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TMI Blog2001 (1) TMI 956X X X X Extracts X X X X X X X X Extracts X X X X ..... n are liable to be taxed at 12 per cent till July 16, 1996 and at 16 per cent from July 17, 1996 on the basis that the goods were branded food products. The notices also refer to a clarification issued by the second respondent under section 28-A of the Tamil Nadu General Sales Tax Act 1959, for revising the earlier orders of assessment. The grounds of challenge in the original petitions are as follows: (1) The notices are based only on the clarification issued by the second respondent under section 28-A of the TNGST Act, 1959. (2) The clarification was issued under section 28-A which according to the petitioners is unconstitutional and ultra vires the fundamental rights enshrined under the Constitution of India. (3) In particular the provision is ultra vires because of section 28-A(3) which makes the clarification binding on all officers under the second respondent. (4) There is no provision for hearing the affected assessees before issuing a clarification under section 28-A of the TNGST Act, 1959. 2.. Mr. V. Ramachandran, learned Senior Counsel appearing for the petitioner, very fairly says that the O.Ps. were entertained only on the question of validity of section 28-A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of law. Sub-sections (1) and (2) are clearly intended for achieving two different objects. Under sub-section (1) the dealer is given an opportunity to ascertain the correct position on any point concerning the rate of tax, so that he can collect accordingly from his customers. It relates only to the goods mentioned in the application. We do not agree with the learned counsel for the petitioner that only if the required fees are paid, it will be a clarification under sub-section (1). The emphasis is on the question whether the dealer moves for clarification. The significance is, when the dealer moves, he places all the materials and he cannot have any grievance of violation of the principles of natural justice. When we come to sub-section (2) the clarification is given suo motu for the purpose of uniformity in the work of assessment and collection of tax and the Commissioner can clarify any point concerning the rate of tax or the procedure relating to assessment and collection of tax. There is no scope for giving opportunity to any dealer or class of dealers. Sub-section (3) says that all persons working under the Commissioner shall observe and follow the clarification given u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion on the basis of arguments and materials placed before him. Then only it will be adjudication by the quasi-judicial authority. Therefore, sub-section (3) can only relate to administrative or all other matters between the Commissioner and the hierarchy of officers under him and not to a quasi-judicial assessment proceeding. A fortiorari the above principle applies to a clarification under sub-section (2). Equally the principles apply to quasi-judicial appeal proceedings before the Appellate Assistant Commissioner. 8.. Further the very words used in sub-section (3) to section 28-A we can come to the same conclusion. The words are, "clarification" as distinct from an "adjudication". Now if we turn to the authorities cited we find that they are in line with the views expressed by us. We will first deal with the cases cited by Mr. V. Ramachandran. 9.. The Andhra Pradesh High Court, in Sri Rajarajeswari Parboiled Rice Industry v. Commercial Tax Officer, Kodad, Nalgonda District [1999] 115 STC 99 was dealing with a circular issued under section 42-A of the Andhra Pradesh General Sales Tax Act, 1957. The scope of section 42-A is as follows: ".....the Commissioner is empowered to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard cases which can be properly categorised as belonging to a class, can thus be given the benefit of relaxation of law by issuing circulars binding on the taxing authorities." 11.. The above decisions are based on the very words of the provisions enabling issue of circulars. In fact section 119(1) itself contains the safeguards to which we have made a reference on the basis of the quasi-judicial power. 12.. Mr. Venkateswaran, learned Senior Standing Counsel for revenue refers to the following pronouncements: [1997] 107 STC 522 (Kar) (Sree Jagadish Colour Company v. Commissioner of Commercial Taxes, Karnataka) deals with a similar provision, namely, section 3-A of the Karnataka Sales Tax Act, 1957. The Karnataka High Court quoted the following passage in Kerala Financial Corporation v. Commissioner of Income-tax [1994] 210 ITR 129 (SC); AIR 1994 SC 2416 in relation to section 119 of the Income-tax Act. "The fact that the circular to which Shri Salve has referred is one which had been issued in exercise of powers conferred by section 119 of the Act has no significance in so far as the point under consideration, namely, whether the circular can override or detract from the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, the assessing authority would be bound by the clarification issued because of the provisions of section 28-A(3) of the Act. We do not read any such compulsion and binding nature in that provision. In fact, the assessing authority would certainly be bound only by the appellate order........" They also emphasised that, "..........the clarification issued by the Special Commissioner under section 28-A of the Act is not, we repeat, not an adjudication. It is merely a clarification given by the Special Commissioner to the concerned dealer who may need the same, for collecting taxes." 15. The last mentioned judgment on section 28-A of TNGST Act seals the issue. We therefore, hold on the issue of validity of section 28-A that no prejudice will be caused to parties and none of their rights is transgressed. 16.. We therefore, dispose of the question of validity of section 28-A of the TNGST Act by giving the following findings and directions: 1.. Section 28-A of the TNGST Act is perfectly valid and intra vires the Constitution of India. 2.. Any clarification given by the Commissioner under sub-section (1) of section 28-A will bind the parties who sought for clarification. If ..... X X X X Extracts X X X X X X X X Extracts X X X X
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