Binding tax circulars can control assessment where they clarify the law and confer concessional treatment on qualifying purchases.

Beneficial tax circulars and Government clarifications issued under the sales tax framework are treated as binding on assessing officers when they clarify the legal position or mitigate statutory rigour. The commentary notes that, where an assessee purchased plant and machinery relying on such directions, the authorities could not ignore the clarification and take a contrary view. Applied to Section 3-G of the U.P. Sales Tax Act, 1948, the stated effect was that purchases qualifying under the Government letter and Commissioner's circular attracted the concessional rate, and the contrary levy under Section 3-G(3) was unsustainable.

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Issues: Whether the assessee was entitled to the concessional rate of tax on purchase of plant and machinery under Section 3-G(1) of the U. P. Sales Tax Act, 1948, and whether the assessing authorities were bound by the Government letter and the Commissioner's circular clarifying that such purchases qualified for the concession.

Analysis: Section 3-G of the U. P. Sales Tax Act, 1948 created a special rate for specified sales, but the controversy turned on the effect of the Government's clarification and the Commissioner's circular issued under the Sales Tax Rules. The assessee had acted on those directions when purchasing plant and machinery for its factory. The decision applied the settled principle that beneficial circulars issued by the taxing authority, clarifying the legal position or mitigating the rigour of the statute, are binding on the officers administering the Act, even if the circular departs from the authority's own view of the statute. On that basis, the contrary view taken by the assessing authority and the Tribunal could not be sustained.

Conclusion: The assessee was entitled to the concession under Section 3-G(1), and the levy made under Section 3-G(3) was unsustainable.

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