ORDER
P. Vishwanatha Shetty, J.
1. Shri Shivayogiswamy, learned Government Pleader, is directed to take notice for the respondent.
2. The petitioner in this petition claims to be the sole distributor of fragrance mats and mosquito mats manufactured by M/s. Sonic Electrochem Private Ltd., 38, Patel Nagar, Indore.
3. In this petition, the petitioner has prayed for quashing the clarifications dated 12th October, 1989 and 9th January, 1990, copies of which have been produced as annexures B and C, respectively, issued by the respondent.
4. In clarification, annexure B, the respondent-Commissioner pursuant to the clarification sought by the petitioner by means of his application dated 9th August, 1989, a copy of which has been produced as annexure A, had clarified that the insecticide mats are liable for tax at the rate of 10 per cent at first sale point under entry No. 11 of Part M of the Second Schedule to the Karnataka Sales Tax Act, 1957 (hereinafter referred to as “the Act”). In clarification, annexure C, what has been clarified in annexure B has been reiterated.
5. Sri G. Sarangan, learned Senior Advocate, appearing for the petitioner along with Sri Nagaraja Naidu, prayed for quashing of clarification, annexure B, issued by the respondent on 3 grounds. Firstly, he submitted that clarification annexure B, is liable to be quashed on the ground that the clarification issued notifying that the insecticide mats fall under entry No. 11 of Part M of the Second Schedule is totally erroneous in law and the said clarification has been issued without considering that the mosquito mats are insecticide mats which fall under entry No. 5 of Part I of the Second Schedule. According to Sri Sarangan, the expression “insecticide” is a combination of two words, namely, “insect” and “cide” and the latter meaning to “kill” or “killer” and therefore the insecticide mats in question are not mosquito repellents as clarified by the respondent. Secondly, he submitted that the clarifications impugned is liable to be quashed on the ground that the same has been issued without hearing the petitioner and without giving an opportunity to the petitioner to show that the insecticide mats do not fall under entry No. 11 of Part M of the Second Schedule. According to the learned counsel, since the clarification impugned seriously affects the rights of the petitioner and imposes a liability on the petitioner to pay higher tax, the petitioner should have been heard and an opportunity should have been afforded to the petitioner before issuing clarification, annexure B. Finally, he submitted that the clarifications impugned is also liable to be quashed on the ground that it is not a speaking order and no reasons have been assigned by the respondent in support of his conclusion that the insecticide mats fall under entry No. 11 of Part M of the Second Schedule. Elaborating this submission, he submitted that there is absolutely no application of mind on the part of the respondent with regard to the question as to whether the insecticide mats of the petitioner is as a matter of fact mosquito repellents falling under entry No. 11 of Part M of the Second Schedule or the one falling under entry No. 5 of Part I of the Second Schedule.
6. Sri Shivayogiswamy, learned Government Pleader appearing for the respondent, countering the submissions of the learned counsel for the petitioner, submitted that this petition is liable to be dismissed on the short ground that the clarifications impugned came to be issued on the basis of the statement made by the petitioner in his application dated 9th August, 1989, a copy of which has been produced as annexure A, wherein the petitioner has referred to the insecticide mats and fragrance mats as the one repelling mosquitoes and emanating fragrant smell. According to the learned Government Pleader, in view of the said case set out by the petitioner before the respondent in his application annexure A, the petitioner cannot have any grievance as according to the petitioner himself the insecticide mats in question are mosquito repellents which fall under entry No. 11 of Part M of the Second Schedule.
7. I am of the view that without going into the merits of the rival contentions advanced by the learned Senior Advocate Sri Sarangan and Sri Shivayogiswamy, as to whether the insecticide mats in question are the one falling under entry No. 11 of Part M of the Second Schedule or the one falling under entry 5 of Part I of the Second Schedule, the clarifications impugned in this petition are liable to be quashed mainly on two grounds. Firstly, on the ground that the clarifications impugned came to be passed without hearing the petitioner. There cannot be any doubt that the clarifications impugned seriously affect the rights of the petitioner and imposes liability on the petitioner to pay higher tax. If the insecticide mats in question fall under entry No. 5 of Part I of the Second Schedule, the petitioner is liable to pay tax only at 3 per cent. On the other hand, if it falls under entry No. 11 of Part M of the Second Schedule, as clarified by the Commissioner in the circulars impugned, the petitioner is liable to pay tax at 10 per cent. Section 3A of the Act provides that all officers and persons employed in the execution of the Act shall observe and follow the directions given by the Commissioner. Therefore, when the question arises as to whether the petitioner is liable to pay tax treating the insecticide mats in question as the one falling under entry No. 5 of Part I of the Second Schedule or the one falling under entry No. 11 of Part M of the Second Schedule, the respondent is required to consider the said question after hearing the petitioner. However, Sri Shivayogiswamy submitted that there is no provision provided under section 3A of the Act to hear the petitioner who seeks clarification. I am of the view that since the property right of the assessee is likely to be affected, it is implied that the person who seeks clarification must be heard before passing an order adverse to his interest. The principle of natural justice in a case of this type must be read into the provision. It is implied in the very nature of the order required to be passed which affects the rights of an assessee. Since it is not in dispute that the clarifications impugned came to be issued without hearing the petitioner, the said clarifications are liable to be quashed.
8. Secondly, as rightly pointed by Sri Sarangan, no reasons have been assigned by the respondent for clarifying that the insecticide mats as the one falling under entry No. 11 of Part M of the Second Schedule. No material is also placed before him to show on what basis the respondent has treated the insecticide mats as the one falling under entry No. 11 of Part M of the Second Schedule. Clarification, annexure B, is not a speaking order. When the rights of the parties are sought to be affected by means of clarification of the nature which is impugned in this petition and which is made binding on the subordinate officers, the clarification issued is required to be supported by some reason or basis in support of the conclusion. Therefore, since clarification, annexure B, does not give any reason for the conclusion of the respondent that the insecticide mats as the one falling under entry No. 11 of Part M of the Second Schedule, I am of the view that the said clarification is also liable to be quashed on the ground that it is not a speaking order.
9. In view of my above conclusion, clarifications dated 12th October, 1989 and 9th January, 1990, annexures B and C, are quashed. However, liberty is reserved to the respondent to pass fresh orders, if he so desires. Liberty is also reserved to the petitioner not to press the application before the respondent as it is open to the petitioner to pursue its remedies before the assessing authority or the appellate authority, as the case may be. Accordingly, rule issued is made absolute and the writ petition is allowed and disposed of in terms stated above.
10. Sri Shivayogiswamy, learned Government Pleader, is permitted to file his memo of appearance within four weeks.
11. Writ petition allowed.
