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The Tata Power Company Limited and Mr. Arun Bapat Versus State of Maharashtra and Others and Vica-Versa

2016 (8) TMI 299 - BOMBAY HIGH COURT

Levy of entry tax – Low Sulphur waxy residue brought from abroad – low Sulphur fuel oil – legislative competence of the state of Maharashtra – revenue neutral exercise or not - Held that:- so long as the import for consumption, use or sale within the local area attracts the levy, it is immaterial whether the goods originally arrived from outside the country or from another state within the country. - The provisions of the Act read together as a whole so also harmoniously lead to the conclus .....

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oods from other parts of the country or from other States within the same country is also an import within the meaning of the Act. We cannot, therefore, restrict the definition of the words “import” and “importer” in the manner suggested by Mr.Dada. His second contention must, therefore, fail. - Constitutional validity upheld - Decided against the assessee. - Revenue neutrality - it was contended that the purpose of entry tax is to neutralize difference between sales tax in the importing Sta .....

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by the language of sub-section (5) of section 3 which states that no tax shall be levied on the specified goods by the dealer registered under the Maharashtra Value Added Tax Act who brings such goods into any local area for the purpose of resale in the State or sale in the course of inter-state trade or commerce or export out of the territory of India. - Therefore, if they are imported from abroad but are not consumed, used or sold within the local areas after being brought in, then, the entry .....

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icle 301 is violated. Further, the petitioners have not anywhere pleaded that even after the State amended the statutes and provided for a scheme of refund / rebate / set off, the so-called barrier still continues, or another barrier has been created. - Thus, merely on the strength of the judgment in the case of Eurotex Industries [2004 (1) TMI 651 - BOMBAY HIGH COURT] it would not be possible to consider the question. - decided against the assessee. - The petition does not aver in specific .....

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ent under the Entry Tax Act in Form No. 5 to the Entry Tax Rules was issued to the dealer-petitioner on 11th June 2013. A copy of that notice is termed by the petitioner No.1 itself as a show-cause notice. The notice is in Form No. 5 and must refer to the returns-cum-challans filed by the petitioner. However, if the order of assessment is carefully perused and though made in Form No. 9 it does not refer to the details of the return. - Scope of the entry in the schedule - classification - Hel .....

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product as furnace oil and include therein heavy furnace oil and residual furnace oil, but to rule out any confusion or doubt even in relation to petroleum fuel oils so long as the description of a particular product or goods is of that category, then it would also include heavy furnace oil and residual furnace oil. Thus, no controversy. - Unless the petitioners discharge their tax liability at their instance, no consideration to the plea of revenue neutrality – appeal dismissed – recovery .....

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B.B. Sharma, AGP COMMON JUDGMENT: [Per S.C. Dharmadhikari, J.] 1. The writ petition and the appeals were heard together. Since common questions of fact and law are raised therein, so also common submissions canvassed, that we dispose them off by this common judgment. 2. The essential relief sought in this writ petition is that this Court should declare that Low Sulphur Fuel Oil and Low Sulphur Waxy Residue brought from abroad are not liable to the levy of entry tax, and the levy and assessment t .....

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Corporate (Legal) who is also a shareholder of the company against the State of Maharashtra and the Commissioner of Sales Tax, Maharashtra State. It is contended that the 2nd respondent-Commissioner appointed under Section 10 of the Maharashtra Value Added Tax Act, 2002 (for short MVAT Act ) is responsible for administering the Maharashtra Entry Tax Act and reference is made in that regard to section 6 of the Maharashtra Tax Act, 2002. 5. The 3rd respondent is a Tribunal, which, though functiona .....

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o as LSWR ) and Low Sulphur Fuel Oil (for short, referred to as LSFO ) into the local area in the State of Maharashtra for the consumption, use or sale therein, it is ultra vires the Constitutional provisions and some of the other laws referred therein. 7. The claim of the petitioners therein, as well as here, is that the raw material for their power plant at Chembur, Mumbai was imported from abroad through the Port of Mumbai. Writ Petition No.429 of 2003 was disposed of finally by a Division Be .....

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ble Supreme Court of India in the case of M/s. Jindal Strips Ltd. & Ors. vs State of Harayana & Ors. (2003) 8 SCC 60 to reach this ultimate conclusion. Thus, Entry No.13 of the Schedule appended to the Maharashtra Entry Tax Act was declared as unauthorized and unconstitutional. 8. The 1st respondent-State preferred a Special Leave Petition before the Hon ble Supreme Court of India being SLP NO.7468-7469/2004. At the time of hearing, the challenge was restricted to that part of the High .....

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h the levy of entry tax on furnace oil has been removed retrospectively, nothing survives in these Special Leave Petitions. The Special Leave Petitions are accordingly dismissed as infructuous. We, however, clarify that the impugned order of the High Court shall not be used as precedent in any other matter. 9. It is the case of the petitioners that, after this order of the Hon ble Supreme Court, it was expected that the respondents would not proceed to levy the entry tax. However, the 2nd respon .....

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a time bar or limitation. In that regard, the attention of respondent No.2 was invited to Rule 8 of the Maharashtra Tax on the Entry of Goods into Local Areas Rules, 2002 (for short Maharashtra Entry Tax Rules ). Since the stipulated three-month period had lapsed much earlier, the action proposed was, it was contended, beyond the period of limitation. The petition proceeds on the footing that the business of generating electricity in the State of Maharashtra requires the petitioners to comply wi .....

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March 2013, for the assessment year 2008-2009. Annexure D and D-1 are copies of the same. In both these orders, entry tax was levied at 12.5% along with interest under section 30(3) of the MVAT Act and penalty under section 29(3) of that Act read with section 6 of the Maharashtra Entry Tax Act, resulting in a very huge financial burden on the petitioners. The details of the demand are set out in paragraph 8 of the petition. 11. Aggrieved by the order of assessment, appeals were preferred before .....

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itioner No.1. Reliance was placed on several judgments of the High Courts and Supreme Court. These pleas are raised in writing and copies of the communications in that behalf are annexed as Annexures - G to L. The amount was paid under protest and without prejudice to the rights and contentions. Before the First Appellate Authority, written submissions on several occasions were submitted along with technical data and certificates of experts. Copies of all these are Annexures M and N to the writ .....

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the judgment dated 16th April 2015, delivered by the Tribunal. Aggrieved by these orders, the Petitioners filed the present writ petition. Since objections were raised to the maintainability of the writ petition on the ground that there is an alternative and equally efficacious remedy of appeal to this Court, the connected appeals have been filed. 12. The Memo of this writ petition was amended and to enable the amendment to be carried out, ad-interim orders passed by this Court on 7th May 2015, .....

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the State; Petitioners in that regard submit that the expression brought or receiving into any goods into a local area from a place outside the State does not include the goods imported from outside the country from abroad nor could it be inferred that the legislature was not aware about its limitation under Article 246 (3) read with Article 286 of the Constitution. 9b) The Petitioners submit that the definition of the term value of the goods in section 2 (n) no reference is made to the customs .....

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entral Sales Tax Act, 1956 also support the above submission. The said provision of section 5 (2) read as under: 5. When is a sale or purchase of goods said to take place in the course of import or export . (1) ….................... (2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before .....

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ocal refineries were unable to supply. 9e) Petitioners submit that Low Sulphur fuel oil and Low Sulphur Waxy Residue have significantly lower sulphur content than locally available low sulphur heavy stock. Even internationally low sulphur waxy residue is scarcely available from selected sources like Singapore, Indonesia and Malaysia. The Petitioners therefore submit that the goods imported from outside the country were not covered by the scope of the Act. 9f) Petitioners submit that the State le .....

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petition is filed by the Additional Commissioner of Sales Tax. In this affidavit, apart from the preliminary objections on merits it is contended that in justifying taxing a transaction of the nature involved in this case, the respondents rely upon Entry 52 of List II of the VIIth Schedule to the Constitution of India. Therefore, there is no question of lack of jurisdiction. The petitioners have not made out any case of violation of any fundamental or constitutional rights. Then it is contended .....

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ashtra. This, according to the Division Bench of this Court, violated Article 301 of the Constitution of India. This judgment of the Division Bench was challenged in the Hon ble Supreme Court of India. In the meantime, the State inserted sub-clause (iv) to clause (a) in sub-section (1) of section 42 of the Bombay Sales Tax Act, 1959 with retrospective effect. This was deemed to have been added with effect from 1st October 2002, by Maharashtra Act No.13 of 2004 dated 29th January 2004. This amend .....

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Act is to be found in section 48(1)(a)(iv). Reliance is placed thereon to urge that a level playing field has been created for the importer and the local dealers. It is, therefore, submitted that the present petition will have to be dealt with independently of the judgment of the Division Bench of this Court on which the petitioners rely. 16. The Affidavit in Reply then states that the proceedings for assessment are governed by section 6 of the Maharashtra Entry Tax Act. Section 6 refers to the .....

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year 2005-2006, and, as per the third proviso to section 23(2), on or before 30th June 2013 for the financial year 2008-2009. In paragraph 13 of the Affidavit in Reply it is urged that Rule 8 of the Maharashtra Entry Tax Rules, 2002 would not apply as the Act will prevail over the Rules. In any event, once the assessment has been done by the officers in accordance with the provisions of the MVAT Act, the provisions thereof, including the powers conferred thereunder, would govern the assessments .....

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etitioners have not deposited the full entry tax amount in the Government Treasury. They will not be entitled to claim refund until such deposit is made. The details as per assessment order, including the break-up of the tax amount is provided in paragraph 15 of the Affidavit in Reply at page 339 of the paper-book. It is urged that only the sums of ₹ 33,82,92,497/- and ₹ 42,36,59,447/- for the respective assessment years have been paid. This is far short of the tax component. 18. It .....

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chedule to the Act. The dispute about the goods of the petitioner not falling under any of these entries cannot be a substantial question of law to be entertained at this stage. 19. Then the grounds of the writ petition are dealt with and it is submitted that once the levy is of tax, then no question of any quid pro quo arises. In paragraph 17 of the Affidavit in Reply various provisions of the two enactments are relied upon. It is pointed out that the present case is not of import of motor vehi .....

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1st October 2002 to 31st March 2005, the goods in question were not covered or liable to entry tax. Thus, at all material times, the goods which are subject matter of the petition were covered under Entry No.12 or 13 of the Schedule. The description of the Entry is material and not its number. Thus, it is submitted that the Legislature is fully empowered to alter or change the basis of the judgment of this Court. In other words, the law on which the judgment of this Court is based can always be .....

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e levy of sales tax. It is in these circumstances, and when it is not shown that Articles 269, 286 and 301 have been violated, that the writ petition must fail and should be dismissed. 20. Petitioner No.2 has filed an Affidavit in Rejoinder. Apart from reiterating the averments in the petition, what has been attempted is to invite this Court s attention to Article 246(3) read with Article 286. It is also urged that apart from these Articles, the deponent of the Affidavit in Reply ignores section .....

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f by amending or inserting some words and phrases will not enable the respondents to overcome this binding judgment. It is urged that the absence of set off is not the only lacuna or defect pointed out by this Court in the Division Bench judgment. Once the levy of entry tax was held to be unauthorised and unconstitutional, then the Supreme Court order, one that is extremely brief, will not assist the State. 21. It is urged that Rule 8 of the Maharashtra Entry Tax Rules is a specific provision. T .....

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neously assume that it would be the MVAT Act and the Rules framed thereunder which are the governing provisions. That would enable them to ignore Rule 8 of the Maharashtra Entry Tax Rules. This is a legally unsound and erroneous assumption. The respondents are, therefore, misguiding this Court. Similar is the case with regard to applicability of Article 286 of the Constitution of India. A plain reading thereof would reveal that it was equally applicable to transactions of sale or purchase of goo .....

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ereunder will have necessarily to be for awarding specific services to the persons on whom tax is sought to be levied. In the present case, the State is admitting that the levy is noncompensatory. Therefore, the Tribunal should have taken this stand of the State to its logical conclusion and set aside the demand in toto. It is the petitioners case that expert opinions would demonstrate that the raw material imported from abroad cannot be subjected to entry tax. That is not covered by the wording .....

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or counsel, would submit that the entire levy is unconstitutional being ultra vires Articles 286, 301 and 304. This Court should allow the writ petition. Mr. Dada has, for convenience sake, divided his submissions into several heads. 24. At the outset, he would submit that the entry tax was challenged by the petitioners and another entity M/s. Eurotex. Inviting our attention to the Division Bench judgment, a copy of which is at page 28 of the paperbook, Mr. Dada would submit that it was held tha .....

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ry Tax Act under which the tax could be levied. Mr. Dada, therefore, submits that it is erroneous on the part of the Tribunal to hold that Entry No.13 exists. It is a non-existent entry on which the Tribunal has relied to uphold the assessment. 25. Then Mr. Dada would submit that as far as the effect of the Division Bench judgment on the levy being noncompensatory is concerned, that binds the State. Once it binds the State, then no attempt can be made to overrule the binding judgment of this Cou .....

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ng that power of assessment is derived from the MVAT Act. Mr. Dada submits that the respondents are misreading and misinterpreting section 6 of the Maharashtra Entry Tax Act. There are specific powers conferred by the MVAT Act insofar as assessment is concerned. Thus, powers including the jurisdiction and competence of the officials thereunder can at best be read into the Maharashtra Entry Tax Act. However, a period of limitation is not just a time-bar, but acts as a fetter on the exercise of po .....

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ion must succeed. 27. Then Mr. Dada brought in the plea of applicability of the Maharashtra Entry Tax Act and submits that the said Act does not apply to goods imported from out of the country; meaning thereby, imported goods brought in India cannot be subjected to entry tax. If the charging section is looked at very carefully, then the act of import from outside the State is not covered by the enactment in question. In the circumstances, once the petitioners are consuming the subject imported g .....

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levy would then amount to the charging of a customs duty on imports, i.e., at the point where the goods cross the national border. This is entirely and solely within the legislative competence of the Centre, and not the State. It is, therefore, the contention that the goods imported from abroad and brought in for use as raw materials by the petitioners herein cannot be subjected to entry tax. 28. Even with regard to the classification of the goods of the petitioners, Mr. Dada relied upon pages .....

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n 5 thereof. That view is incorrect. Entry No.12 of the Schedule has been referred for the goods in question in the written submissions of the State tendered before this Court. This is also incorrect. In that regard, reliance is placed on section 3 of the Maharashtra Entry Tax Act to submit that only goods expressly specified in the schedule are liable to a levy of entry tax. There is no residuary entry in the Schedule. Further, the burden of proof in respect of classification of the goods for t .....

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y the petitioners by pointing out that it fails to take note of the expert opinion and the relevant specifications of the Bureau of Indian Standards. The complaint is that none of the contentions of the petitioners have been dealt with by the First Appellate Authority. Therefore, the orders passed by that authority and the Tribunal are assailed and challenged. It is urged that the Revenue relied on Entry No.13 of the schedule before the Tribunal and that has been accepted. However Entry 13 relie .....

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ent Act itself. Hence the amendment is not relevant to the present period. Even Entry 12 in force for the period post 1st April 2005, covers Furnace oil (including heavy furnace oil and residual furnace oil). Now this is erroneously relied upon because the wording of Entry 13 for the period prior to 31st March 2005, and the entry post 1st April 2005, are obviously different. The very revival and recasting of Entry 13 by the Legislature retrospectively for the period prior to 1st April 2005, must .....

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es that are compensatory or regulatory in nature do not retard free trade and commerce throughout the country of India. Instead, they promote them and, therefore, Article 301 is not violated. However, the State pleads applicability of Article 304(b). In that regard, it is submitted that the levy must be understood correctly. The impugned levy is on goods entering into a local area of the State from outside the State. It does not tax the entry into a local area from another local area within the .....

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also not attracted. In such circumstances, the question as to whether the State law must fulfill the broad requirements of Article 304(a) and 304(b) simultaneously is under consideration before a larger bench of the Hon ble Supreme Court of India and the referral order in the case of Jindal Stainless Steels & Ors. vs. State of Harayana (2010) 4 SCC 595 is relied upon. 30. In the additional written submissions, it is urged that a tax on entry of goods into a local area is patently in violatio .....

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tutional. Additionally it is submitted that if a levy is held to be non-discriminatory and thus meets Article 304(a), still it must satisfy the requirements of Article 304(b) as well. For all these reasons, it is submitted that the impugned levy must be declared as unconstitutional and ultra vires the abovenoted provisions or Articles of the Constitution of India. 31. In support of his contentions, Mr. Dada has placed reliance on a number of judgments and which can be taken in the order of his s .....

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Andhra Pradesh v Andhra Pradesh Mining Corporation. (1997) 106 STC 276 (A.P.) 9) Hari Shankar Bagla v State of Madhya Pradesh. AIR 1954 SC 465 10) Joginder Singh v Deputy Custodian. AIR 1967 SC 154. 11) Punjab Sikh Regular Motor Service v Regional Transport Authority. AIR 1966 SC 1318 12) Collector of Central Excise v Raghuvar India Ltd.. (2000) 5 SCC 299 13) Ahmedabad Manufacturing and Calico Printing Co. v SG Mehta. (1963) 48 ITR 154 (SC) 14) S.S. Gadgil v Lal & Co.. (1964) 53 ITR 231 (SC) .....

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ubmits that in repeated rounds, the same contentions have been raised, though the petitioners / appellants are aware that they are covered and dealt with in the earlier round. The conduct of the petitioner would, therefore, demonstrate as to how they wish to avoid compliance with the Maharashtra Entry Tax Act. 33. Mr. Sonpal invites our attention to both the Affidavit in Reply to the writ petition and the orders passed by the Assessing Officer and the First Appellate Authority. He would submit t .....

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arly Rule 8 cannot be the applicable provision. It cannot be the intention of the Legislature to only provide for a distinct time-period or limitation for the assessment proceedings under the Entry Tax Act when no separate machinery for assessing the tax was created by the Legislature under the Maharashtra Entry Tax Act. According to Mr. Sonpal, it would not be a correct and proper reading of the provisions of the Maharashtra Entry Tax Act. Chapter II of the Maharashtra Tax Act is titled Registr .....

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s recovery and refund of tax and other aspects dealt with by Chapter III, then those would apply, else the whole regime under the MVAT Act touching the above subjects and aspects would govern the proceedings under the Maharashtra Entry Tax Act. If one reads sub-section (1) of section 6 carefully, it would be clear that assessment will have to be done as per the procedure prescribed by the MVAT Act. That Act is specifically referred in sub-section (1) of section 6. Once such a comprehensive provi .....

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hen comes Rule 7 which deals with return-cumchallan. Rule 8 provides for assessment, rectification and review. According to Mr. Sonpal, the amount of tax due from an importer who is not registered shall be assessed by the assessing authority concerned within one month from the detection of his liability to pay the tax, and in case of a registered importer, this period would be three months running from the succeeding month for which return-cum-challan is required to be furnished. Therefore, Mr. .....

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ed and unregistered importers. To say, therefore, that thereafter no tax can be assessed and collected is an extreme proposition for which no support can be found in the language of Rule 8. If the Legislature has not, in any manner, exhausted the power to assess by insertion of specific words, then, by an indirect and oblique process, the said power cannot be taken away. He would submit that such procedural provisions cannot be determinative or conclusive of the power to levy and collect tax, pe .....

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2002 by Maharashtra Act No. 13 of 2004 dated 29th June 2004. He then submits that by Maharashtra Act No.XXXII of 2006, the entire Schedule was substituted retrospectively with effect from 1st April 2005. By Maharashtra Act No.XXV of 2007, the Schedule was revived with effect from 1st April 2005 to 31st March 2006. There was a modification of Entry No.13 of the Schedule to the Maharashtra Entry Tax Act. Mr. Sonpal submits that the goods brought by the petitioners were covered and entry tax was l .....

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at what this Court is dealing with in the present matter is an entry tax. That is a subject dealt with by Entry 52 of List II of the VIIth Schedule to the Constitution of India. Emphasizing the language of this entry Mr. Sonpal would submit that it provides for a tax on the entry of goods into a local area for consumption, use or sale therein. Mr. Sonpal submits that mere entry of the goods into a local area is not the taxable event. The taxable event is entry of the goods into a local area for .....

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mn (II) of the Schedule to the Maharashtra Entry Tax Act into any local area for consumption, use or sale therein, then, it is not permissible to dilute the rigour of the provisions in that behalf. Mr. Sonpal submits that the three provisos to sub-section (1) of section 3 would clarify that the rate of tax to be specified by the Government in respect of any commodity shall not exceed the rate specified for that commodity under the MVAT Act and the tax payable by the importer under the Maharashtr .....

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ecified goods entering into a local area for the purpose of such process as may be prescribed, if after such processing these goods are sent out of the State. Mr. Sonpal relies upon the explanation to this sub-section and thereafter sub-sections (2), (3), (4) and (5) of section 3 to submit that there is no liability to pay entry tax in the event the goods are brought for the purpose set out in sub-section (5) of section 3. He also relies upon the provisos to sub-section (5) of section 3 in that .....

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into a local area from any place outside the State for consumption, use or sale therein. Mr. Sonpal submits that the term import is defined in section 2(f) to mean bringing or causing to be brought or receiving any goods into a local area from a place outside the State, and the term importer is defined accordingly in clause (g) to section 2. The term local area is also defined, as also the terms Schedule , State , Tax and the term Value Added Tax Act . It is in these circumstances that Mr. Sonpa .....

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e Entry Tax Act is levy of tax on the entry of goods into a local area and is not qualified by words from any other State ; goods coming from any part of world or from any country attract the Entry Tax. Hence to contend that entry of goods does not apply to imports is incorrect. As stated earlier the provisions of Article 286 do not prohibit levy of Entry Tax when exclusive power of Entry Tax is earmarked for the State in List II. 39. He submitted that it is incorrect to contend that because the .....

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Board s norms does not imply or mean that the entry tax is not attracted on imported fuel raw materials. Hence it is not sound to contend that the mandate of using low sulphur waxy residue ipso facto exempts the entry tax on imports, much less to contend that levy is illegal, unconstitutional and ultra vires the Constitution of India. 42. It is equally incorrect to contend that the words brought into a local area from place outside the State used in definition of Import cannot include the import .....

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el oil and low sulphur waxy residue is directly in conflict with Central Sales Tax Act 1956 is not sustainable inasmuch as both levies are under different entries of List II of VIIth Schedule. Item 52 pertains to the Entry Tax and Item 54 pertains to the Sales Tax, and both operate in different and independent fields. The reference to Articles 245(1), 251 and 254 is misconceived and misplaced. 45. The revival of Entry 13 to the old schedule prior to 31st March 20005, i.e., from 1st October 2002 .....

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sales tax law, means the MVAT Act 2002, it is submitted that the tax on such products is in accordance with residual Entry E-1 at 12.5%, and the Assessing Officer has correctly restricted the tax levy only to 12.5%. 47. Entry 12, viz., Furnace oil including heavy Furnace oil and residual Furnace oil of the Schedule, as also entry 13, Petroleum furnace oil including a) Heavy furnace oil and b) Residual furnace oil , both cover the products of the appellant. Therefore it is not correct to state th .....

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l oil. 48. In view of the above submissions, Mr. Sonpal submitted that there is no merit in the Appeal and, therefore, it is liable to be dismissed. 49. Mr. Sonpal submits that in the entire petition one does not find any averments of violation of any fundamental or constitutional rights of the petitioners. Some general challenge has been raised, though the petitioners are aware that in the earlier round they could not succeed in doing away with the Entry Tax completely. Mr. Sonpal submits that .....

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he amendment by insertion of subclause (iv) of clause (a) to sub-section (1) of section 42 of the Bombay Sales Tax Act, 1959, retrospectively, the defect was cured. Thus, the basis of the judgment has been altered. Once that has been done then this judgment is no longer a precedent for this case. The present matter will have to be decided independently of this judgment. Now even the Bombay Sales Tax Act, 1959, is replaced by The Maharashtra Value Added Tax Act. Therefore, the challenge to the le .....

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in goods into the local areas in the State of Maharashtra and for the matters connected therewith or incidental thereto. Chapter I of the Act contains preliminary provisions. Section 2 therein contains the definitions, some of which are very relevant for our purpose and are reproduced hereinbelow: 2. Definitions:- (1) In this Act, unless the context otherwise requires,- (a) ….. (b) entry of goods , with all its grammatical variations and cognate expressions means entry of goods into a loc .....

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or receiving any goods into a local area from a place outside the State; (g) importer , in relation to any goods, means,- (i) a person who imports any goods whether on his own account or on account of a principal or any other person, into a local area for consumption, use or sale therein; (ii) any owner of the goods at the time of the import of such goods into a local area; (h) local area means the area for the time being included within the limits of, - (i) the Municipal Corporation of Brihan .....

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ona Cantonment Board and the Kirkee Cantonment Board, the Aurangabad Cantonment Board and the Ahmednagar Cantonment Board shall be deemed to be included in the limits of the Municipal Corporation of the City of Pune, the Municipal Corporation of City of Aurangabad and the Ahmednagar Municipal Council, respectively. Explanation.- For the purposes of sub-clause (iv), the local area within the limits of a District for which a Zilla Parishad is established under the provisions of the Maharashtra Zil .....

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. (k) ….. (l) State means the State of Maharashtra; (m) tax means the tax payable under this Act; (m-1) Value Added Tax Act means the Maharashtra Value Added Tax Act, 2002 and includes the Maharashtra Value Added Tax Rules, 2005; 51. Chapter II of this Act contains the charging section. It is titled as Levy of Tax. Section 3 thereof requires reproduction and is reproduced hereinbelow: 3. Levy of tax:- (1) There shall be levied and collected a tax on the entry of the goods specified in col .....

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time, add, modify or delete the entries in the said Schedule and on such notification being issued, the Schedule shall stand amended accordingly: Provided that, the rate of tax to be specified by the Government in respect of any commodity shall not exceed the rate specified for that commodity under the Value Added Tax Act or, as the case maybe, the Maharashtra Purchase Tax on Sugarcane Act, 1962: Provided further that, the tax payable by the importer under this Act shall be reduced by the amoun .....

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ted to the vehicle for its own consumption while entering into any local area. (2) Notwithstanding anything contained in subsection (1), there shall also be levied a tax in addition to the tax leviable in accordance with sub-section (1) on the entry of Petrol and High Speed Diesel Oil in any local area for consumption, use or sale therein at the rate of one rupee per litre. (3) Any importer who is not liable for registration under this Act or rules made thereunder, shall not be liable to pay tax .....

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on the specified goods, imported by a dealer registered under the Value Added Tax Act, who brings such goods into any local area for the purpose of resale in the State or sale in the State or sale in the course of inter-State trade or commerce or export out of the territory of India: Provided that, if any such dealer, after importing the specified goods, for the purpose of resale in the State or sale in the course of inter- State trade or commerce or export out of the territory of India, consume .....

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ase may be, sub-section (2) of section 6 of the Central Sales Tax Act, 1956, (74 of 1956) applies. (6) If any dealer having imported the specified goods, for the ostensible purpose of resale or, as the case maybe, sale, deals with such goods in any other manner or consumes the same and does not inform the assessing authority as provided in sub-section (5) or does not pay the tax as required under sub-section (5) within the specified period, the assessing authority shall assess the amount of tax .....

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who is liable to pay tax under this Act, shall, if he is a dealer registered or liable for registration under the Sales Tax Act, within such time as may be prescribed for the purpose of making an application in the prescribed form for registration under this Act to the Assessing Authority, make the application. The authority to whom that application is to be made on being satisfied that it is in conformity with the provisions of the Act and Rules, shall register the applicant and grant him a ce .....

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registration. 53. Since heavy emphasis has been placed on section 6 of the Act falling in Chapter III we reproduce the same hereinbelow: 6. Levy and collection of tax, penalties and interest:- (1) Subject to the other provisions of this Act and the rules made thereunder, the authorities for the time being empowered to assess, review, collect and enforce payment of tax under the Value Added Tax Act shall assess, review, collect and enforce payment of tax, including any interest or penalty, payabl .....

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y of any firm or Hindu Undivided Family, to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, rectification, review, references, refunds, penalties, charging or payment of interest, inspection of business premises, seizure of documents, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly. (2) All the provisions relating to offences, interest and penalties inc .....

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Value Added Tax Act. 54. In Chapter IV, Offences and Penalties have been provided for, and by Chapter V miscellaneous provisions are enacted, including conferring power to make rules. The rate Schedule under this Act with effect from 1st April, 2005, insofar as is relevant for our purpose reads: Sr.No. Description of goods Rate of tax 1 … … … … … … 12 Furnace Oil including heavy furnace oil and residual furnace oil 12.50% 13 Petroleum fuel oils includin .....

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Maharashtra. That demand was examined and found to be genuine. That is how the State proposed to levy entry tax on the specified goods. The salient features of the law are also set out in the Statement of Objects & Reasons. 56. Thus the tax is on the entry of goods into a local area from any place outside the State for consumption, use or sale therein. The term import means bringing or causing to be brought or receiving any goods into a local area from a place outside the State. 57. The wri .....

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be found at page 86 of the paper-book. 58. The Assessing Officer found that the petitioners filed an application in Form-501 for the period 2005-2006 for ₹ 70,13,19,318/-. Thereafter, the petitioners filed a revised application for refund in Form-501 dated 30th March 2009, for ₹ 98,54,726/-. A partial refund was already granted on the date specified and in the manner set out at page 87 of the writ petition paper-book. However, for verifying the correctness of the claim made and the r .....

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led by the petitioners and to verify their tax liability under this Act, a notice was issued and in response to which the petitioners senior Manager appeared and attended. He handed over a letter dated 20th June 2013, stating that the assessment is timebarred. Then the petitioners relied upon a judgment and order dated 16th January 2004, passed by this Court in Writ Petition No. 429 of 2004 and the order dated 26th October 2004, of the Supreme Court of India to urge that no entry tax is payable .....

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he dealer is not justified in not paying entry tax on the import of low sulphur furnace oil and low sulphur waxy residue oil brought from outside the State for use in the local area by taking recourse to the above judgment. The Assessing Officer, therefore, held that the levy of entry tax at ₹ 845,73,124,77/- is valid. He, therefore, determined the tax liability and directed issuance of demand accordingly. This order dated 29th June 2013, pertained to the period as noted above, namely, 200 .....

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the First Appellate Authority. They also tendered written submissions. The petitioners pointed out that they are registered under the MVAT Act, CST Act as well as the Entry Tax Act. They submitted that for generation of electricity, they require gas, coal, low sulphur heavy stock. These constitute raw materials. In the written submissions at page 107 of the paper-book it is stated that all these raw materials were purchased from local markets and, therefore, the occasion for levying entry tax o .....

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rom the authority concerned as to whether any entry tax was payable on the goods imported from outside the territory of India. The Assistant Commissioner, by his letter dated 3rd January, 2003, directed the petitioners to make payment of entry tax on the imports effected from outside the territory of India. That is how the first writ petition was filed challenging this version. Then, the judgment and order dated 16th January, 2004, delivered in the writ petition is relied upon. We shall advert t .....

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to the tax demanded from the petitioners. That is how it was submitted that the tax is demanded without any authority of law. It was also urged that low sulphur waxy residue is a different commodity, distinct and separate from heavy or residual furnace oil and so is the position of low sulphur furnace oil. Then, the petitioners relied upon the amendments to the Schedule. It was pointed out that the two amended Acts, namely, Maharashtra Act No.XXXII of 2006 and Maharashtra Act No.XXV of 2007 wou .....

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of which are annexed to the writ petition and tendered during the course of proceedings before the Appellate Authority. We have also perused a copy of the opinion of Mr. S.S. Bhagwat at pages 137 and138 of the paper-book. We have also perused the extracts of the Indian Standard Specification for Heavy Petroleum Stock. 61. The First Appellate Authority before whom the above materials were relied upon passed a detailed order on 13th March, 2014, a copy of which is at Annexure-O page 223 of the pap .....

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. The First Appellate Authority also held that from the wording of the Act it is evident that goods which have been brought into a local area for consumption, use or sale therein are subjected to entry tax. The goods may be brought from any place outside the State. Merely because there is no express provision mentioning entry of goods from outside the territory of India does not mean that the demand is illegal. The words employed and particularly in the definition are wide enough to include even .....

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s far as the ground raised on the bar of limitation, the First Appellate Authority relied on section 6 of the Maharashtra Entry Tax Act in arriving at the conclusion that all the provisions of the MVAT Act mutatis mutandis apply to levy, assessment and collection of entry tax. Once this view is taken and Rule 8 cannot be pressed into service, then, the assessment is not time barred. The First Appellate Authority concluded that there was no difficulty in upholding, therefore, the jurisdiction and .....

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x was noncompensatory and discriminatory. It decided against the State and quashed the entry tax levied on the petitioners vide Entry No.13 to the Schedule on furnace oil and low sulphur waxy residue oil. 67. In paragraph 8 of the order of the Tribunal, the argument of the petitioners counsel that the compensatory part of the order is not set aside has been dealt with. The State Government is stated to have admitted that they have not challenged the compensatory part of the the order. The amendm .....

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rnace oil and residual furnace oil. The Entry has been reproduced in paragraph 9 of the order and the Tribunal held that in the face of its clear wording , the argument of the petitioners counsel cannot be accepted. 69. Then, in paragraph 10, the Tribunal concluded that by virtue of the Amendment Act and the words and expressions therein, Entry No.13 is valid and it covers all periods, earlier as well as subsequent. Once the discrimination is removed, then the plea of the petitioners that entry .....

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of India. The Tribunal concluded that a bare perusal of Article 304 would reveal that the restrictions referred therein are with regard to inter-State trade and not with regard to goods which are imported from outside the country. Hence it held that the petitioners contention did not deserve to be accepted. The Tribunal referred to a number of judgments to conclude that entry tax can be levied on such goods which crossed customs barriers by invoking the power conferred on the State Legislature v .....

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the petitioners that the raw materials imported from abroad do not attract entry tax. 71. On the plea of limitation as well, relying on section 23 of the MVAT Act, the Tribunal proceeded to reject the contentions of the petitioners. Thus, by the impugned order, the Tribunal dismissed both the appeals. 72. For appreciating Mr. Dada s contentions on the controversy being covered substantially by the earlier judgment of this Court, it is necessary to refer to that judgment. The Division Bench judg .....

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on. The petitioners, namely, the present petitioners and one another entity, Eurotex Industries, restricted the challenge based on violation of Articles 14, 19(1)(g), 301, 304 and 286 of the Constitution of India. After referring to the primary facts and the Maharashtra Entry Tax Act, the Bombay Sales Tax Act and the Bombay Sales Tax Rules, the Division Bench noted the rival contentions. The judgment, upto paragraph 26 notes them in extenso and in paragraph 27, the Division Bench holds that impo .....

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rade, commerce and intercourse throughout the territory of India. The tax barrier was created by the levy of entry tax hampering free flow of goods in the State and in that regard in paragraphs 33, 34 and 35 the Bench observed thus: 33. By levy of entry tax on goods which enter the local area from outside the State while similar goods entering the local area from within the State do not bear sales tax, the State has in fact created a tax barrier in contravention of Article 301 which guarantees f .....

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ssion on the part of the State clearly establishes that on introduction of entry tax, the manufacturers have opted to purchase raw materials from within the State, because on account of the tax barrier created by the entry tax, bringing raw materials from outside the State works out to be costlier. In other words, by taxing the goods entering the local areas from outside the State while not taxing the goods entering the local area from within the state, free flow of trade, commerce and intercour .....

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terials entering the local area from within the State would be arbitrary. Where the raw materials entering the local area from outside the State are only subjected to tax, then such levy directly discriminates between the imported goods and the goods which enter the local area from within the state. By taxing the imported goods while exempting the local goods, the State has sought to treat equals unequally which is not permissible in law. 35. It was contended on behalf of the State that because .....

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goods which enter the local area bear either the sales tax or the entry tax. Thus, from the provisions of the Entry Tax Act it is clear that the entry tax is not levied because some other States have levied entry tax on such goods. This reasoning is further fortified by the fact that the Entry Tax Act clearly provides that the rate of entry tax on any commodity shall not exceed the rate specified for that commodity under the BST Act, etc. Thus, by collecting entry tax on goods entering the loca .....

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e to be declared as unconstitutional. 73. In paragraph 36, the Division Bench noted the contention of the State that the entry tax is levied to compensate its local areas which have abolished octroi and the entry tax collected has been used in meeting the expenditure on account of State road fund. However, relying on section 3(7) of the Maharashtra Entry Tax Act, the Division Bench concluded that it cannot be said that levy of entry tax is with a view to compensate the local area on account of a .....

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r of Commerce (supra) not support the contention of the State, because, firstly, in that case, the entry tax was levied to compensate the loss of revenue on cess due to the decision rendered by the Supreme Court and secondly, the Apex Court has held that in that case prior consent of the President was obtained by the State. In the present case, admittedly consent of the President had not been obtained till date. Moreover, in the present case, entry tax is levied and collected at 15% on the footi .....

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ve, the ratio laid down by the Apex Court in the case of Bihar Chamber of Commerce (supra) to the effect that for establishing the compensatory nature of tax, it is enough if some connection, direct or indirect, is shown to exist between the tax and the trading facilities provided y the State does not support the case of the State, because, in the present case, admittedly the entry tax is levied to ensure that the goods entering the local area bear either sales tax or entry tax. Once it is found .....

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unlike the case before the Apex Court, the Petitioners are not contending that the exemption granted to the raw materials purchased within the State should also be extended to the imported goods. What is contended by the Petitioners is that, the basis for levy of entry tax is the levy of sales tax on local goods and if local goods do not bear sales tax then the imported goods cannot be subjected to entry tax. Similarly, the decisions of the Apex Court in the case of Associated Tanners (supra) an .....

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t what should be the quantum of tax is the prerogative of the State and the same cannot be questioned in a court of law. However, when the State Legislature provides that the entry tax on a commodity shall not exceed the rate specified for that commodity under the BST Act, it would be open to the court to find out whether, effectively any sales tax is levied on that commodity. In the present case, the furnace oil and low sulphur waxy residue oil entering the local area from within the State do n .....

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sulphur waxy residue oil instead of striking a balance, in fact creates imbalance between the imported goods and the local goods and in fact has defeated the very purpose of enacting Entry Tax Act. 74. The Division Bench judgment ends in paragraph 39 with a specific finding that Entry No.13 to the Schedule to the Maharashtra Entry Tax insofar as it purports to levy entry tax on furnace oil and low sulphur residue oil is unauthorized and unconstitutional. 75. We have already reproduced the short .....

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s have understood the position accordingly, and have, therefore, raised several contentions. They are not merely relying on the earlier Division Bench, for they are aware of the above clarification by the Hon ble Supreme Court of India. Secondly, they are aware that now another statute has intervened, namely, the MVAT Act. Thirdly, after the judgment of the Division Bench, the present statute, namely, the Maharashtra Entry Tax Act, underwent some changes and amendments. For these reasons, they d .....

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esent petitioners and M/s. Eurotex Industries and Exports Limited. 78. We would first deal with Mr. Dada s contention with regard to the import of goods by the petitioners from outside India not attracting the levy. 79. We must first express our dissatisfaction with the inadequacy of pleadings. The burden on the petitioners when they challenge the constitutionality and legality of a levy is enormous. That burden has to be discharged by producing requisite material. The Hon ble Supreme Court of I .....

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ion in favour of the Constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the Constitutional principles. It must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. It is permissible for the Court to take into consideration matters of common knowledg .....

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rtance of pleadings is lost simply because nowadays an insistence on proper pleadings is misconstrued as a Court being hyper-technical. What we look for and demand is not a slavish, mindless adherence to technicalities. We seek sufficiency of compliance with the law; and there is a sound, well-established rationale, one that is centuries old, for demanding that an assault on the constitutionality of an enactment is not lightly mounted, nor lightly entertained. The legal requirement is the jurisp .....

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t vires challenges are not filed or entertained on slight causs. In the present petition we do not know how many consignments of the goods were imported, from which destination or country abroad, when and whether that import is at a particular port, viz., Mumbai and how the goods found their way to the petitioners unit at Chembur, Mumbai. In the absence of such pleadings, it is not possible for us to assume that the entire quantity of the raw material has been imported or to ascertain whether it .....

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ed on the assumption that the entire quantity of low sulphur waxy residue has been procured by the petitioners, to be used as raw material, from abroad. 80. In dealing with Mr. Dada s contentions we must not lose sight of the definition of the term import which is to be found in the Act under consideration. That definition we have reproduced above [Section 2(f)]. If the Act of bringing or causing to be brought or receiving any goods into a local area from a place outside the State is understood .....

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ds, whether on his own account or on account of a principal or any other person, into a local area for consumption, use or sale therein then irrespective of the site of origin, and so long as the place from where they are brought is outside the State of Maharashtra, then that is an import for the purposes of the Act, and the person would be covered by the above expressions. It is not a levy on the mere entry of goods into a local area. It is a levy on the entry of goods into a local area from ou .....

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sions of the Hon ble Supreme Court of India would be necessary. In a 5-Judge Bench judgment in the case of The Central India Spinning and Weaving and Manufacturing Company Limited; the Empress Mills, Nagpur vs. The Municipal Committee, Wardha, AIR 1958 SC 341 the Hon ble Supreme Court had an occasion to consider the issue of applicability of C.P. and Berar Municipalities Act and the Terminal Tax Rules (Wardha) under that Act to the import of goods within the limits of the Municipality. The Hon b .....

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h are transported across the limits of a Municipal Committee are neither imported within the Municipal limits nor exported therefrom. The argument on the other hand was that a tax is leviable merely on the entry of the goods into the Municipal limits or their exit therefrom and the word terminal has a reference to the termini of the jurisdictional limits of the Municipality and not to the journey of the goods. The Hon ble Supreme Court in paragraphs 6, 7 and 8 considered the ambit and scope of t .....

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restricted to their derivative meaning but bear other connotations also. According to Webster s International Dictionary the word import means to bring in from a foreign or external source; to introduce from without; especially to bring (wares or merchandise) into a place or country from a foreign country in the transactions of commerce; opposed to export. 7. Similarly export according to Webster s International Dictionary means to carry away; to remove; to carry or send abroad especially to for .....

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g of the words which is relied upon by the respondent, goods which are in transit or are being transported can hardly be called goods imported into or exported from because they are neither being exported nor imported but are merely goods carried across a particular stretch of territory or across a particular area with the object of being transported to their ultimate destination which in the instant case was Nagpur. 82. True it is that this decision deals with a terminal tax. However, not only .....

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e two items in List I and II has been pressed before us for the purpose of showing that the word terminal implies the terminus of a journey and not the end of the jurisdictional limits of a Municipality. Terminal in item No. 58 of List I of the 1935 Constitution Act has reference to the terminus of carriage of goods. There is no reason to give to this word a different meaning in item No. 8 of Scheduled Tax Rules under the Government of India Act of 1915 or in clause (o) of s. 66(1) of the Act. T .....

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at the end of a railway journey and the other when they enter the limits of a local area for the object above mentioned. But in both cases the activity in regard to the motion of the goods ends, in the one case as the goods are carried no further by railway and in the other as their entry is for consumption, use or sale. Keeping in view the terms and language and the legislative history of the section 66(1) we are unable to enlarge the terms of the section by mere construction so as to include .....

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cipality by rail or by road. By a notification of 1938 the Municipality in supersession of that tax imposed a new tax called Octroi (without refund) which was to be similarly calculated on the gross weightage of the consignments imported into the limits of the Municipality. This in turn was replaced by the imposition of a new tax also called Octroi (without refund) on consignments imported into the limits of the Municipality. The appellant s contention in that case was that the tax imposed was a .....

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to as terminal taxes in Entry No. 58 of List I of Sch. 7 and the type of taxes referred to as cesses on the entry of goods into a local area in Entry No. 49 of List II. The former taxes must be (a) terminal (b) confined to goods and passengers carried by railway or air. They must be chargeable at a rail or air terminus and be referrable to services (whether of carriage or otherwise) rendered or to be rendered by some rail or air transport Organisation. The essential features of the cesses refer .....

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s may well be subjected to taxation under Entry No. 58 of List I as well to local taxation under Entry No. 49 of List II. The grounds of taxation under the two entries are, as indicated above, radically different, and there is no case for suggesting that taxation under the one entry limits or interferes in any way with taxation under the other. Therefore according to the Federal Court terminal has reference to the terminus of the railway or air i.e., the end of journey. The tax imposed in that c .....

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ts the contention of the appellant that the terminal tax leviable under cl. (o) properly construed must have reference to some activity within the municipal area i.e., the entry for the purpose of remaining within that area or commencement of journey from that area. 36. We are, therefore, of the opinion that the terminal tax under s. 66(1)(o) is not leviable on goods which are in transit and are only carried across the limits of the Municipality, and would therefore allow this appeal, reverse th .....

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ntry tax, the Hon ble Supreme Court held conclusively that entry tax is a tax on the entry of goods into any local area for consumption, use or sale therein. So long as the levy is of this nature it is wholly irrelevant as to from where the goods have been brought. The statute s provisions must be given their plain and clear meaning. In other words, if the act of bringing in the goods is termed as an import and this is also defined, and if the particular act complained of falls within the defini .....

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e State cannot mean outside the territory of India. We do not find any support for such an argument. The reported decisions seem to hold otherwise. Even otherwise, it is difficult to appreciate the implications of this argument. It would lead to needless complexity and incongruous and inconsistent results. For instance, if goods are imported into the port of Mumbai, and used in Mumbai, then, according to Mr. Dada s formulation, such goods are not covered by the levy and entry tax is not attracte .....

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entry taxes. What, therefore, Mr. Dada s argument amounts to is saying that the local entry tax levy is not attracted where the port of entry from abroad is within the state itself; but if the port of foreign import is outside the state, then the entry tax levy is attracted. If this be so, then it is a self- defeating argument and clearly shows that the mere importation from abroad is not a reason to deny the levy of the local entry tax. We find nothing in any judgment or the statute to support .....

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lgaum Municipality, brought these products inside that area either for use or consumption by itself or for sale generally to its dealers or licencees who, in turn, sold them to others. The company also sold these products directly. The company had a Divisional Office and Depot in Belgaum and filed a writ petition in the High Court of Mysore seeking a writ of mandamus to prohibit the Municipality from charging octroi on its products brought inside the octroi limits for sale. Though the Supreme Co .....

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als) brought into a local area (a) for consumption (b) for use or (c) for sale, and the Boroughs Act, before the amendment, had selected only two, namely, consumption and use and left out the third that is, sale . The tax was thus payable only when the goods or animals were brought for consumption or use, by the person who brought them in, but not when the goods or animals were brought in and sold and were consumed or used by the purchaser or someone else. It is conceded that after the amendment .....

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. Manmad Municipality AIR 1958 Bom 43. (12a) The Boroughs Act defines octroi in section 2 (12)- octroi shall include a terminal tax. In clause (v) of section 73(1) terminal tax is mentioned separately and section 61 (1) (0) gives the power to fix terminal tax limits And stations and other ancillary matters. The proviso to section 73 (1) is material and it reads: Provided that, save as provided in clause (xiv) no such tax shall be leviable in boroughs in which an octroi was not levied on or befor .....

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rlying the extended definition gives us the true meaning of octroi as described in section 73 (1) (iv). The Boroughs Act was passed in 1925 and replaced the earlier Act of 1901. The Boroughs Act, therefore, was prior to the Government of India Act, 1935. Under section 80A (3) (a) of the Government of India Act, the Governor General-in-Council had framed rules; on December 16, 1920, which were known as the Scheduled-tax Rules. Schedule II of these Rules (1) A. I.R. 1958 Bom, 43. dealt with taxes .....

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re was no description of the tax. The word octroi comes from the word octroyer which means to grant and in its original use meant an impost or a toll or (a town duty on goods brought into a town. At first octrois were collected at ports but being highly productive, towns began to collect them by creating octroi limits. They came to be known as town duties ., These were collected not only on imports but also on exports see Beuhler: Public Finance (3rd Edn.) p. 426. Grice in his National and Local .....

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irect taxation are practically closed to local authorities. They are unable to levy customs duties, although they may collect the so-called octrois that is, duties levied on goods entering town. 15. It will be noticed that in the Government of India Act octroi was named but not described and now the Constitution avoids the word octroi , as did the Government of India Act 1935 before, and gives a description. In the Boroughs Act the definition of octroi includes Terminal Tax. Terminal Tax, as the .....

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rs. At first the Government of India were not in favour of such a change. Octrois were levied on goods brought into, a local area for consumption, use or sale and were indirect taxes but. terminal taxes were regarded as direct. On July 6, 1917, the Government of India by a Resolution reversed their former policy and agreed that the conversion was not a change from indirect to direct taxation. Terminal taxes were of the nature of octrois, but were not quite the same. The main differences were : t .....

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in the Municipal limits that attracted the levy and this is the ratio of the judgment. The other discussion on the interpretation of the entries etc will not be of any assistance. 88. We are unable to agree with this argument for the simple reason that even in the later judgments of the Hon ble Supreme Court of India, Burmah Shell has been followed. In that regard, a useful reference can be made to two decisions of the Hon ble Supreme Court of India. 89. In the case of Jothi Timber Mart vs. The .....

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general levy of tax on entry of goods, into a local area is not conferred on the State Legislature by item 52 of List II of Sch. VII of the Constitution. The Municipality derives its power to tax from the State Legislature and can obviously not have authority more extensive than the authority of the State Legislature. If the State Legislature is competent to levy a tax only on the entry of goods for consumption, use or sale into a local area, the Municipality cannot under a legislation enacted .....

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y be presumed that the Legislature was using the words in regard to that activity in respect of which it is competent to legislate and to no other; and that the Legislature did not intend to transgress the limits imposed by the Constitution: see In re Hindu Women s Rights to Property Act, 1937(1). To interpret the expression brought into the city used in s. 126(1) as meaning brought into the city for any purpose and without any limitations would, in our judgment, amount to attributing to the Leg .....

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al Thakorlal Dalal vs. Broach Municipality and Ors. AIR 1976 SC 1446 held as under : 3. In order to appreciate the controversy, it will be desirable to refer to the basic facts of the Burmah Shell s case (supra). The Burmah Shell Oil Storage and Distribution Co. India Ltd., hereinafter referred to as the Company, was a dealer in petrol and other petroleum products which it manufactured in its refineries situated out-side the octroi limits of Belgaum Municipality. It brought these products inside .....

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de the octroi limits to other persons but consumed by them outside the octroi limits; and 4. Goods sent by the Company from its Depot inside the octroi limits to extra-municipal points where they are bought and consumed by persons other than the company. This Court examined the scheme of taxation under the Act and the rules and the bye-laws made by the Municipality for the levy of octroi. It also took note of the fact that the words use or sale were substituted for the words or use by Bombay Act .....

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ified that the word sale was included only in 1954 in order to bring the description of octroi in the Act in line with the Constitution, and that the expression consumption and use together 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 using them up or for consumption in a manner which destroys, wastes or uses them up. 4. Looking to the trade of the Company, this Court held that sale by it directly .....

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de for use or consumption by buyers inside the area. In this sense the amplification of the description both in the Government of India Act, 1935 and the Constitution did not make any addition to the true concept of octroi as explained above. That concept included the bringing in of goods in a local area so that the goods come to a repose there. When the Government of India Act, 1935 was enacted, the word octroi was deliberately avoided and a description added to forestall any dispute of the nat .....

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or resale to others for the purpose of use or consumption by them in the area. It was only when the goods were reexported out of the area that the tax could not legitimately be levied...... This Court categorically held that the Company was liable to pay octroi on goods brought into the local area (a) to be consumed by itself or sold by it to consumers direct, and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area irrespective of whether such consumer .....

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ew argument justifying a reconsideration of the decision. 91. Thus, there is no hesitation in concluding that in similar cases and which deal with the same question, assistance of this judgment of the Constitution Bench in Burmah Shell s case has been repeatedly taken. 92. In the case of Man Mohan Tuli vs. Municipal Corporation of Delhi & Ors., AIR 1981 SC Delhi 144 the Hon ble Supreme Court of India underlined the difference between a terminal tax and octroi. In doing so, it referred to the .....

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hrough a local area without being consumed therein the mere fact that the transport carrying the goods halt within the local area for transshipment or allied purposes would not justify the levy of either the terminal tax or octroi duty. This is because the halting of the goods is only for an incidental purpose to effectuate the journey of the goods to the final destination by unloading, sorting and reloading them at a particular place. (2) There is a very thin margin of difference between a term .....

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re kept within the area for such a long and indefinite period that the purpose of reaching the final destination lying in a different area is frustrated or defeated, they may be exigible to terminal tax. (4) Where the goods enter into a local area which is also the destination of the goods either temporarily or otherwise, the terminal tax would be leviable. For instance, if A consigns goods from Patna in Bihar to Delhi in the name of X and X after having received the goods at Delhi re-books or r .....

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, when there is one continuous journey of the goods from Patna to Chandigarh without any break, the final destination would be halted in Delhi for the purpose of unloading, sorting and reloading and may have to be kept in Delhi for a reasonable time. In such a case terminal tax would not be exigible. 93. Then, in the case of Kunwar Ram Nath & Ors. vs. The Municipal Board, Pilbhit, AIR 1983 SC 930 a two-Judge Bench of the Supreme Court of India was considering a challenge to a complaint insti .....

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n dated 18th May 1960; yet, no octroi has been paid, and hence the complaint. This complaint was sought to be quashed by filing a Criminal Case No.3291 of 1972 in the High Court of Allahabad under section 561-A of the Code of Criminal Procedure 1898, which is akin to or on par with section 482 of the Code of Criminal Procedure, 1973. Amongst several contentions raised before the High Court, it was found that the company admitted that it had brought into the Municipal area sugarcane by railway as .....

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ion made before us is somewhat subtle and needs to be considered in some detail. It is argued that since the exemption had been given under the order dated November 20, 1936 on the ground that there was no justification for the continuance of the levy of taxes on rail-borne sugarcane as the municipalities were not rendering any service in regard to it, the levy from which exemption had been given by that order was either a terminal tax or a fee and not a tax. Since what is being levied as octroi .....

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venth Schedule to the Government of India Act, 1935 which read as 58. Terminal taxes on goods or passengers carried by railway or air; taxes on railway fares and freights and of entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 which read as 49. Cesses on the entry of goods into a local area for consumption, use or sale therein . The facts in that case were these: The Lahore Municipality had in the year 1926 imposed under its then existing power of taxation a tax c .....

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and on animals per tail at the rates and on the articles specified in the Schedule to the relevant notification imported into its limits. This notification was superseded by a further notification of the year 1940 by which a tax called octroi (without refunds) was to be charged at the new rates with effect from May 11, 1940 on consignments including grain, imported into its limits. The Punjab Flour and General Mills Co. Ltd., Lahore which was importing for use or consumption grain into its facto .....

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o the Government of India Act, 1935. The Federal Court after explaining the difference between the terminal taxes and cesses which can be levied on goods imported into a local area for purposes of use, consumption or sale therein rejected the contention of the company with these observations: There appears to us a definite distinction between the type of taxes referred to as terminal taxes in entry No. 58 of List 1 of the Seventh Schedule and the type of taxes referred to as cesses on the entry .....

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ea and (b) the requirement that the goods should enter for the purpose of consumption, use sale therein. It is to be noted that there is no limitation on the manner by which the goods to be subjected to such cesses may enter. There is no ground for suggesting that entry of goods by rail or air is any less contemplated than entry by waterway or road. It was argued by the appellant s counsel that because by entry No. 20 of List I Federal railways and the regulation of railways and so forth is incl .....

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not accept this argument. It is not in our judgment justified by the wording of the various entries in the two Lists and would impose a limitation on local taxation under entry No. 49, in List II, which would often work most inequitably in practice between those importing goods by road or waterway and those who could import by rail or air. In our judgment there is no limitation to be implied in entry No. 49 List II, in regard to the manner in which goods may be transported into a local area. It .....

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nt of service to be rendered is treated as an ingredient of a terminal tax but that does not mean that when tax is clearly laid on goods when they are brought into a local area for purposes of use, sale or consumption, it ceased to be a tax levied under section 128 (1) (viii) read with entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 merely because of the reason given for granting exemption under the order the Provincial Government dated November 20, 1936 issued u .....

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Schedule to the Constitution now. The said levy came within entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 and now falls under entry 52 of List II of the Seventh Schedule to the Constitution. The exemption granted in the year 1936 should be construed as an exemption from all taxation by way of octroi leviable and levied under the Act on rail-borne sugarcane and that exemption would continue until it is either rescinded or modified or becomes inapplicable for an .....

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-Rampur Coal Co., Ltd. & Ors. v. The State of Orissa & Ors.(1) substantiates the above view. In that case this Court held that the cess imposed by the Orissa Mining Areas Development Fund Act, 1952 was a fee relatable to entries 23 and 66 of List II of the Seventh Schedule to the Constitution having regard to the object and the scheme of that Act and the purpose for which the cess collected under it was to be used. There is no doubt that in entry 49 of List II of the Seventh Schedule to .....

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ss levied in exercise of the power under entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 was a tax irrespective of any refund allowed or not allowed by the Government as can be seen from the following observation made by the Federal Court at page 26 of the Report: We can see no cause whatsoever for holding that if cesses are imposed in pursuance of the powers conferred by entry No. 49 in List II, any provision need be made for refunds. Whether or not there should .....

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section 128 have to be credited to the municipal fund under section 114 of the Act which can be utilised for the purposes of the Municipal Board as stated in section 120 of the Act. The sum received as octroi is also dealt with like any other tax. There is no element of quid pro quo between the person who pays the octroi and the Municipal Board. Hence octroi being a tax it was competent to the Provincial Government to make an order under section 157 (3) of the Act exempting railborne sugarcane .....

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ctroi on articles and animals imported within the Municipal limits of the Corporation without any reference to their use, consumption or sale of the said goods as being beyond the power of the State Legislature. Reliance was placed on Entry 52 of List II of Schedule VII of the Constitution of India in that behalf. The IOC disputed the authority in the Corporation to impose and demand the octroi on the petroleum products imported by it within the limits of the Corporation which was only exported .....

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he goods passed on to the dealers as and when the goods were laden in the tank lorries and that the sale was complete at the depot of the IOC and that it did not take place at the respective places of business of the dealers and as such octroi duty was rightly levied and demanded. 7. The High Court after extracting the provisions of section 113 of the Municipal Act and Entry 52 of List II of the VII schedule, which read thus: 113. Levy of octroi.- Except as hereinafter provided, the Corporation .....

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pal committees to levy tax only on the entry of goods within the local area when those goods were not meant for consumption, use or sale within that area. It rightly held that the authority of the state Legislature in those matters is subject to the restrictions imposed by Entry 52 and since source of power of section 113 of the Municipal Act is traceable to Entry 52, the wide language employed in section 113 of the Municipal Act had to be read down to mean that the Municipal corporation could l .....

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, use or sale therein is made taxable by the state Legislature on the authority of Entry 52 of List legislature and it obviously cannot have any authority more extensive than the authority of the state Legislature. since the state Legislature in view of Entry of goods for consumption use or sale into a local area, the municipality cannot under a legislation, enacted in exercise of the powers conferred by Entry 52 of List II, have the power to levy tax in respect of good brought into the local ar .....

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to the restrictions contained in Entry 52 of List II. That is not permissible. The expression imported into the city in section 113, therefore, has to be interpreted as meaning imported into the municipal limits for purpose of consumption, use or sale only. Thus, construed in the limited sense, section 113 of the Municipal Act is not ultra vires Entry 52 of List II of Schedule VII. In fairness to the learned counsel for the appellant, it must be recorded, that the finding the High court regardi .....

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. v. Belgaum Borough Municipality, Belgaum, AIR 1963 SC 906 a somewhat similar question arose. A Constitution Bench of this Court held that the company which dealt with petroleum products was liable to pay octroi tax on goods brought into the local area (a) to be consumed by itself or sold by it to consumers and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal limits irrespective of whither such consumers brought him for use in the area or outside it but .....

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ted to the sale of petroleum products by the IOC from its depot within the municipal limits of Jodhpur, Rajasthan, to its dealers outside the municipal limits. After considering the facts and circumstances of the case and various clauses of the agreement (which is identical to the agreement in the present case) Sabyasachi Mukharji, J. (as is Lordship then was) dealt with the case put by the Indian oil Corporation Respondent No. 2 and noticed: According to respondent 2, it had allotted the retail .....

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n the goods were at the risk of respondent 2. It was further alleged by respondent 2 that the pump tank and other outfits which were fitted at the retail outlets belonged to it and these were its property. It was, therefore, alleged that the goods supplied at re tail outlets situated outside the limits of Municipal Council, Jodhpur were sold at the retail outlets where the deliveries were made and not at Jodhpur although the dealers were required to deposit the price of the petroleum products in .....

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urt then referred to the finding of the High court that the Municipal Corporation had no jurisdiction levy octroi on the goods so exported and accorded its approval of that finding. It upheld the order of the High court restraining the Municipal Corporation to levy octroi on goods reexported by IOC to its dealers or agents for the use of ultimate user outside the octroi limits of Municipal Corporation. 95. Having understood the controversy in the above terms, we think that so long as the import .....

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st submission of Mr. Dada has no merit. In the case at hand, the imported raw material was brought in by the petitioners for consumption within the local area. That is undisputed. The argument is that the goods were brought in for consumption not from outside the State but rather from outside the country and hence they do not affect the levy. For the reasoning in Burmah Shell and Punjab Flour (supra), this argument must fail. It is apparent that the above submission overlooks the Constitutional .....

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demonstrates the insertion of the words duty paid in Sr. No.2, 3 and 5 and Bonded is with reference to acts of bringing in the goods from abroad. Thus, considering the wide definitions and even the Schedule entries the acts and deeds of the petitioners fall within the charging provision of the Entry Tax Act. 96. Finally, the decision in the case of Tata Engineering & Locomotive Company Limited & Anr. vs. Municipal Corporation of the City of Thane & Ors., AIR 1992 SC 645 would also c .....

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red by that Act to levy Octroi on animals or goods or both brought within the octroi limits for consumption or use therein . This provision was amended by Amending Act 35 of 1954 by substituting the words use or sale for the words or use with effect from May 5, 1954. In other words before 1954 the word sale was not included in the provision of octroi on goods which the Municipality was authorised to impose. After the amendment the Municipality could levy octroi on goods brought within the octroi .....

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side the octroi limits. The Company contended that the tax could not be collected on goods which were merely sold but not consumed inside the octroi limits. In connection with this contention this Court considered the meaning of words consumption, use or sale therein and observed (at pp. 911-12 of AIR): It is not the immediate person who brings the goods into a local area who must consume them him-self, the act of consumption may be postponed or may be performed by someone else but so long as th .....

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on goods brought into local area (a) to be consumed by itself or sold by it to consumers direct and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area irrespective of whether such consumers bought them for use in the area or outside it. The Company was, however, not liable to Octroi in respect of goods which it brought into the local area and which was reexported . The ratio is thus not a mere sale inside that attracts octroi but a sale intended for c .....

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the narrow meaning of a sale for consumption to the ultimate consumer within the octroi limits. Accordingly if the goods were sold within the octroi limits by the importer even if it resulted in export and consumption was also outside the octroi limit, octroi duty paid is not refundable. This decision came up in appeal before this Court and the decision of this Court is reported in Hiralal Thakorlal Dalai v. Brash Broach Municipality, 1976 (Suppl.) SCR 82 : (AIR 1976 SC 1446). On facts that cas .....

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High Court in Khandelwal Traders Akola s case (AIR 1985 Bombay 218) (supra), which was referred to in the Judgment under appeal. It was held in this case also that where a dealer imports goods within the octroi limits not for ultimate consumption or sale for consumption within the limits but for the purpose of export and obtain permission for export he is not liable to pay octroi on such goods notwithstanding that in the larger sense for purposes of export he sells the goods within the octroi li .....

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ctroi duty payable shall be based on the total amount of the octroi as shown by the entry passes less the total amount of goods transported outside the municipal limits as shown by the transport passes: Provided that in computing the octroi duty payable under subsection (4), the goods trans- ported outside the municipal limits shall be lessened only if such goods have not been sold within the municipal limits and if they have been exported out of such limits within a period of six months from th .....

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r contract with Kirloskars, Batliboi placed an order with the Czech manufacturer of the machine for the import of the machine in question. Batliboi also had filled in a tender with the Defence Department under which, inter-alia, they were required to supply this machine to that department. Thereafter, they made this offer to M/s. Kirloskar to sell the same machine. In the letter addressed to Kirloskars, they had mentioned that the machine would be sold provided the Defence Department releases th .....

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atlibois. Thereafter, the machine was shifted by the Czech manufacturers to Bombay and it arrived in Bombay. The shipment was cleared in July / August 1972 and it was sent to the Kirloskars by rail. The railway receipts were relied upon. It is in these circumstances that Batlibois made an application under section 52 of the Bombay Sales Tax Act, 1959, for the purpose of determining whether the transaction between them and Kirloskars was a sale within the State of Maharashtra as defined under sec .....

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y the Division Bench at page 323 of the report. 99. It is in that context that we must notice the reliance placed by Mr. Dada on paragraph 7 of this decision. The argument there noted was that a State in India cannot levy sales tax on sales in the course of inter-State trade or commerce, sales outside the State and sales in the course of import or export. Reliance was placed on Article 286 of the Constitution of India and other constitutional stipulations. The Division Bench clarified that it is .....

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However, it also turned down the reliance placed on section 4 of the Sales Tax Act by Batlibois. A careful reading of paragraph 7 would denote as to how all the contentions of Batlibois have been rejected. 100. This judgment, therefore, cannot be of any assistance to Mr. Dada. It is apparent from a perusal of this decision that it does not support the argument canvassed before us nor it is a decision on the point at all for the levy of sales tax was in question and not entry tax. Secondly, on f .....

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ed under the Motor Vehicles Act but a demand was raised for payment of entry tax. The other appellants were contractors who had brought in certain equipments manufactured abroad for the purposes of their business within the State of Kerala. The common question was whether the Kerala tax on Entry of Goods into Local Areas Act, 1994, would apply to such imports. 103. Upon noticing this contention, the Division Bench adverted to the provisions of the Act and the rival contentions. 104. The Division .....

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t for the purpose of construing and interpreting the provisions of the Act. 106. Pertinently, the Division Bench did not find any substance in the complaint of the appellants that the Act as such is beyond the competence of the State or that the entry tax and imposition of that nature violates the mandate of Article 286 of the Constitution of India. After reproducing Article 286, the Division Bench held that the said Article refers to levy of sales tax. That is a distinct levy and the limitation .....

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e the scope of the Act and the Entry Tax Act is only confined to those goods brought from outside the State. Thus, the goods brought from outside the borders of the country are not covered by the levy. 107. With greatest respect to the Division Bench of the Kerala High Court, we are unable to agree. Having held that Article 286 cannot be pressed into service, then all that was required was presence of words of restriction or limitation in the Entry Tax Act which would rule out coverage of goods .....

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finition of the term value of the goods , with respect, it is difficult to agree with the view of the Division Bench. It is in these circumstances, with greatest respect to the Hon ble Division Bench of the Kerala High Court, that we differ. 108. If this view is taken, then, there is no difficulty in disagreeing with the single Judge judgment of the High Court of Gauhati in the case of Primus Imaging Private Limited (supra). There as well, after negating the challenge to the applicability of Art .....

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For the same reasons, we do not think that we can agree with the view taken by the High Court of Gauhati. 109. As far as the view taken by the Patna High Court is concerned there the issue was somewhat different. There, the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993, was challenged. The 1993 Act was declared ultra vires Articles 301 and 304 of the Constitution by the Patna High Court in the case of Bihar Chamber of Commerce vs. State of Bihar. Th .....

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from other countries in the definition of Entry of Goods was bad both for its retrospectivity and for want of previous sanction by the President. This argument has been upheld but, with great respect, we do not find anything in this judgment which would indicate that the said High Court opined in any manner that an Entry Tax Act despite a wide definition of the term Entry of Goods would not cover goods imported from abroad. The Division Bench judgment of the Patna High Court, therefore, does not .....

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nterpreted otherwise. For the same reasons as we have assigned for respectfully distinguishing the judgment of the Patna High Court we also distinguish the judgment of the Jharkhand High Court. 112. For the above reasons, we are unable to agree with Mr. Dada that contextually the expression Entry of goods from outside the State would not include entry from outside the territory of India. Given the nature of the levy, we do not think that contextually or otherwise any restrictive or prohibitive p .....

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though such a tax is leviable on the goods brought in from other States within the territory. The latter Act of bringing the goods from other parts of the country or from other States within the same country is also an import within the meaning of the Act. We cannot, therefore, restrict the definition of the words import and importer in the manner suggested by Mr.Dada. His second contention must, therefore, fail. 113. Now we come to the next contention of Mr. Dada and that is that the levy in t .....

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s point simply because by this process we cannot strike down the levy. It is not even suggested that the levy of entry tax in the present case can be struck down as unconstitutional by the process desired by the petitioners. In other words, by referring to the Maharashtra Tax of Entry of Motor Vehicles into Local Areas Act,1987, and considering the object and purpose of that Act, we cannot strike down the levy. The purpose of the levy will not assist us in holding that the entry tax on goods imp .....

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e argument is that the second proviso to section 3 of the Maharashtra Entry Tax Act conclusively establishes the requirement of entry only from another State or Union Territory in India and not entry on goods imported from abroad. 116. We have, with the assistance of the learned senior counsel, perused section 3 and the proviso thereto carefully. Section 3 sub-section (1) sets out the levy of tax. The levy and collection is on the entry of goods specified in column 2 of the Schedule into any loc .....

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tax payable by the importer under this Act shall be reduced by the amount of tax paid, if any, under the law relating to general sales tax in force in the Union Territory or the State in which the goods are purchased by the importer. With greatest respect to the senior counsel, this proviso does not dilute or read down the definition of the terms entry of goods , import and importer , but it only clarifies that if the import is by the importer who has purchased the goods in another State or Unio .....

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htra Value Added Tax Act who brings such goods into any local area for the purpose of resale in the State or sale in the course of inter-state trade or commerce or export out of the territory of India. This would cover the import by such dealer of goods into any local area and ordinarily that would have been subjected to the levy, but for the fact that they have been brought in for the purpose of export out of the territory of India. Therefore, if they are imported from abroad but are not consum .....

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e outside the State is presumed to be the sense in which the Legislature of the State of Maharashtra has subsequently employed the very same expression in the present Act. For the reasons which are already assigned hereinabove and for distinguishing Batliboi (supra), we do not find any substance in this contention. The paragraph which Mr. Dada reads from Batliboi s judgment cannot be read in isolation and totally out of context. The observations therein must be read in the backdrop of the essent .....

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inguishable. This contention need not detain us any further. For these reasons, we do not see that any word of doubtful meaning or interpretation has fallen for interpretation before us. Once such is the position, then, we need not consider the reliance by Mr. Dada on the judgment in Batliboi s and Diwan Brother s case (supra). 118. We are now left with another contention and namely that a tax on entry of goods into a local area is patently in violation of Article 301 and no further burden is re .....

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m para 15 of the petition, there is not a single ground which would enable us to consider this plea. The petition has been amended and the riders are added. Even by the amendments, no such plea is raised. The plea is raised on the basis that in the Annexures to the writ petition, while furnishing a reply to the show cause notice and elsewhere during the course of arguments before the Assessing Authority, the First Appellate Authority and the Tribunal, there is specific reference to this constitu .....

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he same and at pages 238 and 239 of the paper-book. In the impugned order of the Tribunal, however, the argument is noted and particularly in paragraphs 13, 14 and 15. Therefore, to be fair to the learned counsel and to the petitioners, we have allowed extensive arguments to be canvassed and even written submissions to be tendered on this point. For appreciating the contentions, we must refer to Article 301 of the Constitution of India. That Article appears in Part XIII of the Constitution title .....

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osition of restrictions on this freedom enunciated in Article 301. Articles 303 and 304 read as under : 303. Restrictions on the legislative powers of the Union and of the State with regard to trade and commerce.- (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 .....

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mmerce and intercourse among States -Notwithstanding anything in article 302 or article 303, the Legislature of a State may by law- (a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that .....

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another or making or authorising the making of any discrimination of one State by another by virtue of any entry relating to trade and commerce in any of the lists in the VIIth Schedule. Therefore, preference and discrimination is ruled out. Preference to one State over another or making or authorising the making of any discrimination of one State by another by resorting to any of the entries in the Lists in the VII Schedule is impermissible. Yet, by clause (2) the Parliament is not prevented fr .....

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ubjected, so, however as not to discriminate between goods so imported and goods so manufactured or produced and impose such reasonable restrictions on the freedom envisaged by Article 301 as may be required in the public interest. However, proviso to Article 304(b) states that this shall not be permissible unless previous sanction of the President is obtained. 123. When the freedom guaranteed by Article 301 is impeded or interfered with and when can the mandate thereof be held to be violated ha .....

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vant Articles in Part XIII of the Constitution as it stood at the material time: Article 301: Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free. Article 302: Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. Article 304: Notwithstanding anything in Article 301 .....

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amendment for the purposes of clause (b) shall be introduced or moved in the (1) [19661 1 S.C.R. 865. Legislature of a State without the previous sanction of the President. 7. The true scope and effect of those Articles was the subject matter of consideration in Atiabari Tea Co. Ltd. v. The State of Assam (1961) 1 SCR 809 = (AIR 1961 SC 232). The majority view was expressed by Gajendragadkar J. at p. 860 as follows: In construing Article 301 we must, therefore, have regard to the general scheme .....

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levant to remember in this connection that the Article we are construing imposes a constitutional limitation on the power of the Parliament and State Legislatures to levy taxes, and generally, but for such limitation, the power of taxation would be presumed to be for public good and would not be subject to judicial review or scrutiny. Thus considered we think it would be reasonable and proper to hold that restrictions freedom from which is guaranteed by Article 301, would be such restrictions as .....

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for instance, that even a legislative enactment prescribing the minimum wages to industrial employees may fall under Part XIII because in an economic sense an additional wage bill may indirectly affect trade or commerce. We are, therefore, satisfied that in determining the limits of the width and amplitude of the freedom guaranteed by Article 301 a rational and workable test to apply would be: Does the impugned restriction operate directly or immediately on trade or its movement ? (1) [1961 1 S. .....

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at such rate not exceeding five rupees per metric tonne as may be prescribed on the purchase of cane required for use, consumption or sale in a factory Was constitutionally valid. It was held by this Court that normally a tax on the sale of goods-did not ,directly impede or hamper the flow of trade and Section 21 was no exception and was not violative of Article 301 of the Constitution. A similar view was expressed in the State of Madras v. K. Nataraja Mudaliar AIR 1969 SC 147 in which the quest .....

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varying rates of tax prevailing in different States. At p. 150 of the report Shah, J., speaking. for the Court observed: The flow of trade does not necessarily depend upon the rates of sales tax: it depends upon a variety of factors, such as the source of supply, place of consumption, existence of trade channels, the rates of freight, trading facilities, availability of efficient transport and other facilities for carrying on trade. Instances can easily be imagined of cases in which notwithstand .....

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tate may be higher. Existence of long-standing business relations, availability of communications, credit facilities and a host of other factors - natural and business - enter into the maintenance of trade relations and the free flow of trade cannot necessarily be deemed to have been obstructed merely because in a particular State the rate of tax on sales is higher than the rates prevailing in other States. 8. On behalf of the appellant it was contended that the High Court was not right in holdi .....

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t of this Court: Exercise of the power under Article 304(a) can only be effective if the tax or duty imposed on goods imported from other States and the tax or duty imposed on similar goods manufactured or produced in that State are such that there is no discrimination against imported goods. As no foreign liquor is produced or manufactured in the State of Orissa the power to legislate given by Art. 304 is not available and the restriction which is declared on the ground of trade, commerce or in .....

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t or even remote is an extreme approach, one that the Hon ble Supreme Court of India has not upheld. We have already held in the foregoing paragraphs that in the present petition, such pleadings as might enable us to inquire further into this issue are hopelessly lacking. We have not been shown any material on which we can hold that the imposition of entry tax affects the movement of goods. The petitioners themselves have stated that the imported goods / commodities have been brought within the .....

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t. In this regard, before the Tribunal as also before the First Appellate Authority the only contention raised was that the State is discriminating between those goods which are locally procured, meaning imported from within the State or outside the State, and those goods imported from abroad. However, we have not been shown any materials which would enable us to hold that the petitioners business is adversely affected. The argument is that the petitioners imported raw material is made to suffer .....

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ould have to bear depending from where it is purchased creates a discrimination between persons similarly placed. That is only by virtue of the fact that the petitioners purchase furnace oil outside Maharashtra. The argument then was that there is a direct 12% to 15% difference in the pricing / cost of production in favour of the person who purchases furnace oil in Maharashtra for manufacture of electricity because of the provisions of section 42 read with Rule 41D of the Bombay Sales Tax Act an .....

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use or sale must bear either the entry tax or sales tax and that the entry tax levied does not exceed the sales tax levied on the commodity under the Bombay Sales Tax Act. However, the absence of any provision by which a refund / rebate / set off of the liability to pay entry tax vis-à-vis the sales tax enabled the Division Bench to hold that even though goods entering the local area from within the State do not bear sales tax, goods entering the local area from outside the State are subj .....

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of free flow of trade, commerce and intercourse throughout the territory of India. This is the understanding of the Division Bench of the tax barrier created by the levy of entry tax. On introduction of entry tax, manufacturers opted to purchase raw materials from within the State because the entry tax barrier made bringing materials from outside the State costlier. Then, in paragraph 34, it is held that refund of sales tax paid on the raw materials used in the manufacture of a final product is .....

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01 is violated. Further, the petitioners have not anywhere pleaded that even after the State amended the statutes and provided for a scheme of refund / rebate / set off, the so-called barrier still continues, or another barrier has been created. Thus, merely on the strength of the judgment in the case of Eurotex Industries it would not be possible to consider the question. It would really be a discussion in the abstract. In the additional written submissions tendered, all that is stated is that .....

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there is a tax on entry of goods into a local area. We do not think that this is a correct or proper understanding of the question. Ultimately, if the transport or movement of goods is taxed solely on the basis that the goods are carried or transported, that, in the opinion of the Hon ble Supreme Court of India directly affects the freedom of trade as contemplated by Article 301. The petitioners have reproduced a part of the judgment in the case of Atiabari Tea Company Limited (supra). We have .....

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eply by the State to the writ petition contains a specific statement of fact that this Court has earlier held that Entry No.13 to the Schedule to the Maharashtra Entry Tax Act insofar as it purports to levy entry tax on furnace oil and low sulphur waxy residue oil to be unauthorized and unconstitutional. Although the tax was held to be non-compensatory, according to the respondents, the main reason for holding Entry No.13 as unauthorized was due to non-availability of set off to such importers o .....

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ashtra Act No.13 of 2004 dated 29th June 2004. This section reads as under: 42. Drawback, set-off, refund etc.-(1) The State Government may by rules provide, that- (a) in such circumstances and subject to such conditions as may be specified in the rules a drawback, set-off or refund of the whole or any part of the tax- (i) … … … … (iv) paid or levied under the Maharashtra Tax on Entry of Goods into Local areas Act, 2003 be granted to a dealer. 127. It is the specific .....

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still an impediment or interference with the freedom granted by Article 301 of the Constitution of India, then that should have been specifically averred and established. If the burden is on the petitioners to prove and establish this fact, then, they have miserably failed to discharge it. We do not think that we should assist them despite such failure on their part. We say nothing more. 128. Two contentions remain to be considered. The first is with regard to the time-bar. 129. We have already .....

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the word irrelevant may be faulted and criticized. However, the argument appears to be that one must look at the Act and particularly section 6 of the Maharashtra Entry Tax Act to decide the question. The Rules would not override the Act and do not do so ordinarily. 131. Admittedly, in this case, the periods of assessment are 1st April 2005 to 31st March 2006 and 1st April 2008 to 31st March 2009. According to Mr. Sonpal, by virtue of section 23(3A) of the MVAT Act, the assessment has to be comp .....

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er a distinct statute has to be resorted to for assessing the liability to pay entry tax, that does not mean a substantive provision in the Entry Tax Act must be ignored or termed as irrelevant. 133. What is important to note is that the Tribunal in the impugned order has endorsed the view of the respondents. It relies on section 6 to hold that the Assessing Authority under the MVAT Act has authority to assess the entry tax. The Tribunal has emphasized for this purpose they may exercise all or a .....

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the Act and the Rules made thereunder. However, we have not been shown any provision in the Entry Tax Act which would specify the authorities who are for the time being empowered to assess, review, collect and enforce payment of tax, namely, entry tax. That is why the Legislature has chosen the preexisting framework under the MVAT Act. The predecessor enactment of the MVAT Act was the Bombay Sales Tax Act, 1959. There was a ready framework and the authorities were specified and clearly demarcat .....

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Added Tax Act. If, for this purpose the preexisting authorities can exercise all or any of the powers they have under the Value Added Tax Act and the provisions of that Act, including relating to returns, imposition of a tax liability of a person carrying on the business of the transferee or successor etc. to pay tax have been made applicable including provisions relating to appeals, rectification, review, references, refunds, penalties, then they have to apply accordingly. Equally, all provisio .....

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he Entry Tax Act. However, we have noted from the arguments of Mr. Sonpal that Chapter III of the Entry Tax Rules deals with payment of tax, namely, the procedural provision regarding filing of returns, and payment into Government Treasury and/or method of payment of tax, interest and penalty are incorporated in the Rules (See Rules 5 and 6). The return-cum-challan has to be filed in the form specified. A registered importer shall furnish the return-cum-challan under sub-rule (1) of Rule 7 withi .....

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is the stipulation regarding unregistered importer and for a registered importer, the amount of tax due from him shall be assessed by the concerned Assessing Authority within a period of three months immediately succeeding the month for which the return-cum-challan is required to be furnished. 136. The submission of Mr. Dada, is that the assessment orders in question are beyond this three months period, and which has to be construed as a period of limitation. 137. Now, to consider this submissio .....

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ased on this return, then, what Rule 8(1)(ii) specifies is that the said assessment shall be made by the concerned Assessing Authority within a period of three months immediately succeeding the month for which the return-cum-challan is required to be furnished. Thus, without waiting for this return-cumchallan, the assessment will have to be made in the case of a registered importer by the concerned Assessing Authority. 138. We will have to find out if there is a conflict between the rules and th .....

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he period to which the said order relates then, the order passed as aforesaid shall stand cancelled and after such cancellation, the dealer may be assessed in respect of the same period under other provisions of this section: Provided further that, such cancellation shall be without prejudice to any interest or penalty that may be levied in respect of the said period: Provided also that, no order under this subs-section shall be passed after three years from the end of the year containing the sa .....

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ch dealer relies in support of his return, or to produce such documents or evidence as is specified in the notice. On the date specified in the notice, or as soon as may be thereafter, the Commissioner shall, after considering all the documents or evidence which may be produced, assess the amount of tax due from the dealer: Provided that, if a registered dealer fails to comply with the terms of any notice issued under this sub-section, the Commissioner shall assess, to the best of his judgment t .....

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respect of any period by the prescribed date, then the Commissioner may serve on the dealer a notice requiring him to attend on a date and at a place specified therein and after giving the dealer a reasonable opportunity of being hear, proceed to assess, to the best of his judgment, the amount of tax due from him; Provided that, no order of assessment under the sub-section shall be made after the expiry of five years from the end of the year containing the said period. (3A) Notwithstanding anyth .....

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Where the Commissioner has reason to believe that a dealer is liable to pay in respect of any period, but has failed to apply for registration or has failed to apply for registration within the time as required by or under this Act, the Commissioner may after giving the dealer a reasonable opportunity of being heard, proceed to assess, to the best of his judgment, where necessary, the amount of tax, if any, due from the dealer in respect of that period, and any period or periods subsequent ther .....

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transaction of sale or purchase, or that any claim has been incorrectly made, then, in such a case, notwithstanding that any notice for assessment has been issued under other provisions of this section or any other section of this Act, the prescribed authority may, after giving such dealer or person a notice in the prescribed form and a reasonable opportunity of being heard, initiate assessment of the dealer or person in respect of such transaction or claim. (b) During the course of any proceed .....

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nding anything contained in section 59, be deemed to have the requisite jurisdiction and power to assess such dealer or person in respect of such transaction of sale or purchase or claim, covered by clause (a) and such assessment proceedings shall, for all purposes of this Act, be deemed to have been transferred to such authority. (c) The assessment proceedings under this subsection shall be without prejudice to the assessment proceedings in respect of the said period or periods under any other .....

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ub-section, the dealer may be assessed separately under the other provisions of this section in respect of the said period or periods: Provided that, once the dealer or person is assessed under this sub-section, no tax from such transaction or claim and penalty and interest, if any, consequent upon such tax shall be levied or demanded from such dealer or person, at the time of assessment to tax under the other provisions of this section in respect of the said period or periods relating to such t .....

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ed his powers in this behalf. (6) If the Commissioner is of the opinion that, in respect of any period covered by a return, any turnover of sales or of purchases has not been disclosed, or that tax has been paid at a lesser rate, set-off has been wrongly claimed, or deduction has been wrongly claimed, then, notwithstanding anything contained in the other provisions of this section, the Commissioner may serve a notice in the prescribed form on the dealer and proceed to assess him in respect of th .....

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ithstanding anything contained in this section, such assessment shall be made within a period of thirty-six months from the date of communication of such finding or, direction contained in the order, as the case may be, to the Commissioner: Provided that, if a certified copy of the said order is supplied by the dealer concerned to the Commissioner earlier than the said date of communication, then the period of thirty six months shall be counted from the date of the said supply. (8) The Commissio .....

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ady filed an appeal before the appropriate forum against the order of the Tribunal and such appeal is pending before such appropriate forum: Provided that, no order of recovery of the dues including the penalty or interest or forfeiture shall be passed by the Commissioner or the State Government in such case, pending decision by such forum, in the matter, and on decision of the appropriate forum, the Commissioner shall modify the order in accordance with the order of such forum after giving the .....

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for each form of return for the said period. (11) Where a dealer has been assessed under sub-section (2), (3), (4) or, as the case may be, (5) and he makes an application in the prescribed form to the Commissioner within thirty days of the date of service of the assessment order, for cancellation of the assessment on the ground that he had not been able to attend or remain present before the Commissioner at the time of hearing when the assessment order has been passed, the Commissioner shall, af .....

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enalty, as the case may be: Provided that , only one application for cancellation shall be entertained under this subsection in respect of any period of assessment. Provided further that if no order is passed within the aforesaid period of three months, then the assessment order shall be deemed to be cancelled. (12) Notwithstanding anything contained in subsection (2), (3) (4) or, as the case may be, (5), the fresh order of assessment as provided under subsection (11) may be passed before the ex .....

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ase, the limitation for making an order of assessment, for any of the periods, expires on the 31st March 2014, then the order of assessment, for such periods, may be made on or before the 30th September 2015. 140. A perusal of this section would indicate that it is a code by itself for assessment. There, sub-section (1) provides that if the registered dealer fails to file the return in respect of any period by the prescribed date, the Commissioner may assess the dealer in respect of the said per .....

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llation shall be without prejudice to any interest or penalty that may be levied in respect of the said period and the third proviso states that no order under sub-section (1) of section 23 shall be passed after three years from the end of the year containing the said period. 141. As far as the present matter is concerned, what we find is that the Assessing Authority proceeded on the footing that the dealer filed an application in Form-501 for the period 2005-2006 and thereafter filed revised ap .....

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ular No.37A of 2007 and the date in that regard has been specified at page 87 of the paper-book. The dealer in this case filed these applications and raised the claim which was duly verified and considered. On a scrutiny it was discovered that the dealer purchased low sulphur waxy residue and low sulphur oil from outside the State of Maharashtra. These goods are covered under the Entry Tax Act. To verify the correctness of the returns filed by the dealer and to verify the tax liability of the de .....

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51 of the Maharashtra Value Added Tax Act, 2002, has to be filed. 143. In the present case, section 51 was invoked by the petitioners and which deals with grant of refunds. There we must notice that this section as a whole was substituted by Maharashtra Act No.32 of 2006. Where the registered dealer under the MVAT Act has in any return, fresh return or revised return, shown any amount to be refundable and has not undertaken to adjust such amount against the amount due as per any return in accord .....

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ion the plea has been raised. It is apparent from the reply, copy of which is at page 79 of the paper-book, that a show cause notice dated 11th June 2013, with regard to assessment of entry tax for the period, namely, 1st April 2005 to 31st March 2006 was received. 144. That show cause notice alleges that the Deputy Commissioner of Sales Tax wishes to satisfy himself that the return-cum-challans filed by the petitioners in respect of the aforesaid period are correct and complete. The show cause .....

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books of account and presumably records pertaining to the entry tax; and lastly to show cause why penalty should not be imposed. 145. The order of assessment, however, also refers to the communication / letter from the petitioners, copy of which is at page 83 of the paper-book dated 22nd March 2013. The date of the returns has not been mentioned. What we have noted from a perusal of Chapter III of the Entry Tax Rules is that the return-cum-challan has to be filed in Form No.4. This return-cum-c .....

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er, sub-section (3) of section 3 states that any importer who is liable for registration under the Entry Tax Act or Rules made thereunder shall not be liable to pay tax under the Entry Tax Act and any importer who during the course of any year becomes liable for registration under this Act shall not be required to pay the tax on any entry of goods effected by him into a local area immediately before the time he becomes so liable for registration. This is a provision specifically referring to the .....

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l area for consumption, use or sale therein would be taken as entry of goods for that purpose and that is how the importer would be obliged to register himself. The registration is contemplated by section 4 of the Maharashtra Entry Tax Act and every importer who is liable to pay tax under this Act shall, if he is a dealer registered or liable for registration under the Sales Tax Act, within such time as may be prescribed for the purpose of making an application in the prescribed form for registr .....

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ar as the importer is concerned, if he is not liable for registration, he shall not be liable to pay tax; if he obtains the registration on the basis that he is liable to pay tax thereafter, the other provisions would apply. 146A. We do not think that on the vague pleas of the petitioners which do not indicate with clarity and precision as to how the assessment is time-barred that we must consider this question. More so, given the nature of the proceedings before the Assessing Authority. Merely .....

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liable to pay the entry tax, they filed their returns-cum-challans. Thus, returns-cum-challans were to be verified and scrutinized for the purpose of amount of tax due from the petitionerimporter. Since the petitioner no. 1 is a registered importer that rule 8(1)(iii) would be the applicable rule. 146B. In any event, we do not find that it is open to the petitioner to raise the bar of limitation because the notice for assessment under the Entry Tax Act in Form No. 5 to the Entry Tax Rules was i .....

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n-cum-challan duly filed and as indicated in the notice was not the only issue dealt with by the Assessing Officer. Rather, the proceedings were to verify the correctness of the returns filed by the petitioners and to verify the tax liability of the dealer coupled with an application in Form-501 to the MVAT Rules filed by the petitioners for refund. The application for the period 2005-2006 and the revised application for refund in Form-501 of the MVAT Rules was dated 30th March 2009. Partial ref .....

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ore, it is too late in the day to raise the plea of a time-bar. Having taken a partial refund and then seeking to challenge the denial of the balance or remainder sum of refund, revising that claim as well, it is not open to the petitioners to question on the issue of time-bar or limitation a composite exercise concluded by the impugned order. In such circumstances, even otherwise, the governing period in this case could have been the one specified by Section 23 of the MVAT Act. The petitioner N .....

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y cannot be said to be perverse or vitiated by an error of law apparent on the face of the record, leave alone perversity. It is a possible view. 147. Once that view is possible and in the given facts and circumstances, then, we do not think any larger controversy is required to be addressed and decided. Which would be the governing provision and which would prevail and override can be decided in an appropriate case. Meaning thereby, whether Rule 8 can be given a goby as contended by the respond .....

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case. 148. We, therefore, do not wish to express any opinion on the rival contentions, particularly on the wider question and controversy. Once we take this view it is not necessary to refer to the decisions relied by the parties. 149. The only surviving contention is whether the Schedule Entry can be invoked so as to levy, assess and recover the entry tax from the petitioners. In that regard the contention of the petitioners senior counsel is that the Assessing Authority in its order dated 21s .....

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furnace oil. The argument is that this entry was deemed to be in force from the inception of the Act till 31st March 2005. By way of revival the amendment of the Schedule as per section 5 of the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2007, which was enacted in August, 2007, Entry No.13 was revived retrospectively but only for the period prior to 31st March, 2005. This amendment is not relevant to the period in question. So far as Entry No.12 is concerned, that is relied upon .....

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furnace oil . This is the description of the product of the petitioners and it cannot be said that when Entry No.13 was revived from 1st October 2002 to 31st March 2005, there was no entry to cover the products of the petitioners. 152. We have already reproduced above the relevant Schedule Entries 12 and 13. What is important to note is that the Schedule with effect from 1st April 2005, to date, has been set out in the relevant private publication. The footnote to that clarifies that the Schedul .....

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ed 6th August, 2007, with effect from 15th August, 2007. The relevant Amendment Acts are also being referred by the parties. Chapter V to the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2006, refers to amendments to the Maharashtra Tax on Entry of Goods into Local Areas Act, 2002. As far as the substitution of the Schedule is concerned, it states that for the Schedule appended to the Entry Tax Act the Schedule to this Amendment Act shall be substituted and shall be deemed to have .....

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on 31st March 2005, the Schedule to the Maharashtra Entry Tax Act, 2002, as it existed before 1st April 2005, shall be deemed to have been revived and reenacted in the same form as it then existed with certain modifications and that is petroleum fuel oil, including heavy furnace oil and residual furnace oil. Thus, furnace oil, including heavy furnace oil and residual furnace oil is common in the description of goods. It is a substantive entry by itself (Entry No.12) and it is also part and parce .....

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lusive of residual furnace oil. Entry No.13 covers furnace oil and low sulphur waxy oil. If the Schedule Entry No.13 mentions petroleum fuel oil, inclusive of heavy furnace oil and residual furnace oil, then, the attempt of the petitioners to demonstrate that their product or raw material low sulphur furnace oil and low sulphur waxy oil imported from abroad are not covered by the Schedule Entry cannot be accepted and deserves to be rejected. The Tribunal, in paragraph 9 has held that petroleum f .....

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e have rightly held that when the entire Schedule was substituted retrospectively and there is also Entry No.12 which deals with furnace oil, including heavy furnace oil and residual furnace oil which is also included in petroleum fuel oil, then, we cannot enter into this factual controversy. It involved and included the product of the petitioners and if there is entry which takes care of it, then whether it is Entry No.12 or 13 should not be a matter of concern for us. The entries in the Schedu .....

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Assessing Authority and the order in that behalf stands confirmed throughout, then that concurrent view on facts cannot be termed as perverse, particularly when we notice the Schedule to the entries therein. Eventually, this is a matter wherein in writ jurisdiction we must not interfere. The view taken by the authorities who are implementing the Act and levying, assessing and recovering the tax should not ordinarily be interfered with. The conclusions assailed must be demonstrated to be palpabl .....

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oners discharge their tax liability at their instance, we have no reason to consider their plea of revenue neutrality. It is demonstrated that they have failed to discharge the tax liability and in full. The figures in that regard are pointed out in the affidavit-in-reply and which emerge from the record of the taxing authorities. We have no reason to discard them. Therefore, other pleas need not be examined at the instance of the petitioners and particularly when justice does not lie on their s .....

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