Commissioner of Sales Tax, U.P. Vs. M/s. Indra Industries
EmailAppeal: Civil Appeal Nos. 9330-33 of 1994
Petitioner: Commissioner of Sales Tax, U.P.
Respondent: M/s. Indra Industries
Apeal: Civil Appeal Nos. 9330-33 of 1994
Judges: S.P. BHARUCHA, R.C. LOHATI & N. SANTOSH HEGDE JJ.
Date of Judgment: Jan 12, 2000
Head Note:
Sales Tax Law
A.P. General Sales Tax Act, 1957
Section 42 (2) – Recovery of Tax – Departmental circular – Effect and bindingness – Circular issued by Commissioner of Sales Tax binding on the taxing authority though not binding on courts or the assessee – Taxing authority cannot take the stand that the circular is contrary to law and is not binding on the tax authority – High Court therefore justified in holding in favour of the assessee in terms of the circular issued by Commissioner.
A.P. General Sales Tax Act, 1957
Section 42 (2) – Recovery of Tax – Departmental circular – Effect and bindingness – Circular issued by Commissioner of Sales Tax binding on the taxing authority though not binding on courts or the assessee – Taxing authority cannot take the stand that the circular is contrary to law and is not binding on the tax authority – High Court therefore justified in holding in favour of the assessee in terms of the circular issued by Commissioner.
JUDGEMENT:
ORDER
1. The High Court decided against the Sales Tax authorities basing itself upon a circular addressed by the Commissioner of Sales Tax to all Assistant Commissioners (Tax Assessment). The Sales Tax authorities challenge the High Court’s decision by special leave. On behalf of the Sales Tax authorities, it is contented that the said circular is contrary to the law and that, therefore, the High Court should have decided the matter without reference to it. Reliance was placed upon the judgment of two learned judges of this Court in Bengal Iron Corporation & Anr. v. Commercial Tax Officer & Ors. JT 1993 (3) SC 134 = (1994 Suppl.(1) SCC 310). In Paragraph 18, it was said :
“So far as clarifications/circulars issued by the central Govern-ment and/or state Government are concerned. they represent merely their understanding of the statutory provision. They are not binding upon the courts. It is true that those not clarifications and circulars were communicated to the concerned deals but even so nothing prevents the State from recovering the tax, if in truth such tax was leviable according to law.”
2. It was submitted on behalf of the Sales Tax authorities that notwithstanding the said circular, they were entitled to recover the concerned tax from the respondent.
3. The said circular issued on 19th January, 1991 by the commis-sioner of Sales Tax remains in effect till date. It has not been shown that it has been withdrawn. It is, therefore, very remark-able that it should be contented on behalf of the very Sales Tax department whose Commissioner issued that circular that it is erroneous. It is very remarkable that the Sales Tax authorities should instruct their Assistant commissioners who deal with tax assessment in a manner which is according to them, contrary to the law.
4. A circular by tax authorities is not binding on the courts. It is not binding on the assessee. However, the interpretation that is thereby placed by the taxing authority on the law is binding on that taxing authority. In other words the taxing authority cannot be heard to advance an argument that is contrary to that interpretation.
5. The observation in paragraph 18 of the judgment in Bengal Iron Corporation can at best apply only when a case of estoppel against a statute is made out.
6.The civil appeals are dismissed with costs.
1. The High Court decided against the Sales Tax authorities basing itself upon a circular addressed by the Commissioner of Sales Tax to all Assistant Commissioners (Tax Assessment). The Sales Tax authorities challenge the High Court’s decision by special leave. On behalf of the Sales Tax authorities, it is contented that the said circular is contrary to the law and that, therefore, the High Court should have decided the matter without reference to it. Reliance was placed upon the judgment of two learned judges of this Court in Bengal Iron Corporation & Anr. v. Commercial Tax Officer & Ors. JT 1993 (3) SC 134 = (1994 Suppl.(1) SCC 310). In Paragraph 18, it was said :
“So far as clarifications/circulars issued by the central Govern-ment and/or state Government are concerned. they represent merely their understanding of the statutory provision. They are not binding upon the courts. It is true that those not clarifications and circulars were communicated to the concerned deals but even so nothing prevents the State from recovering the tax, if in truth such tax was leviable according to law.”
2. It was submitted on behalf of the Sales Tax authorities that notwithstanding the said circular, they were entitled to recover the concerned tax from the respondent.
3. The said circular issued on 19th January, 1991 by the commis-sioner of Sales Tax remains in effect till date. It has not been shown that it has been withdrawn. It is, therefore, very remark-able that it should be contented on behalf of the very Sales Tax department whose Commissioner issued that circular that it is erroneous. It is very remarkable that the Sales Tax authorities should instruct their Assistant commissioners who deal with tax assessment in a manner which is according to them, contrary to the law.
4. A circular by tax authorities is not binding on the courts. It is not binding on the assessee. However, the interpretation that is thereby placed by the taxing authority on the law is binding on that taxing authority. In other words the taxing authority cannot be heard to advance an argument that is contrary to that interpretation.
5. The observation in paragraph 18 of the judgment in Bengal Iron Corporation can at best apply only when a case of estoppel against a statute is made out.
6.The civil appeals are dismissed with costs.
