1998 (8) TMI 505 - SC - VAT and Sales Tax

Supreme Court: Entry Tax Payment Required for Purchase Tax Exemption

The Supreme Court held that the exemption from purchase tax under the State Sales Tax Act was contingent upon the actual payment of entry tax under the ... Notification dated 8th October, 1978, issued in exercise of powers conferred by section 12 of the M.P. General Sales Tax Act, 1958 questioned Held that:- Appeal allowed. This Court said that if the words “already paid” were delinked from the other words employed therein, they would, lend support to the contention of the Revenue as the said contention related to an antecedent act of payment; but the word “already” was not the decisive term because the word “appropriate” had also to be considered. Upon a parity of reasoning it, in fact, supports the case of the appellant for the notification under the State Sales Tax Act does not use the word “appropriate” or any other similar word. The judgment of the Patna High Court, dealing with the words “has already been paid”, is no assistance in construing this notification. The provisions of the Entry Tax Act that learned counsel for the respondents referred to are of no relevance in the construction of the language of the notification under the State Sales Tax Act. Issues involved:Interpretation of notification under State Sales Tax Act regarding exemption conditions based on payment of entry tax under Entry Tax Act.Analysis:The case involved an appeal by the State against the High Court's judgment allowing writ petitions filed by the respondents based on the interpretation of a notification under the State Sales Tax Act. The notification exempted certain goods from tax under specific conditions, including the requirement that the goods had suffered entry tax under the Entry Tax Act. The respondents argued that they were exempt from payment of purchase tax under the State Sales Tax Act due to their exemption from entry tax under the Entry Tax Act.The State contended that the exemption condition required actual payment of entry tax and not just a deemed sufferance. The Supreme Court analyzed the language of the notification and held that the exemption was only available to goods upon which entry tax had been paid. The Court emphasized the importance of actual payment and the impact of entry tax on the goods for the exemption to apply, as indicated by the use of the word 'suffered' in the notification.The Court referred to previous judgments, including the Gannon Dunkerley case, to support its interpretation of similar terms in tax laws. It distinguished other cases cited by the respondents, emphasizing the specific language used in the notification under the State Sales Tax Act. The Court concluded that the respondents' arguments did not align with the clear language of the notification, which required actual payment of entry tax for the exemption to be applicable.Additionally, the Court noted that other objections raised by the respondents regarding their assessments would be considered by relevant authorities separately. Ultimately, the Court allowed the appeals, setting aside the High Court's order, with no costs imposed on either party.