Binding tax classification clarification controlled the treatment of cast iron castings and invalidated contrary assessment

Cast iron castings were treated as falling within item No. 2(i) of the Third Schedule to the Andhra Pradesh General Sales Tax Act, because the Government's clarification under section 42(2) covered them within the expression "cast iron including ingot." That clarification was binding on the Commissioner, who could not adopt a contrary classification in assessment. The assessment orders were therefore quashed in favour of the assessee.

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Issues: Whether cast iron castings fall within item No. 2(i) of the Third Schedule to the Andhra Pradesh General Sales Tax Act, 1957, and whether the Commissioner of Commercial Taxes was bound by the Government's clarification issued under section 42(2) of the Act.

Analysis: The dispute turned on the effect of the Government's clarification that cast iron castings were covered by the expression "cast iron including ingot" in item No. 2(i) of the Third Schedule. Once such clarification was issued in exercise of the power under section 42(2), the Commissioner could not take a contrary view while assessing the goods. The classification adopted by the Commissioner was therefore inconsistent with the binding clarification and with the schedule entry as clarified by the Government.

Conclusion: Cast iron castings were held to fall within item No. 2(i) of the Third Schedule, and the Commissioner was not entitled to disregard the clarification issued under section 42(2). The assessee succeeded, and the assessment orders were quashed in favour of the assessee.

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