Entry tax valuation excludes MODVAT credit because purchase price governs, not post-entry excise set-off.

MODVAT credit availed on goods cannot be deducted from the value used for entry tax under the Karnataka Tax on Entry of Goods Act, 1979. The relevant value is the purchase price paid by the dealer, including transportation and allied charges, because the taxable event is the entry of goods into the local area. MODVAT credit operates only as a post-entry set-off against excise duty on the final product and does not alter the price paid when the goods entered the local area. Valuation rules under the Central Excise Act and the Central Excise (Valuation) Rules do not govern entry tax valuation. The claimed deduction was therefore not allowable.

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Issues: Whether MODVAT credit availed on goods can be deducted while determining the value of goods for levy of entry tax under the Karnataka Tax on Entry of Goods Act, 1979.

Analysis: The value of goods under section 2(A)(8a) of the Karnataka Tax on Entry of Goods Act, 1979 is the purchase price paid by the dealer, inclusive of transportation and allied charges, and the taxable event is entry of the goods into the local area. MODVAT credit is only a post-entry set-off mechanism against excise duty on the final product and does not reduce the purchase price paid for the goods when they entered the local area. The valuation principles governing excise duty under section 4(1)(b) of the Central Excise Act, 1944 and rule 6 of the Central Excise (Valuation) Rules, 1975 are distinct and do not control valuation under the entry tax statute.

Conclusion: MODVAT credit availed on the goods cannot be deducted while determining their value for entry tax purposes, and the assessee was not entitled to the claimed deduction.

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