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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Mr. P. Rajkumar
  • For respondents: Mr. R. Mahadevan, Addl. Govt. Pleader
Judges
  • Chitra Venkataraman, J.
Acts
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Mr. P. Rajkumar
  • For respondents: Mr. R. Mahadevan, Addl. Govt. Pleader
Judges
  • Chitra Venkataraman, J.
Acts
See more information ...
Smart Summary

Structured Summary of the Provided Opinion

Factual and Procedural Background

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking issuance of a writ of certiorarified mandamus to quash proceedings of the first respondent in Rc.2556.B1/2009 dated 6.3.2009. The petitioner manufactures "Thermal Insulation Panel and Rock wool/PU Foam Sandwiched Panel" and sought a declaration that these products fall under Entry No. 69 of Part B of the First Schedule to the Tamil Nadu Value Added Tax Act, 2006 (taxable at 4%).

On 24.11.2008 the petitioner applied to the second respondent for clarification whether the new product would fall under Entry No. 69 Part B. The second respondent forwarded the request to the first respondent. In proceedings dated 06.03.2009 the first respondent held that PU roofing panels, PU wall panels and PU ceiling panels used as parts and accessories of cold storage/freezing point fall under the residuary category under Part C of the I schedule taxable at 12.5%.

Aggrieved by that clarification, the petitioner challenged the 06.03.2009 proceeding before this Court, contending that the clarification was ultra vires the provisions of the Tamil Nadu Value Added Tax Act, 2006 and that the respondents lacked statutory authority to issue such clarifications.

Legal Issues Presented

  1. Whether the clarification/proceeding dated 06.03.2009 issued by the first respondent is ultra vires the Tamil Nadu Value Added Tax Act, 2006 because there is no statutory power conferred on the respondents to issue such clarifications.
  2. Whether this Court should quash the first respondent's clarification and direct the respondents to classify the petitioner's products under Entry No. 69 of Part B of the First Schedule to the Tamil Nadu Value Added Tax Act, 2006.
  3. Whether a writ of mandamus under Article 226 can be issued to compel classification by the respondents when no statutory obligation to give the particular classification exists.

Arguments of the Parties

Petitioner's Arguments

  • The petitioner's product is assessable under Entry No. 69 of Part B of the First Schedule to the Tamil Nadu Value Added Tax Act, 2006 and taxable at 4%.
  • After the introduction of the Tamil Nadu Value Added Tax Act, the second respondent issued numerous clarifications (over 1,500) to remove difficulties in the provisions, and such clarifications have been published on State Government websites and in journals; thus the petitioner expected a clarification rather than forwarding to the first respondent.
  • The second respondent forwarded the petitioner's query to the first respondent, who issued a clarification without granting the petitioner an opportunity; the petitioner contends that the clarification is not statutorily authorized and is therefore ultra vires.
  • The petitioner argued that because a superior officer issued the clarification, it would be binding on the Assessing Officer and prejudicial to the petitioner's interest unless quashed; consequently, the petitioner sought a direction that the product be classified under Entry No. 69 Part B.

The opinion did not set out any detailed, separate arguments advanced by the respondents in opposition within the text provided.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
W.P. No. 3526 of 2008 dated 04.09.2008 Held that an impugned clarification issued without jurisdiction is without authority and must be quashed; the Court in that case did not express any opinion on the merits of the classification, leaving factual assessment to Assessing Authorities. The court in the present opinion aligned with that view, accepting that a clarification issued without statutory authority is without jurisdiction and cannot have binding effect on assessment proceedings; the court referred to this decision in reaching its conclusion.

Court's Reasoning and Analysis

The Court examined whether the respondents had statutory power to issue the clarification sought by the petitioner. It observed (and the petitioner admitted) that the Tamil Nadu Value Added Tax Act contains no provision conferring on the second respondent, nor by delegation on the first respondent, the authority to give the kind of clarification the petitioner sought.

The Court reasoned that the power to issue a clarification is a statutory jurisdiction: it exists only where a statute confers it. The mere fact that an administrative officer or superior officer issues a clarification does not create statutory validity where none exists. The Court criticized the petitioner's expectation that the respondents must give a clarification in the petitioner's preferred terms, noting that jurisdiction does not depend on the outcome desired by the applicant.

Because the impugned clarification was issued without any statutory authority, the Court held it to be non est in the eyes of the law and therefore incapable of having binding effect on the Assessing Authority. The Court explained that the correct course is for the Assessing Authority to assess the petitioner's claim independently on the basis of materials placed before it and without being bound by the unauthorized circular or clarification. The Court further observed that the appropriate exercise of Article 226 to issue mandamus arises only where a statutory authority has an obligation under the Act and fails to perform it; that circumstance was not shown here.

The Court also noted an earlier order in W.P. No. 3526 of 2008, which it accepted as holding that impugned clarifications issued without jurisdiction are to be quashed, and recognized that in such cases the Court does not express on the substantive merits of classification (which remain for assessing officers).

Holding and Implications

DISPOSED OF

Holding (direct outcome): The writ petition was disposed of. The Court declined to quash the impugned clarification for the purpose of directing classification in the petitioner's favour or to treat the clarification as having any binding effect on assessment. The Court held that the clarification given by the first respondent on 06.03.2009 was issued without statutory authority and therefore has no legal sanction or binding effect on assessment proceedings.

Implications:

  • The Assessing Authority is directed to consider the petitioner's claim about the taxability and classification of the item independently, on the basis of materials produced by the petitioner and uninfluenced by the unauthorized clarification/circular.
  • The unauthorized clarification is of no legal consequence in assessment proceedings and cannot bind the Assessing Authority.
  • No order as to costs was made (the Court recorded "No costs"), and the connected miscellaneous petition was closed.
  • The opinion does not purport to establish a new legal principle beyond applying the existing view that non-statutory clarifications issued without authority have no binding effect; no broader precedent-creating pronouncement is set out in the text beyond the disposition described above.

If any section in this summary appears brief, it reflects the level of detail present in the provided opinion; no facts, arguments, or outcomes have been added beyond the text of the opinion.

Show full summary ...

    M/S. Lloyd Insulations (India) Limited Rep. By Its Additional General Manager (Accounts) Petitioner v. The Joint Commissioner (Ct) Chennai (Central Division) Chennai 600 006.

    Petition under Article 226 of the Constitution of India praying to issue a writ of certiorarified mandamus to call for the impugned proceedings of the first respondent in Rc.2556.B1/2009 dated 6.3.2009, and quash the same as ultra vires the provisions of the Tamil Nadu Value Added Tax Act, 2006 and consequently direct the respondents to classify the “Thermal Insulation Panel and Rock wool/PU Foam Sandwiched Panel manufactured and sold by the petitioner under Entry No. 69 of Part B of the First Schedule to the Tamil Nadu Value Added Tax Act, 2006 as the determination to the contrary by the first respondent is ultra vires the provisions of the said Act.

    ORDER

    The petitioner has sought for issuance of a writ of certiorarified mandamus to quash the proceedings of the first respondent dated 6.3.2009 and to consequently direct the respondents to classify the Thermal Insulation Panel and Rock wool/PU Foam Sandwiched Panel manufactured and sold by the petitioner under Entry No. 69 of Part B of the First Schedule to the Tamil Nadu Value Added Tax Act, 2006 as the determination to the contrary by the first respondent is ultra vires the provisions of the said Act.

    2. The petitioner approached the Commissioner for clarification by stating that the product manufactured by him is a product assessable under Entry No. 69 of Part B of the First Schedule to the Tamil Nadu Value Added Tax Act, 2006 taxable at 4%. Since there are three clarifications as to the said Entry and the product manufactured by the petitioner is a new product, to verify as to whether it would fall under Item No. 69 Part B, the petitioner sought for clarification by filing an application dated 24.11.2008 before the second respondent. However the second respondent forwarded the request of the petitioner to the first respondent who clarified in his proceeding dated 06.03.2009 that the PU roofing panels PU wall panels and PU ceiling panels used as parts and accessories of cold storage/freezing point shall fall under the residuary category under Part C of the I schedule taxable at 12.5%. Aggrieved by the same, the petitioner has moved this Court by filing this writ petition.

    3. The petitioner contends that even in the absence of provisions similar to Section 28A of the Tamil Nadu General Sales Tax Act, after the introduction of Tamil Nadu Value Added Tax Act, in order to remove the difficulties in the provisions under the Tamil Nadu Value Added Tax Act, the second respondent has issued more than 1500 clarifications and the same have been released in the State Government websites and also in the various journals publishing sales tax decisions. The petitioner's grievance is that instead of issuing a clarification, the second respondent has forwarded the application to the first respondent, who had passed the clarification without granting opportunity to the petitioner.

    4. The petitioner contends that the clarification by the first respondent is not a statutory clarification. Being a proceeding from a superior officer, the same would be binding on the Assessing Officer and hence, if an assessment is to be passed by the Assessing Officer on the lines expressed by the first respondent, the petitioner's interest would be seriously prejudiced. Hence, the clarification is ultra vires the provisions of the Act and consequently, the petitioner seeks a direction to the second respondent to classify the product as assessable under Entry No. 69 Part B of First Schedule.

    5. I do not agree with the submission of the petitioner. As already seen and admitted by the petitioner itself, the Act contains no provision conferring either on the second respondent or on the first respondent by delegation, an authority to give clarification. Yet, conscious of the total absence of power, for reasons best known to the petiitoner, it invited the clarification by presenting an application, which the respondents readily gave too. However, when the clarification went against the expectations of the petitioner and on lines diffferent from what the petitioner willed, the present contentions are made that the clarification is ultra vires the provisions of the Act that the authority be directed to classify the product as assessable under Entry 69 of Part B I schedule to the Act. The jurisdiction to issue a clarification is, pure and simple, a statutory power and the availability of a jurisdiction is not dependent on the relief that an applicant may wish. The contention of the petitioner only gives the impression that what otherwise would not have been legally possible would be a permissible one in the eyes of the petitioner, had the clarification gone in favour of the petitioner. With a plea that the proceedings of the first respondnet dated 06.03.2009 is ultravires the provisions of the Act and that there is no provision to confer authority on the respondents under the Act to give clarification, I fail to understand the logic of the petitioner calling upon this Court to direct the respondents to give the clarification in the manner in which it seeks. In other words, all that the petitioner wants is a Mandamus to be issued to the respondents to endorse their approval to the classification made by the petitioner. The jurisdiction of this Court under Article 226 of the Constitution of India to issue a Mandamus arises only if and when the statutory authority has the obligation to do a particular thing under the Act and that the authority fails to perform its statutory function.

    6. Learned counsel for the petitioner placed reliance on the decision in W.P No. 3526 of 2008 dated 04.09.2008, wherein this Court had passed an order holding that the impugned clarification issued is without jurisdiction and the same has to be quashed. This Court further held that this Court had not expressed any opinion regarding the merits of the clarification, as the same is a subject matter to be assessed by the Assessing Authorities. By no stretch of any legal principle the prayer of the petitioner could fall within the scope of Article 226 of the Constitution of India.

    7. I agree with the view expressed by this Court holding that clarification issued is without jurisdiction. Given the admitted fact that there is no legal authority on the respondents to issue the clarification and there being no statutory provisions to that effect, it being non est in the eye of law, I do not find any justification in the prayer seeking the quashing of the clarification as ultra vires the provisions of the Act. I can only say that the clarification, whether it is in favour of the Department or the assessee can have no effect at all to have any binding effect on the Assessing Authority in the assessment proceedings. Consequently, the Assessing Authority has to assess the claim of the assessee independently on the basis of the materials produced before him. The petition seeking clarification and the clarification given by the first respondent have no legal sanction, hence, are of little significance and consequence as far as the assessment proceedings are concerned. Having regard to the above, I do not find there exists any ground to grant the prayer in the writ petition by way of quashing the same and to hold that the item in question had to be assessed under a particular head. In these circumstances, the assessing authority is directed to consider the claim of the assessee as to the taxability of the item on the basis of the materials placed by the assessee independently uninfluenced by the circular issued by the first respondent which is not backed by any authority of law.

    The writ petition is disposed of accordingly. No costs. Consequently, connected MP is closed.

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    Comments

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