Entry tax liability on Schedule II goods remains with the purchaser despite the seller's failure to make the required declaration.

The M.P. Entry Tax Act, 1976 distinguishes between the selling dealer's duty to declare goods as local goods on the invoice and the purchasing dealer's liability for entry tax on entry into a local area. Entry tax applies to Schedule II goods entering a local area, while the exemption proviso operates only where the goods are other than local goods and tax has already been paid by the selling registered dealer. Failure by the seller to make the statutory declaration under section 7 attracts penalty, but it does not remove the purchaser's substantive liability if entry tax remains unpaid. The purchasing dealer therefore remained liable to entry tax, and the contrary view was not justified.

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Issues: Whether entry tax was leviable on purchases of Schedule II goods treated as local goods when the selling registered dealer failed to make the declaration required by the Entry Tax Act.

Analysis: The scheme of the M.P. Entry Tax Act, 1976 draws a distinction between the seller's obligation to issue a bill, invoice or cash memo declaring the goods as local goods and the purchaser's liability to pay entry tax on entry of such goods into another local area. Section 3 levies entry tax on the entry of Schedule II goods into a local area, and the exemption in the proviso applies where the goods are other than local goods and the tax has already been paid by the selling registered dealer. Section 7 requires the selling dealer to make the declaration and visits failure with a penalty under sub-section (5), but that default does not extinguish the substantive liability of the purchasing dealer if entry tax has not been paid.

Conclusion: The purchasing dealer remained liable to entry tax, and the Board was not justified in holding otherwise.

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