Binding tax clarification limits revisional power where no Revenue prejudice is shown and the appellate order stands

The Commissioner's revisional power could not be used to disregard a binding clarification issued under section 3-A of the Karnataka Sales Tax Act, 1957. The clarification governed sales of lime or lime mortar to builders, and the appellate authority had correctly applied it by taxing the turnover under section 5(1) rather than under entry 79 of the Second Schedule. Mere preference for the higher rate under entry 79 did not justify revision, and no prejudice to the Revenue was shown. The revisional order was therefore without jurisdiction, and the appellate order was restored in favour of the assessee.

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Issues: Whether the Commissioner could set aside the appellate order by disregarding the clarification issued under section 3-A of the Karnataka Sales Tax Act, 1957, and whether the appellate order caused prejudice to the Revenue so as to justify revision under section 22-A of the Act.

Analysis: Section 3-A empowers the Commissioner to issue clarifications for uniform administration of the Act, and such clarifications are binding on officers administering the Act. The appellate authority had applied the clarification to sales of lime or lime mortar made to builders and had taxed the turnover under section 5(1) instead of entry 79 of the Second Schedule. The Commissioner could not treat his own clarification as inapplicable and invoke revisional power merely because he preferred the higher rate under entry 79. On the facts, the lower rate applied under the clarification, and no prejudice to the Revenue was shown.

Conclusion: The Commissioner's revisional order was without jurisdiction and could not stand; the appellate order was restored in favour of the assessee.

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