2006 (11) TMI 554 - HC - VAT and Sales Tax

Assam Entry Tax Act 2001: No Entry Tax on Imported Goods; Court Sets Aside Tax Imposition on Petitioners.

The HC concluded that the Assam Entry Tax Act, 2001, does not authorize the levy of entry tax on goods imported from outside the country. The court ... Levy entry tax - goods imported - Restrictions as to imposition of tax on the sale or purchase of goods - article 286 of the Constitution of India - Whether the State is competent to levy entry tax on the goods imported into a local area from outside country? - HELD THAT:- Since the restrictions, imposed by article 286, are only on the levy of tax on the sale and purchase of goods, the State is competent to levy entry tax by virtue of entry 52 of List II of the Seventh Schedule to the Constitution of India on the goods imported into any local area from outside the State for use, consumption or sale therein. Thus, there is no merit in the contention advanced, on behalf of the petitioners, that the State has no power to levy entry tax on the goods imported into any local area from outside the State even if such entry is for the purpose of use, consumption or sale in the local area. In the present case, the language of section 3 read with section 2(1)(b) of the Act is very clear that the Assam Entry Tax Act, 2001, provides for levy of entry tax on entry of specific goods into a local area from another local area or from outside the State only and the same does not provide for levy of entry tax into local area from outside the country and, hence, no entry tax can be levied on entry of specified goods into a local area imported from outside the country. In short, no entry tax can be imposed by the State on the goods imported into a local area from outside the country. In fact, such is not the legislative intent, for, section 3 read with section 2(1)(b) of the AET excludes goods brought into a local area, in Assam from outside the country in the course of import of such goods into the territory of India. In the case at hand, as the entry of the specified goods into a local area of the State is in the course of import into the territory of India, such import is not subject to levy of entry tax under the AET Act. Hence, the imposition of entry tax on the goods, in question, cannot be sustained and is, therefore, set aside and quashed. The respondents are directed not to insist on payment of entry tax by the present petitioners. Thus, this writ petition shall stand disposed of. Issues Involved:1. Competence of the State to levy entry tax on goods imported from outside the country.2. Interpretation of the Assam Entry Tax Act, 2001, and its applicability to imported goods.3. Constitutional restrictions under Article 286(1)(b) on the imposition of entry tax.4. Legislative intent and statutory interpretation principles.Issue-Wise Detailed Analysis:1. Competence of the State to levy entry tax on goods imported from outside the country:The primary issue in these writ petitions is whether the State is competent to levy entry tax on goods imported into a local area from outside the country. The Assam Entry Tax Act, 2001 (AET Act) was enacted under Entry 52 of List II of the Seventh Schedule of the Constitution of India, which allows the State to levy tax on the entry of goods into any local area for consumption, use, or sale therein. Section 3 of the AET Act is the charging section that mandates the levy and collection of entry tax on specified goods entering a local area.2. Interpretation of the Assam Entry Tax Act, 2001, and its applicability to imported goods:The definition of 'entry of goods into a local area' under Section 2(1)(b) of the AET Act includes entry from any place outside that local area, including a place outside the State. However, the court noted that the words 'including a place outside the State' do not mean outside the country. The term 'importer' in Section 2(d) does not encompass a person importing goods from outside the country. The legislative intent, as interpreted by the court, was to exclude goods brought into a local area from outside the country from the purview of entry tax.3. Constitutional restrictions under Article 286(1)(b) on the imposition of entry tax:Article 286(1)(b) of the Constitution prohibits States from imposing tax on the sale or purchase of goods in the course of import into or export out of the territory of India. The court clarified that this restriction applies to sales tax and not to entry tax. The power to levy sales tax is derived from Entry 54 of List II, while the power to levy entry tax is derived from Entry 52 of List II. The taxable event under the Entry Tax Act is the entry of goods into a local area, which is distinct from the sale or purchase of goods. Therefore, the restriction under Article 286(1)(b) does not apply to entry tax.4. Legislative intent and statutory interpretation principles:The court emphasized the importance of adhering to the language and words used in the statute. Citing precedents, the court stated that the intention of the Legislature is to be gathered from the words used in the statute, and if the language is clear and explicit, effect must be given to it. The court noted that the AET Act's language clearly excludes goods imported from outside the country from the levy of entry tax. The court also referred to the principles of statutory interpretation, emphasizing that in taxing statutes, one must look at the letter of the law and not its spirit.Conclusion:The court concluded that the Assam Entry Tax Act, 2001, does not provide for the levy of entry tax on goods imported into a local area from outside the country. The legislative intent, as gathered from the clear language of the statute, excludes such goods from the purview of entry tax. Consequently, the imposition of entry tax on the goods in question was set aside and quashed, and the respondents were directed not to insist on payment of entry tax by the petitioners. The writ petitions were disposed of with no order as to costs.