Retrospective tax clarification cannot reopen final assessments or raise liability where ambiguity must favour the assessee

Completed assessments under the State sales tax law could not be reopened on the basis of a later departmental clarification drawn from an interpretation of the Central Excise Tariff. The clarification, issued after finalisation of the assessments, could not retrospectively enhance the tax rate or create a new fiscal burden. Where the tax entry remained ambiguous, the benefit had to be given to the assessee. The challenge to the writ court's order failed, and the protection of finalised assessments against retrospective revision was affirmed.

---

---

Issues: Whether the revenue could reopen completed assessments and levy tax at a higher rate on the basis of a later departmental clarification derived from an interpretation of a different statute, and whether such clarification could operate retrospectively.

Analysis: The assessments had already been finalised on the basis of the Special Tribunal's view and tax had been collected at 10%. The later clarification enhancing the tax rate to 16% was issued after the assessments had attained finality. The Court held that a clarification founded on the interpretation of the Central Excise Tariff could not be used to disturb completed assessments under the State sales tax enactment, particularly with retrospective effect. In fiscal matters, where ambiguity exists in the tax entry, the benefit must go to the assessee and departmental clarifications cannot be applied so as to create a retrospective burden.

Conclusion: The reopening of concluded assessments and the demand of tax at 16% were unjustified. The challenge to the writ court's order failed and the assessee succeeded.

Final Conclusion: The appellate court affirmed the protection of finalised assessments and rejected retrospective enhancement of tax liability through the impugned clarification.

Ratio Decidendi: A departmental clarification cannot retrospectively alter the tax liability arising from completed assessments, and ambiguity in a taxing entry must be resolved in favour of the assessee.

---