2007 (2) TMI 618 - HC - VAT and Sales Tax

Summary

Issues:
Taxability of pulses and flours under the Tamil Nadu General Sales Tax Act, 1959; Interpretation of circular and government order regarding waiver of liabilities and reopening of past assessment cases.

Analysis:
The High Court addressed the issue of taxability of pulses and flours under the Tamil Nadu General Sales Tax Act, 1959. Referring to a previous judgment, the Court confirmed that flours are taxable even if pulses were already taxed, based on specific entries in the Act. The Court noted that the tax department had a consistent interpretation until the 1993 judgment, where it was clarified that fresh tax on flour was required even if tax was paid on pulses. Subsequently, a circular was issued by the department stating that liabilities up to March 31, 1993 would be waived, and past assessment cases would not be reopened. This circular was later ratified by the Government through an official order.

The petitioners in the case had their assessments completed before the circular and government order were issued. However, their assessments were reopened based on the 1993 judgment, which the petitioners argued was impermissible given the circular's provisions. The Court agreed with the petitioners, stating that assessments reopened after the circular's issuance could not be legally sustained. Therefore, the Court ruled to set aside the assessments made after September 16, 1993, specifically in relation to additional sales tax, in line with the circular and government order. Consequently, the writ petitions were allowed, and no costs were awarded.

In conclusion, the judgment clarified the taxability of pulses and flours under the Tamil Nadu General Sales Tax Act, 1959, and emphasized the importance of adhering to circulars and government orders in assessment proceedings. The Court's decision to set aside assessments made post-circular issuance highlights the significance of following established guidelines and interpretations in tax matters to ensure legal compliance and consistency in tax assessments.