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2019 (11) TMI 718 - HC - VAT and Sales TaxLevy of entry tax - validity of insertion of new entry as “unmanufactured tobacco in sealed container” - agriculture product or not - power to levy - whether it was covered in the residual entry earlier - Karnataka Value Added Tax Act, 2003 - Central Sales Tax Act, 1956 - and Karnataka Tax on Entry of Goods Act, 1979. HELD THAT:- Section 3[1] of the KTEG Act provides that the tax on entry of goods specified in the First schedule into a local area for consumption, use or sale therein shall be levied at such rates not exceeding 5% of the value of the goods as may be specified retrospectively or prospectively by the State Government by Notification, with different dates and different rates specified in respect of different goods or different classes of goods or different local areas. Thus, the charging Section shall be effective only on the notification issued by the State Government under Section 3(1) of the KTEG Act in respect of any of the goods enumerated under the first schedule to the Act. In view of the product sold in sachet under a brand name after subjecting raw tobacco to physical process of cutting, shredding and sizing so as to make it fit for consumption including the process of being packed in a sealed container, the unmanufactured tobacco ceases to be an agricultural produce as defined under the KTEG Act and the dictionary meanings. The arguments advanced on behalf of the petitioner that Entry 96 of the First Schedule does not include unmanufactured tobacco assuming to be accepted, even then, certainly it would fall under the Residuary Entry 103. Entry 103 of First Schedule encompasses all such goods which are not covered under any of the Entries enumerated in Entry No.1 to 102 except the goods mentioned in the Second Schedule. For better clarity, understanding or specification, if the Entries are expressly made, it cannot be held to be beyond the power contemplated under Section 3[1] of the Act otherwise, the Entry 103 would render redundant or innocuous - the challenge to the notification impugned fails. The Notification impugned dated 1.10.2013 issued by the Government of Karnataka insofar it relates to the amendment made to the Notification dated 30.3.2002 for insertion of sub-item [ii] in Serial No.[5], specifying unmanufactured tobacco in “sealed container” for levy of Entry Tax at 5% with effect from 02.10.2013 cannot be held to be unjustifiable and is accordingly upheld - petition dismissed.
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