Pre-production factory goods are not entry-taxable as business purchases; the demand was quashed.

Goods brought into the State solely for construction and setting up a factory before commencement of production were held not exigible to entry tax as purchases made in the course of business. The court applied the reasoning of the earlier decision relied upon and treated the relevant purchases as pre-business capital acquisition rather than business transactions. As the factory commenced production only after the period for which entry tax was demanded, the notice under clause (3) of section 22-A of the M.P. General Sales Tax Act, 1958 could not sustain the levy. The impugned demand was quashed.

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Issues: Whether goods brought for construction of a factory before commencement of production could be subjected to entry tax under the notice issued under clause (3) of section 22-A of the M.P. General Sales Tax Act, 1958.

Analysis: The goods in question were purchased and brought into the State for construction and setting up of the factory, and not for carrying on business as such. The factory commenced production only later, after the relevant period for which entry tax was demanded. On the same reasoning as in the earlier decision relied upon, goods brought before commencement of business for construction of the factory do not attract entry tax as business purchases.

Conclusion: The demand of entry tax was not sustainable and the notice was quashed in favour of the petitioners.

Final Conclusion: Entry tax could not be levied on goods acquired solely for construction of the factory prior to commencement of business, and the impugned demand was set aside.

Ratio Decidendi: Goods brought before commencement of business for construction of a factory are not exigible to entry tax as purchases made in the course of business.

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