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Issues Involved:
The issues involved in the judgment are the imposition of penalty under section 3-B of the U.P. Sales Tax Act, the validity and binding nature of a circular issued by the Commissioner of Sales Tax, and the authority of the Sales Tax Department to recover tax based on the circular. Imposition of Penalty under Section 3-B of the U.P. Sales Tax Act: The applicant, a dal manufacturer, held an eligibility certificate u/s 4-A of the U.P. Sales Tax Act from January 29, 1983. Penalty was imposed on the assessee under section 3-B for the relevant assessment years, upheld by the Sales Tax Tribunal. The Tribunal's order stated that sales through commission agents, as per a circular, should be included in the turnover. However, a previous judgment held that the circular is binding on the department. As the applicant had the eligibility certificate during the assessment years, its sales were not taxable, and thus, the penalty under section 3-B should not be imposed. The revision was allowed, and the impugned order was set aside. Validity and Binding Nature of Circular Issued by the Commissioner of Sales Tax: The High Court ruled against the sales tax authorities based on a circular issued by the Commissioner of Sales Tax. The authorities challenged this decision, arguing that the circular was contrary to the law and should not have been considered. They contended that despite the circular, they were entitled to recover the tax. The circular, issued on January 19, 1991, remained in effect and had not been withdrawn. The court emphasized that while a circular is not binding on the courts or the assessee, the interpretation it provides is binding on the taxing authority. The Sales Tax Department's argument against the circular issued by its Commissioner was deemed remarkable, and the court dismissed the civil appeals with costs. Authority of Sales Tax Department to Recover Tax Based on Circular: The Sales Tax Department challenged the High Court's decision, asserting their right to recover tax despite the circular. The court emphasized that while circulars are not binding on courts or assesses, the interpretation provided by the taxing authority is binding on that authority. The court dismissed the civil appeals, highlighting that the observations in a previous judgment apply only when estoppel against a statute is established.
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