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TMI Blog2023 (5) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... d Act provides certain exemptions from the levy of entry tax for the dealer alone regarding goods on which tax has been paid or becomes payable. Schedule II, read with Section 3(4), provides a general exemption on entry tax for certain goods. Recently, in OCL India Ltd. vs State of Orissa and ors. [ 2022 (11) TMI 287 - SUPREME COURT ], the Hon'ble Supreme Court considered the scope of interpretation of local area occurring under Entry 52 of List II of the Seventh Schedule to the Constitution. This was in the context of the Orissa Entry Tax Act, 1999, which defined local area to include industrial townships, including areas within the industrial township constituted under Section 4 of the Orissa Municipal Act, 1950, subjecting goods entering into such areas to entry tax - The Court held that reliance upon Diamond Sugar Mills Ltd. vs State of Uttar Pradesh [ 1960 (12) TMI 83 - SUPREME COURT] was misplaced because, in that decision, the Apex Court had to deal with a different set of facts. The levy on sugarcane imposed by the State of U.P. was on the incidence of entry into factory premises. The Court, therefore, correctly concluded that factory premises per se could not constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.471/2007 manufactures tyres, tubes, flaps, and other allied rubber products at their unit in Goa. For this, the Petitioner purchases raw materials/components from outside Goa. 5. On 29/8/2000, the Goa Tax on Entry of Goods Act, 2000, entered force. On 30/8/2000, the State of Goa specified that with effect from 1/9/2000, tax shall be levied and collected under the impugned Act at the rates specified therein. The rates were set on a percentile ranging from 0.50% to 10%. From 01,09.2000, the raw materials brought into Goa became taxable, and the Petitioners claim to have discharged this tax liability from time to time. 6. On 14/11/2000, the Government issued a notification superseding the earlier notification dated 30/08/2000 and specified fresh rates for entry tax on a paisa per rupee basis. 7. Since the Petitioner has questioned the constitutional validity of Sections 2(g), 2(m), and Section 3 of the impugned Act, the same are transcribed below for the convenience of reference : 2(g) dealer means any person who in the course of business, whether on his own account or on account of a principal or any other person, brings or causes to be brought into a local area any goods or take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and any other local authority by whatever nomenclature called, constituted or continued under any law for the time being in force; 3.3. Levy of tax. (1) There shall be levied and collected a tax on entry of any goods specified in SCHEDULE I hereto, into a local area upon use of any facilities/infrastructure or any other amenities belonging to or provided by the State for consumption, use or sale therein, at such rates not exceeding the rates shown against each of the entry in the said SCHEDULE. (2) The tax levied under sub-section (1) shall be paid by every registered dealer or a dealer liable to get himself registered under this Act who brings or causes to be brought into a local area the goods, using any facilities/infrastructure or any other amenities belonging to or provided by the State whether on his own account or on account of his principal or any other person or who takes delivery or is entitled to take delivery of such goods on its entry into a local area. Explanation . Where the goods are taken delivery of on its entry into a local area or brought into a local area by a person other than a dealer, the dealer who takes delivery of the goods from such person shall be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax levied and collected as octroi by a Municipal Council, Zilla Panchayat or Village Panchayat or any other local authority, as the case may be, within its local areas. 8. Therefore, as is evident from the above, the scheme of the impugned Act and the charging section stipulate that there shall be a levy and collection of tax on the entry of goods into the State of Goa into a local area for consumption, use or sale therein. Schedule I lists the goods taxable under Section 3(1) of the impugned Act. 9. Section 3(2) of the impugned Act makes it obligatory for the dealer and manufacturers to pay the tax. Section 3(3) of the impugned Act provides certain exemptions from the levy of entry tax for the dealer alone regarding goods on which tax has been paid or becomes payable. Schedule II, read with Section 3(4), provides a general exemption on entry tax for certain goods. 10. When this Petition was filed, the Petitioner relied upon Automobiles Transports Vs. State of Rajasthan AIR 1962 SC 1406; Jindal Stainless Ltd., and anr. vs State of Haryana and ors . - (2006) 7 SCC 241 and some Madras and Kerala High Courts decisions then holding the field. A nine-judge Constitution Bench has explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing terms : 11.59.1. Taxes simpliciter are not within the contemplation of Part XIII of the Constitution of India. The word 'Free' used in Article 301 does not mean free from taxation . 11.59.2. Only such taxes as are discriminatory in nature are prohibited by Article 304(a). It follows that levy of a nondiscriminatory tax would not constitute an infraction of Article 301. 1159.3. Clauses (a) and (b) of Article 304 have to be read disjunctively. 1159.4. A levy that violates 304(a) cannot be saved even if the procedure under Article 304(b)or the proviso there under is satisfied. 1159.5. The compensatory tax theory evolved in Automobile Transport case and subsequently modified in Jindal Stainless Ltd. (2) v. State of Haryana, (2006) 7 SCC 241 case has no juristic basis and is therefore rejected. 1159.6. Decisions of this Court in Atiabari Tea Co. Ltd. v. State of Assam- AIR 1961 SC 232, Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan, AIR 1962 SC 1406 and Jindal cases (supra) and all other judgments that follow these pronouncements are to the extent of such reliance over ruled. 1159. 7. A tax on entry of goods into a local area for use, sale or consumption the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to pay entry tax, those moving the goods from one local area are not subject to entry tax, thereby discriminating against those bringing goods from outside the State. They further submitted that the absence of provisions for exemption/ refund of taxes, even in respect of goods, which initially suffered entry tax, moved out of the local area to another State by way of stock transfer or sale, renders the impugned provisions invalid and ultra vires Entry 52 of the State List. They contend that such provisions violate Article 301 and are not saved by Article 304 of the Constitution. 20. Mr Pereira submitted that the pith and substance of the levy of entry tax is only to tax such goods entering the local area to be used or consumed within the local area. That being the case, the absence of a refund when such goods move out of the local area violates the principles underlying the levy of entry tax. Accordingly, he submits that the impugned provisions are discriminatory and ultra vires Articles 14, 301 and 304 of the Constitution. 21. The contentions now raised by the petitioners' counsel were precisely those considered by the Division Bench of this Court in Hindusthan National Glas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y bar in express terms prohibiting levy of double taxes. Article 265 of the Constitution only mandates that, no tax shall be levied or collected except by authority of law . Upon same object and person, separate taxes can be imposed for different purposes by the same authority or by different authorities. Last word on the topic can be found in recent decision of the Supreme Court in the case of Sri Krishna Das v. Town Area Committee (1990) 183 ITR 401 SC, wherein it is observed: Double taxation, in the strict legal sense means taxing the same property or subject-matter twice, for the same purpose, for the same period and in the same territory. To constitute double taxation, the two or more taxes must have been (1) levied on the same property or subject matter, (2) by the same Government or authority, (3) during the same taxing period, and (4) for the same purpose . Octroi duty and entry tax are imposed by the different authorities and for entirely two different purposes. Former is for augmenting the resources of the local body and the latter is for compensating the loss of revenue of the State on account of diversion of transaction of sale and purchase of vehicles to the neighbouri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act. Such importers are, accordingly, placed on the same footing as other dealers who sell or buy; goods within the State. Instead of levying entry tax on such dealers and then granting a set-off, the Legislature has opted to grant a conditional exemption under Section 3(5) of the MVAT Act. The grant of such an exemption is neither discriminatory nor unconstitutional. The Petitioner's submissions further ignore the fact that the grant of set-off or exemptions to dealers who are registered within the State and importing goods into a local area covered by the Entry Tax Act has the same effect as grant of set-off to a dealer who purchases such goods domestically within a local area of the State. The purpose of a set off is to obviate any cascading effect of tax on the ultimate consumer. The set off under rule 52 is available to prevent the cascading effect of multi point taxation scheme which stops at the stage of consumer. The final consumer is not entitled to any set-off and has to sustain the burden of tax ultimately. Therefore, where the importer is itself the ultimate consumer of the goods imported into the local area and is not using them to manufacture further goods for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y classification whether as alleged or at all. 68. ... 69. 70. The Act in no way makes any discrimination against the local purchases and importers much less any hostile discrimination. The importers are given input tax credit of Entry Tax Paid to the Government against the VAT liability and balance is payable or refundable as the case may be. Hence tax burden of Entry Tax not borne by the dealers who purchase locally within the State who get set off of the input tax credit u/s 48 r/w 52, is balanced in case of persons who suffer entry tax by making provisions in the MVAT Act that the entry tax can be adjusted against the MVAT liability thus in effect the dealers who import from other State or Country are at par with local manufacturers who purchase from local dealers so far as burden of tax is concerned since in effect there is no entry tax at all when rebate or set off or ITC is granted for the same. Further as per the second proviso any local sales tax paid by the importer on the goods that are imported is also available for reduction from the entry tax payable under the Act. Thus the rebate is provided in second proviso of the Act that the tax payable by the importer under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of its ultimate destination. Finally, in Sahaj Gram Panchayat vs State of Gujarat (1999) 2 SCC 366 , the argument that the industrial areas could not be excluded in the exercise of the powers under Article 2439(Q)(1) was repelled. 26. Further, the Hon'ble Supreme Court held that it is also a cardinal rule of interpretation that words of a taxing statute should be read in their ordinary, natural, and grammatical meaning. Further, in construing the words in a constitutional enactment that confers legislative power, a liberal construction should be placed upon them to have effect in their widest amplitude. The object of the levy, i.e., entry tax, is the regulation of entry of goods in a regular area for consumption, i.e., manufacture, use or sale. There is no dispute that entry of goods into an industrial area or estate is for their use for manufacturing or processing or the purposes of their delivery as their ultimate destination, i.e. for consumption, use or sale within that area. It could even be that the goods enter within the industrial area or estate as the ultimate point of destination for their use. In any case, the levy would be attracted because the incidence is the en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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