2005 (8) TMI 645 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Authority of the Commissioner of Commercial Taxes to issue circular instructions interpreting orders of the Sales Tax Appellate Tribunal.
2. Classification of plastic water storage tanks under the Andhra Pradesh General Sales Tax Act, 1957 (APGST Act).
3. Binding nature and scope of circulars issued by the Commissioner of Commercial Taxes under section 42-A of the APGST Act.

Issue-wise Detailed Analysis:

1. Authority of the Commissioner of Commercial Taxes to Issue Circular Instructions Interpreting Orders of the Sales Tax Appellate Tribunal:
Petitioners questioned the authority of the Commissioner of Commercial Taxes to issue circular instructions interpreting the order passed by the Sales Tax Appellate Tribunal. They argued that the Commissioner is not empowered under section 42-A of the APGST Act to issue such circulars, and his erroneous interpretation places fetters on the quasi-judicial powers exercised by statutory authorities under the APGST Act. The court noted that the circular in question was not issued under section 42-A but was an internal communication meant for subordinate officers. The court concluded that the Commissioner did not have the authority to issue circulars interpreting orders of courts and Tribunals, as these matters are to be adjudicated by statutory authorities discharging quasi-judicial functions under the Act. Consequently, the circular was set aside as being without authority of law.

2. Classification of Plastic Water Storage Tanks under the APGST Act:
The petitioner argued that plastic water storage tanks fall under sub-item (iv) of entry 19 of the First Schedule to the APGST Act, as amended with effect from May 12, 1997, and are exigible to sales tax at four percent. The Deputy Commissioner of Commercial Taxes initially sought to revise the assessment order, bringing these tanks under entry 187, relying on a previous order of the Sales Tax Appellate Tribunal. However, upon recognizing the distinction between the assessment periods before and after the amendment, the Deputy Commissioner dropped further proceedings and confirmed the assessment under entry 19(iv). The court highlighted that classification of goods is a quasi-judicial power vested in assessing, appellate, and revisional authorities under the statute, which cannot be usurped by the Commissioner through circular instructions.

3. Binding Nature and Scope of Circulars Issued by the Commissioner of Commercial Taxes under Section 42-A of the APGST Act:
The court examined the scope and extent of the powers conferred on the Commissioner under section 42-A of the APGST Act. It was argued that the power to clarify various aspects under the statute should be exercised sparingly to avoid ambiguities and should not be used to impose additional liabilities on traders. The court referred to several judgments, including those of the Supreme Court, which held that circulars issued by the Commissioner are binding on departmental officials but cannot alter statutory provisions or fetter the exercise of quasi-judicial powers. The court concluded that the impugned circular, not being issued under section 42-A, was without authority of law and set it aside. However, it allowed the second respondent to continue proceedings based on the show cause notices, considering the matter on its own merits and in accordance with the law.

Conclusion:
The court set aside the circular issued by the Commissioner of Commercial Taxes as it was without authority of law and clarified that such circulars cannot interfere with the quasi-judicial powers of statutory authorities under the APGST Act. The court allowed the continuation of proceedings based on the show cause notices, emphasizing that the matter should be considered on its own merits and in accordance with the law.