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2017 (2) TMI 350 - GUJARAT HIGH COURTLevy of entry tax - entry / import of Tractors into the State of Gujarat - the levy is discriminatory, in violation of Article 304(a) of the Constitution of India and contrary to the objects and purpose of enactment of Entry Tax Act under which Entry Tax is levied - Held that: - the entire legislative history of the Entry Tax Act as well as object and reasons behind the introduction as well as amendments of the Entry Tax Act establish that Entry Tax was always sought to be levied at the rates prescribed for such goods under the Sales Tax Act / VAT Act. In other words, there is a nexus between the Entry Tax rates and local Sales Tax / VAT rates on similar goods. Thus only those motor vehicles which were covered under Entry 128 of Schedule-IIA to the sSles Tax Act and which are now covered under residuary Entry 87 of Schedule-II to the VAT Act which attract 15% tax under the VAT Act would be covered under the entry of motor vehicles under the Entry Tax Act. Levy of entry tax at the rate of 15% on Tractors by treating them as falling under Entry for motor vehicles even though Tractors have always been covered by separate entry under the Sales Tax Act and the VAT Act and for which rate of tax under the VAT Act is 5%, therefore is dehors the scheme of the Entry Tax Act as countenanced by the legislative history as well as objects of the Entry Tax Act. To levy Entry Tax at 15% on import of Tractors into the State of Gujarat by treating them as “motor vehicles” even though local VAT Tax on Tractors is 5%, would be contrary to the object and scheme of the Entry Tax Act, State of Gujarat has come out with a notification dated 12/5/2016 by which levy of entry tax on Tractor in excess of 5% has been exempted. However, once levy of entry tax on Tractors beyond / above 5% is held to be illegal, discriminatory and violative of Article 304(a) of the Constitution of India and contrary to the object and purpose of enactment of Entry Tax Act, there is no question of exemption. Once levy itself is held to be illegal, unconstitutional and/or contrary to the objects and purpose of Entry Tax Act, there is no question of first to pay such a tax and thereafter to get refund by way of Input Tax Credit. Why should importers be forced to first pay Entry Tax which otherwise is illegal and/or discriminatory and thereafter to go for refund by way of input Tax Credit. The respondents – State cannot levy / charge Entry Tax on Tractors beyond Value Added Tax under the VAT Act i.e. beyond 5% - petition allowed - decided in favor of petitioner.
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