Unauthorised tax clarification cannot sustain classification; assessment on lime as a chemical was rightly set aside.

A tax assessment based solely on an unauthorised clarification under section 59A of the Kerala General Sales Tax Act, 1963 could not stand. Once the Government order treating lime as a chemical was held unauthorised, the classification under entry 71 of the First Schedule also failed, and the assessment and first appellate orders resting on that basis were unsustainable. The Tribunal was therefore justified in allowing the assessee's appeal and directing re-computation of tax at the correct rate. The revision was found to be without merit, and the Tribunal's order was upheld.

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Issues: Whether the Government clarification issued under section 59A of the Kerala General Sales Tax Act, 1963 could sustain the classification of lime as a chemical for assessment purposes, and whether the Tribunal was right in setting aside the assessment and directing re-computation of tax at the appropriate rate.

Analysis: The Government order treating lime as a chemical had been issued in exercise of power under section 59A of the Kerala General Sales Tax Act, 1963. That clarification had already been held unauthorised, and once that basis fell, the foundation for treating lime as a chemical under entry 71 of the First Schedule also failed. The assessment order and the first appellate order, both resting on that clarification, therefore could not stand. In those circumstances, the Tribunal was justified in allowing the assessee's appeal and in directing the assessing authority to re-compute tax at the correct rate.

Conclusion: The Tribunal's order was upheld. The revision was without merit and the assessment had to be re-computed at the appropriate rate.

Ratio Decidendi: A tax assessment based solely on an unauthorised statutory clarification cannot survive, and once the foundation of the classification fails, the proper course is to set aside the assessment and re-compute tax according to the correct legal rate.

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