Tax classification of centrifuged latex cannot be recast by circular when it remains rubber in processed form.

A challenge to the circular was maintainable because prior revision and review proceedings did not bar judicial scrutiny, and the circular could be examined where doing so would resolve prolonged litigation. Centrifuged latex was held to be preserved and concentrated latex, not a new rubber product, so it could not be reclassified to sustain purchase tax at the field-latex stage. The later amendment treating natural rubber in all forms as taxable at the last purchase point reinforced that the commodity remained rubber in another form and did not justify inconsistent tax treatment through an administrative circular.

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Issues: (i) Whether the writ petition challenging the circular was maintainable; (ii) whether centrifuged latex could be treated as a rubber product so as to justify levy of tax at the purchase point of field latex.

Issue (i): Whether the writ petition challenging the circular was maintainable.

Analysis: The circular had been relied on to sustain the reassessment exercise, but the appellants were not precluded from questioning its validity merely because earlier proceedings had travelled through revision and review. The circular itself did not bind the Tribunal or the High Court so as to foreclose judicial scrutiny, and where a challenge to the circular could bring finality to prolonged litigation, the writ court could entertain it.

Conclusion: The challenge to the circular was maintainable, in favour of the appellant.

Issue (ii): Whether centrifuged latex could be treated as a rubber product so as to justify levy of tax at the purchase point of field latex.

Analysis: The Department had treated centrifuged latex as rubber at the hands of purchasers under the last-purchase entry, while simultaneously attempting to treat it as a rubber product in the hands of the appellant to support levy at the field-latex purchase stage. Centrifuged latex was found to be only preserved and concentrated latex and not a new rubber product. The later amendment treating natural rubber in all forms as taxable at the last purchase point supported the view that, even prior to amendment, centrifuged latex remained rubber in another form and did not become a rubber product merely because of processing. Since the Department itself did not treat it as a rubber product for sale-point taxation, there was no basis to deny the appellant the exemption originally granted on field latex.

Conclusion: Centrifuged latex was not a rubber product for the purpose of levy at the purchase point of field latex, in favour of the appellant.

Final Conclusion: The circular was held unsustainable to the extent it treated centrifuged latex as a rubber product up to 31 March 1988, and the appellant obtained relief from the attempted purchase-tax treatment.

Ratio Decidendi: A commodity that remains the same taxable goods in a different processed or concentrated form cannot, without a consistent statutory basis, be reclassified as a different product for one stage of taxation while being treated as the original goods at another stage; administrative circulars cannot override that classification.

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