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TMI Blog2014 (8) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... Existence of section 67(3) is of no assistance. Facially section 67(3) supports the submission of the petitioner that no direction of the kind made by the impugned circular could have been issued by the Commissioner. If understood in its proper perspective, the impugned circular dated January 23, 2006 (No. 47/2005-06) in this case cannot be said to fall within the power of the Commissioner at all. In other words, if the circular purports to direct the assessing or quasi-judicial authorities to take a particular view and not grant credit in respect of evaporation loss, that is not to be interpreted as binding; the assessing authorities, of course, are entitled to take into consideration Revenue's concerns, as are permitted by law, while examining the claims for credit at the point of sale to their customers - impugned circular dated January 23, 2006 (Circular 47 of 2005-06) shall not bind the authorities into taking a particular view to disallow the claims for the evaporation losses claimed as credit by the petitioners at the point of sale to their customers. Such claims shall be examined and taken into account by the assessing authorities on a factual basis - Decided in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch goods and the credit taken in any earlier tax period shall be reversed in the tax period in which goods are claimed to have been lost or destroyed.' The revenue implications, calculated on the basis of a standard evaporation of 0.5 per cent allowed by the companies as reported, are approximately to the tune of 35 per cent of net tax payable by a petrol pump, which the Department is supposed to have been losing by this prevalent practice in this trade. This is illustrated by a calculation on following assumptions: 1000 litres of, say, petrol is purchased. Purchase cost, i.e., ₹ 42,480 at ₹ 42.48 per litre (inclusive of 20 per cent VAT), which makes out an input tax of ₹ 7,080. Considering standard allowance of 0.6 per cent on account of evaporation made full use of by the dealer, 994 litres of the petrol is sold for ₹ 43,229 at ₹ 43.49 per litre (inclusive of 20 per cent VAT). The output tax involved is ₹ 7,205. Thus, the effective tax paid to the Department is ₹ 125 only (Rs. 7,205 ₹ 7,080). However, in light of the rule position mentioned above, input-tax credit of ₹ 43 for a litre of petrol (at ₹ 42.48 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Subject to sub-section (3) of this section, the Commissioner may, from time to time, issue such orders, instructions and directions to any value added tax authorities as he thinks fit for the due and proper administration of this Act and all such persons engaged in the administration of this Act shall observe and follow such orders, instructions and directions of the Commissioner. (3) No order, instruction or direction may be issued by the Commissioner to a person exercising the power to determine, (a) a particular objection made or to be made under section 74 of this Act; or (b) a particular question under section 84 of this Act; so as to require the person to determine the objection or answer the question of a particular person in a particular manner. (4) Nothing in sub-section (3) shall prevent the Commissioner from issuing general orders, instructions and directions to any person who determines objections under section 74 or answers questions under section 84 of this Act about the manner of determining classes of objections or answering classes of questions. 6. Section 74 enables a person dissatisfied with an assessment order under the Act to object against i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported into Delhi; (l) the rate of tax that is payable on a sale or import of goods and the classification of the goods under the Schedules; (m) whether a transaction is the purchase of goods, or requires an adjustment to be made under section 10 of this Act arising out of a purchase; (n) the amount of any tax credit to which the dealer is entitled in respect of a purchase or import of goods; (o) the amount of any tax credit in respect of any used goods purchased by a dealer; (p) the location of any sale or purchase; (q) the application of a composition scheme in the circum stances of the dealer; or (r) the tax period of a dealer. (5) The Commissioner shall make the determination within such period as may be prescribed. (6) Where, (a) the Commissioner fails to make a determination under this section within the time prescribed under sub-section (5) of this section; (b) the person thereafter implements the transaction which is the subject of the application and in the manner described in the application; and (c) the person has, in the application for the determination of the determinable question, indicated the answer to the determinable question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from section 84 that determinable questions which might call for decisions in a particular assessment proceeding (as long as it is not pending before the court of law and is not covered by situations spelt-out in section 84(3)), can be answered by the Commissioner. Such decisions of the Commissioner have binding effect on the party in terms of section 84(9). These proceedings are akin to advance ruling proceedings enacted in various fiscal statutes such as Income-tax Act, Central Excise Act, etc. 8. This court had earlier occasion to deal with a similar question as to the interpretation of a circular which made a policy declaration binding upon assessing authorities, enjoining them to follow a particular interpretation. In Sita Juneja Associates v. Commissioner of Sales Tax (CWP No. 1932 of 1998, decided on September 22, 1998), the Division Bench had noticed previous rulings of the Supreme Court in Orient Paper Mills Ltd. v. Union of India [1978] 2 ELT (J345) and State of Madhya Pradesh v. G.S. Dall and Flour Mills [1991] 80 STC 138 (SC); [1991] 187 ITR 478 (SC), etc. The Division Bench specially relied on the Supreme Court judgment in Orient Paper Mills [1978] 2 ELT (J345) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his court's opinion, the existence of section 67(3) is of no assistance. Facially section 67(3) supports the submission of the petitioner that no direction of the kind made by the impugned circular could have been issued by the Commissioner. If understood in its proper perspective, the impugned circular dated January 23, 2006 (No. 47/2005-06) in this case cannot be said to fall within the power of the Commissioner at all. In other words, if the circular purports to direct the assessing or quasi-judicial authorities to take a particular view and not grant credit in respect of evaporation loss, that is not to be interpreted as binding; the assessing authorities, of course, are entitled to take into consideration Revenue's concerns, as are permitted by law, while examining the claims for credit at the point of sale to their customers. 11. In view of the above, it is hereby directed that the impugned circular dated January 23, 2006 (Circular 47 of 2005-06) shall not bind the authorities into taking a particular view to disallow the claims for the evaporation losses claimed as credit by the petitioners at the point of sale to their customers. Such claims shall be examined and ..... 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