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2022 (8) TMI 371 - HC - VAT and Sales TaxDeletion of demand of entry tax created under Section 12 of Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 - sale of sugar manufactured by the assessee - when it is found that delivery of sugar has been given at the factory gate and thereafter the purchaser was at liberty to transport the goods at his own choice - local sale made by the opposite party/dealer or not - delivery of sugar outside the State of U.P. or the export of the same outside the State not established - HELD THAT:- Undisputedly, the levy of entry tax under the Act arises on scheduled goods when they are proposed to be consumed, used or sold in another local area, within the State. By very nature of that levy, two exclusions arise. First, no Entry Tax may be levied on goods that are intended to be consumed, used or sold within the local area where they are produced. It is so because the levy of Entry Tax is only on the causing of entry of scheduled goods into a local area. It assumes goods to be taxed were in existence before their entry into that local area. Only then they may be brought into a different local area which would lead to levy of entry tax. Therefore, goods consumed, used and sold within the local area of their origin or manufacture would not attract levy of entry tax. This necessary exclusion is incorporated in the statute itself, under Section 4(1) of the Act. The second exclusion that must always exist is with respect to goods that may be taken out of the local area where they are produced, to a local area outside the State of U.P. whether by way of export to another place within the country or in the course of export sale outside the country. That exclusion must exist as it is inherent in the Constitutional scheme - By using the phrase "intends to bring into the local area", the legislature had made it plain that the provision of Section 12 of the Act would apply only if the intention of the purchaser is to take the goods to a "local area" as defined under Section 2(d) of the Act. Those areas would be such as may fall within the territory of State of U.P. only and not outside it. In the facts of the present case, the assessee relied on documents such as invoice, transportation documents and payments received through bank. On the contrary, the revenue only relied on the delivery of goods made at the factory gate of the assessee and, therefore, the sale being complete at that point of time. Hence intention to carry the goods outside the State was stated to be lacking. Thus, for the purpose of applicability of Section 5 of the Central Act, it was necessary to establish existence of prior contract of sale occasioning the movement of goods, to outside the country. That issue is not before this Court, in the present case. It would arise and would have to be tested on its own merit, in the central assesment, if that issue arose. However, for the purposes of the Act, the lesser test would allow the assessee to successfully contend that no occasion arose as may have created the obligation on the assessee to charge and receive payment on entry tax act while making sale of goods that were intended to be carried outside the State of U.P. In absence of any evidence led by the revenue to doubt the intention (to transport the taxable goods outside the State of U.P. for their consumption, use or sale at such other place), established on the strength of sale invoice, transportation documents and payments made, no liability arose under Section 12 of the Act. In absence of any evidence led by the revenue to establish that the goods were not actually exported and in absence of any credible material to doubt the evidence led by the assessee that the goods were taken outside the State of U.P., there is no perversity in the order of the Tribunal. Revision dismissed.
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