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Issues: (i) Whether the Commissioner's circular, issued while interpreting the export-linked exemption provisions, was valid when it failed to consider the explanation to section 7(b) of the Andhra Pradesh General Sales Tax Act, 1957. (ii) Whether assessments made by following that circular were liable to be set aside and remitted for fresh consideration.
Issue (i): Whether the Commissioner's circular, issued while interpreting the export-linked exemption provisions, was valid when it failed to consider the explanation to section 7(b) of the Andhra Pradesh General Sales Tax Act, 1957.
Analysis: The circular proceeded only on the basis of section 5(3) of the Central Sales Tax Act, 1956 and section 15(ca) of that Act, treating the purchase of paddy as too remote from the export transaction. It did not advert to the explanation to section 7(b) of the Andhra Pradesh General Sales Tax Act, 1957, which extends the expression "sale or purchase effected immediately before the export" to include the last sale or purchase preceding the sale or purchase referred to in section 5(3). That omission meant that a relevant statutory provision bearing directly on the disputed transactions was left out of account. A clarification or instruction issued to subordinate authorities must address all relevant provisions governing the issue.
Conclusion: The circular was held unsustainable and was quashed.
Issue (ii): Whether assessments made by following that circular were liable to be set aside and remitted for fresh consideration.
Analysis: Where the assessments were based on, or materially influenced by, the invalid circular, they could not be sustained. The proper course was to set aside those assessments and require fresh assessments by the competent authorities, uninfluenced by the circular. In matters where the exemption claim had been rejected independently on grounds not founded on the circular, the writ petitions were not granted relief on merits and the parties were left to pursue statutory remedies.
Conclusion: The assessments resting on the circular were set aside and remitted for fresh assessments, while the remaining writ petitions were dismissed or left to be pursued under the Act.
Final Conclusion: The batch was disposed of by striking down the impugned circular, granting relief in matters where assessments were founded on it, and leaving independent exemption disputes to be decided by the statutory authorities without being fettered by that circular.
Ratio Decidendi: An administrative tax circular is invalid if it interprets the governing exemption scheme by ignoring a relevant statutory provision that directly expands or qualifies the exemption.
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