Binding tax circulars and fertilizer exemption principles protected phosphate and potassium content in NPK 10:26:26.

Phosphate and potassium content in NPK 10:26:26 was treated as exempt from trade tax under the departmental circular of 11.3.2013 read with earlier government communications, which provided that tax applied only to the nitrogen component at 6.5% per metric ton. The circular issued by the taxing authority was binding on the department, and the assessee could not be denied the exemption in light of prior Supreme Court and Division Bench authorities on exemption and non-discriminatory treatment of similar fertilizer commodities. The matter was not required to be remanded to the Tribunal, and the exemption claim was accepted.

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Issues: Whether phosphate and potassium content of NPK 10:26:26 was entitled to exemption from trade tax in view of the departmental circular and government orders.

Analysis: The revision turned on the effect of the departmental circular dated 11.3.2013, read with the earlier government communications, which stated that in NPK 10:26:26 the phosphate and potassium components were exempt from trade tax and tax was leviable only on the nitrogen component at 6.5% per metric ton. The Court held that such a circular issued by the taxing authority was binding on the department, and in light of the earlier Supreme Court and Division Bench authorities on exemption and non-discriminatory treatment of similar fertilizer commodities, the assessee could not be denied the benefit. The Court also held that there was no need to remand the matter to the Tribunal.

Conclusion: The phosphate and potassium content of NPK 10:26:26 was held exempt from trade tax, and the revisionist was held entitled to the exemption.

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