TMI Blog2019 (3) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... inate against goods from outside the State but instead is to bring about economic unity and parity by doing away with the discrimination visited by virtue of differing rates of tax in different States - There is no Constitutional burden on the State to equalize all inequalities of burden on goods even if such inequalities do not result from the State's taxation. No inequality results from any action /legislation attributable to the State of Maharashtra. Merely since the State of Maharashtra has allowed reduction for Central Sales Tax in the Maharashtra Tax on Entry of Motor Vehicle into Local Areas Act, 1987, does not mean that it is obligated to give a similar reduction for entry tax under the Maharashtra Entry Tax Act. Notably, other States also do not give any reduction for Central Sales Tax while levying entry tax. Therefore, local goods exported from Maharashtra to other States, which also bear Central Sales Tax, would incur a higher tax burden than just the VAT of the State to which they are exported. Under Entry 52 of List II of Seventh Schedule appended to the constitution, the State is empowered to levy and collect entry tax on the entry of the goods into local area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dismissed. - Writ Petition No. 4563 Of 2013, Writ Petition No. 2785 Of 2017, Writ Petition No.1813 Of 2013 - - - Dated:- 4-3-2019 - S.C. DHARMADHIKARI PRAKASH D. NAIK, JJ. Mr. R. V. Desai, Senior Counsel a/w Mr. Rohit Pardeshi, Mr. Mayank Jain i/by Khaitan and Co., for the Petitioner in W.P. No.4563 of 2013. Mr. V. Shridharan, Senior Counsel a/w Mr. Prakash Shah and Mr. Jas Sanghavi i/by PDS Legal, for the petitioner in W.P. No.1813 of 2013 and W.P. No.2785 of 2017. Mr. Darius Khambata, Special Counsel with Ms. Naira Jejeebhoy and A.L. I. Patel, Additional Government Pleader, for respondent Nos. 1 to 3 in WP No.4563 of 2013 and W.P. No.2785 of 2017. Mr. Davrius Khambata, Special Counsel a/w Ms. Naira Jeejeebhoy and Mrs. Geeta Shastri, AGP for respondent Nos. 1 to 3 in WP NO.1813 of 2018. Mr. Sonpal, Special Counsel a/w B. V. Samant, AGP for the Respondent State in WP No.2785 of 2017. JUDGMENT [PER : PRAKASH D. NAIK, J.] 1] The petitioners have invoked Writ Jurisdiction of this Court under Article 226 of the Constitution of India. 2] The petitioner in Writ Petition No.4563 of 2013 seeks declaration that the Maharashtra Tax on the Entry of Good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Union Territory or the State in which goods are purchased by the importer. As the Petitioner had paid 2% CST at the time of import, the respondent should reduce the said amount and ought to levy Entry Tax at the rate of 10.5% only. 8] It is further submitted that LNG produced and purchased within the State would be subject to Value Added Tax (V.A.T.) at the rate of 12.5% under the provisions of Maharashtra Value Added Tax Act, 2002 (for short referred as, M.V.A.T Act). Under Section 48 of the MVAT Act, the State Government allows a set off or refund of the whole or any part of the tax paid under MVAT Act and Entry Tax Act. Rule 53 of the MVAT Rules provides for reduction in set off. As per Rule 53(1), if the dealer has used any taxable goods as fuel, then the amount equal to 3% of the corresponding purchase price shall be reduced from the amount of set off otherwise available in respect of the said purchase. 9] It is submitted that the State Legislature has levied Entry Tax under Entry 52 of the List II of the Seventh Schedule to the Constitution. The Entry 52 relates to tax on the entry of goods into Local Area for consumption, use or sale therein. The Legislative power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly or equally circumstanced or similarly situated as envisaged in Article 304(a) of the Constitution of India. In the present case the tax burden is substantially unreasonable on the goods imported from outside. The State is treating equals as unequals. There is additional tax burden of ₹ 82,70,417/- on goods from outside the State which is in nature of hostile discrimination. The goods from outside State suffer tax burden of ₹ 2,06,76,042/- and the goods within the State suffers ₹ 1,24,05,625/-. It is submitted that in paragraph 141 of the aforesaid decision, it was observed that the Court was inclined to accept the submission made on behalf of the State that so long as the intention behind the grant of exemption/adjustment/credit is to equalize the fall of the fiscal burden on the goods from within the State and those from outside the State, such exemption or set off will not amount to hostile discrimination offensive to Article 304(a). 12] In the aforesaid decision, it is further observed that the Courts have left it open for examination by the regular benches hearing the matters whether the impugned enactment achieve the object of such equalization or lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with Article 366(28) includes imposts of every kind viz. Tax, duty, cess or fees. The aforesaid Act has been enacted by the State Legislature, under Entry 52 of List II of the Seventh Schedule to the Constitution of India, but the power to collect tax has been delegated to the local bodies. Although Octroi is collected by the local bodies, it remains a tax imposed under Entry 52 of List II of the Seventh Schedule as the taxable event is entry of Goods into the Local Areas for consumption, use or sale therein. The taxable event under the Entry Tax Act, is also Entry of Goods into the local areas for consumption, use or sale therein. Thus, on the goods into the local areas for consumption, use or sale therein, the dealer is liable to pay entry tax as well as Octroi. As the taxable event for levying of entry tax and Octroi is one and the same, it amounts to double taxation. Double taxation on the same aspect under same taxable entry is ultra vires the constitution. 15] It is submitted that Explanation 2 to Section 3 of the CST Act, states that where the movement of goods commences and terminates in the same State, it shall not be deemed to be a movement of goods from one Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim set off of amount equivalent to 7.5 % of the purchase value after reducing amount equal to 3% on the purchase price as stipulated under the said Rule 1(a) of Rule 53 of MVAT Act. It is submitted that the amount levied on entry tax purported to be under Entry 52 does not conform to the principle of constitutionally amended section 21(h) of the Entry Tax Act. The definition Local Area to include all areas within the Municipal Corporation, Zilla Parishad and Cantonment Board. It is also provided by way of Explanation that all area under a , b and c class Municipal Councils and Village Panchayats, falling within the area of the districts, would fall under Zilla Parishad. Thus, practically the entire State of Maharashtra is declared as local area. As per Section 3(7) of the Entry Tax Act, levy is in addition to any tax levied and collected as Octroi or Entry tax by any authority including local authority in the State. 18] It is submitted that the Power to levy tax under Entry 52 of List II of the Seventh Schedule remains with local authority constituted under Mumbai Municipal Corporation Act, Bombay Provincial and Municipal Corporation Act, or City of Nagpur Corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of list II to the Seventh schedule to the Constitution of India. The interpretation of Entry 52 limits the levy, assessment, collection and retention of the tax, by local areas only and the process must be for the benefit of the same local area. Entry 16 to the Schedule of the Maharashtra Tax on the Entry of Goods into Local Areas is ultra-vires Entry 52 since the said Act, in effect deems the entire State to be a single local area and since the proceeds of the levy go to common state fund and not to the respective local area within which goods are actually sold, used or consumed therein. 21] In determining the scope of entry in the lists to the constitution, consistent pre-constitutional legislative practice followed must be properly considered and due weight must be given to it. The octroi has been consistently levied, collected and utilized by the local areas prior to enactment of constitution and Government of India Act 1935. The term local area has well established meaning that is, the area administered by local authority such as Municipality, district Board, Local Board, Union Board, Panchayat or any other body constituted under the statute for the governance of the loc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... local areas though levied may be by the State Legislature, must be assessed, collected by the local areas and utilized from same local area as that was consistent legislative practice adopted prior to enactment of the Constitution and the Government of India Act, 1935. 23] The change in the Nomenclature of the entry is not relevant and would not change the character and the nature of the tax. The Legislative practice prior to enactment of the Constitution, is that octroi or entry tax is levied, collected and utilized by local area. The nature of levy is not changed after the Constitution is enacted and the said principle must be read into entry 52 of list II. 24] It is submitted that the Hon'ble Supreme Court in the case of Diamond Sugar Mills (supra), while judging the validity of U. P. Sugarcane Zone Act, 1956, considered the question whether the factory could be termed to be local area . The Apex Court exploring the Legislative history of entry 52 so as to interprete the meaning and scope of term, local area as utilized in the said entry. 25] Learned counsel drew our attention to the observation of the Apex Court in paragraph Nos. 17, 18, 19, 20, 21, 22 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial decree, specific rates being fixed for the three separate sorts of octroi area, established on the basis of population, namely, communes having (1) less than 10,000 inhabitants, (2) from 10,000 to 50,000 and (3) more than 50,000. While we are not concerned here with other features of the octroi tax system, it is important to note that the tax was with regard to the entry of goods into the areas of the communes which were local political units. According to the Shorter Oxford English Dictionary commune in France is a small territorial division governed by a maire and municipal council and is used to denote any similar division elsewhere. 20. The characteristic feature of an octroi tax then was that it was on the entry of goods into an area administered by a local body. Bearing in mind this characteristic of octroi duty we find on an examination of items 7 and 8 of the Schedule Rules mentioned above that under the Government of India Act, 1919, the local legislature of a Province could without the previous sanction of the Governor-General impose a tax octroi - for entry of goods into an area administered by a local body, that is, a local government authority and the area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28] It is further submitted that the Maharashtra Tax on the Entry of Goods into Local Areas Act 2002 does not levy tax on entry of goods from another local area within the state and hence discriminates the provisions of Article 304(a) of the Constitution of India. It is submitted that in the case of Ratan Lal Co. and anr -vs- The Assessing Authority and anr 1968 (25) STC 137 followed in V. Guruviah Naidu Sons -vs- State of Tamil Nadu and anr 1976 (38) STC 565 , It was held that so long as the rate of taxes imposed on imported goods and locally produced goods was same, article 304(a) would not be violated. In the present case, there is not even tax imposed on the goods imported from other local areas within the State. Hence the entry tax clearly creates fiscal tax barrier by which goods imported from other States are discriminated against in comparison to goods imported into local area from another local area in the same State. Mr. Shridharan submitted that, if the majority judgment has not expressed any opinion on a particular point, but the minority judgment has expressed an opinion on that very same point, then the minority view is a binding precedent. He relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsistently been levied, assessed, collected and retained by the local authority within which the goods have been sold, consumed or used, reliance was placed on several decisions which are referred hereinabove and the decision in the case of Surya Joti Devices India (P) Ltd -vs- State of Punjab 1996 SCC Online P H 465, State of Bihar -vs- Bihar Chamber of Commerce (1996) 103 STC 1. to supplement his submission that the scope of legislative entry in one of the three lists of Constitutions, is limited by the consistent legislative practice adopted by various legislatures prior to the enactment of the Constitution. Reliance was placed on the State of Bombay -vs Narothamdas Jethabai 1951 SCR 51, State of Bombay -vs- F.N. Balsara AIR 1951 SC 318, learned counsel also relied upon the decision in the case of Thresslamma L. Chiryil -vs- State of Kerala [2007) 7 VST 293 (Ker), ITC Ltd -vs State of Tamil Nadu and anr [2007] 7 VST 367 (Mad), Bharat Earth Movers Ltd -vs State of Karnataka and ors [2007] 8 VST 69 (Karna), Firm A.T.B. Mehtab Majid Co. -vs- The State of Madras and anr 1962 (14) STC 355, State of Madhya Pradesh and anr -vs- Bhailal Bhai and ors 1964 (15) STC 450, A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpressly clarifies that the imposition of taxes by a State must not discriminate. In Jindal's case (supra), the Hon'ble Supreme Court has clarified that non discriminatory State taxes do not violate Article 301 of the Constitution. Only discriminatory taxes are forbidden. It is further clarified that there is no impediment to trade, commerce and intercourse unless the tax visits a hostile discrimination. Imposition of Entry Tax under Entry 52 of the State List would not violate Article 301 or Article 304(a) of the Constitution merely by virtue of such tax being a tax on the movement of goods. The burden is on the person challenging the validity of the legislation to show that the intention in levying the tax is to visit a hostile discrimination on goods from outside the State. 33] Mr. Khambata, further submitted that it is open to the State to impose a tax on goods brought into the State from outside the State (imported goods), provided such tax is equal to the tax imposed by the State on goods manufactured /produced within the State. This can be done to ensure that the importer is not in a more advantageous position than local manufacturers/producers by virtue of the ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Video Electronics (supra). It is further submitted that the majority in the Jindal's case (supra) has approved the decision in the case of Video Electronics (supra). It is well settled that the tax would not be discriminatory or amount to a restriction /interference with trade merely by reason of differential treatment or imposition of a different rate, where such differential treatment does not actually affect trade, commerce or intercourse. It is clarified that ground of incentive /set off with a view to develop economically backward areas does not violate Article 304(a) of the Constitution if there is a justifiable reason for the classification. In Jindal's case (supra), the Hon'ble Supreme Court has once again clarified that differentiation is not necessarily discrimination and that the Court is required to examine whether the differentiation made is intended or inspired by an element of unfavourable bias in favour of the goods produced or manufactured in the State as against those imported from outside and whether the differentiation can be supported by reasons. Therefore, the State cannot act in a hostile protectionist manner. As long as the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Learned counsel further submitted that in Jindal's case (supra), the Supreme Court has rejected the compensatory tax theory evolved in Automobile Transport (Rajasthan) Ltd -vs- State of Rajasthan (1963) 1 SCR 491 and subsequently modified in Jindal Stainless Ltd (2)-vs- State of Haryana (2006) 7 SCC 241's case (supra), and it was held that this theory has no juristic basis. It is contended that it is not necessary to deposit the entry tax collected into a separate fund or should be proportiionate to the expenditure incurred by a local area. It is permissible for the entry tax to be added to the Consolidated Fund of a State. It is submitted that in the decision of Jindal's case, it was observed that the entry tax is a State level levy and the entry tax revenue is treated as the State Revenue. He further submitted that the Apex Court in the case of Jindal (supra), has reiterated the approach to be taken by Courts while considering the constitutional validity of fiscal measures and the requirement to grant greater latitude to the legislature in taxation related legislations. He would contend that when the above principle of law are kept in mind, it is clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was defined in section 2(g) as a, person who brings a motor vehicle into a local area from any place outside the State . The Court recognized that, local area and area of the State are two different concepts under the Constitution and held that since the Taxable event was the entry in any one of the local area of the State, the factor that the Act refers to more than one local area, which together covers the entire area of the State, could make no difference and would not put the Act beyond the legislative competence of the State Legislature under entry 52 . The challenge to the decision in case of Jaika Automobile, was dismissed by the Hon'ble Supreme Court in Shaktikumar M. Sancheti -vs- State of Maharashtra (1995) 1 SCC 351 observing that there was no infirmity in the view of the Bombay High Court. 39] Mr. Khambata, relied upon the decision in the case of State of Bihar -vs- Bihar Chamber of Commerce (1996) 9 SCC 136 and more particularly observations in paragraph Nos. 12 and 36 of the said decision, submitted that the Court in the said decision has held that State is a compendium of local areas and that the requirement of Entry 52 of List II is satisfied so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, as such not binding upon any Court. He also relied upon the decision in the caste of State of Kerala and others -vs Fr. Villaim Fernandez (supra). It is submitted in the case of State of Kerala -vs-Fr. William Fernandez (supra), it is held that similar Acts are within competence of State Legislature. The grounds taken in this petition are with intention to stall recovery of dues. The grounds are frivolous. The assessment orders of levying taxes challenged before First Appellate authority while fixing part payment at 3% entry tax liability at 12.69 crores to which part payment of ₹ 2.69 crores is paid and there is default in payment of ₹ 10 crores by petitioner in W.P. No.2785 of 2017. The Apex Court in Jindal's case (supra) has decided all the issues. The principles relevant for present controversy are broadly laid down by the Apex Court in the said decision. In Jindal's case, the Supreme Court has observed that it is not necessary that money realised by levy should be put into separate fund or that levy should be proportionate to the expenditure. There is no bar to subsume the revenue realised from Regulatory/Compensatory Taxes into consolidated fund of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and (b) of Article 304 have to be read disjunctively. c) Article 304(a) frowns upon discrimination of hostile nature in the protectionist sense and not merely differentiation. d) The tax levied for entry of goods cannot be such that it is for the purpose of protecting local industries /manufacturers. e) The levy must be tax on entry of goods to local area in the State, the levy is imposed with intention to protect the local industries vis-a-vis the goods coming from other State. The discrimination is not merely differentiation but should be of hostile nature with intention to protect local industries. f) The power of tax as per entries in list II is sovereign. g) The only limitation on the power is provided vide Article 303 or Article 286(2) etc. of the Constitution. h) Levy of tax under Article 304(a) does not require assent of President and even if assent is taken the same cannot sustain the levy if it is discriminatory. i) Levy of taxes are not restrictive unless discriminatory. j) Article 304(a) recognizes the availability of power to impose taxes on goods imported from other State. k) The sovereign power to levy taxes can have lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The State of Kerala and Anr. (1961) 3 SCR 77 that a taxing statute is subject to the conditions laid down in Article 13 of the Constitution . A taxing statute may accordingly by open to challenge on the ground that it is expropriatory; or that the statute prescribes no procedure or machinery for assessing tax, but it is not open to challenge merely on the ground that the tax is harsh or excessive. Consistent view taken in the above series of decisions and other decisions is that tax legislations can be challenged on the ground that they infringe the Fundamental Rights under Part III but that does not however mean that there is freedom from taxation or that tax is per se a restriction on Fundamental Rights or freedom of trade, commerce and intercourse. . 46] In paragraph Nos. 71, 129, 203, 215, 306 and 310 of the said decision, it is clarified that clauses (a) and (b) of the Article 304 have to be read disjunctively, consequently the tests required to be satisfied for Article 304(b) are not applicable to taxes imposed under Article 304(a). In paragraph Nos. 72, 126, 150,158, 159, 217, 268, 269, 319, and 415 of the above decision, it is observed that Article 304(a) expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied. Even in the case of local manufactures if their cost of production varies, the net tax collected will be more or less in some cases but that does not create any inequality because inequality is not the result of the tax but results from the cost of production of the goods or the cost of their importation. This ground, therefore, has also no substance. We do not think it necessary to set down here the provisions of the Haryana Amendment Act because they follow the scheme of the Punjab Amendment Act in substance and what we have said in regard to the Punjab Amending Act applies mutatis mutandis to Haryana Amendment Act also. 48] In the case of State of Madras -vs- N.K. Nataraja Mudaliar (supra), it has been observed that :- a difference in the rate imposed does not ipso facto mean that there is a restriction on trade or commerce since other factors may be relevant /compensate. The Supreme Court has expressly clarified that the, prevalence of differential rates of tax on sales of the same commodity cannot be regarded in isolation as determinative of the object to discriminate between one State and another . Similarly in the case of Video Electronic Pvt Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same legislature enacts two different laws but in substance they form one legislation, it might be open to the Court to disregard the form and treat them as one law and strike it down, if in their conjunction they result in discrimination. But such a course is not open where, as here, the two laws sought to be read in conjunction are by different Governments and by different legislatures. Article 14 does not authorize the striking down of a law of one State on the ground that in contrast with a law of another State on the same subject its provisions are discriminatory. Nor does it contemplate a law of Center or of the State dealing with similar subjects being held to be unconstitutional by a process of comparative study of the provisions of the two enactments. The sources of authority for the two statues being different, Article 14 can have no application . 51] In Jindal's case, the Apex Court has rejected compensatory tax theory evolved in Automobile Transport (Rajasthan) Ltd -vs- State of Rajasthan (supra), and subsequently modified in Jindal Stainless Ltd (2) v. State of Haryana (supra), in the light of the observations of the Court, it is not necessary that e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced in such local areas are treated at par with each other. c) Where goods are purchased outside Maharashtra, no tax is leviable under the MVAT Act. However, tax would be payable under the MVAT Act in respect of the same goods sold within the State of Maharashtra. It may transpire that the rate of tax levied on the goods in the State where they are purchased is significantly lower than the rate being levied under the MVAT Act. In such a case, dealers in Maharashtra would suffer a discrimination and purchasers would opt to purchase the goods from other States where the rate of sales tax is significantly lower. d) The first proviso to Section 3(1) of the Maharashtra Entry Tax Act clarifies that the rate of entry tax shall not exceed the rate specified for that commodity under the MVAT Act. e) The second proviso to section 3(1) of the Maharashtra Entry Tax Act grants a set-off in respect of the General Sales Tax paid on the goods in the State or Union Territory where the goods were purchased. In order to avail of the benefit of this proviso, the sales tax must be one in force in the State, namely one imposed by the State. f) Section 3(5) of the Maharashtra Ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactured in the taxing State. This paragraph merely accepts that the State may take steps to equalise the fall of the fiscal burden on imported and local goods. It does not mandate that the State must equalise the fall of the fiscal burden regardless of at whose hands that fall is. On the contrary, it is only the burden imposed by that State on local goods that must be equalized with the burden imposed by the State on local goods. Moreover, para 141 of the Jindal's case makes it apparent that what is important is the intention to equalise. In the present case, there is no material to indicate that the State does not have an intention to equalise. In fact, the intention to equalise is borne out by the fact that the rates of entry tax and VAT imposed by the State are the same. 56] In the State of Bihar -vs- Bihar Chamber of Commerce (supra), it was held that State is a compendium of local areas and that the requirement of Entry 52 of List II is satisfied so long as the tax is levied on the entry of goods into a local area in the State. It would be relevant to quote paragraph 36 of the said judgment which reads thus :- 36. ....Entry 52 empowers the State Legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but it is legality or illegality which renders it valid or invalid . 57] It is contended by petitioners that Entry tax cannot be levied only on goods coming from outside State by defining the entire State as a local area. In support of the submission, petitioner had relied upon the decisions in the case of Thressiamma L. Chiravil v. State of Kerala (supra), ITC Ltd -vs- State of Tamil Nadu (supra), Bharat Earth Movers Ltd -vs- State of Karnataka 2007 8 VST 69 Kar, Jaiprakash Associates Ltd v. State of Arunachal Pradesh Manu /GH/0010/2009, L T Case Equipment v. State of Karnataka (2010) 27 VST 447, in view of the decision in the case of Jindal (supra) the ratio in the said decision cannot be applied in this proceeding. In the case of State of Kerala -vs- Fr. William Fernandez (supra), the Apex Court has rejected the submission that entry tax legislation is not covered by Entry 52 of List II of the Seventh Schedule to the Constitution. It was observed that entry tax legislation must be given a broad / wide meaning and cannot be confined in the manner suggested. In each local area if the State levied tax on the entry of goods from another local area in the State, it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt, in the case of Shaktikumar Sancheti's case, has observed that :- Feeble attempt was made to submit that the tax being in addition to octroi realised by the local body it amounted to double taxation. The taxable event for entry tax is not same as octroi . 60] By way of amendment carried out in W.P. No.1813 of 2013, the petitioner has alleged that levy of Entry Taxes under the Maharashtra Tax on Entry of Goods into Local Areas Act, 2002, is discriminatory, unconstitutional inasmuch as it differentiates between importers, who have no liability under the Maharashtra Value Added Tax Act, 2002 and those who are registered under MVAT Act and have VAT liability. The respondent's contention IS that persons importing goods into a local area for their own use do not pay VAT in the State of Maharashtra. By levying entry tax at a rate that does not exceed the rate specified under the MVAT Act, such persons are placed in the same position as a person who procures those goods from within the State. This is in keeping with the rationale and purpose of providing a level playing field and ensuring there is no disparity in the rate of tax payable in respect of goods brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final consumer and hence he is not entitled for any set-off nor for exemption from payment of entry tax under Section 3(5) of the Entry Tax Act. These provisions are neither discriminatory nor unconstitutional inasmuch as the different class of importers under the Entry Tax Act that the Petitioner refers to is similar to the different class of purchasers recognized under the MVAT Act viz., final consumers and persons who are purchasing for the purpose of re-selling the goods. 61] Under Entry 52 of List II of Seventh Schedule appended to the constitution, the State is empowered to levy and collect entry tax on the entry of the goods into local areas. Further, the imposition of tax on sale or purchase of goods is permissible under entry 54 of List II. Entry 52 and Entry 54 are two separate fields of legislations. Incidence of tax under these two entries is also independent. Merely because the rate of tax under both the taxing statutes is the same, it cannot be said that the state is levying VAT in the garb of Entry Tax. The State having taken a conscious decision to avoid discrimination has decided not to levy Entry tax in excess of VAT applicable on similar goods. 62] Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Automobile Transport case and subsequently modified in Jindal's case has no juristic basis and is therefore rejected. vi. A tax on entry of goods into a local area for use, sale or consumption therein is permissible although similar goods are not produced within the taxing state. vii. Article 304(a) frowns upon discrimination (of a hostile nature in the protectionist sense) and not on mere differentiation. Therefore, incentives, set-offs etc. granted to a specified class of dealers for a limited period of time in a non hostile fashion with a view to developing economically backward areas would not violate Article 304(a). The question whether the levies in the present case indeed satisfy this test is left to be determined by the regular benches hearing the matters. viii. States are well within their right to design their fiscal legislations to ensure that the tax burden on goods imported from other States and goods produced within the State fall equally. Such measures if taken would not contravene Articles 304(a) of the Constitution. The question whether the levies in the present case indeed satisfy this test is left to be determined by the regular benches hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UT or the State in which the goods are purchased by the importer in effect takes care of the ground that the dealers who import goods are discriminated vis a vis the dealer who procure the goods from local sources. 66] Provided further that, the 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. 67] As per plain simple language of the Entry 52 of List II of VII th Schedule to the Constitution of India, there are no restrictions or impediment put in specific words that the funds collected by levy under the Act shall be only for the area in which goods have entered. Moreover neither there is any specific restriction on levy that cannot be credited to Consolidated Fund of State but must be utilized by a separate fund for the specific local area in which goods have entered. There is no scope for reading such restrictions in the Entry Tax Act. The consistent theory of looking at pre-legislative practice, if at all has to be followed, has no basis. The judgments in case of Diamond Sugar Mills and B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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