Page 34 - ELT_15th June 2020_VOL 372_Part 6th

CIRCULARS CANNOT OVERRIDE RIGHTS VESTED BY THE
STATUTE
By
CS Dr. M. Govindarajan
PRACTICING COMPANY SECRETARY

Introduction
The Parliament or the State Legislature enacts the tax laws and notify
them in the Official Gazette. Powers are vested on the respective Governments to
issue rules to carry out the provisions of the respective tax laws by means of noti-
fications. Besides this the Government also issues circulars to clarify the position
of laws. The whole objective of such circulars is to adopt a uniform practice and
to inform the trade as to how a particular product will be treated for the purpos-
es of tax. Notifications or public notices let the general public know about laws
and changes that are made by the Government. Circulars are more of internal
memos that provide clarification on certain laws or issues.

Challenging of circulars
It is now well-established that circulars issued by the C.B.E. & C. or the
C.B.D.T. are not binding on the assessees but they are on the Departments. Thus,
the assessee has the right to challenge the correctness of a circular before any au-
thority constituted under the relevant statute.
In Commissioner of Central Excise, Bolpur v. Ratan Melting & Wire Industries
- 2008 (231) E.L.T. 22 (S.C.) the Supreme Court held that circulars and instruc-
tions issued by the Board are no doubt binding in law on the authorities under
the respective statutes, but when the Supreme Court or High Court declares the
law on the questions arising for consideration, it would not be appropriate for
the Court to direct that the circular should be given effect to and not the view
expression in a decision of this Court or High Court. So far as the clarifica-
tions/circulars issued by the Central Government and of the State Government
are concerned they represent merely their understanding of the statutory provi-
sions. They are not binding upon the Court. It is for the Court to declare what the
particular provision of statute says and it is not for the executive. Looked at from
another angle, a circular which is contrary to the statutory provisions has really
no existence in law.
5 A1882323 )
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