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Judgment
The questions raised in these petitions are identical to those considered by this Court in M/s. Gina Engineering Company and Others v State of Karnataka and Others, W.P. Nos. 4000 to 4002 of 1993, DD: 4-2-1993. It is brought to my notice that several High Courts have taken identical view for identical reasons. Hence these petitions have to be disposed off in terms of the said decision.
However, it has to be noticed that subsequent to the rendering of this decision there has been change in the view of this Court and of the Supreme Court in the matter of interpretation of law as to enforcement of clarifications and circulars issued by the Department under the relevant provisions. The law on the matter is as stated by a Division Bench of this Court in M/s. Lipton India Limited v State of Karnataka, 1994(38) Kar. L.J. 320. The legal position in regard to the enforceability of the circulars is stated as under:
"Therefore, that reply could never have been relied upon by the Assessing Authority while exercising its independent quasi-judicial power in assessing the appellant''s product. It is also now well-settled by a catena of decisions of Supreme Court that general executive instructions cannot bind the Assessing Authorities discharging quasi-judicial functions under the Act."... and expressed doubt whether such clarifications and circulars bind the quasi-judicial Authorities functioning under the Karnataka Sales Tax Act, while acting in a quasi-judicial capacity the Authorities are bound by law and not by any administrative clarifications or circulars. Therefore, it is made clear that it is not open to the Authorities concerned to rely upon such circulars and clarifications and proceed to decide the matters".
The proper course for the Department would be to examine the returns filed by the parties concerned, their applications for composition with reference to the transaction and then determine the tax payable by them in terms of Section 17(6) of the Act. If assessments have been completed in any of these cases, the same shall be brought in conformity with the decision of this Court and until such time shall not be enforced against the assessees. In any of these cases where assessments have not been completed, it is open to the parties to file their objections to the notice issued to them and work out their respective claims.
Petitions shall stand disposed of accordingly.