TMI Blog2013 (6) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to him. All that the manufacturer is required to do is to disclose quantum of such sales to the Authorities while submitting return in Form-E. Thus it can safely be concluded that section 12 has no universal application and will not apply to sales made within the same local area where there is no intention on part of the purchaser to take goods to another local area. As there is no infraction of law on part of the Petitioner Company in not making deductions of entry tax at source from persons/dealers for sales made within the same local area i.e. Mawana, as provisions of sec.12 will not apply to such sales. A fortiori, there is no justification for initiating penalty proceedings against the Petitioner Company. No disputed question of facts are involved and the court has proceeded to decide the controversy assuming the facts mentioned in the impugned notices to be correct. Even then, it has been found that the proceeding initiated on the basis of impugned notices are illegal and an exercise in futility and therefore impugned Notice are hereby quashed. The authorities are restrained from proceeding any further, in pursuance of such notices. The writ petition succeeds and is all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om such persons who intend to bring goods into a local area from any manufacturer within the State. He further submits that under section 12 of the Act neither the purchaser is under obligation to pay entry tax to the manufacturer nor manufacturer is under obligation to realize the entry tax from purchaser who does not intend to take the goods into another local area and consequently impugned notices are wholly without jurisdiction. In such circumstances, he submits that the authorities should be restrained from proceedings any further in the matter. 7. On the other hand, Sri C.B. Tripathi, special counsel for the respondent submitted that though it is not in dispute that the transactions with regard to which the penalty proceedings have been initiated are sales made to person within the same local area but section 12 of the Act which starts with non-obstante clause requires a manufacturer to realize entry tax for every sale and to deposit the same in the manner prescribed, failing which, he will make himself liable for penalty. He further submits that section 12 of the Act is not a provision which imposes entry tax on the manufacturer but is only a machinery provided under the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding five percent of the value of the goods as may be specified by the State Government by notification and different rates may be specified in respect of different goods or different classes of goods; Provided that the State Government may by notification amend the Schedule and upon issue of any such notification, the Schedule shall, subject to the provisions of sub-section (10), be deemed to be amended accordingly. (2) The Tax under sub-section (1) shall be continued to be levied till such time as is required to improve infra-structure within the State such as power road, market condition etc., with a view to facilitate better market condition for trade, commerce and industry. (3) The tax levied under sub-section (1) shall be payable by a dealer who brings or causes to be brought into the local area such goods, whether on his account or on the account of his principle or takes delivery or is entitled to take delivery of such goods on its entry into a local area. ......................... 10. It is clear that the incidence of tax is upon entry of goods specified in the Schedule into a local area for consumption, use or sale therein from any place outside that local area. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the above discussion is that no entry tax is leviable if there is no movement of goods into a local area. In case, purchase and sale of goods takes place within the same local area, then it will not attract any entry tax as there is no movement of goods into a local area from any place outside such area, State or territory of India. 17. In the instant case, it is not in dispute that the notices have been issued only in respect of transactions of sale made by the petitioner Company to persons within the same local area of Mawana where it's manufacturing unit is situate. It is also not in dispute that under the Rules framed under the Act elaborate procedure is prescribed under Rule 7 with regard to manner in which the manufacturer has to realize and deposit tax in order to ensure compliance of section 12(1) of the Act. 18. It requires a manufacturer to receive tax payable on value of goods through a Demand Draft in the name of concerned assessing authority and to file monthly return in form ''E'. It is not in dispute that the Petitioner Company has duly filed returns in form ''E' for the month of April and May, 2009 (Annexure SA-1 and SA-2 respectively). In the aforesaid statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule as may be notified by the State Government, shall at the time of taking delivery of the goods from the manufacturer, pay to the manufacturer the tax payable on entry of such goods into the local area and the manufacturer shall receive the tax so paid. The manufacturer shall not give such goods to the purchaser unless the amount of such tax has been paid by the purchaser. (2) The manufacturer receiving the tax under sub-section (1) shall submit to the Assessing Authority a return in respect of the goods supplied, and the tax received, by him under sub-section (1) and deposit the tax so received in such manner and within such time as may be prescribed. (3) Where any manufacturer fails to deposit, the tax under this section he shall be liable to pay the tax alongwith the interest and penalty, if any, payable thereon which shall be recoverable as arrears of land revenue. (4) Where the Assessing Authority is satisfied that any goods referred to in sub-section (1) is lost or destroyed after its delivery by the manufacturer and before its entry into the local area, it shall direct that the tax paid in respect of such goods shall be refunded to the person who had paid the tax u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturer within the State. If the purchaser does not intend to bring goods into a local area, it will not attract any entry tax. It is noticeable that in case the legislature had intended to bring all transactions of sale and purchase within the ambit of section 12, it could have said that "any person who purchases goods specified in the Schedule ....., shall, at the time of taking delivery of the goods from the manufacturer, pay to the manufacturer the tax payable on entry of such goods into the local area..." instead of using the words "....any person who intends to bring into a local area from any manufacturer within the State, such goods specified in the Schedule....,shall, at the time of taking delivery of goods from the manufacturer, pay to the manufacture the tax payable on entry of such goods into a local area..." Any contrary interpretation will render the words "intends to bring into a local area" otiose. It is settled principle of interpretation of statutes that every word should be given its full meaning. 25. It is noticeable that though section 12 casts an obligation on the manufacturer not to hand over goods to a purchaser, unless entry tax has been paid, but it dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishing proof of non- consumption of such goods within the local area and of their being taken outside such local area, that the refund of tax can be claimed. Section 5 has undergone amendment w.e.f. 1.11.1999. Perusal of amended provision will show that it does not contemplate any contingency for reversal/refund of entry tax paid on purchases made from local manufacturers, without the good entering into other local area except in cases where such good are lost or destroyed before their entry into a local area. 29. There is no other contingency provided under the Act, where refund can be claimed or allowed. This also supports the conclution that Act does not contemplate deposit of entry tax by the purchasers, on sales made from manufacturers, with in the same local area. 30. Thus, doctrine of 'no prejudice' cannot be pressed in the instant case to compel a manufacturer to realise entry tax on sales within same local area. In 1967 SCR(3) 577, Bhawani Cotton Mills Vs. State of Punjab and another, the Apex Court disapproved the practice of compelling a person to pay tax, when under law he is not liable to pay it by observing: "To say that if a person is not liable for paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods being lost or destroyed after delivery by the manufacturer and before entry into local area. This provisions make it clear that what is being imposed is Entry Tax and in case the goods never entered the local area the tax has to be refunded. In para 18, it has further observed as follows:- "As regards the objection that the tax is only on intention and only (sic) not on actual entry of goods into a local area, in our opinion the manufacturer obviously cannot predict whether the dealers buying goods will actually bring them into the local area or not. All that the manufacturer can know is what the dealers informs him. However, since the Entry Tax has to paid by the dealers to the manufacturer at the time of taking the delivery of the goods from the manufacturer, obviously on dealer in his sense will pay the tax and will yet not bring the goods into the local area. If the goods are lost or destroyed, he can get the refund vide sub-section (4)". 32. The aforesaid observations of the division bench were made in a different context and for repelling the argument that impugned provisions are onerous or arbitrary or places unreasonable restrictions on the manufacturer, in as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged or allegations made therein were true, none of the conditions laid down in the specified sections was contravened, the respondent would have no jurisdiction to initiate proceedings pursuant to that notice. To state it differently, if on a true construction of the provisions of the said two sections, the respondent has no jurisdiction to initiate proceedings or make an inquiry under the said sections in respect of certain acts alleged to have been done by the appellants, the respondent can certainly be prohibited from proceeding with the same." 37. Similar view was taken by the Apex Court in the case of Calcutta Discount Co. Ltd Vs. Income Tax Officer, (1961) 41 ITR 191, wherein the reassessment proceedings initiated on the basis of notice were challenged as barred by limitation. The Apex Court observed as under: "Mr. Shastri next pointed out that at the stage when the Income Tax Officer issued the notices he was not acting judicially or quasi judicially and so a writ or certiorari or prohibition cannot issue. It is well settled however that though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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