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2014 (9) TMI 247 - HC - VAT and Sales TaxValidity of section 3 of the Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011 - Held that:- A bare perusal of the provisions for the Trade Development Fund created by the notification dated March 29, 2008 under the Act of 2005, amended in the year 2008, and the Trade Development Fund under the Act of 2011, clearly demonstrates that the provision is similar without there being any change and therefore, the State's submission in the counteraffidavit that the new Act is entirely different is liable to be rejected Even such projection would have saved the validity of the Act of 2011 in view of the fact that in the Act of 2011 itself, the State has provided financial utilization exclusively for the development of trade, commerce and industries in the State of Jharkhand by making provisions of construction, development and maintenance of the roads and bridges for linking the market and industrial area to their hinterlands, for providing finance, aids, grants and subsidies to financial, industrial and commercial units; creating infrastructure for supply of electrical energy and water supply to industries, marketing and other commercial complexes and creation, development and maintenance of other infrastructure for the furtherance of trade, commerce in general, which services and facilities have already declared to be not only for the benefit of the tax-payer. Therefore, basic purposes for utilization have been shown in the clauses (a) to (d) of sub-section (3) of section 4 of the Act of 2011. Works cannot be said to be benefits and services to tax-payer community from whom tax is sought to be recovered under the Act of 2011. The above benefits are required to be borne from the general revenue of the State so far as it relates to the construction of roads and bridge and finance, aid, grant and subsidies to financial or industrial or commercial units are provided by the State Financial Corporation as well as by the other financial institutions and neither in the Act nor in the notification issued under the Act, any provision has been made so as to provide any scheme to give finance, aid, grants and subsidies to financial, industrial and commercial units. The State should have first collected the quantifiable data to find out the need of the benefit and the requirements of its meeting with the levy of compensatory tax. The State Government enacted the law in wilderness in hope that the State may collect the tax and thereafter it may appropriate the tax for the benefit and services of the tax-payers and that too, without there being any data base or project report and then if it fails to justify the imposition of tax, then tax may not be refunded to the tax-payers with the plea of traders' unlawful enrichment. The statute cannot be enacted so as to create liability of the tax-payers and ultimately of the public by taking chance of it being constitutionally valid, with all probabilities of being violative of the provisions of the Constitution of India. Act of 2011 is admittedly a levy of compensatory tax but without furthering the principle of equivalence and is not providing quantifiable and measurable benefits to the tax-payers and is even not broadly proportional to the benefit. The State further failed to discharge its burden by placing material or even calculation or data before this court that payment of compensatory tax is reimbursement for the quantifiable or measurable benefits provided or to be provided to its tax-payers. The creation of the fund under clause (a) to (d) of section 4(3) in the name of the Jharkhand State Trade Development fund and utilization of the tax amount for the purposes as given in clauses (a) to (d) under sub-section (3) of section 4 do not indicate and prove reimbursement/recompense of the tax amount to the tax-payers. The purposes shown in clauses (a) to (d) of sub-section (3) of section 4 of the Act of 2011 are of general nature and not specific benefits to the tax-payers. It is declared that section 3 of the Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011 is ultra vires and unconstitutional as being not saved by article 304 of the Constitution of India and is in conflict with article 301 of the Constitution of India. Since the charging section 3 of the Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011 has been held to be ultra vires, the respondent-State cannot enforce any of the provisions of the Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011. - Decided in favour of assessee.
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