Entry tax recovery barred where manufacturer had not realised tax from purchasers and the governing circular remained operative.

Entry tax for the period from 01.04.2005 to 29.05.2005 could not be recovered from the manufacturer where the governing Government circular barred recovery from a manufacturer if the tax had not been realised from purchasers. The assessment order recorded that the petitioner had not recovered entry tax from its customers for that period and that recovery remained stayed. On that basis, the circular continued to apply, and the authorities were bound to act in accordance with it, so no recovery could be enforced.

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Issues: Whether entry tax for the period from 01.04.2005 to 29.05.2005 could be recovered from the petitioner manufacturer in view of the Government circular and the finding recorded in the assessment order.

Analysis: The writ petition was disposed of on the basis of the Government circular dated 18.10.2006, which stated that entry tax and interest for the relevant period would not be recovered from a manufacturer if the tax had not been realized from the purchaser, though no refund would be made where tax had already been deposited. The assessment order itself contained a finding that the petitioner had not realized entry tax from its customers for the relevant period and that recovery was to remain stayed. In these circumstances, the circular continued to govern the field and the authorities were bound by it.

Conclusion: No recovery of entry tax for the period from 01.04.2005 to 29.05.2005 could be made from the petitioner.

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