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2015 (4) TMI 1082 - MADHYA PRADESH HIGH COURT

2015 (4) TMI 1082 - MADHYA PRADESH HIGH COURT - [2015] 83 VST 178 (MP) - Leviability of entry tax by virtue of statutory provisions as contained under the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 - Different grades of tea is brought into the State of Madhya Pradesh by the petitioner and in the process of blending, different grades of tea is used while conducting the process of blending - Held that:- in the light of the judgment delivered by the Division Bench of .....

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commodity in question has been used and the words 'consumption and use' are mentioned in the charging section, in the light of the aforesaid Division Bench judgment, the revisional authority was justified in dismissing the revision of the petitioner, therefore the entry tax is to be levied.

Imposition of penalty - Non-payment of tax dues - Held that:- as per the statutory provision of law and the fact the liability of entry tax was not satisfied in time by the petitioner and the matt .....

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0, 9766 of 2010, 3914 of 2011, 5617, 10205 of 2012, 9535, 9537, 9539, 10593 of 2013, 6416 of 2014of 2013 - Dated:- 22-4-2015 - P.K. Jaiswal and S.C. Sharma, JJ. ORDER Regard being had to the similitude in the controversy involved in the present cases, the writ petitions were analogously heard and by a common order, they are being disposed of by this court. Facts of Writ Petition No. 462 of 2009 are narrated here under. The petitioner before this court has filed this present writ petition being a .....

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Act, 1956 engaged in the business of manufacture and sale of tea. The petitioner-company is having its own tea gardens situated outside the State of Madhya Pradesh where the tea is grown and processed in the units which results in finished commodities. The tea manufactured by the petitioner company outside the State of Madhya Pradesh is sold through its C & F depots and consignment agents appointed throughout the country. The company is also registered as a dealer under the provisions of th .....

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rades of finished tea from its gardens/depots situated outside the State of Madhya Pradesh and in Madhya Pradesh blending of tea is done and it is repacked in smaller consumer packets. In short, different grades of tea is mixed at Indore and contention of the petitioner is that it is nothing but a physical mixing of different grades of tea without involving any mechanical or chemical process, no physical or chemical change even there is no change in the commercial name of the commodity and prior .....

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goods which are not meant for consumption or use in local area. Petitioner has further stated that thereafter the company started paying entry tax at the time of entry of goods and on transfer of goods outside the State of Madhya Pradesh a claim for set off was made in accordance with the proviso to section 3(1) of the Entry Tax Act. Petitioner has further stated that the modus operandi was changed in view of the fact that there was a time lag between the entry of the goods and subsequent transf .....

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her stated that for the period with effect from April 1, 2003 to March 31, 2003 the petitioner claimed a set off in accordance with the proviso to section 3(1) of the Entry Tax Act in respect of blended tea transferred outside the State of Madhya Pradesh. The assessment was completed by order dated December 7, 2006. The petitioner submitted a detailed reply and stated that in view of the notification issued by the State Government in exercise of the powers conferred by clause (o) of section 2 of .....

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and his contention is that such definition of manufacture was applicable for the purpose of entry tax also. It has also been stated that since blending of tea has been statutory excluded from the definition of manufacture and in absence of any manufacture there could not be any change in commercial commodity as such it can never be said that the tea brought to the State of Madhya Pradesh for the purpose of blending is either used or consumed in the local area. Petitioner's claim was disallo .....

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titioner has preferred a revision before the Additional Commissioner of Commercial Tax and the same has been dismissed. Contention of the petitioner is that the blending of tea does not mean that the goods have been used or consumed and, therefore, in the light of section 3(1) of the Entry Tax Act no such tax can be imposed upon the petitioner-company and the petitioner-company is entitled for a set off. Learned counsel for the petitioner has placed reliance upon the following judgments: (1) Nil .....

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s Tax, U. P. v. Lal Kunwa Stone Crusher (P.) Ltd. [2000] 118 STC 287 (SC). (7) State of Maharashtra v. Mahalaxmi Stores [2003] 129 STC 79 (SC). and his contention is that in the aforesaid case mixing of different grades of tea does not constitute a process of manufacture and, therefore, once the process of manufacture is not taking place the question of using different grades of tea while conducting the blending process does not arise. The petitioner has prayed for allowing of the writ petition .....

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y the petitioner does not arise. He has placed reliance upon the judgment delivered in the case of Badrinarayan v. State of M. P. reported in [1988] 70 STC 12 (MP) and in the case of Chandrabhan & Co. v. D. K. Verma reported in [1981] CTJ 60 and his contention is that keeping in view the aforesaid judgments as different grades of tea is used in the process of blending the question of allowing the claim of the petitioner does not arise and entry tax has rightly been charged. Heard learned cou .....

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siness of a dealer of goods specified in Schedule III into each local area for consumption or use of such goods but not for sale therein; and such tax shall be paid by every dealer liable to tax under the Vanijyik Kar Adhiniyam who has effected entry of such goods: Provided that no tax under this sub-section shall be levied,- (i) in respect of goods specified in Schedule II other than the local goods, purchased from a registered dealer on which entry tax is payable or paid by the selling registe .....

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cified in Schedule II or Schedule III effected during any period has been deposited by a dealer into the Government treasury and subsequent to such entry the goods are disposed of in the manner described in clause (ii) of this proviso, such dealer shall be entitled to a set-off of the tax already paid by him in respect of such goods and such set-off shall be adjusted towards the tax payable by him in such manner as may be prescribed: Provided further that notwithstanding anything contained in th .....

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I, other than goods which are local goods in relation to such local area, from another dealer of the same local area for consumption or use, the entry of such goods shall be deemed to have been effected into such local area by the dealer who has purchased such goods for the aforesaid purpose and entry tax shall be paid by such dealer: Provided also that in respect of packing material 'sale' shall mean the sale of packing material as such and shall not include its sale along with the good .....

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fferent grades of tea is used while conducting the process of blending. In the case of Badrinarayan [1988] 70 STC 12 (MP), the Division Bench 7 of this court, in paragraph 3 to 5 has held as under (pages 14 to 16 in 70 STC): "3. Having heard the learned counsel for the parties, we have come to the conclusion that this petition deserves to be allowed. The short question for consideration in this case is whether the petitioner was entitled to the grant of eligibility certificate in accordance .....

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DULE Class of dealers Period Restrictions and conditions subject to which exemption has been granted 1 2 3 1. Dealers who- (a) hold certificate of registration under the Madhya Pradesh General Sales Tax Act, 1958 (No. 2 of 1959); (b) are registered as small-scale industrial units with the Industries Department of the Government of Madhya Pradesh; and (c) have set up industry in any of the districts specified in Part I of the annexure. Two years from the date of commencement of production. The de .....

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rpose.' Now, it is not disputed that the petitioner has set up an industry at Indore, which is one of the districts specified in the annexure to the notification. It is also not disputed that the petitioner holds a certificate of registration under the Act. The only ground on the basis of which eligibility certificate was refused to the petitioner was that the process of blending tea leaves carried on by the petitioner, did not amount to 'manufacture' and hence, the petitioner could .....

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of the Bombay High Court in Nilgiri Ceylon Tea Supplying Co. v. State of Bombay [1959] 10 STC 500 (Bom). The assessees in this case were registered dealers in tea under the Bombay Sales Tax Act, 1953, and they purchased in bulk diverse brands of tea and without the application of any mechanical or chemical process, blended these brands of different qualities according to a certain formula evolved by them and sold the tea mixture in the market. The question arose before the sales tax authorities .....

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t;processed" within the meaning of the proviso to clause (a) of section 8, because there was "not even application of mechanical force so as to subject the commodity to a process, manufacture, development or preparation" and the commodity remained in the same condition. The argument of the Revenue before us was that this decision of the Bombay High Court was on all fours with the present case and if the blending of different brands of tea for the purpose of producing a tea mixture .....

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Bombay High Court in the Nilgiri Ceylon Tea Supplying Co.'s case [1959] 10 STC 500 (Bom) as laying down the correct law. When different brands of tea were mixed by the assesses in the Nilgiri Ceylon Tea Supplying Co.'s case [1959] 10 STC 500 (Bom) for the purpose of producing a tea mixture of a different kind and quality according to a formula evolved by them, there was plainly and indubitably processing of the different brands of tea, because these brands of tea experienced, as a result .....

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Act, 'blending of tea' is one of the industrial units specified, to whom exemption under the notification would not be available. This shows that but for this provision, exemption would have been available. Such a provision was not incorporated in the notification dated October 23, 1981. Under the circumstances, it must be held that the refusal to issue eligibility certificate to the petitioner was not justified. 5. For all these reasons, this petition is allowed. The respondents are dir .....

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held as under: "The words 'consumption' and 'use' in the context of entry 52 of List II were construed by the Supreme Court in Burmah Shell Oil Storage and Distributing Co. of India Ltd. v. Belgaum Borough Municipality AIR 1963 SC 906. The Supreme Court observed that 'the two expressions use and consumption together therefore, connote the bringing in of goods and animals not with a view to taking them out again but with a view to their retention either for use without us .....

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oob Co. v. State of Bombay AIR 1961 SC 213 which was a case relating to the application of the Explanation to article 286(a) of the Constitution. In Anwarkhan Mahboob's case AIR 1961 SC 213 the Supreme Court said that 'consumption consists in the act of taking such advantage of the commodities and services produced as constitute the "utilization" thereof'. The court further observed that the word 'consumption' in not limited to the final act of consumption and that .....

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n spinning; of spun yarn being consumed in weaving of woven cloth being consumed in the making of 'wearing apparel'. Further light on the meaning of the words 'consumption' and 'use' is thrown by the recent decision of the Supreme Court in Kathiawar Industries v. Jafftabad Municipality AIR 1979 SC 1721 where it was held that uncrushed salt brought within the municipality for being crushed in the appellant's factory before it was exported was brought for consumption or .....

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consumption or use of a commodity entering a local area will make the commodity liable to tax under the Entry Tax Act." In the words of honourable Shri Justice G. P. Singh, the then Chief Justice, the word 'consumption' is a word of wide import and the word used is wider than consumption and any kind of utilisation which is ordinarily understood as consumption or use of a commodity entering a local area will make the commodity liable to tax under the Entry Tax Act. In the light of t .....

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x Act, as the commodity in question has been used and the words 'consumption and use' are mentioned in the charging section, in the light of the Division Bench judgments, this court is of the considered opinion that the revisional authority was justified in dismissing the revision of the petitioner. In respect of the judgments relied upon by the learned counsel for the petitioner, as they all relate to manufacturing process and the term manufacture, are of no help to the petitioner. No c .....

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he point of imposition of penalty. Section 69 of the Madhya Pradesh Commercial Tax Act, reads as under: "69. Power of Commissioner or appellate or revisional authority to impose penalty in certain circumstances.-(1) If the Commissioner or the appellate or revisional authority, in the course of any proceedings under this Act is satisfied that a dealer has concealed his turnover or the aggregate amount of purchase prices in respect of any goods or has furnished false particulars of his sales .....

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giving the dealer an opportunity of being heard. On hearing the dealer, the Commissioner or the appellate or the revisional authority as the case may be, shall pass an order not later than one calendar year from the date of initiation of such proceeding or within such further time as allowed by the State Government, directing the dealer that, he shall in addition to the tax payable by him pay by way of penalty a sum which shall not be less than three times but shall not exceed five times of the .....

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