Non-speaking tax clarification on cotton seeds could not support classification without hearing or consideration of the exempt entry.

A tax assessment based on a non-speaking clarification could not sustain the treatment of cotton seeds used exclusively for seeding purposes as taxable, because the clarification gave no reasons, no proper hearing was shown, and the relevant schedule entry was not considered. The court therefore held that the disputed classification could not stand on the material before it. Only the limited question of taxability for such seeds was set aside and remitted for fresh assessment after giving the dealer an opportunity to object, while the remaining parts of the assessment were left undisturbed.

---

---

Issues: (i) Whether the clarification and assessment orders could sustain the taxability of cotton seeds used exclusively for seeding purposes without reasons, opportunity of hearing, or consideration of the relevant schedule entry; (ii) whether the assessment should be set aside in part and remitted for fresh consideration on the taxability of such seeds.

Issue (i): Whether the clarification and assessment orders could sustain the taxability of cotton seeds used exclusively for seeding purposes without reasons, opportunity of hearing, or consideration of the relevant schedule entry.

Analysis: The clarification stated that hybrid cotton seeds were taxable under the Second Schedule, but it did not record reasons or cite the applicable legal basis. The communication also did not disclose that the dealer had been given a proper opportunity before it was issued. The assessment orders likewise did not deal with the contention that cotton seeds used only for seeding purposes fell within the exempted schedule entry. A clarification issued under the Commissioner's power cannot be sustained when it is non-speaking and ignores the relevant statutory classification question.

Conclusion: The clarification and the assessment orders could not be sustained to the extent they treated cotton seeds used exclusively for seeding purposes as taxable without proper reasoning and consideration of the relevant entry.

Issue (ii): Whether the assessment should be set aside in part and remitted for fresh consideration on the taxability of such seeds.

Analysis: Since the disputed aspect of taxability had not been independently examined and the relevant schedule entry had not been properly applied, the appropriate course was to reopen only that limited question. Fresh assessment was therefore required after giving the dealer a reasonable opportunity to object and after ignoring the impugned clarification and connected communications. The remaining parts of the assessment were left undisturbed.

Conclusion: The assessment orders were set aside only to the extent they related to the taxability of cotton seeds used exclusively for seeding purposes, and the matter was remitted for fresh assessment on that limited question.

Final Conclusion: The writ petitions succeeded only in part, with limited interference confined to the disputed classification and taxability of cotton seeds used for sowing purposes, while the assessments remained effective in all other respects.

Ratio Decidendi: A tax assessment based on a non-speaking clarification, without reasons, opportunity of hearing, or independent consideration of the relevant statutory entry, cannot stand to the extent of the disputed classification and must be remitted for fresh decision on that limited issue.

---