Entry tax on pre-commencement factory construction materials rejected as outside the course of business

Entry tax was held not to apply to iron and steel purchased for constructing factory buildings before commencement of manufacturing operations, because the relevant tax entry was triggered only when goods entered the course of business. The expanded meaning of "business" under the Sales Tax Act, covering transactions incidental or ancillary to trade or manufacture, did not extend to pre-commencement construction activity. Such purchases were treated as prior to and outside the manufacturing business, not connected with it in the requisite legal sense. Earlier Division Bench decisions on the same issue were followed, and the contrary argument based on the wider definition of business was rejected.

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Issues: Whether entry tax was payable on iron and steel purchased for construction of factory buildings before commencement of the assessee's manufacturing business, and whether such purchases were in the course of business or incidental or ancillary to that business.

Analysis: Entry tax under the relevant Act was attracted only on entry of goods in the course of business. The term "business" had to be read with the expanded definition in the Sales Tax Act, which included transactions in connection with, incidental to, or ancillary to the trade or manufacture carried on by the dealer. The purchases in question were made only for construction of buildings before the factory commenced production, and the construction activity preceded the commencement of the assessee's manufacturing business. Such pre-commencement construction could not be treated as a transaction in the course of business, nor as one incidental or ancillary to the manufacturing business. The earlier Division Bench decisions on the same point were followed, and the attempted distinction based on the wider definition of "business" was rejected.

Conclusion: The purchases of iron and steel were not liable to entry tax, and the assessment orders were unsustainable in favour of the assessee.

Ratio Decidendi: Purchases of building material made for constructing factory premises before commencement of the manufacturing business are not transactions in the course of business and are not incidental or ancillary to that business, so entry tax is not exigible on such purchases.

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