Sales tax exemption for packaged blended tea upheld after Gazette publication confirmed and contrary clarification quashed.

Packaged blended tea was held eligible for exemption from sales tax under the Karnataka Sales Tax Act where the applicable Government Order had been published in the Karnataka Gazette and the same exemption position had been affirmed in the connected matter. The earlier objection based on non-publication no longer survived after the Supreme Court directed reconsideration de novo. The Commissioner's clarification dated 27 November 1993, being inconsistent with that exemption position, was quashed.

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Issues: Whether the appellant-company was entitled to exemption from sales tax on packaged blended tea under the Karnataka Sales Tax Act, 1957, and whether the Commissioner's clarification dated 27 November 1993 could be sustained.

Analysis: The appellant had challenged proposition notices issued under section 12-B(2) of the Karnataka Sales Tax Act, 1957 and a regular assessment notice under section 12(3), asserting entitlement to exemption on the strength of Government Order No. CI-138/SPC/90(P) dated 27 September 1990. The earlier dismissal had proceeded on the footing that the Government Order had not been published in the official Gazette, but that basis no longer survived after the Supreme Court found that the Order had in fact been published in the Karnataka Gazette on 7 March 1991 and directed reconsideration de novo. In the present hearing, the Court followed its decision in the connected matter involving identical facts and held that industrial units of the same kind were entitled to exemption under the Act. The Commissioner's clarification, being inconsistent with that position, could not stand.

Conclusion: The appellant-company was entitled to exemption from sales tax, and the Commissioner's clarification dated 27 November 1993 was quashed.

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