Entry tax on goods routed through Paradeep for offshore use was unsustainable without entry into the local area for consumption or sale.

Entry tax under the Orissa Entry Tax Act, 1999 applies only when scheduled goods enter a local area for consumption, use or sale there. Goods routed through Paradeep for onward despatch to an offshore rig in the continental shelf did not satisfy that condition, and mere passage through the State was insufficient to attract the levy. In the absence of a notification extending the taxing law to the continental shelf under the applicable maritime zones legislation, the assessment orders and demand notices could not be sustained and were quashed.

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Issues: Whether entry tax under the Orissa Entry Tax Act, 1999 could be levied on scheduled goods brought through Paradeep for use in offshore exploration operations in the continental shelf, and whether the goods were shown to have entered the local area for consumption, use or sale therein.

Analysis: The levy under the Orissa Entry Tax Act, 1999 applies only to entry of scheduled goods into a local area for consumption, use or sale therein. The materials in question were brought through Paradeep for onward despatch to an offshore rig located in the continental shelf. In the absence of a notification extending the operation of the taxing enactment to the continental shelf under the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976, the mere fact that the goods passed through Paradeep did not establish that they were entered in the local area for consumption, use or sale therein. The assessment orders also did not proceed on the basis of the new factual case later projected in the counter-affidavit, and the way-bill indicated onward despatch outside the State for high-seas exploration.

Conclusion: The levy could not be sustained, and the assessment orders and demand notices were liable to be quashed.

Final Conclusion: The writ petitions succeeded and the impugned assessments and demand notices were set aside.

Ratio Decidendi: Entry tax can be imposed only when scheduled goods are brought into a local area for consumption, use or sale therein, and not merely because goods are routed through the State for offshore use in the absence of a valid extension of the taxing law to the offshore area.

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