TaxTMI 
TaxTMI 
2009 (7) TMI 1166
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....rst Schedule to the Kerala General Sales Tax Act, 1963 providing for tax at 2.5 per cent, magnesium sulphate was not covered by the said entry. Since magnesium sulphate was not specifically covered by entry 50, the petitioner applied for a clarification on rate of tax before the Government under section 59A of the Kerala General Sales Tax Act, 1963. The Government vide annexure A2 order dated February 21, 1986 clarified that magnesium sulphate is an item of fertilizer taxable at the rate of 2.5 per cent. Based on the clarification, the petitioner started collecting tax and remitting the same along with monthly and annual returns filed after the clarification. The assessments were also completed accepting the rate of tax returned by the peti....
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....ernment on February 21, 1986, no matter the said clarification was cancelled by this court along with all other clarifications, without any challenge against the same. The Division Bench took note of the fact that the petitioner collected tax in terms of annexure A2 clarification issued by the Government and monthly returns and annual returns were accepted without any contest and the petitioner was deprived of the right to collect tax in excess of 2.5 per cent by virtue of annexure A2 order and therefore, the Division Bench felt that it would not be just, fair or legal to demand tax at higher rate ignoring annexure A2 clarification issued by the Government. We have heard counsel for the petitioner and the Special Government Pleader appearin....
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....Division Bench of this court nor the Supreme Court had any occasion to consider the adverse consequences on manufacturers and dealers who following the clarification issued under section 59A collected and remitted the tax based on clarification which remained uncontested by any party before any court. We are in complete agreement with the grievance highlighted by the petitioner because by virtue of annexure A2 order issued on February 21, 1986, the petitioner was bound to collect tax only at 2.5 per cent and could be assessed only at that rate on the sale of magnesium sulphate until this court cancelled the clarification along with other clarifications. In fact, the Government did not accept the judgment of the Division Bench and filed a....
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....ssing officer to have objected against filing of monthly returns at the rate of tax based on the clarification issued by the Government, namely, annexure A2. We are of the view that until the assessing officer rejects the monthly return filed by the petitioner, he was bound to complete the assessment based on annexure A2 clarification issued by the Government because by virtue of the same, the petitioner was forbidden from exercising their statutory right to collect tax in excess of such rate under section 22(1) of the Act. The Supreme Court has in Ponds India Ltd. v. Commissioner of Trade Tax [2008] 15 VST 256 held that if an entry had been interpreted consistently in a particular manner for several assessment years, ordinarily it would no....