JUDGMENT
S.B. Sinha, C.J.
1. Legality and validity of a circular issued by the Commissioner of Sales Tax dated 8th March 2000 is in question in this writ petition. The basic fact of the matter is not in dispute. The petitioner has been carrying on business in the manufacture and sale of masterbatches. It is contended that the said item is a raw material used in the plastic industry for manufacture of plastic goods. Whenever plastic goods are manufactured which are required to be coloured, masterbatches which is a viable and convenient raw material is used as coloring agent.
2. On or about 1st April 1998, a notification was issued by the Lt. Governor in terms whereof 3% tax was levied on taxable turnover on plastic material. The table prescribing First Point Taxable Goods was also amended by a notification of the same date in terms whereof plastic raw material became liable to tax at first point. The petitioner filed a return and the Sales Tax Officer accepted the contention of the petitioner that the masterbatches come within the purview of the said notification and an assessment was made accordingly. By reason of the impugned order, however, the Commissioner noted:
“It has been brought to the notice of the undersigned that some dealers engaged in business of manufacturing and trading of materbatches are treating the sales of masterbatches as plastic raw material, whereas it has been held that masterbatches is neither plastic raw material, not colourant pigment. The same should not be treated in the classification of plastic raw material and colourant pigment. Hence masterbatch shall fall under the category of unspecified goods taxable @ 8%. It is also pointed out here that the rate of tax of the plastic raw material was reduced from 7% to 3% with effect from 01-04-98. The rate of tax for unspecified goods remained @ 7%, hence the unscrupulous dealers tried to exploit the position by treating the masterbatch as plastic raw material/pigment.
It is therefore impressed upon all the Assessing Authorities to ensure that dealers engaged in the business of manufacturing and trading of masterbatch should charge and deposit the due tax with the Department at the aforesaid rates in the past as well as in the present. It is also impressed that the dealers who have not deposited the tax in the past may be asked to file the revised return along with due tax with a view to ensure that timely action is taken to bring to the all the defaulting dealers. I am also entrusting this work in the Zonal Assistant Commission, who would collect the report from the individual ward and submit a consolidated report to the undersigned.”
3. Pursuant to or in furtherance of the said purported circular, the Assessing Officer issued a re-assessment notice stating:
“The Assessment of the Dealer has been completed on 26.03.2001. On going through the file, it has come to my notice that the Dealer has charged the tax @ 3% instead of 7% for the year 1998-99, treating as Plastic Raw Material, but as per Circular No. 48(99-00) there is a direction by the worthy CST that the Masterbatch is neighter Plastic Raw Material, nor Colourant Pigment and the same should not be treated in the classification of Plastic Raw Material and Colourant Pigment. The masterbatch shall fall under the category of unspecified goods taxable at 8% as such, the same may be taxed @ 7%. As such notice Under Section 24. ST-15 may be issued to the Dealer for appearing on 09-05-2001 and the case is reopened”.
4. The contention of the petitioner is that the purported notice issued pursuant to or in furtherance of the said circular must be held to be wholly illegal inasmuch as the Commissioner of Sales Tax in exercise of its power of superintendence cannot issue any circular which will interfere with the exercise of judicial powers of the quasi-judicial officers.
5. The contention of the respondents, on the other hand, is that masterbatches had been held to be not a raw material for manufacture of plastic items in a decision of CGAT in National Organic Chemical Industries v. Collector of central Excise, Bombay, 1987 (30) ELT 463 and the impugned circular has been issued pursuant to or in furtherance thereof.
6. According to the respondents, by reason of the impugned circular, no direction had been issued for re-opening of the assessment of particular individuals but in effect and substance, the same is merely Clarificatory in nature.
7. Mr. Randhir Chawla, the learned counsel for the petitioner would submit that the Commissioner of Sales Tax does not have any power to issue a circular as obtaining in the appropriate authority in terms of Section 37B of the Central Excise and Salt Act or in the Board of Direct Taxes under Section 119 of the Income-tax Act. In exercise of its purported control over the subordinate officers, the Commissioner of Sales Tax, contends the learned counsel, cannot issue any circular in terms whereof the jurisdiction of the Assessing Officer in the matter of exercise of his judicial power is impeded. Strong reliance in this connection has been placed on Sita Juneja & Associates v. Commissioner of Sales Tax Officer and Ors., 1998-99 Delhi Sales Tax Cases 60. The learned counsel further relied upon a decision of the apex court in Bengal Iron Corporation and Anr. v. Commercial Tax Officer and Ors., (1993) 90 STC. 47
8. Mr. Bhatia, learned counsel appearing for the respondent would contended that administrative circular issued by the Commissioner of Sales Tax cannot per se be said to be bad in law. In support of his contention, reliance has been placed on S.V. Halavapalli and Sons and Ors. v. Commercial of Commercial Taxes and Ors., (1984) 57 STC 343 and Adarsh Industrial Corporation v. State of Haryana, Chandigarh and Anr., (1990) 79 STC 94.
9. Delhi Sales Tax Act, 1975 is a taxing statute. It is not in dispute that raw material for manufacture of plastic items was covered by a notification dated 1st April 1998. The question as to whether an item falls within a particular classification or a particular entry, is indisputably a matter which would fall for consideration of the assessing authority. Chapter III of Delhi Sales Tax Act provides for the appointment of the authorities as also the Appellate Tribunal. Section 9 of the said Act reads thus:
“9. Sales tax authorities–(1) For carrying out the purposes of this Act, the Administrator shall appoint a person to be the Commissioner of Sales Tax.
(2) To assist the Commissioner in the execution of his functions under this Act, the Administrator may appoint as many Additional Commissioners of Sales Tax, Sales Tax Officers and such other persons with such designations as the Administrator thinks necessary.
(3) The Commissioners shall have jurisdiction over the whole of Delhi and the other persons appointed under Sub-section (2) shall have jurisdiction over such areas as the Commissioner may specify.
(4) The Commissioner and other persons appointed under Sub-section (2) shall exercise such powers as may be conferred, and perform such duties as may be required by or under this Act.”
10. It is not in dispute that like the provisions of Section 37B of the Central Excise and Salt Act, 1944 or Section 119 of the Income-tax Act, 1961, the Commissioner does not have any power to issue any circular.
11. In Laxman Dundappa Dhamanekar and Anr. v. Management of Vishwa Bharata Seva Samiti and Anr., , the apex court has held that a circular cannot be issued in the absence of any power conferred upon the authority in terms of any statute. The apex Court held:
9.”…The field relating to method of appointment of regular teachers in a government-aided institution is fully covered by the provisions of the Act and the Rules and we do not find any provisions in the Act empowering the Government to supplement the Rules by executive instructions. It is no doubt true that if the Act had empowered the State Government to issue administrative instructions by way of supplementing the Rules, the position would be different. In such a case, the Government would have power to fill up the gaps in the Rules by issuing administrative instructions if the Rules are silent on the subject provided the same is not inconsistent with the statutory Rules already framed. In the present case, the Act does not empower the State Government to supplement the Rules by issuing administrative instructions or orders. In the absence of such provision in the Act, it is not open to the Government to supplement the Rules by executive orders. If we accept the argument of learned counsel for the respondent, it would be repugnant to Section 3 and 15 of the Act.”
12. A Division Bench of this court in Sita Juneja & Associates (supra) categorically held that if issuance of such circular amounts to interference in the judicial exercise of the power of tax authorities in passing the judicial orders under the Act, the same would be without jurisdiction. It was held:
“30. The adjudicatory discretion vesting in the assessing authorities cannot be bound down by the dictates from the superiors if not so warranted or permitted by the statute. The assessing authorities should be left free to arrive at findings from case to case depending on the reliability and acceptability on the material brought on record of each individual case. To put it in the context of the cases at hand, the assessing authority could not have been obliged to hold the goods having not been exported to Nepal solely for non-production of the requisite certificate from the Indian Custom Officers; even in the absence of such certificates the assessing authority should not have been inhibited from holding the sale transactions to be expert sales if on the material available and brought on record by the assessed it was possible to hold so.
31. To sum up, the Commissioner of Sales Tax being so placed in the hierarchy of the department can issue instructions to his subordinates but in the administrative field only. No provision in the law of sales tax has been brought to our notice by the learned counsel for the respondents equivalent to or pari materia with Section 37B of the Central Excise Act, 1944 or Section 119 of the Income-tax Act, 1961. There is nothing wrong if the Commissioner of Sales Tax issues such circular which bring to the notice of his subordinates things like changes in legislation, law declared by the Supreme Court, binding precedents laid down by the High Courts and so on, so as to enlighten them and keep them abreast of the developments in the field of law so as to avoid committing errors. On ticklish issues generally arising before the subordinates the Commissioner of Sales Tax may suitably guide or advise them with a view to lending a helping hand. But the Commissioner of Sales Tax cannot issue such circular or instructions as interfere or intermiddle with the exercise of statutory power or statutory directions vesting in the subordinates in judicial or quasi-judicial arena. To issue such circular is crossing the limits and entering the forbidden frontiers. The use of such language in the circular as has been highlighted by us in sub-paras of para 6 above has the effect of binding the assessing authorities in exercise of their statutory powers and discharging quasi-judicial functions and therefore cannot be sustained.”
13. Yet again in Bengal Iron Corporation and Anr. v. Commercial Tax Officer and Ors. (supra), inter alia, it was held:
“So far as Clarifications/Circular issued by the Central Government and/or State Government are concerned, they represent merely their understanding of the statutory provisions. They are not binding upon the courts.”
14. The decision of the Karnataka High Court in S.V. Halavapalli and Sons and Ors. v. Commissioner of Commercial Taxes and Ors. (supra), cannot be said to have any application in the instant case. Therein a Clarificatory circular was issued to the effect that the term “cereal” at item No.9 means the edible oils and not seeds. The court went to the merit of the matter and held that the seeds would not come within the purview of cereal. It was stated:
“26. We can take judicial note of the fact that a common man in a village who grows paddy, ragi and other cereals raises the crop for human consumption and does not use the crop grown as seeds. He selects and collects the best from out of the wheat, paddy, ragi, etc., he has grown for the purposes of showing and raising a new crop. He does not use them as food. He makes a distinction and treats each as a distinct commodity. He does not identify one with the other. He calls those collected by him for raising the fresh crop as “seed-paddy”, “seed-ragi”, “seed-jowar”, etc., and does not call them paddy, ragi, etc.”
15. In Adarsh Industrial Corporation v. State of Haryana Chandigarh and Anr. (supra), as regards any instructions issued by the Excise the Taxation Commissioner, a question arose as to whether entry 2-B of Schedule D and Section 17 of the Haryana General Sales Tax were ultra vires. The said plea was negated. As regards the question as to whether a unit is an exempted unit or not, the Exercise and Taxation Commissioner, Haryana had issued instructions to all the assessing and subordinate authorities to exempt scrutinize certain cases by the dealers of rise and paddy to exempted units. It was held that the said instructions did not in any manner hinder or restrict the discretion vested in the authorities as thereby no direction had been issued to pass particular orders and those encroaching upon the jurisdiction or influencing the mind of the authorities. Such is not the position here inasmuch as a positive direction has been issued.
16. The order dated 24th April 2001 issued by the Sales Tax Officer is as follows:
“The Assessment of the Dealer has been completed on 26.03.2001. On going through the file, it has come to my notice that the Dealer has charged the tax @ 3% instead of 7% for the year 1998-99, treating as Plastic Raw Material, but as per Circular No. 48 (99-00) there is a direction by the worthy CST that the Masterbatch is neither Plastic Raw Material, nor Colourant Pigment and the same should not be treated in the classification of Plastic Raw Material and Colourant Pigment. The masterbatch shall fall under the category of unspecified goods taxable at 8% as such, the same may be taxes @ 7%. As such notice U/S__ST- 15 may be issued to the Dealer for appearing on 09-05-2001 and the case is reopened.”
17. There cannot, therefore, be any doubt whatsoever that the purported jurisdiction of the Sales Tax Authorities in terms of Section 24 had not been complied with. The notice was issued at the instance of the Commissioner, a higher authority. It is accepted at the bar in the said proceedings that the re-assessment proceedings are complete. We may notice that only in a case where disputed questions as required to be determined, the matter may be referred to the Commissioner who may determine such question within such period as may be prescribed in relation to the matters specified therein and order of assessment even does not come within the purview of Section 49 of the said Act.
18. For the reasons afore-mentioned, we have no other option but to hold that the said circular in ultra vires the Delhi Sales Tax Act and consequently, the impugned notice dated 24th April 2001 which was issued pursuant to or in furtherance thereof, was issued without any authority, is liable to be set aside. It is directed accordingly.
19. The writ petition is allowed but in the facts and circumstances of the case, without any order as to costs.