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2013 (6) TMI 28 - ALLAHABAD HIGH COURTLevy of entry tax - Manufacturer of sugar - whether not a 'dealer' within the meaning of Section 2(b) of the Act and not liable to entry tax - The Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 - allegation on assessee selling non levy sugar from its Mawana unit to the dealers of the local area and although non levy sugar attracts entry tax @ 2% but the same has not been deducted nor deposited as per the provisions of section 12 therefore, the Company should show cause why penalty of twice the amount - Held that:- It is noticeable that though section 12 casts an obligation on the manufacturer not to hand over goods to a purchaser, unless entry tax has been paid, but it depends upon the intention of the person making the purchase. If a dealer registered under the Act within the same local area, purchases goods from the local manufacturer with intent to sell goods within the same local area, then the purchaser is neither obliged to deposit entry tax with the manufacturer nor the manufacturer is under obligation of law to refuse to sell the goods to him. All that the manufacturer is required to do is to disclose quantum of such sales to the Authorities while submitting return in Form-E. Thus it can safely be concluded that section 12 has no universal application and will not apply to sales made within the same local area where there is no intention on part of the purchaser to take goods to another local area. As there is no infraction of law on part of the Petitioner Company in not making deductions of entry tax at source from persons/dealers for sales made within the same local area i.e. Mawana, as provisions of sec.12 will not apply to such sales. A fortiori, there is no justification for initiating penalty proceedings against the Petitioner Company. No disputed question of facts are involved and the court has proceeded to decide the controversy assuming the facts mentioned in the impugned notices to be correct. Even then, it has been found that the proceeding initiated on the basis of impugned notices are illegal and an exercise in futility and therefore impugned Notice are hereby quashed. The authorities are restrained from proceeding any further, in pursuance of such notices. The writ petition succeeds and is allowed.
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