2001 (8) TMI 1366 - AT - VAT and Sales Tax

Issues Involved:
1. Validity of the assessment proceedings under TNGST Act.
2. Application of circulars issued by the Commissioner of Commercial Taxes.
3. Interpretation of Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959.
4. Binding nature of circulars on the assessing authorities.
5. Alternative remedy and statutory appeals.

Detailed Analysis:

1. Validity of the assessment proceedings under TNGST Act:
The petitioner sought to quash the proceedings of the respondent/assessing authority in TNGST 1880011/98-99 dated June 20, 2001, as invalid, illegal, and violative of Articles 14 and 141 of the Constitution of India. The assessing authority initially issued a pre-assessment notice for the assessment year 1998-99, proposing a taxable turnover of Rs. 32,44,16,090, which included the taxable turnover under section 3(4) of the Act. A revised notice was later issued, adopting a new formula prescribed by the Principal Commissioner and Commissioner of Commercial Taxes.

2. Application of circulars issued by the Commissioner of Commercial Taxes:
The petitioner contended that the circular instruction prescribing the formula to arrive at the tax payable under section 3(4) of the Act is binding on the assessing authority and any modification of the circular should take effect prospectively. The tribunal noted that circulars issued by the Commissioner of Commercial Taxes were not binding on the persons working under the control of the Commissioner prior to the introduction of section 28-A of the Act with effect from November 6, 1997. Circulars issued under section 37-B of the Central Excise Act are binding on the department, but the department cannot challenge the correctness of such circulars.

3. Interpretation of Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959:
Section 3(4) of the Act contemplates the levy of purchase tax if the manufactured goods by availing concessional rate of tax under section 3(3) of the Act are not sold but despatched to a place outside the State either by branch transfer or by transfer to an agent for sale. The tribunal observed that section 3(4) of the Act does not specifically exclude export sales while imposing purchase tax. The expression "in any of the manner" in section 3(4) would include sale by export.

4. Binding nature of circulars on the assessing authorities:
The tribunal referred to various judgments, including Navnit Lal C. Javeri v. K.K. Sen and Ellerman Lines Ltd. v. Commissioner of Income-tax, which held that circulars issued by the Central Board of Direct Taxes are binding on all officers and persons employed in the execution of the statute. However, it was noted that the circulars issued by the Commissioner of Commercial Taxes in the present case were not issued under section 28-A of the Act and hence were not binding on the assessing officers.

5. Alternative remedy and statutory appeals:
The tribunal held that the proper course for the petitioner is to approach the statutory authority for any relief, as the alternative remedy provided under the statute is an efficacious one. The tribunal dismissed the petition, giving liberty to the petitioner to file a statutory appeal against the order of assessment. The time spent in pursuing the matter before the Special Tribunal shall be excluded for the purpose of calculating the limitation to file the statutory appeal.

Conclusion:
The original petition was dismissed, and the petitioner was given the liberty to file a statutory appeal against the order of assessment. The tribunal found no merit in the contention that the formula suggested during 1999 has to be adopted prospectively for the assessment year 1999-2000 and upheld the revised notice and the orders passed by the assessing authority.

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