Cadbury India Limited vs Assistant Commissioner (CT), Fast Track Assessment CIRCLE IV, Chennai and Another

S. Manikumar, J.—The petitioner has sought for a writ of prohibition, prohibiting the respondents from assessing or levying or collecting the sales tax on the sale of "Halls" at more than four per cent in view of G.O. Ms. No. 65, CT, dated April 4, 2000 (Not. No. II(I)CT/22(e)/2000 Gazette, dated April 4, 2000 with effect from April 4, 2000) followed by G.O. Ms. No. 33, CT dated March 27, 2002 (Not. No. II(I)CT19(b-19)/2002 Gazette, dated March 27, 2002, issued u/s 17 of the Tamil Nadu General Sales Tax Act, 1959 and the statutory circular u/s 28A of the Tamil Nadu General Sales Tax Act, 1959 issued by the Special Commissioner of Commercial Taxes for the petitioner themselves in D. Dis. Acts. Cell. 11/41976/2003, dated January 2, 2004 on the representation made by the petitioner, dated July 1, 2003. It is the case of the petitioner that they are registered dealers on the files of the Commercial Taxes Department, manufacturer and seller of chocolates, toffees and "Halls". They have obtained licence from the Director of Indian of Medicine under rule 154/155 in form No. 25(D) vide Licence No. AUS 547 for the manufacture of "ayurvedic drug". According to the petitioner, the manufacture of "Halls", is popularly known in the trade circle/common man understanding as a remedy or medicine for the cold, cough, sore throat caused by virus. "Halls" contains the following ingredients :

(i) Pudina

(ii) Nilgiri thailam

(iii) Narangi thailam

(iv) Nimbuka ka thailam

(v) Lemon oil

The goods manufactured by the petitioner, viz., halls were also tested by the Central Research Laboratory situate at "Dhanvantari Marg, Nagpur" and the report by the General Secretary of Bhartiya Vaidyak Samanvaya Samati, principal and lecturer of Shri Ayurved Mahavidyalaya also states that "Halls" contains ayurvedic medicines and not otherwise. Under the Central Excise Act, 1944, there was a dispute as to whether "Halls" is ayurvedic medicine or not. The Central excise authorities rejected the claim made by M/s. Warner Lambert India (P) Limited. An appeal was filed before the first appellate authority and the company succeeded. The Revenue took up the matter to the Tribunal. The Appellate Tribunal in a decision in 1990 (29) ECC 172 by an order dated February 10, 1999 reversed the order of the first appellate authority. The order of the Tribunal was challenged before the apex court. While testing the correctness of the order of the Tribunal, the Supreme Court in Warner Hindustan Ltd. Vs. Collector of Central Excise, Hyderabad, by its order, dated August 3, 1999, observed that, "the Tribunal was not correct in concluding that ''Halls'' as confectionary and remanded the case back to the assessing authorities". Pursuant to the said order of the apex court, the Assistant Commissioner of Central Excise by an order dated August 25, 1999 concluded that "Halls" is not a confectionary and it is only an ayurvedic medicine.

The petitioner has further submitted that under the TNGST Act, a notification was issued in G.O. Ms. No. 65, CT dated April 4, 2000--Notn. No. II(I)/CT/22(e)/2000--Gazette dated April 4, 2000--effective from April 4, 2000 to encourage the use of the other medicines, which states that,

makes a reduction in rate of tax from eight per cent to four per cent in respect of the tax payable by any dealer on the sale of homeopathic and ayurvedic medicines.

The said notification was cancelled by G.O. Ms. No. 34, CT, dated March 27, 2002--Notn. No. II(I)CT/19(b-25)/2002--Gazettee, dated March 27, 2002--effective from March 27, 2002, reducing the rate of sales tax to four per cent in relation to sale of "siddha, unani, homeopathic and ayurvedic medicines", which is in force till the date of filing of the writ petition. The Special Commissioner, by proceedings dated February 28, 2003, in circular D. Dis. Acts. Cell-II/74890/2002, clarified to M/s. Solaimalai Agencies, one of the retailers that "Halls" is classifiable under entry 5(i)/Part D of the First Schedule to the Act. However, it is the case of the petitioner that in the petition filed by M/s. Solaimalai Agencies, the attention of the Special Commissioner was not specifically invited to the factual aspect such as the ingredients used for the manufacture of "Halls", licence obtained, and the order of the apex court. Therefore, the petitioner preferred an application, dated June 27, 2003, along with a letter dated July 1, 2003 for clarification from the Special Commissioner u/s 28A of the TNGST Act for the purpose of uniformity of assessment, as per section 28A(2) of the Act, with all the details and further requested the said authority to clarify the rate of tax applicable to "Halls".

In response to the application submitted by the petitioner and in exercise of the powers conferred u/s 28A of the TNGST Act, the Special Commissioner in D. Dis. Acts. Cell-LC/41976/2003, dated January 2, 2004, clarified that "Halls" is an ayurvedic medicine eligible for concessional rate of tax at four per cent under G.O. Ms. No. 65, CT, dated April 4, 2000 (Not. No. II(I)CT/22(e)/2000 Gazette, dated April 4, 2000 with effect from April 4, 2000) and G.O. Ms. No. 33, CT, dated March 27, 2002 (Not. No. II(I)/CT19(b-19)/2002 Gazette, dated March 27, 2002). According to the petitioner, the said circular issued by the Special Commissioner is still in force. Pursuant to the notification stated supra, the petitioner filed returns disclosing sale of "Halls" as medicine and when the first respondent issued a pre-assessment notice, the petitioner relied on the Notification No. 33, CT, dated March 27, 2002 and also produced the clarification, dated January 2, 2004, issued by the Special Commissioner. Taking note of the same, the Assistant Commissioner of Commercial Taxes, Chennai, the first respondent appropriated the differential rate of tax, over and above four per cent towards excess collection of tax and imposed penalty u/s 22(2) of the TNGST Act. The petitioner also accepted the said order of assessment and did not file any appeal against the order dated September 28, 2005. According to the petitioner, the order of assessment made in respect of sale of "Halls" has reached its finality.

It is further case of the petitioner that pursuant to the audit inspection and based on the Central excise circular of the year 1997 and clarificatory circular dated February 28, 2003 issued to the retailer, viz., M/s. Solaimalai Agencies, the first respondent without application of mind, has proceeded to initiate reassessment proceedings on the basis that "Halls" is not an ayurvedic preparation and it is only a confectionary, taxable at 12 per cent under the TNGST Act. In these circumstances, the first respondent has issued a notice, dated March 20, 2007 for revision of assessment of turnover on sales of "Halls" and proposed to revise the assessment at 12 per cent. As the action of the respondent is contrary to law and against the judgment of the apex court, the petitioner instead of submitting their objections to the notice, has preferred the writ petition for a prohibition, against the respondents from levying or collecting sales tax on the sale of "Halls" at more than four per cent issued earlier.

Mr. V. Sundareswaran, learned counsel for the petitioner, submitted that "Halls" contains (i) pudina, (ii) nilgiri thailam, (iii) narangi thailam, (iv) nimbuka thailam, (v) lemon oil. In addition to the above, it also contains com syrup. According to him, the constituents of halls tablets are well known in ayurvedic formulations and books and are used as medicines to cure or mitigate ailments, such as cold, cough and sore throat caused by virus. "Halls" is understood by the common man to contain" therapeutically value" and "prophylactic value". The "pudina" used in Halls tablets is known for ayurvedic properties, such as aromatic, carminative, stimulant, antispasmodic, stomachic and emmengogous. Insofar as nilgiri oil is concerned, it has the properties of anineuralgic. He submitted that mere presence of sugar in the said tablet cannot categorise it as confectionary and "Halls" range of products can be classified only as ayurvedic medicine.

Placing reliance on the decisions in Amrutanjan Ltd. Vs. Collector of Central Excise, Commissioner of Central Excise, Calcutta Vs. Sharma Chemical Works, Commissioner of Central Excise, Calcutta-IV Vs. Pandit D.P. Sharma, Naturalle Health Products (P) Ltd. Vs. Collector of Central Excise, Hyderabad, Dabur India Limited Vs. Commissioner of Central Excise, Jamshedpur, , Puma Ayurvedic Herbal (P) Ltd. Vs. Commissioner, Central Excise, Nagpur, CCE v. Zandu Pharmaceuticals reported in [2007] 8 RC 16, the learned counsel for the petitioner submitted that when the apex court has classified goods containing similar ingredients as ayurvedic medicines, issuance of the impugned notice, for reassessment is arbitrary and therefore, it is liable to be set aside.

Referring to the averments made in the counter-affidavit that the product "Halls" contains mainly sugar as a basic ingredient, learned counsel for the petitioner submitted that the extent of quantity of medicament used in a particular product and the fact that the use of such medical element in the product even if minimal, would not detract from the product being classified as medicine. In this context, he relied on a decision of the Supreme Court in Puma Ayurvedic Herbal (P) Ltd. Vs. Commissioner, Central Excise, Nagpur, ; [2006] 6 RC 328; [2006] 3 SCC 266. He further submitted that merely because the product "Halls" contains sugar, it cannot be classified as confectionary.

On the availability of the product in general shops and the sale of "Halls" even without a doctor''s prescription, learned counsel for the petitioner submitted that it is not necessary that for a product to be classified as medicament, it should sold only under a doctor''s prescription. Reliance was placed on Puma Ayurvedic Herbal (P) Ltd. Vs. Commissioner, Central Excise, Nagpur,

Placing reliance on a decision in Amrutanjan Ltd. Vs. Collector of Central Excise, learned counsel for the petitioner submitted that even if the product contained an ingredient, which is not known to ayurveda, that would not by itself make it nonayurvedic medicine.

According to him, the main criteria for determining the classification as to how the product is put to use by the customers and even if the medicament is palatable, that would not take it out of the entry of medicament: In this context, he relied on a decision in B.P.L. Pharmaceuticals Ltd. Vs. Collector of Central Excise, Vadodara,

The learned counsel for the petitioner further submitted that on June 27, 2003, the petitioner filed an application before the Special Commissioner in form IV under rule 26A for a clarification with regard to the rate of tax for "Halls", enclosing the details, such as (i) C licence issued by the drug controller for 2003-04, for manufacture of the List of approved drugs, (ii) renewal of licence, (iii) report of the Central Research Laboratory for Drug Analysis, (iv) order of the Commercial Taxes Department passed in another State, (v) order of the Supreme Court in Warner Hindustan Ltd. Vs. Collector of Central Excise, Hyderabad, wherein, the apex court held that the order of the Tribunal was quite wrong in allowing the appeal filed by the Central excise authorities, classifying "mint tablets" as "confectionary" and (vi) order of the Assistant Commissioner of Central Excise, Bangalore, in the petitioner''s own case, classifying "Halls" only as medicament.

Referring to clarification No. 1 of 2004 (D. Dis. Acts. Cell. 11/48940/2003, dated January 2, 2004), learned counsel for the petitioner submitted that the said clarification was applied by the Commercial Tax Department, in their assessment proceedings in TNGST-5162095/2001-02, dated March 15, 2004 in the case of M/s. Solaimalai Agencies, Madurai, and the tax collected over and above four per cent, equivalent to Rs. 19,15,046 was appropriated towards penalty u/s 22(2) of the TNGST Act, 1959 and that no appeal was filed against the said order, dated March 15, 2004. He therefore, submitted that when the Revenue had appropriated the excess tax over and above four per cent as penalty the logical conclusion that could be arrived at by the registered dealer and the assessing authorities should be that, the rate of tax applicable to the sale of "Halls" is four per cent and not more than that. In such circumstances, it is not open to the respondents to revive the earlier assessment proceedings, treating the product as confectionary. He also relied on Clarification No. 3/2004, dated January 2, 2004 and Clarification No. 106/2004, dated April 6, 2004, issued in respect of the petitioner''s own case, treating "Halls" mentholypts as falling under entry No. 19(i)(b) in Part C of the First Schedule, taxable at four per cent with effect from April 4, 2000.

The learned counsel for the petitioner further submitted that the Commissioner of Commercial Taxes, Chennai, has issued similar Clarification No. 132 of 2005, dated September 5, 2005, in the case of Acti-V, classifying the said product as ayurvedic product taxable at four per cent under entry No. 19(i)(b) of Part C of the First Schedule, and the said product equal to "Halls".

Referring to the pre-assessment notice, dated August 12, 2005, for the assessment year 2003-04 and the reply, dated September 8, 2005 submitted by the petitioner, agreeing for appropriation of excess tax towards penalty u/s 22(2) of the Tamil Nadu General Sales Tax Act and the final order, dated September 28, 2005, of the assessing authority, imposing sales tax at four per cent for the sale of "Halls" and appropriating the excess sales tax over and above four per cent, towards penalty, learned counsel for the petitioner submitted that when the order of assessment had attained a finality and when the subsequent assessments were also made on the same lines, it is not open to the first respondent to issue a fresh notice for reassessment on the basis of an audit inspection conducted at the office of the first respondent.

The learned counsel for the petitioner further submitted that by issuing the impugned notice, the first respondent has abdicated his functions as a quasi-judicial authority under the statute and he cannot be permitted to be influenced by the dictation of audit wing. In this context, he relied on a decision of the Supreme Court in Sirpur Paper Mill Ltd. v. Commissioner of Wealth-tax reported in [1970] 77 ITR 6 (SC) and State of U.P. v. Maharaja Dharmander Prasad Singh reported in AIR 2003 SC 938. He also submitted that the opinion of the audit wing cannot run contrary to the decision of the apex court or the adjudication proceedings of the authorities under the Act, such as the circulars of the Commissioner of Commercial Taxes, Chennai (Clarification No. 3/2004, dated January 2, 2004 and Clarification No. 106/04; dated April 6, 2004).

He further submitted that the reasons contained in the impugned order and reference to the decision in 1990 (29) ECC 172 do not exist at all, in view of the fact that the apex court has set aside the above decision in Warner Hindustan Ltd. Vs. Collector of Central Excise, Hyderabad, Referring to the order of the Assistant Commissioner of Central Excise, Bangalore, dated August 25, 1999, made in the case of Warner Lambert Co. Ltd., which was taken over by the petitioner, classifying as medicament, he submitted that the decision of the assessing authority to revise the assessment of the year 2004-05, based on the audit note, is only a change of opinion of the assessing authority and in view of the decision of the Supreme Court in Binani Industries Limited v. Assistant Commissioner of Commercial Taxes [2007] 6 VST 783, a change of opinion cannot give rise to fresh cause of action, warranting revision of tax.

Placing reliance on the decisions of the Supreme Court in M/s. Ranadey Micronutrients etc. Vs. Collector of Central Excise, and Suchitra Components Ltd. Vs. Commissioner of Central Excise, Guntur, learned counsel for the petitioner submitted that once Clarification Nos. 3/2004, dated January 2, 2004 and 106/2004, dated April 6, 2004 are issued to the petitioner treating the product as ayurvedic medicine u/s 28A of the Tamil Nadu General Sales Tax Act, they are binding on the dealer as well as the assessing officer and it is not open to the Revenue to advance argument against the very same circular. He further submitted that when the abovesaid circulars are not withdrawn or modified, product "Halls" should be treated only as ayurvedic medicine and not otherwise. For the abovesaid reasons, he submitted that the impugned notice is contrary to the principles laid down by the Supreme Court and therefore, prayed that a writ of prohibition be issued.

The first respondent has filed a detailed counter-affidavit. Reiterating the averments and recording his preliminary objections to the maintainability of the writ petition, Mr. R. Mahadevan, learned Additional Government Pleader submitted that the first respondent has issued only a pre-revision notice calling for objections from the petitioner, on the basis of the decision of the Supreme Court, which decided the correctness of the order made by the Central Excise Tribunal, Collector v. Warner Hindustan Ltd. reported in [1989] 42 ELT 33 and on the basis of a clarification issued by the Commissioner of Commercial Tax, Chennai, in D. Dis. Acts. Cell-II/4980/2002, dated February 28, 2003 (clarification No. 44/2003) issued in the case of M/s. Solaimalai Agencies, who are the distributors, holding that the product "Halls" is taxable as confectionary at 12 per cent. He further submitted that the Central Excise Department, in its memorandum, dated September 10, 2007, has referred to few decisions Gridharilal Sugar and Allied Industries Ltd. v. Commissioner of Central Excise (Appeals), Indore [1997] 95 ELT 14 (MP), [1999] 56 ELT 9 and [1996] 83 ELT 50 (sic) wherein, it has been held that "Halls" which contains 88.17 per cent of sugar and minor percentage of other ingredients, will not by itself constitute an ayurvedic medicine. He therefore submitted that when there is a change in legal position or fresh facts come to the notice of the Revenue, which were not taken note at the time of original assessment, it is always open to the Revenue, to issue notice to the dealer for revision of assessment and the petitioner-assessee has to submit their objections, if any.

The learned Additional Government Pleader further submitted that in the absence of abuse of powers or patent illegality in issuing the pre-revised notice, the petitioner cannot seek for an extraordinary remedy of writ of prohibition against statutory authorities and granting any relief, would amount to preventing the assessing authority from discharging his statutory duty and hence, the writ petition is not maintainable in law.

Placing reliance on the decision in Warner Hindustan Ltd. Vs. Collector of Central Excise, Hyderabad, learned Additional Government Pleader submitted that when the Supreme Court has set aside the order of the Excise Tribunal as wrong and remitted the matter back with a direction to, excise authorities to issue a fresh notice to the assessee before classifying "Halls" tablets as confectionary, it is open to the first respondent to issue the impugned pre-revision notice, and it cannot be construed as mere change of opinion.

The learned Additional Government Pleader further submitted that when a dealer had been assessed at a lower rate of tax, than the rate at which, the goods ought to have to be assessed, the assessing authority, in exercise of the power conferred on him by the statute, can issue a notice to the dealers, within a period of five years from the date of filing of the assessment. According to the learned counsel, if any bona fide error is committed while levying the tax, the assessing officer is empowered to revise the assessment within the abovesaid statutory period and therefore, there is no illegality in proposing to levy tax at 12 per cent treating the goods as confectionary: According to the learned counsel, the action of the first respondent is in conformity with the decision in Warner Hindustan Ltd. case.

The Learned Additional Government Pleader further submitted that basically the petitioner-company is dealing with the manufacture and sale of chocolates, toffees and confectionary items, etc., including "Halls". By G.O. Ms. No. 65, CT, dated April 4, 2000, (Notification No. II(1)CT/22(e)/2000 Gazette, dated April 4, 2000), the Government reduced the rate of tax from eight per cent to four per cent in respect of tax payable by any dealer on the sale of homeopathic and ayurvedic medicines. Subsequently, the said notification was rescinded by the Government in G.O. Ms. No. 34, CT, dated March 27, 2002. Another Notification in G.O. Ms. No. 33, dated March 27, 2002, was issued reducing the rate of tax to four per cent on the sale of sidda, unani, homeopathi and ayurvedic medicines. He further submitted that the clarification given by the Commissioner of Commercial Taxes, Madras, under sub-section (1) of section 28A, i.e., as to the correct rate of tax on a particular product, will bind the dealers, who seek for such clarification. If it is a society or association, it would bind all its members. He therefore submitted that when the dealers are at liberty to canvass the applicability of the clarification to the goods manufactured or sold by them before the assessing/appellate-authorities, approaching writ remedy should not be encouraged.

Placing reliance on a decision in Tvl. Pizzeria Fast Foods Restaurant (Madras) Pvt. Ltd. Vs. Commissioner of Commercial Taxes and Others, , learned Additional Government Pleader further submitted that when the Division Bench of this court has categorically held that a clarification issued u/s 28A of the Tamil Nadu General Sales Tax Act, is not binding on the assessing authorities, when they function in quasi-judicial capacity, it is for the petitioner to canvass the applicability of the clarification issued by the Commissioner of Commercial Taxes, Chennai, before the assessing authority, whose notice is impugned in this writ petition. Reliance is placed on the decisions in A.S. Balu v. Special Commissioner and Commissioner of Commercial Taxes [2004] 134 STC 524 (TNTST), Salt Sales Corporation v. Deputy Commercial Tax Officer (Additional) [2004] 134.STC 529 CTNTST) and Tvl. Pizzeria Fast Foods Restaurant (Madras) Pvt. Ltd. Vs. Commissioner of Commercial Taxes and Others,

Placing reliance on a decision in Union of India v. Tata Engineering and Locomotive Ltd. reported in AIR 1998 SC 287, he submitted that the applicability of the judgment of the superior court to the facts of each case, has to be considered by the assessing/appellate authority and therefore, the manner and mode of assessment cannot be controlled by the court at this stage, as it would be amounting to preventing the statutory authority from exercising their statutory functions. In this context, he relied on a decision in Orient Paper Mills Ltd. Vs. Union of India (UOI),

On the contents of product, viz., "Halls", learned Additional Government Pleader further submitted that the main business of the petitioner is manufacture and sale of chocolates and toffees. One of the dominant ingredients in neutralisation of "Halls" is sugar, which is a basic ingredient for confectionary. He further submitted that no medical practitioner, allopathic or ayurvedic, prescribes "Halls" either for cold, cough or for sore throat. The sales are effected not only in medical shops, but also in general shops, without any prescription and therefore, the product cannot be called as a medicament. Whether Halls is a ayurvedic medicine or confectionary is essentially a question of fact and therefore, it has to be decided only by the statutory authorities.

In so far as collection of tax at 12 per cent on the sale of Halls for the assessment year 2003-04, learned Additional Government Pleader submitted that the petitioner-company on a proper understanding of the classification of the goods, has collected 12 per cent tax, and they cannot now contend that Halls is taxable only at four per cent.

Placing reliance on a decision in Commissioner of Customs and Central Excise and Others Vs. Charminar Nonwovens Ltd., , learned Additional Government Pleader submitted that in a matter relating to clarification of a commodity, the decision has to be taken by the assessing authority on the facts of each case. Even though a decision might have been taken earlier, but the matter requires re-examination, if certain facts are discovered on further investigation or due to change of law. When intricate technical flaws are involved, it is always proper for the High Court to leave the issue to the assessing authorities and direct the petitioner to canvass the applicability of a circular or clarification issued in relation to the product in question, instead of taking up the role of assessing/appellate authorities, who are the judges in their own cause Under the statute. He therefore submitted that interference at the stage of notice is not called for.

On the applicability of section 16(i)(b) of the Tamil Nadu General Sales Tax Act, learned Additional Government Pleader submitted that if the turnover of the dealer had been assessed at a lower rate, then the assessing authority can always reassess the turnover and therefore, the impugned notice is valid in law. He further submitted that all the contentions that are raised in this writ petition are still open to the petitioner, and therefore, they have to submit their objections with adequate evidence to substantiate their claim that "Halls" range of products are medicine and prayed that the matter be left to the assessing authority to examine as to whether product "Halls" is an ayurvedic medicine or confectionary. For the abovesaid reasons, he prayed for dismissed of the writ petition-.

Heard the learned counsel for the parties and perused the materials available on record.

Before adverting to the facts of this case, it is relevant to extract few decisions of the Supreme Court as to when a writ of prohibition can be issued by the High Courts. A writ of prohibition is issued only when patent lack of jurisdiction is made out. It is true that a High Court acting under article 226 is not bound by the technical Rules applying to the issuance of prerogative writs like certiorari, prohibition and mandamus in United Kingdom, yet the basic principles and norms apply to the writ must be kept in view, as observed by the Supreme Court of T.C. Basappa Vs. T. Nagappa and Another,

In S. Govinda Menon v. Union of India reported in AIR 1967 SC 1274, the Supreme Court held that the jurisdiction for grant of writ of prohibition is primarily supervisory and object of the writ is to restrain courts of inferior Tribunals from exercising jurisdiction which they do not possess at all or else to prevent them from exceeding the limits of their jurisdiction. In other words, the object is to confine court of Tribunals of inferior or limited jurisdiction within their bounds. The writ of prohibition lies not only for excess of jurisdiction or for absence of jurisdiction but also in a case of departure from the rules of natural justice. But the writ does not lie to correct the course, practice or procedure of an inferior Tribunal or a wrong decision on the merits of the proceedings. Writ cannot be issued to a court or an inferior Tribunal for an error of law unless the error makes it go outside its jurisdiction. A clear distinction has therefore, to be maintained between want of jurisdiction and the manner in which it is exercised. If there is want of jurisdiction then the matter is coarum non judice and a writ of prohibition will lie to the court or inferior Tribunal forbidding it to continue proceedings therein in excess of jurisdiction. This view was taken following the decision of Regina v. Comptroller-General of Patents and Designs reported in [1953] 2 WLR 760.

In Thirumala Tirupati Devasthanams and Another Vs. Thallappaka Ananthacharyulu and Others, the honourable Supreme Court of India held as follows :

On the basis of the authorities it is clear that the Supreme Court and the High Courts have power to issue writs, including a writ of prohibition. A writ of prohibition is normally issued only when the inferior court or Tribunal (a) proceeds to act without or in excess of jurisdiction, (b) proceeds to act in violation of the rules of natural justice, (c) proceeds to act under law which is itself ultra vires or unconstitutional, or (d) proceeds to act in contravention of fundamental rights. The principles, which govern the exercise of such power, must be strictly observed. A writ of prohibition must be issued only in rarest of rare cases. Judicial discipline of the highest order has to be exercised whilst issuing such writs. It must be remembered that the writ jurisdiction is original jurisdiction district from appellate jurisdiction...

It is settled law of the land that writ of prohibition can be issued as soon as inferior court/Tribunal proceeds to apply a wrong principle of law when deciding a fact on which jurisdiction depends. The effect of the remedy is an injunction against the court of Tribunal commanding it to cease from the exercise of jurisdiction to which it has no legal claim. Therefore, it is necessary to adjudicate the issues raised with reference to the principles of law, stated supra.

Yet another aspect to be noted is that the first respondent has not denied the fact that "Halls" range of productions contains ingredients stated supra. Nor he has denied that the circular clarifications No. 3/2004, dated January 2, 2004 and 106/2004, dated April 6, 2004, issued earlier, in respect of the petitioner, under the Tamil Nadu General Sales Tax Act, as it stood before December 31, 2006 are still in force and not rescinded by the Revenue.

Part C of the First Schedule to the Tamil Nadu General Sales Tax Act, deals with medicines, instruments, appliances, apparatus, etc., used in treatment. The point of levy of tax in the State is the first sale. Entry 196)(b) deals with medicines and drugs, including siddha, unani, homeopathic and ayurvedic preparations.

Having regard to the dispute in the manufacture of product with drug licence issued by the drug control authorities based on upon the presence of certain constituents and certain subsidiary curative and prophylactic properties, the Government of India in their Circular No. 333/49/97-CX, dated September 10, 1997, have decided that all assessments of products claimed to be ayurvedic medicaments under Chapter 30 of the Central Excise Tariff Act, should be re-examined by the Commissioner of Central Excise, whether manufactured under a drug licence or not so as to re-determine their classification under the Central Excise Tariff Act, 1985. Certain guidelines were directed to be followed by the excise authorities and they are as follows :

(a) The perception of the product in popular parlance, whether as medicaments or cosmetics/toilet requisite, the advertising, marketing and the manner in which the product is put up may also be taken into consideration.

(b) It may be ascertained that the products claimed to be medicaments, should have substantial therapeutic claims which are not subsidiary in nature and the mode of prescription and use should be similar to that of a medicine/drug. It may be noted that medicaments are normally prescribed in doses, for a limited time, and for specific conditions/ailments.

(c) The drug licence may be used as a guide for the classification of a product but not as the determining factor. The classification of a product under Chapter 30 or Chapter 33 may be done as per the Rules of interpretation of the Central Excise Tariff Act, 1985 read with Chapter note 1(d) to Chapter 30 and Chapter Note 2 to Chapter 33 and various judgments mentioned above.

In the case of M/s. Solaimalai Agencies, one of the distributors of "Halls", in clarification No. 44/2003 in D. Dis. Acts. Cell-II/74980/2002, dated February 28, 2003, the Commissioner of Commercial Taxes, Chennai, clarified that "Halls" is taxable as confectionary at 12 per cent vide entry No. 5(i) in Part D of the First Schedule to the TNGST Act, 1959. The petitioner, being the manufacturer and seller, has sent a letter, dated July 1, 2003, and sought for a clarification on the rate of tax to be levied to the product "Halls". They have enclosed a copy of the order passed by the Deputy Commissioner (Appeals) First, Commercial Taxes, Jaipur, dated October 31; 2001, on Warner and Lambert India Pvt Limited (stated to be taken over by M/s. Cadbury India Ltd. with effect from March 30, 2003), wherein, it has been held that "Halls" is only an ayurvedic medicine and not a confectionary. Along with the said letter, they have also submitted a report from Shri Ayurved Mahavidyalaya, Nagpur. Additional particulars were also submitted to the Special Commissioner of Commercial Taxes, Chennai, on June 27, 2003.

Perusal of the order in original, dated August 25, 1999 of the Assistant Commissioner of Central Excise D, Bangalore, shows that on an earlier occasion, the Assistant Commissioner of Excise, had classified "Halls" under Tariff 3003/19, i.e., as patent or proprietary medicines. Later, the Collector (Appeals) overruled the said classification and classified it under Tariff 3003.30. On departmental appeal, the Tribunal reclassified the said item under 17.04 as chewing gum. Thereafter, the apex court, by its order, dated August 3, 1999, Warner Hindustan Ltd. reported in [1999] 6 SCC 762, remitted the matter to the excise authorities to consider the case afresh, after giving an opportunity to the assessee to establish the contrary. On examination of the case put forth by the assessee, Warner Lambert India Ltd., Bangalore, the Assistant Commissioner of Central Excise, held that the correct classification for Halls range of products is under Chapter 30 (C.S.H. 3003.20 as per the current tariff, i.e., 3003.30 as per the old tariff).

On examination of the petitioner''s application, dated July 1, 2003 and the materials furnished along with their letters, dated August 26, 2003 and December 4, 2003, the Commissioner of Commercial Taxes, Chennai, in his proceedings in D. Dis Acts. Cell-11/41975/2003, dated (Clarification No. 3 of 2004), held that,

The Halls tablets, containing pudina, nilgiri thailam, narangi thailam, nimbuke thailam, lemon oil, etc., used for cold, cough, soar throat and to freshen the breath, sold with brand name "Halls mentholyptus" falls under item No. 19(i)(b) of Part C of the First Schedule read with Notification No. II(1)/CT/22(e)/2000, dated April 4, 2000 and Notification No. II(1)/CT/19(b-19)/2002, dated March 27, 2002, taxable at four per cent from April. 4, 2000.

On August 12, 2005, the Assistant Commissioner (CT), Fast Track Assessment Circle IV, Chennai, finding that the petitioner have collected tax over and above four per cent, on the product "Halls" for the assessment year 2003-04, has issued a pre-assessment notice to disallow that tax already collected and proposed to levy tax u/s 12(3)(b) of the Act with reference to the difference between the taxes assessed and taxes paid as per returns, Besides, the assessing authority also proposed to levy penalty u/s 22(2) of the Act. Pursuant thereto, the petitioners in their letter, dated September 8, 2005, have admitted the taxable turnover and also remitted the excess tax collected at the rate often per cent on the sale of "Halls" till January 7, 2007. On the basis of the clarification, the petitioners have requested the assessing authority to levy tax at the rate of four per cent. Agreeing with the contentions of the petitioner, by order, dated September 28, 2005, the Assistant Commissioner (CT), Fast Track Assessment Circle IV, has imposed, sales tax at four per cent on the sale of "Halls" and appropriated sales tax over and above four per cent towards penalty and ordered as follows:

In respect of the penalty proposed u/s 22(2) of the Act, the dealers in their letter, dated September 8, 2005 have stated that they have remitted the tax collected at ten percent along with SC due in respect of sales of Halls and have expressed their willingness to have the tax and surcharge collected over and above four per cent with SC due, applicable to Halls, to be recovered as penalty u/s 22(2) of the Act. Hence, the excess collection of tax and surcharge is recovered by way of penalty u/s 22(2) of the Act, as already proposed and also admitted by the assessee-company.

The clarifications issued by the Commissioner of Commercial Taxes, Chennai, in respect of "Halls" and similar products are extracted hereunder :

(a) Clarification No. 44/03, dated February 28, 2003, issued to M/s. Solaimalai Agencies, relied on by the Commercial Tax Officer (FAC) Madurai Rural South Circle in TNGST 5162095/2001-02, at the stage of pre-assessment notice, is as follows :

Halls is taxable as confectionary at 12 per cent vide entry No. 5(i) in Part D of the First Schedule to the TNGST Act, 1959.

(b) The subsequent Clarification No. 1/04, dated January 2, 2004, issued to M/s. Solaimalai Agencies, is as follows :

The Halls tablets, containing pudina, nilgiri thailam, narangi thailam, nimbuke thailam, etc., used for cold, cough, soar throat and to freshen the breath, sold with brand name "Halls Mentholyptus" falls under item No. 19(i)(b) in Part C of the First Schedule read with Notification No. II(1)/CT/22(e)/2000, dated April 4, 2000 and Notification No. II(1)/CT/19(b-19)/2002, dated March 27, 2002, and is taxable at four per cent from April 4, 2000.

A perusal of the assessment order, dated March 5, 2004 of the Commercial Tax Officer (FAC), Madurai rural south, for the TNGST assessment year 2001-02, for M/s. Solaimalai Agencies, shows that the dealers therein had collected eight per cent of tax on the sale of Halls and paid to the Government. Hence, the difference of excess collection of tax (eight per cent-four per cent) was recovered as penalty u/s 22(2) of the TNGST Act, 1959.

(c) The Commissioner of Commercial Taxes, Chennai, in D. Dis. Acts. Cell-II/41975/2003, dated January 2, 2004, has issued clarification No. 3 of 2004, as follows:

The Halls tablets, containing pudina, nilgiri thailam, narangi thailam, nimbuke thailam lemon oil, etc., used for cold, cough, soar throat and to freshen the breath, sold with brand name "Halls Mentholyptus" falls under item No. 19(i)(b) of Part C of the First Schedule read with Notification No. II(1)/CT/22(e)/2000, dated April 4, 2000 and Notification No. II(1)/CT/19(b-19)/2002, dated March 27, 2002, taxable at four per cent from April 4, 2000.

(d) Clarification No. 106 of 2004, dated April 6, 2004, shows that "Halls" is taxable at four per cent with effect from April 4, 2000 and it reads as follows :

The Halls tablets containing pudina, nilgiri thailam, narangi thailam, nimbuke thailam, etc., used for cold, cough, soar throat and to freshen the breath, sold with brand name "Halls mentholyprus" are taxable at four per cent under entry No. 19(i)(b) in Part C of the First Schedule to the TNGST Act, 1959, read with Notification No. II(1)/CT/22(e)/2000, dated April 4, 2000 and Notification No. II(1)/CT/19(b-19)/2002, dated March 27, 2002, taxable at four per cent from April 4, 2000.

(e) In respect of Acti V, the Commissioner of Commercial Taxes, has issued a clarification in No. 132 of 2005, dated September 15, 2005, which runs as follows :

Acti-V is classified as ayurvedic product and taxable at reduced rate of four per cent under entry No. 19(i)(b) in Part C of the First Schedule read with Notification No. II(1)/CT/22(e)/2000, dated April 4, 2000 and Notification No. II(1)/CT/19(b-19)/2002, dated March 27, 2002 with effect from April 4, 2000.

(f) Again in respect of another dealer, viz., Tvl Perfetti Van Melle India (P) Ltd., the rate of tax applicable to "Chlora Mint" was fixed at four per cent and it is as follows :

The petitioner is informed that ''Chlora mint'' is a product manufactured from out of peppermint thailam, pudina satra, sugar base approved flavour and colour and is classified as an ayurvedic product, taxable at reduced rate of four per cent under entry No. 19(i)(b) in Part C of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959 read with Notification No. II(1)/CT/22(e)/2000, dated April 4, 2000 and Notification No. II(1)/CT/19(b-19)/2002, dated March 27, 2002.

Readings of the circulars issued to the manufacturers and other dealers of the products of similar kind and the orders of assessment stated supra, shows that the understanding of the Revenue is that "Halls" is taxable at four per cent and in cases where excess tax was collected over and above four per cent, was directed to be recovered u/s 22(2) of the TNGST Act, in respect of both the petitioner as well as one of the distributors, viz., M/s. Solaimalai Agencies, for the assessment year 2003-04 an 2001-02, respectively.

A perusal of the impugned notice, dated March 20, 2007 for revision of assessment shows that the assessing officer has taken into consideration the decision of 1990 (29) ECC 172 and the decision rendered by the Deputy Commissioner (T) (Appeals), Chennai in Tvl. Nestle India Ltd., for the similar product, "Acti-V". The notice for revision of assessment, is also based on the circular, dated September 10, 1997 of the Central Excise Department stated supra, where attention was drawn to the decisions in Girdharilal Sugar and Allied Industries Ltd. v. Commissioner of Central Excise (Appeals), Indore [1997] 95 ELT 14 (MP), [1999] 56 ELT 9 and [1996] 83 ELT 50 (sic). The impugned proceedings also proceeds on the footing that simply because of the constituents of pudina and nilgiri are present to such a minor extent, that would not make "Halls" as ayurvedic medicine and therefore, the preparation does not have any substantial therapeutic claims. There is no indication in the revision of assessment notice that the clarifications issued by the Commissioner of Commercial Taxes, Chennai, in Clarification No. 3 of 2004, dated January 2, 2004 and 106 of 2004, dated April 6, 2004 have been rescinded or not. In the circular, dated September 10, 1997, the Department of Revenue, Ministry of Finance, has directed that all assessments of products claimed to be ayurvedic medicaments under Chapter 30 should be re-examined by the Commissioner of Central Excise, whether manufactured under a drug licence or not, so as to re-determine their classification under the Central Excise Tariff Act, 1985.

The judgment in Warner Hindustan Ltd. Vs. Collector of Central Excise, Hyderabad, relates to the same issue as to whether Halls, ice mint tablets should be classified as ayurvedic medicine under sub-heading 3003.30 or as a confectionary under sub-heading 17.04. The appellant therein claimed that the above tablets are to be classified as ayurvedic medicine under tariff heading No. 3003/03 under the Central Excise Tariff Act. A show-cause notice was issued as to why these tablets should not be classified under the tariff heading 3003/19 as "patent or proprietary medicines". The Assistant Collector, after hearing the appellant therein, held that the tablets were patent or proprietary medicines classifiable under heading 3003.19. In the appeal filed by the appellant-company, the Collector of Central Excise (Appeals) held that the tablets were ayurvedic medicines classifiable under heading 3003.19. The excise authorities went on appeal to the Tribunal and for the first time, took the stand that the tablets were correctly classifiable under heading 17.04 as "confectionary". But the appellant, stuck to its stand that the tablets were ayurvedic medicines classifiable under heading 3003.30. The Tribunal agreed with the contention of the Department and held that all the goods are assessable under tariff heading 17.04. While testing the correctness of the order of the Tribunal, the Supreme Court observed that the proper course for the Tribunal to have followed was to dismiss the appeal of the excise authorities making it clear that it was open to the excise authorities to issue a fresh show-cause notice to the appellant-company on the basis that the tablets were classified under sub-heading 17.04 as items of confectionary. In such circumstances, the Supreme Court, while allowing the appeal, remitted the matter back to the assessing authorities to issue notice to the appellant as to why the tablets should not be classified as items of confectionary under heading 17.04, provided it is open to the excise authorities to do so in law.

A perusal of the proceedings, dated August 25, 1999 of the Assistant Commissioner of Central Excise, Bangalore, shows that a show-cause notice was issued to Mrs. Warner Lambert India Ltd., Bangalore, (stated to be taken over by M/s. Cadbury India Ltd., with effect from March 30, 2003), classifying Halls range of products under Chapter 1704.10, applicable to the chewing gum base under rule 173B of the Central Excise Rules, 1944. Earlier, the company had cleared "Halls" by paying excise duty applicable to confectionary, under Chapter 1704.10 under protest. The appeal filed by them against the decision in 1990 (29) ECC 172 (which is referred to in the impugned order) was pending before the Supreme Court.

No materials have been placed before this court as to the course of action taken by the excise authorities after the pronouncement of the judgment, dated August 3, 1999 Warner Hindustan Ltd. Vs. Collector of Central Excise, Hyderabad, But the order, dated May 28, 1999, passed by the Assistant Commissioner of Central Excise, Bangalore, shows that the company had declared the goods "Halls" by paying excise duty as applicable to confectionary under sub-heading 17.04 under protest, pending disposal of the civil appeal, which was disposed of on August 3, 1999.

Reading of the order, dated August 25, 1999 shows that the Assistant Commissioner of Central Excise, Bangalore, has issued a show-cause notice to M/s. Warner Lambert Ltd., calling upon them to submit their objections as to why, (i) the duty paid under protest under rule 23B should not be vacated and (ii) the chewing gum based classified under Chapter 1704.10 of the Central Excise Tariff Act, 1985. In reply, dated March 23, 1999, the company has contended that Halls range of products are rightly classifiable under Chapter 30.03 of the Central Excise Tariff and the said products are only medicaments. Considering the relevant provisions of the Central Excise Tariff Act, the Assistant Commissioner of Central Excise (D), Bangalore, in his order, dated August 25, 1999, held as follows :

It is true that Central Excise Tariff does not specifically define the product, but speaks of the ayurvedic preparation. Just because it contains sugar or sweetening ingredients also it cannot be averred that it is a confectionary. There is also no evidence on record to show that the product is considered as a sweetening material in bulk quantity cannot change the quality of the active ingredient, in the product. Thus, I hold that the product is correctly classifiable under 3003.30 of the Central Excise Tariff.

Eventhough the judgment of the Supreme Court in Warner Hindustan Ltd. v. Collector of Central Excise reported in [1999] 6 SCC 762, decided in the case of the petitioner, has not been referred to in the order, dated August 25, 1999 of the Assistant Commissioner of Excise, Bangalore, while adjudicating the claim of the petitioner-company, as to whether, "Halls" range of products are falling within confectionary of medicament, classifiable under Chapter 30.03, perusal of the order of the Assistant Commissioner, Excise, Bangalore, shows that the assessing authority has issued a show-cause notice to the petitioner-company and only after analysing the issue at length with reference to different items, under the Excise Tariff Act, the decisions of the Supreme Court in Amrutanjan Ltd. Vs. Collector of Central Excise, Panama Chemical Works v. Union of India [1992] 62 ELT 241 (MP), and other cases, the Assistant Commissioner of Central Excise, Bangalore, has categorically held that "Halls" range of products, are classifiable as medicament under Chapter 30.03. Having considered the above adjudicatory order passed on the merits, as one of the supporting documents, to come to the conclusion that "Halls" which contains (i) pudina, (ii) nilgiri thailam, (iii) narangi thailam, (iv) nimbuke thailam, (v) lemon oil as a ayurvedic medicine and issued necessary clarifications to that effect, this court is of the view that it is too late in the day for the respondent to contend that the issue is still pending consideration with the excise authorities and therefore, the assessing authority can reopen the assessment.

Further, a perusal of the order made by the Deputy Commissioner (Appeals) First, Commercial Taxes, Jaipur, dated October 31, 2001, in respect of Warner and Lambert India Pvt. Limited (taken over by M/s. Cadbury India Ltd., with effect from March 30, 2003), shows that the appellate authority has upheld the contention of the manufacture and held that,

Therefore, it is explicit to say that Halls tablet is one of the ayurvedic medicines and on this levying of taxes required to impose as per available provisions. In the above circumstances, in my opinion, the Halls tablet is not coming in the category of confectionary, but it is coming under the category of the "ayurvedic medicine". Therefore, it is appropriate to corroborate the order passed by the tax assessor and Collector and required to dismiss and hence, the appeal of the appellants are hereby approved.

It should be noted that while seeking clarification from the Commissioner of Commercial Taxes, Chennai, as to the rate of tax applicable to the product "Halls", the petitioner has enclosed the orders passed by the Central Excise Authority, Bangalore, dated August 25, 1999 and the appellate authority, Jaipur, dated October 31, 2001, stated supra, and the said fact is not controverted in the counter-affidavit. Based on the request, dated July 1, 2003 and the supporting materials stated supra, the Commissioner of Commercial Taxes, Chennai, in his clarification No. 3/2004, dated January 2, 2004, and further clarification No. 106/2004, dated April 6, 2004, has clarified that the rate of tax applicable to "Halls" is only four per cent with effect from April 4, 2000.

Therefore, as rightly contended by the learned counsel for the petitioner, the decision in 1990 (29) ECC 172 can no longer be applied, when the said judgment of the Tribunal has been set aside by the Supreme Court. What is taken into consideration by the Assistant Commissioner (FAC), Circle IV, Chennai 6, in the impugned notice, is the clarification No. 44/2003, dated February 28, 2003, issued in respect of M/s. Solaimalai Agencies, where Halls was earlier declared as a confectionary. Reading of the impugned notice shows that the assessing officer has not taken into consideration, the subsequent Clarification Nos. 1 and 106 of 2004 issued in the case of the petitioner and the orders of the. Deputy Commissioner (Appals) First, Commercial Taxes, Jaipur, dated October 31, 2001, on the same subject of classification of Halls, decided in favour of Wamer and Lambert India Pvt. Limited and the order of the Assistant Commissioner, Central Excise, Bangalore, dated May 28, 1999, holding the product "Halls", as ayurvedic medicine. Though the Commissioner of Commercial Taxes, Chennai, in Clarification No. 44/03, dated February 28, 2003, has clarified that "Halls" is taxable as confectionary at 12 per cent vide entry No. 5(i) in Part D of the First Schedule to the TNGST Act, in a subsequent clarification No. 1/04, issued to the very same company, viz., M/s. Solaimalai Agencies, on January 2, 2004, it is stated that pursuant to the Notification No. II(1)CT/22(e)/2000 Gazette, dated April 4, 2000 with effect from April 4, 2000 and Not. No. II(1)/CT19(b-19)/2002 Gazette, dated March 27, 2002, the product "Halls" is taxable at four per cent with effect from April 4, 2000. It is also to be noted that the above clarification was also applied by the Commissioner, Commercial Taxes Department, in his assessment proceedings in TNGST 5162095/2001-02, dated March 15, 2004 and the tax collected over and above four per cent, equivalent to Rs. 19,15,046 was appropriated towards penalty u/s 22(2) of the TNGST Act, 1959. It is also evident from the materials that no appeal has been preferred against the said order and it has become final.

In the absence of any further clarification, cancellation of the earlier circulars issued, in respect of the manufacturer and distributor, M/s. Solaimalai Agencies, whether it is still open to the assessing authority to fall back on an earlier circular, dated February 28, 2003 issued in respect of a distributor, by which, it was clarified that "Halls" is only a confectionary and taxable at 12 per cent. The contention raised in the counter-affidavit is that the assessing officer has issued only a notice, calling for objections and it is open to the petitioner to submit and adduce evidence to substantiate their claim that "Halls" should be treated as medicine. If product "Halls" had already been clarified to be an ayurvedic medicine taxable at four per cent, by way of Clarifications No. 3/2004, dated January 2, 2004 and 106/2004, dated April 6, 2004, issued to the petitioner, should the dealer be again called upon to place all the materials and prove that is only an ayurvedic medicine. It is the contention of the respondent that in Pizzeria Fast Foods Restaurant (Madras) Pvt Ltd. v. Commissioner of Commercial Taxes, Chennai reported in [2005] 140 STC 97 (Mad), a Division Bench has held that clarification issued, u/s 28A will not be binding on the assessing authority and therefore, it would not be appropriate to prevent them from exercising the jurisdiction and the manner of assessment should not be controlled by the court, as held in Orient Paper Mills Ltd. Vs. Union of India (UOI),

In Tvl. Pizzeria Fast Foods Restaurant (Madras) Pvt. Ltd. Vs. Commissioner of Commercial Taxes and Others, the question that was posed before this court was relating to challenge of a clarification issued by the Commissioner of Commercial Taxes, Madras, u/s 28A of the Tamil Nadu General Sales Tax Act, 1959. The assessment was based on the abovesaid clarification. It was, inter alia, contended that the clarification was contrary to the statutory provisions of section 3(d) of the Act as applicable, prior to April 9, 2002. It was further contended that as the clarification/circulars are binding on the authorities in the Department and therefore, directing the petitioners therein to challenge the correctness of the circulars before the assessing authority or the appellate authority would be an empty formality, when the Commissioner of Commercial Taxes, Chennai, a higher authority than the assessing officer or appellate authority has issued the circular and that he is bound to follow the same. In that context, the Division Bench has observed that (page 108 in 140 STC):

It may be noted that a clarification can only be issued on an application by a registered dealer regarding the rate of tax on any goods. It seems that the purpose of inserting section 28A was that some businessmen wanted to know their tax liability, so that they could make financial and other arrangements accordingly. In a business, a businessmen has to do planning so that he can earn profits. For doing such planning, he obviously would like to know what would be his tax liability so that he can take it into account when doing his financial planning for the business; Hence, for the above-said purpose, he can apply to the Commissioner to clarify any point regarding the rate of sales tax on a taxable commodity.

In the above reported judgment, the Division Bench, paragraphs 28 and 29 has further held as follows (pages 108 and 109 in 140 STC) :

As regards sub-section (3) of section 28A, in our opinion this provision only means that when the sales tax authorities are fixing the rate of tax in their executive capacity, they shall follow the circular of the Commissioner u/s 28A. However, when the sales tax authorities are acting in a judicial of quasi-judicial capacity, in our opinion, they cannot be bound by the order of the Commissioner, because to take a contrary view would mean interference by the executive in a judicial function." When the assessing authority under the Sales Tax Act (or the appellate authority) decides a case, he is functioning in a judicial capacity (even ''though he may be a sales tax authority). Hence, when he is acting in a judicial capacity, he should not feel bound by any clarification issued by the Commissioner, as such clarifications u/s 28A are not binding on him when he is functioning in a judicial capacity and they are only binding when he is functioning in an administrative capacity, when initially fixing the rate of tax on a specific commodity.

In Kerala Financial Corporation v. Commissioner of income tax [1994] 210 ITR 129 (SC), the Supreme Court held that the circulars issued by the Central Board of Direct Taxes u/s 119 of the income tax Act, 1961, could not override or detract from the provisions of the Act, as that would be destructive of all known principles of law and would be giving a power to the executive authority to amend the provisions of the Act. In our opinion, the same principle shall apply to section 28A of the Act also. The Commissioner cannot take a view which is contrary to the provisions of the Act or Rules made thereunder as interpreted by the courts or the statutory authorities under the Act when they are performing judicial or quasi-judicial functions (vide Sales Tax Officer and Another Vs. Shree Durga Oil Mills and Another,

In the reported judgment, based on a circular issued on March 18, 2002, which stipulated that branded pizza can be taxed at 16 per cent, the assessment which was initially completed and levied tax at two per cent u/s 3(d) of the Act was sought to be revised and tax at 16 per cent was proposed to be levied. In that context, the Division Bench held that the circular issued u/s 28A is not binding on the appellate authority or the assessing authority and therefore, the taxing authority acting in a judicial or quasi-judicial capacity can take a different view, even though he may be a sales tax authority.

No doubt the Division Bench of this court in Tvl. Pizzeria Fast Foods Restaurant (Madras) Pvt. Ltd. Vs. Commissioner of Commercial Taxes and Others, held that clarifications issued by the Commissioner of Commercial Taxes, Chennai, are not binding on the assessing authorities, when they exercise their quasi-judicial powers, the question is whether it would be open to the another quasi-judicial authority to simply ignore the clarifications issued earlier and also the previous revision of assessment, dated September 28, 2005 and propose to make a fresh assessment, falling back on an earlier clarification of the year 2003, issued in respect of a distributor of "Halls".. If according to the assessing authority, the product "Halls" is not meant to be an ayurvedic product, then what is the effect of clarifications issued by the Commissioner for Commercial Taxes, Chennai, who took into consideration the ingredients of the product and issued Clarification No. 3 of 2004, dated January 2, 2004, which reads as follows :

The Halls tablets, containing pudina, nilgiri thailam, narangi thailam, nimbuke thailam, lemon oil, etc., used for cold, cough, soar throat and to freshen the breath, sold with brand name "Halls Mentholyptus" fall under item No. 19(i)(b) in Part C of the First Schedule read with Notification No. II(1)/CT/22(e)/2000, dated April 4, 2000 and Notification No. II(1)/CT/19(b-19)/2002, dated March 27, 2002, taxable at four per cent from April 4, 2000.

"Change of opinion", means a change in the conclusion of the assessing officer on the same set of facts and law. For revising an assessment, there must be a reason to believe that there is a change of law or discovery of a new fact, which was not taken note of, at the time of initial assessment. The validity of initiation of the proceedings has to be adjudged on the basis of the reasons recorded on the date of assumption of jurisdiction and it should be tested as to whether the assessing officer had in his possession certain definite and relevant material facts which were not taken note of at the time of initial assessment and mere change of opinion on the same set of facts and law does not justify reassessment.

This court is of the opinion that the powers of this court are not fettered to examine to the limited extent, as to whether the conclusion arrived at by the assessing officer was based on any material on record which he could or could not have considered at the time of initial assessment. Of course, it is open to the assessing officer to reopen an assessment on the basis of some fresh facts which had come to light, which were not disclosed or unearthed by the assessing officer on further enquiry or examination of records.

Change of opinion", presupposes that an opinion must have been formed at the original stage, based on material facts. There must be some positive fact or records to show that the opinion arrived at the initial stage was erroneous. If the assessing authority has to consider the very same materials on record and come to a different conclusion, then certainly it amounts to change of opinion. In the case on hand, it is not the case of the assessing officer that the petitioner has failed to disclose all the particulars of turnover or the particulars, on the basis of which, clarifications were issued fixing the rate of tax, applicable to the product. As per the details furnished by the petitioner, the products manufactured by them contain, nilgiris--0.66 per cent (w/w) (Indian varieties), pudina--1 to 2 per cent, non-reducing sugar--64.73 per cent (w/w) and reducing sugar 23 to 45 per cent (w/w). The total sugar content is 88.18 per cent (w/w). That apart, the product contains volatile oil (clavanger)--0.425 per cent. The facts mentioned in the circular, dated September 10, 1997, issued by the Central Excise Department, stating that "Halls" contains the ingredients, sugar 88.17 per cent, nilgiris--0.66 per cent (w/w) and pudina--1 to 2 per cent (w/w), were already available with the Revenue. Only after examining the ayurvedic and therauptic value of the ingredients contained in the product "Halls", the Revenue has issued clarifications to the petitioner, holding that the product is assessed to tax at the rate of four per cent from April 4, 2000. The admissibility of the claim had already been considered by the Revenue, when they appropriated the excess tax collected by the assessee, towards penalty u/s 22(2) of the Act and therefore, it is not open to them to contend that because of the presence of minor extent of the above ingredients, the product cannot be claimed as a ayurvedic medicine, as the preparation does not have sustain therauptic value, and therefore, it requires revision of assessment. Thus it is evident that the assessing authority has formed a prima facie opinion on the same set of facts and law and there is no change of law or discovery of any new fact, which he could not have considered at the time of initial assessment.

It could be seen from the revised assessment order, though the assessee had collected 12 per cent tax on the goods, i.e., in the words of the assessing authority, "realistic tract of understanding" of rate of tax to be levied, by way of revision of assessment, the Revenue penalised the assessee for excess levy of tax from the consumers holding that tax should have been levied only at the rate of four per cent and not more than that. It is pertinent to point out that the counter-affidavit is silent about the course of action taken by another assessing authority, when he had penalised the assessee for collection of excess tax. Now by the impugned order the first respondent, based on the clarification issued in the year 2003, has proposed to revise the assessment. If that be the case, would it not fall within the ambit of change of opinion, by another assessing authority. Considering the totality of the case, this court is of the considered view that the impugned show-cause notice is nothing but an outcome of a change of opinion.

In this context, the decision of the Supreme'' Court in Binani Industries Ltd., Kerala Vs. Assistant Commissioner of Commercial Taxes, VI Circle, Bangalore and Others, would be applicable, where the Supreme Court held that on mere change of opinion, an assessment cannot be reopened and further held that the circulars issued by the Customs Board of Central Excise are binding on the departmental authorities and they cannot take a different stand and repudiate the circulars issued by the Board, on the basis that it was inconsistent with the statutory provisions.

Let me now extract few decisions of the Supreme Court on the binding effect of the circulars on the authorities.

In Ranadey Micronutrients v. Collector of Central Excise reported in [1996] 87 ELT 19 (SC), the Supreme Court held that the object of the circular issued by the CBSE is meant of adoption of uniform practice. Such circulars binding on officers of the Revenue Department and they cannot repudiate a circular on the ground that it is inconsistent with a statutory provisions.

In yet another decision in Suchitra Components Ltd. Vs. Commissioner of Central Excise, Guntur, the Supreme Court held that a beneficial circular has to be applied retrospectively while an oppressive circular has to be applied prospectively and not from the earlier date.

When the ratio decidendi of the abovesaid judgments are made available to the facts of this case, it can be concluded that the beneficial circular issued by the Commissioner of Commercial Taxes, Chennai, in respect of manufacturer and distributor, respectively were already applied and that they were also directed to pay penalty u/s 22(2) of the TNGST Act, for excess collection over and above four per cent applicable to the product "Halls".

A bare reading of the circulars, shows that the ingredients of the product Halls tablets and their effect were duly taken note of by the Commissioner of Commercial Taxes, Chennai. The notifications in unambiguous terms read that "Halls tablets", contains pudina, nilgiri thailam, narangi thailam, nimbuke thailam, lemon oil, etc., used for cold, cough, soar throat and to freshen the breath, sold with brand name "Halls Mentholyptus" falls under item No. 19(i)(b) in Part C of the First Schedule read with Notification No. II(1)/CT/22(e)/2000, dated April 4, 2000 and Notification No, II(1)/CT/19(b-19)/2002, dated March 27, 2002, taxable at four per cent, from April 4, 2000.

When the beneficial circular has been applied on earlier occasions, the reasons adduced for revision of assessment on the basis of a decision in 1990 (29) ECC 172 and on the basis of the circular, dated September 10, 1997, of the Central Excise Department are contrary to the ratio decidendi of the Supreme Court.

Let me consider some of the judgments as to how the courts have considered the aspect of classification of the goods under different entries and the onus of burden.

In Hindustan Ferodo Ltd. v. Collector of Central Excise, Bombay reported in [1997] 106 STC 214 (SC); [1997] 89 ELT 16 (SC), the Supreme Court held that the onus of establishing that a product falls within a particular item is on the Revenue. It has been held that if the Revenue leads no evidence, then the onus is not discharged. A perusal of the impugned notice does not indicate as to whether the Department had made any enquiries or placed any evidence, to show that in common parlance, the product, "Halls" is not used medicament. In the case on hand, as stated supra, the Commissioner of Commercial Taxes, Chennai, after considering the entire particulars submitted by the petitioner along with his application, dated July 1, 2003, has already clarified that the product as medicament, even though it contains a lesser percentage of the ingredients, such as, pudina and nilgiris.

In Commissioner of Central Excise, Calcutta Vs. Sharma Chemical Works, this court noticed its earlier decisions to hold that onus of proof to show that a particular product is classifiable under one entry or the other is on the Revenue. : "Banphool Oil" was held therein as classifiable as an ayurvedic medicament under sub-heading 3003.30 stating (page 261 in 132 STC) :

.. mere fact that a product is sold across the counters and not under a doctor''s prescription, does not by itself lead to the conclusion that it is not a medicament. We are also in agreement with the submission of Mr. Lakshmikumaran that merely because the percentage of medicament in a product is less, does not ipso facto mean that the product is not a medicament. Generally the percentage or dosage of the medicament will be such as can be absorbed by the human body. The medicament would necessarily be covered by fillers/vehicles in order to make the product usable. It could not be denied that all the ingredients used in Banphool Oil are those which are set out in the ayurveda text books. Of course, the formula may not be as per the text books but a medicament can also be under a patented or proprietary formula. The main criteria for determining classification is normally the use it is put to by the customers who use it. The burden of proving that Banphool oil is understood by the customers as an hair oil was on the Revenue.

In Naturalle Health Products (P) Ltd. Vs. Collector of Central Excise, Hyderabad, the Supreme Court considered the case of a manufacture of Vicks medicated cough drops and Vicks Vaporub throat drops and manufacture of "Sloan''s Balm" and "Sloan''s Rub", regarding the classification of the product. Their appeals were allowed and the product manufactured were clarified as medicine under the. Central Excise Tariff Act. In the reported judgment, the Supreme Court followed an earlier decision in 1988 (16) ECC 145 and at paragraph 41, it is held as follows (page 969 in 1 RC) :

We are also of the opinion that when there is no definition of any kind in the relevant taxing statute, the articles enumerated in the tariff Schedules must be construed as far as possible in their ordinary or popular sense, that is, how the common man and persons dealing with it understand it. If the customers and the practitioners in ayurvedic medicine, the dealers and the licensing officials treat the products in question as ayurvedic medicines and not as allopathic medicines, that fact gives an indication that they are exclusively ayurvedic medicines or that they are used in the ayurvedic system of medicine, though is a patented medicine. This is especially so when all the ingredients used are mentioned in the authoritative books on ayurveda. As rightly contended by counsel for the appellants, the essential character of the medicine and the primary function of the medicine is derived from the active ingredients contained therein and it has certainly a bearing on the determination of classification under the Central Excise Act. As held in Amrutanjan Ltd. Vs. Collector of Central Excise, the mere fact that the ingredients are purified or added with some preservatives does not really alter their character.

Pudina and Nilgiris thailam, etc., are generally used for ayurvedic preparations and that is why, the Commissioner of Commercial Taxes, Chennai, has clarified that Halls tablets would fall under entry 19(1)(b) in Part C of the First Schedule. As rightly contended by the learned counsel for the petitioner, the extent of quantity of medicament used in a particular product and the fact that the use of the medical element in the product was minimal, that would not detract that the same being classified as medicament. It is also not necessary that the said item must be sold under doctor''s prescription and that the availability of the product across the counter in many shops is not relevant. Reference can be made to paragraph 22 in Puma Ayurvedic Herbal (P.) Ltd. v. Commissioner, Central Excise, Nagpur reported in [2006] 145 STC 200; [2006] 6 RC 328; [2006],3 SCC 266, where the Supreme Court at paragraph 22, held as follows (page 209 in 145 STC):

In order to be a medicinal preparation or a medicament it is not necessary that the item must be sold under a doctor''s prescription. Similarly, availability of the products across the counter in shops is not relevant as it makes no difference either way.

The word "confectionary" is not defined under the Sales Tax Act. In such circumstances, popular sense theory has to be applied, i.e., sense which the people are conversant with the subject-matter, with which, the statute is dealing would attribute to it. It is well-settled that the correct principle of construing the meaning of entries in a taxing Act, like the Sales Tax Act is to find out what transaction, its language, according to its natural meaning, fairly and squarely hits and not to assume what was intended to be done. What is relevant is not the dictionary meaning, but how the entries are understood in common parlance specially in commercial circles. It is the contention of the respondents that "Halls" is a confectionary.

In Annapurna Biscuit (Mfg.) Co. v. State of U.P. [1975] 35 STC 127 (All), the Allahabad High Court has explained what confectionary means and it reads hereunder (page 128 in 35 STC) :

... Confectionary is essentially a sweetmeat. In certain preparations to the sweet base are added chocolate, fruits, nuts and peanuts, eggs, milk products, flavours and colours...

It is well-settled law that when Legislature itself gives the meaning of a term by a definition or Explanation, it has to be adopted in interpreting it whatever may be the popular understanding in The State of Orissa Vs. Dinabandhu Sahu and Sons, Only in the absence of a specific definition in the statute, the words or terms should be understood in the same way in which, they are understood in ordinary parlance in the area in which the law is in force by the people who ordinarily deal with the relevant goods. The principle that was first laid down by the Supreme Court in Ramavatar Budhaiprasad Etc. Vs. Assistant Sales Tax Officer, Akola, has been followed in number of cases, such as, Delhi Cloth and General Mills Co. Ltd. Vs. State of Rajasthan and Others, Atul Glass Industries (Pvt.) Ltd. Vs. Collector of Central Excise, Collector of Customs v. Swastic Woollens (P.) Ltd. [1989] 72 STC 201 (SC), United Copiex (India) Pvt. Ltd. Vs. Commissioner of Sales Tax, It is also held that the words of everyday use must be construed not in scientific or technical sense but only in common parlance (if there is a conflict between the two), unless a contrary intention is clearly expressed in the statute. [Commissioner of Sales Tax v. Jaswant Singh Charan Singh [1967] 19 STC 469 (SC)].

The'' decisions relied on by the first respondent in the counter-affidavit are not applicable to the facts of thiscase. The decision of the apex court in Orient Paper Mills Ltd. Vs. Union of India (UOI), related to the period 1961, when there was no section 35B of the Central Excise Act, which was introduced in 1985, empowering the Central Board to issue circulars. Further the decision of the apex court in Commissioner of Customs and Central Excise and Others Vs. Charminar Nonwovens Ltd., related to the issue, wherein, there was no statutory clarification as in the case of the petitioner u/s 28A of the Act. As rightly contended by the learned counsel for the petitioner, the decisions in A.S. Balu v. Special Commissioner and Commissioner of Commercial Taxes [2004] 134 STC 524 (TNTST) and Salt Sales Corporation v. Deputy Commercial Tax Officer (Additional) [2004] 134 STC 529 (TNTST), rendered by the Special Tribunal, which is no more a good law in view of the decision of the Division Bench of the Supreme Court in Tvl. Pizzeria Fast Foods Restaurant (Madras) Pvt. Ltd. Vs. Commissioner of Commercial Taxes and Others,

As regard the decision in Commissioner of Customs & Central Excise v. Charminar Nonwovens Ltd. reported in [2004] 136 STC 356 (SC), there cannot be any quarrel over the principle that in the matter relating to commodity classification, it has to be decided on the facts of each case and if any intricate technical issues are involved, it would be appropriate to direct the assessee to agitate his grievance before the statutory authority. But in the given case, except referring to a judgment in Gridharilal Sugar and Allied Industries Ltd. v. Commissioner of Central Excise (Appeals), Indore reported in [1997] 95 ELT 14 (MP), [1999] 56 ELT 9 and [1996] 83 ELT 50 (sic), and some orders referred to in the Central Excise Circular, dated September 10, 1997, no fresh materials seemed to have been discovered on further investigation or for that matter there is a change in the legal position. Even the changed legal position as regards the classification of the product "Halls", as held by the Central excise authority in his order, dated August 25, 1999, has been taken into consideration by the Commissioner of Commercial Taxes, Chennai, while issuing clarification to the petitioner. Therefore, the decision relied on by the respondent is inapposite to the facts of this case.

Again, this court agrees with the ratio decidenti in Orient Paper Mills Ltd. Vs. Union of India (UOI), that the manner and mode of assessment cannot be controlled by the courts and that the assessing authority has to consider the applicability of the judgments to the facts of each case, But at the same time, if the assessing authorities take a different view, one proposing to revise the assessment based on the clarifications issued in 2003 that sale of "Halls" is taxable at 12 per cent and the other, revising the turnover holding that, "Halls" range of products is taxable at four per cent and thus, following the clarifications of the year 2004, and when the same is brought to the notice of this court, the assessing authorities have to be prevented from acting contrary to their circulars, issued in respect of the very same assessee. As stared supra, the apex court in Binani Industries Limited v. Assistant Commissioner of Commercial Taxes, VI Circle, Bangalore [2007] 6 VST 783, has held that even at the stage of pre-revision notice initiated contrary to the beneficial circulars, the dealers can approach the court of law for remedy. It is also to be noted that the applicability of Notification No. 1 of 2004, dated January 2, 2004 and No. 106 of 2004, dated April 16, 2004 to the case of the petitioner is not disputed by the first respondent. As rightly contended by the petitioner, the circulars are not withdrawn or rescinded by the Revenue and they are still in force. In view of the statutory clarifications issued u/s 28A of the Act in favour of the petitioner and the original assessment having been completed by the first respondent, he is estopped from taking a contrary view, and such legitimate expectation flowing from the statutory provision of section 28A of the Act, cannot be defeated by an erroneous approach, more so, when the excess tax over and above collected by the petitioner was remitted and appropriated towards penalty u/s 22(2) of the Act.

In Commissioner of Customs, Calcutta Vs. Indian Oil Corporation Ltd. and Another, the apex court held that the circulars issued by the Revenue u/s 37B of the Central Excise Act, 1944 (which is in pari materia to section 28 of the TNGST Act) are binding primarily on the basis of the language of statutory provisions buttressed by the need of adjudicating officers to maintain uniformity in the levy of tax/duty through out the country and on the basis of promissory estoppel and when a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid or contrary to the statute. In the case on hand, as stated supra, the notifications issued to the petitioner, holding that, "Halls" as a medicament, leviable at four per cent as per the provisions of the TNGST Act are in operation and therefore, the Revenue is bound by the same and in such a view of the matter, it is not open to the first respondent, to issue the impugned notice for revision of a completed assessment.

Applying the said judgments to the facts of this case, when the Commissioner of Commercial Taxes, Chennai, has issued the clarification Nos. 3 and 106 of 2004, dated January 2, 2004 and April 16, 2004, respectively and revised the assessment on earlier occasion and concluded the penalty for excess collection of tax over and above four per cent, treating "Halls" as ayurvedic medicine, another assessing authority, by mere change of opinion, cannot propose to revise the assessment treating the said product as confectionary. Therefore, when the show-cause notice issued by the assessing authority is inconsistent with the circulars in force, the same can be challenged by way of a writ petition. Though the general principle of law is that the writ against show cause is not maintainable, yet if the authority acts contrary to the clarificatory circulars and if it lacks jurisdiction, it can be subjected to judicial review in writ jurisdiction. Reference can be made to few judgments of the Supreme Court.

In Whirlpool Corpn. v. Registrar of Trade Marks reported in [1998] 8 SCC 1, the Supreme Court, held that :

The power to issue prerogative writs under article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the fundamental rights contained in Part III of the Constitution but also for ''any other purpose''.

Under article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the fundamental rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged...

Much water has since flown under the bridge, but there has been no corrosive effect on these decisions which, though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation.

That being so, the High Court was not justified in dismissing the writ petition at the initial stage without examining the contention that the show-cause notice issued to the appellant was wholly without jurisdiction and that the Registrar, in the circumstances of the case, was not justified in acting as the ''Tribunal:

In Union of India v. Kunisetty Satyanarayana reported in [2006] 12 SCC 28, the Supreme Court, held that :

Writ jurisdiction is discretionary jurisdiction and hence such discretion under article 226 should not ordinarily be exercised by quashing a show-cause notice or charge-sheet.

No doubt, in some very rare and exceptional cases the High Court can quash a charge-sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter.

In view of the binding precedents of the circulars issued by the Commissioner of Commercial Taxes, in favour of the assessee and for the reasons stated supra, this court is of the view that the impugned show-cause notice issued contrary to the circulars, is without jurisdiction and it is liable to be set aside and accordingly, set aside and consequently, the petitioner is entitled to the relief sought for in the writ petition. In the result, the writ petition is allowed. No costs. Consequently, connected miscellaneous petition is closed.