2004 (4) TMI 536 - HC - VAT and Sales Tax

Summary

Issues:
Controversy over determining tax component on sale of rice based on conflicting decisions of two-member and three-member benches of the Sales Tax Tribunal.

Analysis:
The judgment deals with a dispute regarding the calculation of the tax component on the sale of rice, arising from conflicting decisions of the Sales Tax Tribunal. The petitioners argued that the formula provided under section 8A(1) of the Central Sales Tax Act, 1956, was upheld by the Court in a previous case. The three-member Bench of the Sales Tax Tribunal had followed the Court's decision in a similar case, establishing a settled principle. However, a later decision by a two-member Bench created confusion, leading to the issuance of circular instructions by the Commissioner, Commercial Tax Department.

The Court emphasized that when there are conflicting decisions on a legal principle, the law laid down by a larger Bench prevails unless overturned by a subsequent larger Bench. In this case, the three-member Bench's decision had settled the controversy regarding the tax component on the sale of rice. The Court noted that the two-member Bench did not have the benefit of considering the three-member Bench's decision, leading to confusion in its ruling. Therefore, the Court declared that the two-member Bench's decision was not a good law.

Based on the settled legal principle, the Court held that the view taken by the two-member Bench was invalid, and the circular instructions issued based on that decision were also invalid. Consequently, the assessments or reassessments made following the circular instructions were set aside. The Court allowed the writ petitions, directing the respondents to take consequential steps without awarding any costs. The ruling clarified the legal position and resolved the confusion caused by conflicting decisions within the Sales Tax Tribunal, providing a clear direction for future assessments in similar cases.