutory provisions. They are not binding upon the courts. It is true that those clarifications and circulars were communicated to the concerned dealers but even so nothing prevents the State from recovering the tax, if in truth such tax was leviable according to law. There can be no estoppel against the statute. The understanding of the Government, whether in favour or against the assessee, is nothin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of tax in respect of sale of flax fibre is to be determined after considering the materials particularly the process to manufacture involved in the product in question. This question cannot be determined in the writ jurisdiction as observed by the Supreme Court decision cited supra. A change of opinion to reassess the turnover at the correct rate of tax cannot be said to be illegal and this view is confirmed by the decision of the Supreme Court in S.L.P. Civil No. 10324 of 1991 in the case of State of Andhra Pradesh v. Ratna Sree Box Makers reported in [1996] 101 STC Frsc 3. 12.. As explained supra no violation of principles of natural justice is involved in passing the reassessment, and the various decisions quoted by Mr. R. Venkatraman, the learned counsel for the proposition that there is violation of natural justice and therefore the order of reassessment has to be set aside have no relevance at all. Thus, I find that there is no case to interfere with the order of assessment in writ jurisdiction under article 226 of the Constitution of India when the petitioner has an alternative remedy by way of filing statutory appeal against the order of revision passed on March 31, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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