Entry tax set-off applies to a subsequent dealer of tax-paid goods sold in inter-State or outside-State trade.

Proviso (vii) to section 3(1) of the Entry Tax Act, 1976 was construed to allow set-off where goods in Schedules II or III had already suffered entry tax and were later sold outside the State or in inter-State trade or commerce. The expression "paid by him" was read in the context of the statutory scheme and the object of preventing repeated taxation. On that basis, the benefit was not limited to the original payer of the tax; a subsequent dealer purchasing tax-paid goods could also claim set-off, subject to proof before the assessing authority that entry tax had in fact already been paid.

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Issues: Whether a dealer purchasing goods on which entry tax had already been paid by commission agents was entitled to set-off under proviso (vii) to section 3(1) of the Entry Tax Act, 1976 when the goods were subsequently sold outside the State or in the course of inter-State trade or commerce.

Analysis: Proviso (vii) to section 3(1) grants set-off where entry tax has already been paid on goods specified in Schedules II or III and the goods are later disposed of in the manner described in clauses (v) or (vi). The expression "paid by him" was construed in the context of the scheme of the Act and the object of preventing further taxation on goods that had already suffered entry tax. The entitlement to set-off was held not to be confined only to the original dealer who first paid the tax, because a subsequent dealer who purchased such tax-paid goods and later sold them in the stipulated manner stands on the same footing for the purpose of the statutory benefit.

Conclusion: The assessee was entitled to the set-off of entry tax, subject to proof before the assessing authority that the goods had in fact already suffered entry tax.

Final Conclusion: The reference was answered in favour of the assessee by holding that set-off under proviso (vii) is available to a subsequent dealer of goods that had already suffered entry tax, if the statutory conditions are otherwise satisfied.

Ratio Decidendi: A statutory set-off intended to prevent repeated levy on goods already subjected to entry tax cannot be restricted only to the first payer of the tax where the goods are later sold in the manner contemplated by the provision.

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