May 2011
(2011) 38 VST 124 (Mad.) Sunder India Limited and others v. Commissioner of Commercial Tax, Ezhilagam, Chennai and others.
By C. B. Thakar, G. G. Goyal Advocate, Chartered Accountants
fiogf49gjkf0d
Sales Tax — Interpretation of taxing statutes — Entries in Schedule — Clarification of Commissioner cannot have retrospective effect — Ambiguity in view of Department as to rate of tax applicable — Interpretation favouring dealer to be adopted.
Facts :
The petitioners were dealers in paper-based decorative laminated sheets, made of paper, and treated the same as ‘paper-based product’. The Commissioner of Commercial Taxes issued a clarification dated 17th August 2005, that the products were ‘decorative laminates’ and taxable @ 16%. According to the petitioners the rate of tax applicable on such goods was 10%, thus they sought for review of aforesaid clarification. On review, the Commissioner issued a clarification dated 23rd March 2006 and stated that the paper based laminated decorative sheets are taxable @ 10%. The said clarification was issued after taking note of an earlier order of Tamil Nadu Taxation Special Tribunal. However, later on based upon the Supreme Court’s decision in a matter under Central Excise, wherein the impugned product was held as falling under a different tariff entry than that of paper-based product, the Commissioner again issued a clarification, on 30th May 2008, that the impugned product is correctly liable to tax @ 16%. Thus, tax was sought to be levied at such rate for past periods and notices were issued to reopen the completed assessments also. On writ petitions;
Held :
(1) That the Tamil Nadu Taxation Special Tribunal delivered its decision on 12th April, 1996, which was based upon expert opinion received from the Joint Director of Industries regarding nature of product. The finding was accepted by the Department. The entry contained in the Schedule has not undergone any change. Thus, the Circular issued by the Commissioner, relying on the interpretation given by the Supreme Court in respect to Central Excise Tariff, could not be sustained. The Department was not justified in relying on the Circular for reopening assessments.
(2) That the clarification issued by the Commissioner could not be applied retrospectively.
(3) That since the Department was not firm in its view with regard to the percentage of tax, the benefit of doubt should be extended to the dealers.
(4) That the contention of the Department, that the writ petitions challenging the notices to reopen the assessments were premature in nature, could not be sustained. Similarly, the revised orders passed were also bad in law.
