1994 (7) TMI 308 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 6-B of the Karnataka Sales Tax Act regarding the exemption of turnover tax for wheat and wheat products.
2. Retrospective effect of Supreme Court judgments on past transactions.
3. Validity of circular issued by the Commissioner of Commercial Taxes.
4. Jurisdiction of the Joint Commissioner to revise orders passed by the Assistant Commissioner.

Analysis:

Issue 1: Interpretation of Section 6-B
The appellants contended that wheat and wheat products should be treated as the same commodity for the purpose of exemption from turnover tax under section 6-B of the Karnataka Sales Tax Act. However, the Supreme Court's decision in Rajasthan Roller Flour Mills Association v. State of Rajasthan clarified that wheat and wheat products are distinct items. This decision binds all authorities in the state, including the High Court. The Supreme Court's interpretation must be followed in all pending proceedings, irrespective of the stage of assessment. The contention that the Supreme Court decision should only apply prospectively was rejected, citing the principle under article 141 of the Constitution. The High Court dismissed this contention.

Issue 2: Retrospective Effect of Supreme Court Judgments
The appellants argued that the Supreme Court decision should not have retrospective effect on past transactions. They claimed that the revisional authority could not revise assessments based on the Supreme Court's decision when the earlier view of the Karnataka High Court was prevailing. The High Court disagreed, emphasizing that the Supreme Court's decision must be applied to all pending proceedings, regardless of when the assessments were made. The High Court cited Maj. Genl. A.S. Gauraya v. S.N. Thakur to support the binding nature of Supreme Court judgments on all subordinate courts.

Issue 3: Validity of Circular Issued by Commissioner
The appellants raised the issue of a circular issued by the Commissioner of Commercial Taxes, which directed assessing authorities to follow the Karnataka High Court decision treating wheat and wheat products as the same commodity. The High Court clarified that once the Supreme Court reversed the High Court's decision, the circular lost its efficacy. Circulars issued by tax authorities do not bind judicial or quasi-judicial bodies, as per the proviso to section 3-A of the Act. The High Court referenced Bengal Iron Corporation v. Commercial Tax Officer to emphasize that such circulars are not binding on judicial authorities.

Issue 4: Jurisdiction of Joint Commissioner
The appellants contested the jurisdiction of the Joint Commissioner to revise orders passed by the Assistant Commissioner, who later became a Deputy Commissioner. The High Court held that the Joint Commissioner had the authority to revise the Assistant Commissioner's order, even after the latter's promotion to Deputy Commissioner. The order passed by the Assistant Commissioner remained valid and subject to revision by the Joint Commissioner under section 21(2) of the Act. The High Court rejected this contention, affirming the Joint Commissioner's jurisdiction.

In conclusion, the High Court dismissed the appeals as all contentions raised by the appellants failed to establish their case. The judgments delivered by the High Court and the Supreme Court were binding on all authorities, and the circular issued by the Commissioner lost its validity after the Supreme Court's decision. The Joint Commissioner had the jurisdiction to revise the Assistant Commissioner's orders, even after the latter's promotion.