Statutory tax-clarification power under section 59-A is adjudicatory only, binds parties alone, and cannot operate retrospectively.

Section 59-A of the Kerala General Sales Tax Act, 1963 was construed as a statutory adjudicatory power to decide a referred question on the rate of tax after hearing both sides, not as a source of unilateral executive instruction or delegated legislation. The Government's decision under that provision binds only the parties to the reference for the relevant assessment year, while quasi-judicial authorities remain bound to interpret the Act and Rules independently. The provision was also held not to authorise retrospective clarification or decision that increases an assessee's tax burden; any such effect is confined to prospective operation. On that construction, the original assessment was restored.

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Issues: (i) the scope of the Government's power under section 59-A of the Kerala General Sales Tax Act, 1963; (ii) whether quasi-judicial authorities under the Act are bound by the Government's clarification or decision under section 59-A; and (iii) whether a decision under section 59-A can operate retrospectively so as to increase the tax burden of an assessee.

Issue (i): What is the scope of the Government's power under section 59-A of the Kerala General Sales Tax Act, 1963?

Analysis: Section 59-A was construed in the setting of the Act as a provision for decision on a referred question concerning the rate of tax, not as a source of unilateral executive instructions or delegated legislation. The power was held to require a lis between the assessee and the assessing authority, and the Government was treated as exercising a statutory adjudicatory function. The decision must be taken after hearing both sides and on the basis of materials placed before it, with any wider legislative change left to the rule-making or amending powers under the Act.

Conclusion: The power under section 59-A is a statutory adjudicatory power to decide a referred question on rate of tax after hearing both parties, and it cannot be exercised unilaterally.

Issue (ii): Whether quasi-judicial authorities under the Act are bound by the Government's clarification or decision under section 59-A?

Analysis: The decision under section 59-A was held to bind only the parties to the dispute and only for the assessment year concerned. The Tribunal and other quasi-judicial authorities under the Act remain bound by their own duty to interpret the statute and the Rules. The Government's decision was not treated as a general command binding all authorities or as a substitute for independent quasi-judicial adjudication by the Tribunal.

Conclusion: Quasi-judicial authorities under the Act are not bound by the Government's clarification or decision under section 59-A.

Issue (iii): Whether a decision under section 59-A can operate retrospectively so as to increase the tax burden of an assessee?

Analysis: The Court held that section 59-A does not authorise the Government to issue clarifications or decisions having retrospective effect when they adversely affect an assessee or enhance the tax burden. Any such decision was confined to prospective operation. Applying that construction, tarpaulin was not taxable at 10 per cent under entry 100 of the First Schedule for the relevant assessment year, and the original assessment treating it otherwise was restored.

Conclusion: A decision under section 59-A cannot be given retrospective effect to increase the tax burden of an assessee.

Final Conclusion: The revision succeeded, the Tribunal's order was set aside, and the original assessment was restored on the footing that the Government's decision under section 59-A could not override independent quasi-judicial determination or operate retrospectively against the assessee.

Ratio Decidendi: A statutory power to decide a referred question on tax rate must be exercised as quasi-judicial adjudication, binds only the parties to the reference for the relevant assessment year, and cannot be used to impose retrospective fiscal liability.

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