DADHA PHARMA PVT LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) This is a revision by the assessee against the order dated 18-4-1989 in T.A.No. 1173 of 1987 on the file of the Sales Tax Appellate Tribunal, Addl. Bench, Ernakulam. We are concerned with the assessment year 1982-83. The background in which the revision has been filed (briefly stated) is as follows. The revision petitioner is a dealer in allopathic drugs, tarpaulin, etc. The petitioner, treating the tarpaulin as an unclassified item taxable at multi-point at 4% collected the tax at that rate from the customers and paid it to the Government. The assessment for the year 1982-83 was made treating tarpaulin as an unclassified item chargeable at 4%. The assessment order was passed on 28-1-84. The Deputy Commissioner, Ernakulam, acting suo motu under S.35 of the K.G.S.T. Act, invited objections of the petitioner, and then relying upon a clarification issued by the Government in G.O.(R) No.60/86 TD dated 19-4-1986, came to the conclusion that tarpaulin will come under Entry 100 of the K.G.S.T. Act and it is taxable at 10% with effect from 16-9-1980. He accordingly passed an order directing the assessing authority to revise assessment. In compliance with the order of the Deputy Commissioner dated 2-11-1987, the assessing authority revised the assessment for the year 1982-83 by order dated 22-1-1988. He subjected the turnover regarding tarpaulin to taxation at 10% and raised an additional demand for Rs.35,503/- towards sales tax and Rs.2,552/- towards surcharge. The assessee revision petitioner filed an appeal against the revised assessment order dated 22-1-1988, and the same is pending before the Deputy Commissioner (Appeals) as S.T.A.No. 204 of 1988. The revision petitioner also filed an appeal before the Sales Tax Appellate Tribunal against the order of the Deputy Commissioner, dated 2-11-1987. The Tribunal refused to interfere with the Deputy Commissioner's order on the ground that the Tribunal being a creature of the statute is bound by the clarification issued by the Government in exercise of its power under S.59-A of the Act. The Tribunal did not go into the merits of the contentions raised on behalf of the assessee.

(2.) In this Revision, Shri. T. Karunakaran Nambiar raised the following arguments: (1) the Sales Tax Appellate Tribunal, being a quasi judicial authority, is not bound by the clarifications issued by the Government under S.59-A; its duty is to interpret the statutory provisions; (2) the so-called clarification issued on 19-4-1986 cannot have retrospective operation, and it cannot declare that between the dates 16-9-1980 and 31-3-1984 tarpaulins are taxable under Entry 100 of the First Schedule; (3) the very fact that with effect from 1-4-1984 the First Schedule is amended to introduce entry 100-C is a clear indication that the earlier Entry 100 did not cover tarpaulin; under no circumstances can a tarpaulin be described as "bonded fibre fabrics other than those made of coir" as described in Entry 100 of the First Schedule; and, (4) the manner in which the Government exercised its power under S.59A and issued the clarification dated 19-4-1986 in G.O.(R) No.60/86 TD is a clear indication that under the guise of issuing a clarification the State Government is trying to modify or alter the entries in the Schedule. Such a power is not available to the State Government. That is a function which can be performed only by the legislature.

(3.) On behalf of the revenue, Shri. N.N. Divakaran Pillai, Spl. Senior Standing Counsel (Taxes), urged that the power to issue clarifications under S.59A extends to deciding the questions which arise as to the rate of tax leviable on any goods. In effect, it is a sort of statutory adjudication and naturally the clarification issued under S.59A is binding on all the authorities created under the statute. Shri. Pillai urged that there are numerous instances of Government issuing clarifications in exercise of its power under S.59A and those clarifications have not been found to be invalid in law. Shri. Pillai further contends that a clarification issued under S.59A is not merely an executive order, but it p akes the character of a statutory adjudication and exercise of the powers of delegated legislation. Such a clarification is binding on the various authorities under the Act, as well as the general public. Unless the clarification is challenged separately in appropriate proceedings, it cannot be challenged in this Revision.