TMI Blog2003 (9) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... desh Commercial Tax Act, 1994 (in short, the 1994 Act ) and under the Central Sales Tax Act, 1956 (in short, the 1956 Act ). 3.. Under section 3 of the Entry Tax Act the entry tax on diesel is payable at the rate of one per cent under entry No. 24 of Schedule II appended to the Act, if such goods are brought into the local area for consumption, use or sale therein. The petitioner has been made liable to pay entry tax on diesel oil at the rate of one per cent whether it was brought from outside the State or from oil companies such as Indian Oil Corporation or Bharat Petroleum Products, etc. As the oil companies are registered dealers they paid the entry tax at the rate of one per cent on the diesel oil brought by them from outside the State and this tax burden of one per cent is being passed on to the purchasing dealers like the petitioner on the purchases made by them within the State. The entry tax of one per cent was being charged whether the diesel oil purchased within the State or brought from outside the State in the local area of Narsinghgarh either directly or indirectly. When the matter stood thus, the State Government brought out a Notification No. A-3-99-2001-ST-V (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls so that there may not be cascading effect on the value of manufacture of goods. Section 4 itself embodies the policy in clear cut terms that the entry tax on the raw material which is consumed or used in the manufacture of other goods shall be lower and, therefore, the notification fixing higher rate and that too not by the State Legislature is totally unsustainable being founded on unguided power. It is contended that the entire matter is left to the whim and caprice of the State Government to levy whatever rate of tax it chooses and, therefore, the unguided power is wholly writ large. It is contended that the levy of entry tax at the rate of ten per cent seriously affects the business of the petitioner and offends article 19(1)(g) of the Constitution. 6.. In the aforesaid factual backdrop a prayer has been made to declare section 4-A of the Entry Tax Act as ultra vires and further to declare the notification contained in annexure P-1 providing for levy of entry tax at the enhanced rate of ten per cent on diesel brought from a place outside the State of Madhya Pradesh for use in generation of electrical energy as wholly ultra vires the powers of the State Government being vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either misusing form C for the purpose of import or were using bogus form C instead of purchasing petroleum products from the same nationalised companies in the State of Madhya Pradesh. This was done to avoid payment of commercial tax, as provided under the 1994 Act. It is also urged in the return that to curb the tendency in the larger public interest and to see that the State exchequer does not suffer the State Government in exercise of powers conferred on it by section 4-A of the Entry Tax Act issued the notification in question providing for ten per cent rate of entry tax whenever diesel or other petroleum products as specified in the notification are imported into the local area from outside the State of M.P. for industrial units for use as raw material or in the generation of the electricity. The facility to import in bulk quantity is only available to industrial units and not to any individual. The petitioner was importing the diesel from outside the State and was consuming within the State but no benefit was being derived by the State Government in the shape of public revenue. Keeping in view all these factors including the demand made by the industrial organisation to red ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have heard Mr. H.S. Shrivastava, learned Senior Counsel and Mr. Sumit Nema for the petitioners and Mr. Hemant Shrivastava, learned Government Advocate for the respondents. 10.. It is submitted by Mr. Shrivastava and Mr. Sumit Nema, learned counsel for the petitioners, that the imposition of entry tax violates the free-flow of trade and commerce and thereby offends the essential facet of articles 301, 303 and 304 of the Constitution. It is put forth by them that section 4-A is absolutely unconstitutional as there is no guidance and no economic principle is inherent therein and, therefore, the same being wholly irrational and unreasonable is hit by article 14 of the Constitution. It is also urged by them that the notification which has been brought into existence is a piece of delegated legislation and by delegated legislation the rate could not have been fixed and, therefore, the notification suffers from constitutional vice. It is propounded by them that no public purpose is subserved and, therefore, the notification is bad in law. It is their further submission that the State Government could not have fixed the rate in an arbitrary manner at ten per cent without any bedrock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at a rates not exceeding ten per centum as may be specified in such notification notwithstanding anything to the contrary contained in section 4. (2) On the issue of the notification under sub-section (1), entry tax shall not be chargeable and payable on such goods at any other rate mentioned in any other provision of the Act. It is put forth that there is no guidance or economic principle involved and, therefore, the provision is hit by article 14 of the Constitution of India. It is submitted by Mr. Shrivastava that there is excessive delegation without any guidance in the provision and, therefore, the provision is vitiated in the eye of law. It is urged by him that the discretion which has been vested in the executive smacks of arbitrariness and suffers irrationally. To appreciate the aforesaid submission of the learned counsel for the petitioner we have carefully perused the aforesaid provision and bestowed our anxious consideration. On proper scrutiny, we find that the provision inheres in it the maximum limit to which the entry tax can travel, the local area has a role in it and that apart the entry tax is based upon the concept of development of local area, quite apa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Pradesh [1997] 105 STC 30 (SC); (1997) 2 SCC 37 and came to hold that the purchases of raw material inside the State to achieve the end-product cannot be a basis to justify exemption. In the aforesaid decision the division Bench held that if a dealer has utilised the paper purchased from outside State he is not entitled to exemption and grant of such exemption offends the conscience of the provisions of articles 301 and 304(a) of the Constitution. To appreciate the scenario in proper perspective it is proper to refer to articles 301, 303 and 304(a) of the Constitution as the same have been pressed into service by Mr. Shrivastava. They read as under: 301. Subject to the other provisions of this Part, trade, commerce, and intercourse throughout the territory of India shall be free. *** *** *** 303. (1) Notwithstanding anything in article 302, neither Parliament nor the Legislature of a State shall have power to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation imposed by Parliament by law relating to mineral development. The Act of 1957 does contain limitation on imposition of tax on mineral rights but entry tax is not a tax on mineral right and, therefore, is not covered by the limitations imposed by the Act of 1957. The decision in India Cement Limited AIR 1990 SC 85 is not applicable to the present case; so also is the position regarding the decisions in Orissa Cement Limited AIR 1991 SC 1676 and Synthetics and Chemicals Limited v. State of U.P. AIR 1990 SC 1927. 17.. In view of the aforesaid enunciation of law made herein and the concept of entry tax, as has been understood, from the decision rendered in the case of Associated Cement Companies AIR 1996 MP 116 We do not find that the same creates any barrier in trade. 18.. We may notice another contention raised by the learned counsel for the petitioners that the presidential assent was necessary. It is urged that the Government could not have empowered to notify. It was submitted that for the same presidential assent is necessary and it could not have been delegated. In this context we may profitably refer to the Constitution Bench decision rendered in the case of Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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