TMI Blog2007 (7) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... into the local areas by the petitioner for weighment. The petitioner sold coal worth Rs. 82,27,701.35 to different parties and on the sale bills, the petitioner did not endorse certificate as required by sub-section (1) of section 7 of the Act that the goods were local goods and entry tax was not paid. Out of this amount, sales of the value of Rs. 47,47,581.71 were made to registered dealers who had given certificates that entry tax had been paid on the coal purchased by them. Sales of the value of Rs. 4,97,694.03 were made to the Defence Department of the Government of India and sales of the value of Rs. 55,623.62 had been made to new industries and sales of the value of Rs. 3,13,402.49 to manufacturers of tax-free goods and rest of the sales of the amount of Rs. 26,11,419.50 were made to other dealers, some of whom were unregistered dealers. The assessing officer levied a penalty of Rs. 3,08,388.52 under section 7(5) of the Act for default on the part of the petitioner to endorse a certificate on the bills raised for the sale of Rs. 82,27,701.35 that the goods were local goods and entry tax had not been paid. Aggrieved, the petitioner filed an appeal before the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the petitioner, submitted that in Western Coalfields Ltd. v. Commissioner of Sales Tax, M.P. [2009] 19 VST 459 (MP); [2007] 10 STJ 364 (MP) a Division Bench of this court has already examined the matter at length and held that liability to pay the entry tax under the Act arises only if entry of goods into the local area is for consumption or use or sale in the local area and, therefore, if any entry of goods into a local area is only for the purpose of weighment and not for consumption, use or sale of goods within the local area, no entry tax is payable. He submitted that the Board of Revenue has accepted the view taken by the assessing officer that determination of price takes place only after weighment and, therefore, the petitioner, having caused the entry of goods into the local areas in which the weighbridges were situated, was not liable to entry tax. He submitted that the Supreme Court in the case of Entry Tax Officer, Bangalore v. Chandanmal Champalal Co. [1994] 95 STC 5; [1994] 4 SCC 463, relying on its earlier decisions in Burmah-Shell Oil Storage and Distributing Co. of India Ltd. v. Belgaum Borough Municipality, Belgaum [1963] Supp. 2 SCR 216; [1963] AI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the local area and if entry of goods into a local area is only for the purpose of weighment and not for consumption, use or sale of goods within the local area, no entry tax is payable. In view of the aforesaid decision of the Division Bench in Western Coalfields Ltd. [2009] 19 VST 459 (MP); [2007] 10 STJ 364 (MP), we answer the first question referred to us as follows: (1) on the facts and circumstances of the case, the Board was not right in holding that the entry in the local area of weighbridge caused by the dealer made him liable to entry tax on the coal, (2) the dealer was not liable to entry tax raised on the coal in its mines which was loaded in the trucks brought by purchasers after full payment of price only and release orders issued in favour of the purchasers and (3) on sale of coal, when the delivery was given to the purchaser/agent at the pit mouth in the truck brought by the purchaser or at the weighbridge after the coal was weighed, the dealer would not be liable to entry tax because the coal was not sold for use or consumption in the local area and instead was taken out of the local area soon after weighment. On the fourth, fifth, sixth and seventh questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o rebut the presumption that he had facilitated the evasion of entry tax on local goods sold to these industries by not making a statement on the bills that the goods were local goods and no entry tax had been paid on such local goods. He submitted that sub-sections (1) and (5) of section 7 of the Act applies to sales to registered dealers and since the Defence Department does not carry on any licence and is not a dealer, no penalty can be levied under sub-section (5) of section 7 for contravention of subsection (1) of section 7 in case of sales to the Defence Department. Mr. Awasthy, learned Government Advocate, on the other hand, submitted that the language of sub-sections (1) to (5) of section 7 of the Act is clear that every registered dealer who, in course of his business, manufactures, produces or grows any goods specified in Schedule II in a local area in such manner that the goods become local goods in relation to that local area, has to issue to the registered dealer, who purchases local goods from him, a bill, invoice or cash memo specifically stating that the goods being sold are local goods in relation to such local area and that no entry tax has been paid on such go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal goods in relation to a local area and that no entry tax has been paid on such goods so that if a registered dealer causes the entry of such local goods into another local area, he has to pay tax on entry of such goods into another local area as provided in section 3 of the Act. It follows, therefore, that where the selling registered dealer does not make a statement in the bill, invoice or cash memo that the goods being sold are local goods in relation to a local area and that no entry tax has been paid on such local goods, the purchasing registered dealer is not put to notice that he would be liable to entry tax on such goods if he causes entry of such goods into another local area and in the process he is likely to evade entry tax on the entry of such local goods sold to him into another local area. For this reason, sub-section (5) of section 7 of the Act provides that where a registered dealer sells local goods in course of his business to other registered dealers and fails to make a statement in the bill, invoice or cash memo that the goods being sold are local goods in relation to such local area and that no entry tax has been paid on such local goods, it shall be presumed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the registered dealers that the goods were local goods in relation to a particular local area where they were produced by the petitioner and that no entry tax had been paid on such goods. The Board of Revenue appears to have taken a view that the petitioner has not been able to rebut the presumption because the registered dealers, who have purchased the coal, could well obtain refunds in the light of the decision of the Supreme Court in Ranomal Ramesh Kumar's case and since there was no proof that such refunds have not been claimed, it could not be said that entry tax had not been evaded by the purchasing registered dealers. In our considered opinion, this reasoning given by the Board of Revenue is far-fetched. So far as the petitioner was concerned, it was required to establish only that the purchasing registered dealers had, in fact, paid the entry tax on the coal purchased by them and therefore the petitioner did not facilitate the evasion of entry tax by not making the statement in the bills under which the coal was sold by the petitioner to the registered dealers that the goods were local goods and entry tax was not paid on such local goods. We accordingly answer quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d payment or for commission, remuneration or other valuable consideration and includes (i) a local authority, a company, an undivided Hindu family or any society (including a co-operative society), club, firm or association which carries on such business; (ii) a society (including a co-operative society), club, firm or association which buys goods from, or sells, supplies or distributes goods to, its members; (iii) a commission agent, a broker, a del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of the principal; (iv) any person who transfers the right to use any goods for any purpose, (whether or not for a specified period) in the course of business to any other person. It will be clear from the definition of dealer that it means a person who carries on the business of buying, selling, supplying or distributing the goods. The Defence Department of the Government of India does not carry on the business of buying, selling, supplying or distributing the goods. Hence the Defence Department of the Government of India is not a dealer and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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