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2019 (9) TMI 519

..... duction in the levy of entry tax - HELD THAT:- Though the levy of entry tax and State sales tax are separate and distinct, the intention of section 4 appears to be that there should be a unified and integrated levy on the transaction of entry into and sale of a vehicle within a State. If an assessee is in a position to establish that it had defrayed the entry tax liability on a particular vehicle, credit to that extent would be available in computing sales tax liability on the sale of that vehicle. In the present case, there is, admittedly, a violation of statutory provisions insofar as the petitioner has not filed returns under the Entry tax Act. The excuse offered, of ignorance of law, does not constitute valid justification for non-compliance of statutory duties. That is one aspect of the matter. The other aspect is, that VAT liability of a higher percentage than entry tax, has admittedly been remitted by the petitioner - The crucial aspect is the timing of the two remittances. A return of entry tax is due on or before the 20th of a month immediately succeeding such taxable event accompanied by proof of payment of entry tax in terms of section 7 of the Entry Tax Act read with Ru .....

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..... wever, admittedly, the petitioner has not filed any returns in terms of the provisions of the Entry Tax Act. A common pre-assessment Notice was issued for the periods 2013-14 to 2015-16 (upto August, 2015) on 30.09.2015. The notice alleges that statutory returns in terms of the Entry Tax Act had not been filed and called upon the petitioner to do so disclosing the purchase turnover of the vehicles and pay entry tax at 12.5% as required. 3. The petitioner filed a reply dated 15.10.2015 stating that it was unaware of the provisions of the Entry Tax Act and had come to be informed of the same only in the course of an investigation conducted by the Enforcement Wing on 18.09.2015. The inspection had been uneventful otherwise and no difference of stock or purchase/sales omission had been noticed by the Officer. The petitioner stated that it had filed returns under the VAT Act offering sale turnover to tax at 14.5% and thus had paid sales tax in excess. It relied on the provisions of Section 4 of the Entry Tax Act that provided for a set off of excess entry tax against the sales tax liability. 4. Placing reliance on a decision of the learned single Judge in the case of Tvl. Kasi and Sethu .....

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..... tates that the provisions of Section 4 of the Entry tax Act offer a concession or benefit to the assessee by way of set off of the entry tax paid against VAT liability. Such a concession cannot be claimed as a vested right by the petitioner, that too, in the converse. Moreover, being a concession, the provisions would have to be construed strictly and hence cannot be expanded to beyond what is offered therein. He relies, in this regard, upon two judgments in the case of Jayam and Company V. Assistant Commissioner and another ((2016) 15 SCC 125) and TVS Motor Company Ltd. V. State of Tamil Nadu and others ((2018) 59 GSTR 1). 8. He urges that the Court notice a correlation called for by Section 4 of the Entry tax Act, between the vehicle in respect of which the Entry tax is remitted and the vehicle in respect of which credit for payment of VAT is sought. According to him, there has to be a one-to-one correlation established in this regard for the dealer to avail the benefit of set-off under Section 4. As far as the case law in Kasi and Sethu (supra) is concerned, he distinguishes the case on facts, confirming however that the decision has attained finality and has not been carried in .....

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..... since entry tax liability would have been cleared at the point of entry of the goods into the State and credit available for set-off. 14. In the present case, there is, admittedly, a violation of statutory provisions insofar as the petitioner has not filed returns under the Entry tax Act. I am of the view that the excuse offered, of ignorance of law, does not constitute valid justification for non-compliance of statutory duties. That is one aspect of the matter. The other aspect is, that VAT liability of a higher percentage than entry tax, has admittedly been remitted by the petitioner. 15. The crucial aspect, in my view, is the timing of the two remittances. A return of entry tax is due on or before the 20th of a month immediately succeeding such taxable event accompanied by proof of payment of entry tax in terms of section 7 of the Entry Tax Act read with Rule 3(2) of the Tamil Nadu Tax on Entry of Motor Vehicles Rules, 1990 (in short Rules ). 16. The return of turnover in terms of VAT Act shall be filed under section 21 read with Rule 7(1)(a) of the Tamil Nadu Value Added Tax Rules, 2007 on or before the 20th of the succeeding month. Since both entry tax as well as VAT returns a .....

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..... us if the vehicle had entered the State but had been sold interstate, the turnover from such inter-state sale would not be available for grant of credit for payment of Entry tax. Thus, a correlation qua vehicle has to be furnished by the assessee to establish that entry tax paid and VAT credit sought, are in respect of the same vehicle. This exercise is required for acceptance of the claim under Section 4. 22. In this case, neither the objections filed by the petitioner before the officer nor the Writ affidavit provide details of such correlation. In the absence of the factual particulars as to (i) when a particular/identified vehicle entered the State of Tamil Nadu (ii) when such vehicle was sold and (iii) whether such sale was intra or inter-state, the claim of the assessee for set-off under section 4 cannot be granted merely for the asking. 23. The transactions in this case cannot be said to be automatically revenue neutral, since, as I have noted in the paragraphs above, if there is an elapse of time between the entry and sale of the vehicle, nonpayment of entry tax will result deferment/postponement of the liability, till such time the vehicle is ultimately sold. Even then, if .....

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..... thus, substantial compliance with the mandate of both statutes in that case - Entry tax as well as the VAT Acts. The petitioner before me is in rank violation of the Entry Tax Act and has not filed entry tax returns at all. 28. Thus, a claim for converse credit can certainly be accepted, seeing as the intention is for a unified levy and Section 4 is intended to reduce tax liability by integration of the liabilities under both the entry tax and VAT Statutes. However, such benefit is not absolute but conditional and only upon satisfaction of the circumstances as noted and discussed above. For the aforesaid reasons, I am unable to accept the prayer of the petitioner for an automatic and absolute application of Section 4 of the Entry Tax Act in the facts of this case. 29. The respondent has finalised the assessments without granting an opportunity of personal hearing and has also imposed penalty under section 15(1) of the Entry Tax Act that statutorily requires an opportunity of personal hearing. 30. In the aforesaid circumstances, I set aside the assessments for being re-done by the Assessing Authority bearing in mind the above discussion and directions, as culled from my appreciation .....

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