Fertilizer classification and binding departmental clarification govern tax treatment of magnesium sulphate under the sales tax schedule.

Magnesium sulphate is discussed as falling within the specific fertilizer entry rather than the residuary chemicals entry because it was shown to be used as a fertilizer and not merely as a chemical. The commentary also addresses the effect of a prior clarification issued under section 59A: where that clarification governed collection, returns, and completed assessments over several years, departure from it requires a material change in circumstances. A settled departmental position should not be altered without such change, especially when tax has been collected and remitted on the clarified basis.

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Issues: (i) Whether magnesium sulphate was assessable under entry 50 of the First Schedule to the Kerala General Sales Tax Act, 1963 or under entry 29; (ii) whether the assessee could be assessed contrary to the clarification earlier issued under section 59A of the Kerala General Sales Tax Act, 1963 after the assessee had collected and remitted tax on that basis.

Issue (i): Whether magnesium sulphate was assessable under entry 50 of the First Schedule to the Kerala General Sales Tax Act, 1963 or under entry 29.

Analysis: Magnesium sulphate was shown to be used as a fertilizer and not as a mere chemical. Entry 50 specifically covered fertilizers, while entry 29 covered chemicals not elsewhere classified and did not contemplate items already falling within specific entries. The Court also noted that the exclusion of magnesium sulphate from entry 50 earlier was likely linked to its later inclusion under the Fertilizer (Control) Order, 1985. On the materials placed, the commodity answered the description of a fertilizer.

Conclusion: The product was assessable under entry 50 of the First Schedule to the Kerala General Sales Tax Act, 1963.

Issue (ii): Whether the assessee could be assessed contrary to the clarification earlier issued under section 59A of the Kerala General Sales Tax Act, 1963 after the assessee had collected and remitted tax on that basis.

Analysis: The clarification had governed the assessee's collection, returns, and completed assessments for several years. The Court held that the assessing authority ought to have objected before departing from that position, and that a settled departmental understanding should not be altered in the absence of any material change. The Court further relied on the effect of the earlier clarification and the assessee's conduct in collecting tax only at the clarified rate.

Conclusion: The assessee could not be denied the benefit of the earlier clarification, and assessment at the higher rate was unsustainable.

Final Conclusion: The revision succeeded, and the assessment was held to be unsustainable to the extent it classified magnesium sulphate outside entry 50.

Ratio Decidendi: Where a commodity is specifically shown to be a fertilizer, it falls within the specific fertilizer entry rather than the residuary chemicals entry, and a long-standing departmental clarification governing collection and assessment cannot be departed from without a material change in circumstances.

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