Binding circular on revised VAT returns required consideration; assessment was quashed for ignoring relevant material and remanded.

Revised returns filed during the transition from the Karnataka Sales Tax regime to VAT had to be considered in light of the Commissioner's circular, which was binding on the department and intended to ease the changeover. An assessment made without considering that circular, and without addressing revised returns that disclosed additional tax liability, amounted to non-consideration of relevant material and non-application of mind. Rejection of revised returns even for months within limitation was therefore unsustainable. The assessment order and consequential demand notice were quashed, and the matter was remanded for fresh consideration of the revised returns in accordance with the circular.

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Issues: Whether the assessment order was sustainable despite ignoring the assessee's revised returns and the Commissioner's circular governing acceptance of belated revised returns in the VAT transition period.

Analysis: The revised returns were filed in the context of the transition from the Karnataka Sales Tax regime to the VAT regime. The circular issued by the Commissioner was intended to soften the difficulties arising from the changeover and was binding on departmental . The assessment order was passed without considering that circular, even though the revised returns showed additional tax liability and were submitted for acceptance of the tax due. The rejection of the revised returns, including for months that were within limitation, reflected non-consideration of relevant material and non-application of mind.

Conclusion: The assessment order and consequential demand notice were rightly quashed, and the matter was correctly remanded for reconsideration of the revised returns in accordance with the Commissioner's circular.

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