Sales tax deferral scheme interpretation clarified by binding circular, requiring Revenue to follow its own statutory clarification.

A sales tax deferral scheme under the Tamil Nadu General Sales Tax Act was construed to operate from the earlier of reaching the base production volume or the base sales volume, where the circular issued under statutory power clarified the scheme consistently with its text and purpose. The circular bound departmental authorities, and the Revenue could not disregard its own clarification. On that interpretation, the assessee qualified for deferral on excess sales, and the contrary departmental view was rejected.

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Issues: Whether, under the sales tax deferral scheme, the assessee became entitled to deferral on sales in excess of the base sales volume immediately on reaching either the base production volume or the base sales volume, and whether the departmental circular issued under the statutory power bound the Revenue.

Analysis: The scheme traced its authority to section 17A of the Tamil Nadu General Sales Tax Act, 1959, and the Government orders and eligibility certificate had statutory force. A conjoint reading of the relevant clauses showed that the benchmark was fixed with reference to both production and sales, but the operative condition for deferral on excess sales was meant to protect revenue while encouraging higher production. The circular issued under section 28A of the Tamil Nadu General Sales Tax Act, 1959 clarified that the benefit would be available from the date of reaching the base production volume or base sales volume, whichever was earlier. Such circulars bind the departmental authorities unless contrary to law, and the Revenue could not repudiate its own clarification.

Conclusion: The assessee was entitled to the deferral benefit on the interpretation placed by the circular, and the Revenue's contrary view was rejected.

Ratio Decidendi: A departmental circular issued under a valid statutory power binds the Revenue authorities, and where the circular clarifies the operation of a fiscal deferral scheme consistently with the scheme, the authorities must apply that interpretation.

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