JUDGMENT Rajes Kumar, J.
1. Present revision under Section 11 of the U.P. Trade Tax Act (hereinafter referred to as the "Act") is directed against the order of the Tribunal dated 13th October, 1997 relating to the assessment year, 1988-89 under the Central Sales Tax Act.
2. During the year under consideration, the applicant sold its product to Canteen Stores/Military Canteens for Rs. 82,88,645.36 p in the course of inter-State sales and claimed exemption on it on the ground that the sales to Canteen Stores Department was exempted from tax under Notification No. 7037 dated 31st January, 1985. However, the assessing authority levied tax, it appears that the requisite certificates required under the Notification No. 7037 dated 31st January, 1985 was not filed. Applicant filed appeal before the Deputy Commissioner (Appeals), Trade Tax, Ghaziabad. Before the Deputy Commissioner (Appeals) four certificates appears to have been filed. Appellate authority accepted those certificates and remanded back the matter to the assessing authority with the direction to examine the genuineness of the certificates and pass assessment order afresh Assessing authority passed fresh assessment order allowed the exemption on the turnover of Rs. 82,88,645.36 p to Canteen Stores Department on the basis of certificates. Assessing authority issued notice under Section 22 of the Act with the view to levy tax on the turnover of Rs. 82.88.645.36 p made to Canteen Stores Department on the ground that the turnover to Canteen Stores Department was not generally exempted under the U.P. Trade Tax Act and it was exempted vide Notification No. 7037 dated 31st January, 1985 on fulfillment of certain conditions and therefore, it was not liable to be exempted under Section 8(2-A) of the Central Sales Tax Act in view of the decision of the Apex Court in the case of Commissioner of Sales Fax, Jammu and Kashmir and Ors. v. Pine Chemicals Ltd and Ors. reported in 96 STC, 355. Applicant filed reply to the notice which has not been accepted by the assessing authority and vide order dated 30th August, 1995 passed order under Section 22 of the Act and has levied tax under the Central Sales Tax Act on the turnover of Rs. 82.88,645.36 p made to Canteen Stores Department First appeal filed by the applicant was rejected. Second Appeal tiled before the Tribunal has also been rejected.
3. Heard learned counsel for the parties.
4. Learned counsel for the applicant submitted that the claim of exemption on the turnover of Rs. 82,88,645.36 p relating to Canteen Stores Department has been accepted by the first appellate authority in view of the Circular No. 2-10-(1)-(97-98) 956 Head Quarter dated 23rd July, 1987 and the matter has been remanded back to the assessing authority only to examine the genuineness of the certificates which was filed before the first appellate authority and, therefore, the assessment order passed in pursuance of the appellate order could not be rectified under Section 22 of the Act in view of the Division Bench decision of this Court in the case of M.R. Soap (private) Ltd, Ghaziabad v. Assistant Commissioner (Assessment), Sales Tax, Modinagar, Ghaziabad reported in 1991 UPTC, 517. He further submitted that vide Circular dated 23rd July. 1987, it has been held that the turnover to Military Canteens/ Canteen Stores Department tax would be treated as generally "exempted within the meaning of Section 8(2-A) of the Central Sales Tax Act and, accordingly, sales to such department would be exempted from tax under the Central Sales Tax Act. He submitted that the said Circular is binding upon the authorities and though the Apex Court held contrary, but in view of the opinion expressed by the Government and circulated by the Commissioner of Trade Tax by the aforesaid circular, it is not open to the revenue authority to go against the circular and to levy tax. He further submitted that the circular is binding even though it is contrary to the provisions of the Act and in support of his contention, he placed reliance on the decision of the Apex Court in the case of Collector of Central Excise, Vadodra v. Dhiren Chemical Industries reported in 2002 (2) SCC, 127, Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam reported in 2003 (5) SCC, 528, Paper Products Ltd. v. Commissioner of Central Excise reported in (1999) 7 SCC, 84 and Commissioner of Sales Tax, A.P. v. Indra Industries reported in 2000 UPTC, 472. He further submitted that under Section 22 of the Act only mistake apparent on the face of record can be rectified and in cases where the issue involved debate and an investigation of fact and two opinions are possible such mistake cannot be rectified under Section 22 of the Act.
5. Learned Standing Counsel submitted that vide order dated 30th March, 1994, appellate authority has only remanded back the case to the assessing authority to pass assessment order afresh with the direction to examine the certificates. He submitted that the appellate authority has not allowed the exemption and, therefore, it is wrong to say that so far as claim of exemption on the sale to Military Canteens/ Canteen Stores Department for Rs. 82,88,645.36 p is concerned, order of the assessing authority has been merged in the appellate order. He further submitted that in pursuance of the appellate order, assessing authority has passed fresh order and, therefore, such order could be rectified under Section 22 of the Act. He submitted that the decision of the Division Bench of this Court in the case of M.R. Soap (private) Ltd, Ghaziabad v. Assistant Commissioner (Assessment), Sales Tax, Modinagar, Ghaziabad is not applicable to the present case. He further submitted that beyond any doubt under the Notification No. 7037 dated 31st January, 1985, exemption was conditional on the fulfillment of certain requirements and, therefore, the sales to Military Canteens/ Canteen Stores Department was not generally exempted under the U.P. Trade Tax Act and, therefore, the provision of Section 8(2-A) of the Central Sales Tax Act is not applicable. He submitted that under the similar circumstances the Apex Court in the case of Commissioner of Sales Tax, Jammu and Kashmir and Ors. v. Pine Chemicals Ltd. and Ors. (supra) has held that the provisions of Section 8 (2-A) does not apply. He submitted that the circular will not override the provisions of the Act and since the mistake was apparent in view of the provisions of the Act, order under Section 22 of the Act was in accordance with law which has been rightly upheld by the Tribunal.
6. Having heard the learned counsel for the parties, 1 have perused the order of the Tribunal and the authorities below. I do not agree with the submissions of the learned counsel for the applicant that the assessing authority could not rectify the subsequent assessment order dated 29th March, 1995 under Section 22 of the Act because it was passed in pursuance of the order passed by the appellate authority and in fact the appellate authority has allowed the claim of exemption and has only remanded back the matter to the assessing authority for verification of the genuineness of the certificates, Perusal of the appellate order shows that the appellate authority has not allowed the claim of exemption. Matter has been remanded back to the assessing authority to examine the genuineness of the certificates and pass fresh assessment order. Assessing authority passed fresh assessment order on 29th March, 1995 accepting the claim of exemption, therefore, it was fresh independent order and could be rectified.
7. So far as the other contention of the learned counsel for the applicant is concerned, that in view of the Circular issued by the Commissioner of Trade Tax on the basis of the Government decision which is binding on the revenue authority, proceeding under Section 22 of the Act could not be taken and the alleged mistake cannot be said to be, a mistake apparent on the face of record has substance.
8. It may be mentioned here that by Notification No ST-11-7037/X-7(23)/83-U.P. Act-XV-48-Order-85, dated 31.1.1985 sales to or purchases and sales by Canteen Stores Department/Military Canteens were exempt on the condition that it was certified by (a) an officer not below the rank of Commanding Officer or, as the case may be (b) the Executive Director, or an officer not below the rank of Deputy Director duly authorised by him, that the goods are meant for being sold to members of the Armed Forces of India/other defence establishments/ Ex-Servicemen.
9. Section 8(2-A) of the Central Sales Tax Act reads as follows:
"8. Rates of tax on sales in the course of inter-State Trade or commerce.-
(2-A) Notwithstanding anything contained in Sub-section (1A) of Section 6 or Sub-section (1) or Clause (b) of Sub-section (2) of this section, the tax payable under this Act by a dealer on his turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale or, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four per cent, (whether called a tax or fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate.
Explanation.- For the purposes of this subsection a sale or purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods."
10. The above notification and Section 8(2-A) of the Act have been considered by the Government of U.P. and on the basis of opinion of Government, Circular dated 23.7.1987 has been issued by the Commissioner of Income Tax. Circular dated 23rd July, 198? reads as follows.
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11. In the aforesaid circular, it has been stated that the Government vide letter dated 16.7.1987 has directed that the sales made to Khadi Gram Udyog, Board, Military canteens/ Canteen Stores Department and U.P. Rajya Kramchari Kalayan Nigam, Chetna are exempted from tat and they are to be treated as generally exempted within the meaning of Section 8(2-A) of the Central Sales Tax Act and thus sales made to institution will be exempted from tax.
12. In the case of Collector of Central Excise, Vadodra v. Dhiren Chemical Industries reported in (2002) 2 Supreme Court Cases, 127, Apex court has held as follows:
"We need to make it clear that, regardless of the interpretation that we have placed on the said phrase, if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that interpretation will be binding upon the Revenue."
13. In the case of Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam, reported in (2003) 5 Supreme Court Cases, 528, Apex Court has held as follows:
" In view of the aforesaid clear pronunciation by this Court, in our view it was not open to the Department to prefer the appeal before the Tribunal contrary to what has been laid down in the circular dated 12.7.1989 which specifically provided that in such cases residual Section 15(1)(c) of the Customs Act would apply to the case where the goods are removed from a warehouse after expiry of the warehousing period and that the rate of duty in such cases shall be the rate prevalent on the date of payment of duty. No doubt the aforesaid circular is withdrawn by circular dated 14.8.1997. Still, however, at the relevant time neither can the impugned order passed by the Collector of Customs (Appeals) be said to be in any way illegal or erroneous nor was it open to the Department to challenge the said order."
14. In the case of Paper Products Ltd. v. Commissioner of Central Excise reported in (1999) 7 Supreme Court Cases 84, Apex Court has held as follows:
" It is clear from the abovesaid pronouncements of this Court that apart from the fact that the circulars issued by the Board are binding and the Department, the Department is precluded from challenging the correctness of the said circulars even on the ground of the same being inconsistent with the statutory provision. The ratio of the judgment of this Court further precludes the right of the Department to file an appeal against the correctness of the binding nature of the circulars. Therefore, it is clear that so far as the Department is concerned, whatever action it has to take, the same will have to be consistent with the circular which is in force at the relevant point of time.
As Stated above, it is an admitted fact that by virtue of Circular No. 4 of 1985 dated 23.7.1986 as clarified by circular dated 7.8.1987, all the three products of the appellant are to be treated as products of the printing industry and not that of the packing industry. A change in the said view of the Board occurred for the first time by virtue of its Circular No. 6 of 1989 dated 16.1.1989. Further, the Board itself by its subsequent Circular No. 29 of 1989 dated 5.5.1989 has made it abundantly clear that the change notified in Circular No. 6 of 1989 will be prospective from the date of issuance of Circular No. 6 of 1989, that is, from 16.1.1989. Therefore, it is clear that till the issuance of Circular No. 6 of 1989 which is dated 16.1.1989 the products of the appellant, by virtue of the two circulars dated 23.7.1986 and 7.8.1987, have to be classified under Chapter 49 of the Act as being products of the printing industry eligible for exemption of duty under Notifications Nos. 122 of 1975 and 234 of 1982 as applicable at the relevant time. The impugned show-cause notices and consequent demand being ab initio bad inasmuch as the same was contrary to the existing circulars of the Board, the same cannot be sustained."
15. In the case of Commissioner of Sales Tax, A.P. v. Indra Industries reported in 2000 UPTC, 472, Apex Court has held as follows:
"A circular by tax authorities is not binding on the courts. It is not binding on the assessee. However, the interpretation that is thereby placed by the taxing authority on the law is binding on that taxing authority. In other words the taxing authority cannot be heard to advance an argument that is contrary to that interpretation."
16. The ratio of the aforesaid decisions of the Apex Court are that though the circulars issued by the Department are contrary to the provisions of the Act is binding and it is not open to the revenue authority to challenge such circulars. In this view of the matter, once the view has been taken by the assessing authority granting exemption on the turnover of inter-State sales made to Military Canteens/ Canteen Stores Department after applying the provision of Section 8(2-A) of the Central Sales Tax Act on the ground that such sales are generally exempted under the U.P. Trade Tax Act, it is not open to the revenue authority to take a different view inasmuch as, such view was based on Government opinion vide letter dated 16.7.1987 and circular of the Commissioner of Trade Tax dated 23 July, 1987. It may be mentioned here that in the presence of circular dated 23rd July, 1987 in which inter-State sales made to Military Canteens/Canteen Stores Department has been categorically held exempted from tax under Section 8(2-A) of the Central Sales Tax Act, for taking a contrary view, one has to examine the notification afresh and to apply its mind again It is also highly debatable 'that when there was Government opinion and Circular issued by Commissioner of Trade Tax granting exemption under Section 8(2-A) of the Central Sales Tax Act on the inter-State sales to canteen Stores, treating such sales exempted generally under the State law and such circulars are held binding whether any different view can be taken. Thus in the present situation, the alleged mistake cannot be said to be mistake apparent on the face of record which could be rectified under Section 22 of the Act.
17. In the result, revision is allowed. Order of the Tribunal is set aside.