2015 (5) TMI 105

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..... Then on 16.02.2010, a notice was issued to the assessee under Section 39(1) of the Act requiring the assessee to answer as to why the White Oats should not be subjected to tax and why the assessee be not liable to pay tax along with interest and penalty? This notice was for the assessment years 2006-07 to 2008-09. For the assessment year 2009-10, a separate notice under Section 39(1) of the Act was issued on 18.08.2010 requiring the assessee to explain as to why tax, along with interest and penalty, be not charged for the said period. The assessee replied to both the notices. Then for the assessment years 2006-07 to 2008-09 (36 months), by assessment order dated 28.07.2010 passed by the Assessing Officer, the appellant was subjected to tax for the sale of White Oats. For the assessment year 2009-10 (12 months), by a separate order dated 31.01.2011 the appellant was subjected to tax for the aforesaid 12 months. The assessee challenged the said orders in appeals, which were decided by two separate orders dated 20.12.2012 passed by the Joint Commissioner of Commercial Taxes whereby the appeals of the assessee were dismissed. Challenging the said appellate orders, the assessee filed ....

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.... 39(1). The said notice was issued immediately after a second clarification was given by the Commissioner with regard to the said product (i.e., White Oats) vide Clarification No.CLR/CR-95/09-10 dated 20.01.2010, which was to the following effect: "The clarification is made with regard to fixing of tax on "Pre Cooked & Processed White Oats" at 12% under Section 4(1)(b) of Karnataka Tax Assessment Rule, 2003". 6. There is no dispute about the fact that White Oats which are dealt with by the assessee are processed White Oats. As such, after the second clarification was issued on 20.1.2010, there was no ambiguity or doubt with regard to the said product being subjected to tax under the Act. It is for the period up to 20.1.2010 which is in dispute i.e., whether for this period the assessee was liable to pay tax or not? 7. The submission of the learned Sr. counsel appearing for the petitioner is two fold: Firstly it is submitted that after the clarification was issued by the Commissioner on 03.06.2006 for the commodity in question (White Oats), the sample of which was supplied to the Commissioner which was similar to the product being dealt with by the assessee, no tax could....

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....on 39(1) of the Act) were issued independent of the second clarification dated 20.01.2010. According to the respondents, the processed Oats were always subjected to tax. Under Section 38 of the Act, the assessee gives a selfassessment and files its returns and according to the respondents, when the said product was liable for payment of tax, the assessee ought to have paid tax on the same. It is contended that by not having done so, the assessee had evaded payment of tax and thus, notice under Section 39(1) of the Act had rightly been issued, which was well within the period of limitation. 10. Having heard learned counsel for the parties and considering the facts and circumstances of this case, we are of the view that till the issuance of the second clarification dated 20.01.2010, the assessee was not liable for payment of tax. The primary reason for coming to this conclusion is that the first clarification dated 03.06.2006 was issued by the Commissioner itself on a query made by another dealer with regard to the sale of White Oats, which was a product similar, if not identical to the product being dealt with by the assessee herein. When along with the query, the sample of th....

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....arding the White Oat flakes being subjected to tax or not) started paying taxes on sale of the said commodity. 11. The Tribunal dealt with the merits of the matter as to whether the Oats in question which were processed as Oat Flakes were Coarse Grain or Coarse Oat or not, and after finding that the Processed Oat Flakes would not be classified as Coarse Oat, held that the said commodity would not be covered under the exemption clause. The Tribunal, however, did not consider the question that on a query with regard to an identical product i.e., White Oat Flakes, the Commissioner had itself given a clarification on 03.06.2006 and held it to be exempted from tax. After the issuance of the said clarification, the question of payment of tax, till the second clarification dated 20.01.2010 had been issued, would not arise. 12. Even otherwise, the tax, in the present case, is such which is to be collected from the customers and then paid to the department. It cannot be doubted that after the issuance of the clarification dated 03.06.2006, the assessee had a genuine belief that the commodity in question was exempted from tax. The assessee thus did not collect any tax from the customer....