1992 (9) TMI 346 - AT - VAT and Sales Tax

Issues Involved:
1. Validity of the eligibility certificate dated January 22, 1991.
2. Interpretation of the term "jute goods" in Notification No. 1653 F.T. dated April 1, 1980.
3. Applicability and binding nature of trade circular No. 4/80 dated June 9, 1980.
4. Impact of contemporanea expositio on the interpretation of statutory provisions.

Detailed Analysis:

1. Validity of the Eligibility Certificate:
The applicant set up a small-scale industry for manufacturing jute and hessian bags, with production commencing on May 13, 1989, and the first sale occurring on May 22, 1989. The eligibility certificate was issued on January 22, 1991, for the period from May 25, 1989, to March 31, 1990. The Assistant Commissioner of Commercial Taxes declared the eligibility certificate invalid with effect from May 25, 1989, and rejected the application for renewal. The Additional Commissioner upheld this decision. The Tribunal found that the Assistant Commissioner and Additional Commissioner erroneously withdrew the eligibility certificate and rejected the renewal application. The eligibility certificate dated January 22, 1991, was restored and declared valid. The application for renewal for the period from April 1, 1990, to March 31, 1991, was directed to be disposed of in accordance with the law.

2. Interpretation of "Jute Goods":
The central issue was whether jute bags and hessian bags fall within the expression "jute goods" as defined in Notification No. 1653 F.T. dated April 1, 1980. The notification specified "hessian," "sacking," and "carpet backing" as jute goods. The applicant argued that these terms referred to fabric or cloth and did not include bags made from such materials. The Tribunal agreed with this interpretation, stating that "jute goods" referred to hessian, sacking, or carpet backing fabrics or cloths, and did not include jute bags or hessian bags.

3. Applicability and Binding Nature of Trade Circular No. 4/80:
The respondents argued that jute bags and hessian bags were covered by the term "sacking" as clarified by trade circular No. 4/80 dated June 9, 1980. The applicant contended that the circular was an administrative interpretation without binding effect on quasi-judicial authorities. The Tribunal concluded that the trade circular could not influence or override the judicial interpretation of statutory provisions. The circular was not applicable to the interpretation of item 12 of the Tenth Schedule of rule 3(66a) of the Bengal Sales Tax Rules, 1941.

4. Impact of Contemporanea Expositio:
The respondents suggested that the trade circular should be treated as contemporanea expositio, an interpretation that has been in operation for a long period. The Tribunal rejected this argument, stating that the proper domain of a court of law is to give the correct interpretation of statutory provisions. The Tribunal emphasized that administrative circulars cannot bind judicial authorities or courts. The Tribunal referred to judicial precedents to support its view that administrative instructions are not binding on courts or tribunals in interpreting statutory provisions.

Conclusion:
The Tribunal held that item 12 of the Tenth Schedule to rule 3(66a) did not include jute bags and hessian bags. The orders of the Assistant Commissioner and Additional Commissioner were set aside, and the eligibility certificate dated January 22, 1991, was restored and declared valid. The application for renewal was directed to be disposed of in accordance with the law. The Tribunal emphasized that administrative circulars cannot override judicial interpretations of statutory provisions.

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