Binding tax circulars and final classification of goods upheld exemption for narrow woven fabrics and braided cord.

Narrow woven fabrics and braided cord were treated as exempt cotton fabrics under the textile notification, not as taxable tapes, niwar or laces under the disputed entry. The Tribunal's earlier classification had attained finality and had been accepted by the State, and a departmental circular reflected that settled position. A tax authority is bound by its own circular and cannot advance a contrary stand after adopting that interpretation. On those facts, the Revenue could not successfully dispute the exemption, and the Tribunal's view that the goods were not liable to tax was left undisturbed.

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Issues: Whether narrow woven fabrics and braided cord were exempt from tax as cotton fabrics, and whether the Revenue could dispute the effect of the Government circular and earlier final decision treating the goods as exempt.

Analysis: The turnover was sought to be taxed under the entry covering tapes, niwar and laces including cord, string or line used for tying purposes or for drying clothes, while the dealer claimed exemption under the textile notification. The earlier Tribunal view treating narrow woven fabrics and braided cord as exempt cotton fabrics had attained finality and had been accepted by the State Government. A circular issued by the tax administration communicated that position, and the settled rule applied was that such circulars bind the departmental authorities, who cannot advance a stand contrary to their own binding interpretation. On the facts, the finding that the goods were not taxable could not be successfully controverted by the Revenue.

Conclusion: The exemption of narrow woven fabrics and braided cord was upheld and the Revenue's challenge failed.

Final Conclusion: The revisions were dismissed, leaving the Tribunal's view intact that the goods were not liable to tax under the disputed entry.

Ratio Decidendi: A tax authority is bound by its own circular and cannot contest a stand contrary to the interpretation adopted by the administration; where the classification of goods as exempt has attained finality and been accepted by the State, the Revenue cannot resist that position.

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