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2007 (8) TMI 667 - RAJASTHAN HIGH COURTTax on entry of goods into local area - Held that:- Tax on entry of goods into local area having the effect of directly impeding the free movement of trade and commerce within the State is not compensatory in nature and falls within the ambit of article 301 of the Constitution of India. Until it is enacted in terms of the provisions of article 304(b), it cannot be said to fall within the legislative domain of the State Legislature. The restriction under article 301 of the Constitution has been found to be a constitutional restriction on the right of legislative competence to enact laws in derogation thereof and saving from that clause has been provided under articles 302 to article 305. When admittedly in the present case requirement of article 304(b) before enacting a law falling within the domain of article 301 has not been followed, the impugned Act must be held to be ultra vires to Chapter XIII of the Constitution in consonance with Atiabari's case AIR 1961 SC 232. Accordingly, this petition is allowed. The Rajasthan Tax on Entry of Goods into Local Areas Act, 1999 is held to be ultra vires article 301. The demand raised against petitioner shall not be enforceable in case not already paid by the petitioner. However, if any amount is collected by the petitioner from its customer as entry tax, the same shall be allowed to be retained by it on proof that the burden thereof has not been passed on to buyers, consumers or users. If the burden has been so passed on to such other persons, the same shall be paid by the petitioner to the State Treasury within a month failing which such amount shall be recoverable from him. Likewise, any amount already paid by the petitioner as entry tax shall be refunded to him on proof of the fact that burden thereof has not been passed on to the users, consumers or buyers of such goods, as the case may be, as aforesaid. The petitioner may lay his claim for refund with required proof before the concerned assessing authority under the Commercial Taxes Department.
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