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2022 (9) TMI 386 - CST, VAT & Sales Tax
Interpretation of the exemption notification - Meaning and scope of capital goods as per the notification - levy of Entry tax at reduced rates - interplay between exemption notification dated 19.05.2003 and clause 5.1 of the EPCG scheme - Rejection of tax concession for imported goods under item 9 of exemption notification No.5/11/2002 dated 19.05.2003 issued under Section 25(1) of the Goa Tax on Entry of Goods Act, 2000 - competence of State and its authorities to levy entry tax on imported goods - seeking refund of entry tax paid by them under protest regarding imported goods under item 9 of the notification dated 19.05.2003.
HELD THAT:- Item 9 in the notification dated 19.05.2003 refers to the capital goods brought or caused to be brought or delivered into a local area by (to) units covered under EPCG Scheme - Item 9 of the notification dated 19.05.2003 significantly does not refer to all the goods or all the capital goods mentioned in clause 5.1 of the EPCG scheme. Item 9 refers to capital goods brought or caused to be brought or delivered into a local area by or (to) units covered under Export Promotion Capital Goods Scheme. Therefore, it would not be appropriate to read into item 9 any coverage to all the goods or capital goods referred to or mentioned in clause 5.1 of the EPCG scheme.
The expression capital goods referred to in item 9 of the notification dated 19.05.2003 has neither been defined under the said notification nor the Entry Tax Act, 2000. However, Section 2(B) of the Entry Tax Act, before its amendment in 2013, provides that the words and expressions used in the said Act but not defined shall have the meaning as assigned to in the Goa Sales Tax Act, 1963. After that, in the year 2013, for the expression Goa Sales Tax Act, 1964 (Act 4 of 1964), the expression the Goa Value Added Tax Act, 2005 (Goa Act 9 of 2005) was substituted.
Based on the provisions of the Goa Act and the Central Act, therefore, there was nothing wrong with the Respondents referring to the definition of capital goods in Section 2(f) of the Goa Value Added Tax Act, 2005, given explicit provision in Section 2(B) of the Entry Tax Act, 2000. Moreover, such reference was justified because authorities interpreted the notification dated 19.05.2003, which was issued under Section 25(1) of the Entry Tax Act, 2000. Now if the definition of capital goods under Section 2(f) of the Goa Value Added Tax Act, 2005 is perused, then it is quite clear that the same will not include imported cars for which the Petitioners seek to pay reduced tax.
There is no illegality in the impugned orders dated 11.08.2005 and 05.01.2006 by which the Petitioners were denied the benefit of the exemption notification. Mr Usgaonkar's contention about discrimination and consequent violation of Article 14 of the Constitution is quite misconceived. In terms of Section 25 of the Entry Tax Act, it is for the State Government to determine any specified class or persons or class of dealers or any goods or class of goods that can be exempted from payment of entry tax or qualify to pay reduced entry tax. Section 25 of the Entry Tax Act is only an enabling provision - there is no mandate to provide for an exemption or to reduce tax. Thus, if the State Government believed that it was necessary in the public interest to grant exemption or decrease the rate of entry tax only to capital goods brought or caused to be brought or delivered into a local area by or to units covered under the EPCG scheme, there is no question of any unreasonable classification or discrimination involved.
Therefore, this is not a case of Respondents attempting to frustrate the provisions of the Central EPCG scheme. The Petitioners have already obtained the benefit of the EPCG scheme by importing cars against payment of only 5% customs duty. The exemption notification dated 19.05.2003 nowhere commits to reduced entry tax rates for all goods referred to in the EPCG scheme.