Statutory exemption for maize starch failed where the amended sales tax schedules did not specifically cover it.

A clarification issued under section 28A could not override the Tamil Nadu General Sales Tax Act, 1959 or the amended Schedules, and an exemption operated only where the goods were specifically covered by the exempting schedule entry. Earlier circulars and a 1970 notification, lacking statutory backing, could not prevail after the statutory amendments. Maize starch was not specifically exempted in the relevant Third Schedule entry and starch remained classified in the First Schedule as taxable. The impugned clarification dated 8 October 1998 was therefore valid, and maize starch continued to be liable to tax at the prescribed rate.

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Issues: Whether the impugned clarification dated 8 October 1998 treating maize starch as taxable was valid, and whether the earlier exemption notification and prior circulars could continue to exempt maize starch from tax despite the subsequent statutory amendments.

Analysis: The notification dated 14 March 1970 was not backed by any statutory provision and could not prevail once the schedules to the Tamil Nadu General Sales Tax Act, 1959 were amended. After the insertion of section 28A, clarifications issued by the Commissioner had statutory backing, but such power could not be exercised contrary to the Act or the amended schedules. The Court noted that section 3(2) fastened tax liability on goods in the First Schedule, while section 8 granted exemption only to goods specifically covered by the Third Schedule. Maize starch was not specifically exempted in the relevant Third Schedule entry, and starch was classified in the First Schedule as taxable at the prescribed rate. Earlier circulars issued before section 28A also lacked statutory backing and could not override the later statutory regime.

Conclusion: The impugned clarification dated 8 October 1998 was valid, the earlier exemption notification could not be relied upon, and maize starch remained liable to tax at four per cent.

Final Conclusion: The challenge to the clarification failed, and the writ petition was dismissed.

Ratio Decidendi: A clarification issued under section 28A cannot override the statutory scheme of the Act or the amended schedules, and an exemption can operate only if the goods are specifically covered by the exempting schedule entry.

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