Independent product classification required; non-party clarification could not alone fix tax liability under the Tamil Nadu VAT framework.

A clarification issued by the Commissioner in proceedings involving another dealer could not, by itself, determine the petitioner's tax liability under the Tamil Nadu VAT Act, 2006. While such a clarification may guide the assessing authority, it does not bind a non-party dealer, and the product had to be independently examined on its nature, application and technical specifications to decide whether it fell within the relevant information technology product entry. Because the assessment orders were made solely on the basis of that non-binding clarification, they were unsustainable and were set aside for fresh assessment. The clarification itself was not formally set aside.

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Issues: (i) Whether a clarification issued by the Commissioner of Commercial Taxes in favour of a third party dealer binds the petitioner for the purpose of assessment under the Tamil Nadu Value Added Tax Act, 2006. (ii) Whether the assessment orders based solely on that clarification could be sustained without independently examining the nature and classification of the product.

Issue (i): Whether a clarification issued by the Commissioner of Commercial Taxes in favour of a third party dealer binds the petitioner for the purpose of assessment under the Tamil Nadu Value Added Tax Act, 2006.

Analysis: A clarification issued in proceedings to which the petitioner was not a party may bind the assessing authority, but it does not bind a third party dealer. The rate of tax applicable to the petitioner's product could not therefore be determined only on the strength of such clarification.

Conclusion: The clarification did not bind the petitioner.

Issue (ii): Whether the assessment orders based solely on that clarification could be sustained without independently examining the nature and classification of the product.

Analysis: The assessing authority was required to examine the product, its application and technical specifications to decide whether it answered the description of an information technology product under the relevant tariff entry. Since the assessments were made only by relying on the non-binding clarification, fresh consideration was necessary.

Conclusion: The assessment orders could not be sustained and were liable to be set aside and remanded for fresh assessment.

Final Conclusion: The petitioner obtained relief against the assessment orders, but the clarification was only declared non-binding and not formally set aside.

Ratio Decidendi: A clarification issued in proceedings involving another dealer cannot, by itself, determine the tax liability of a non-party dealer; the assessing authority must independently classify the goods on the basis of their actual nature and use.

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