Entry tax valuation must follow prevailing local market price at entry, not a later sale price, for non-purchased goods.

For goods brought into a local area otherwise than by purchase, entry tax under the Karnataka Tax on Entry of Goods Act is to be computed on the prevailing market price in the local area at the time of entry, not on a later sale price. Section 3 is the charging provision, while the valuation provision for such goods requires market value in the local area and leaves no scope for using a subsequent sale price or notional markup from stock transfer value. In the absence of material showing that market price, the authorities may adopt a gross-profit based estimate to determine taxable value. The revision was dismissed and the assessment upheld.

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Issues: Whether, for goods brought into a local area otherwise than by purchase, entry tax under the Karnataka Tax on Entry of Goods Act, 1979 is to be levied on the sale price or on the prevailing market price of the goods in the local area at the time of entry.

Analysis: Section 3 is the charging provision, while section 2(A)(8a) defines the value of goods. For goods not purchased by the dealer, the statutory measure is the prevailing market price of such goods in the local area. The Court held that the provision is clear and unambiguous, and that tax cannot be levied on a later sale price or on a notional markup from stock transfer value. The principle in Hansa Corporation did not assist the assessee because the amended definition specifically governs valuation of such goods and requires determination of market value in the local area at the time of entry. In the absence of material showing the prevailing market price, the authorities were justified in adopting a gross-profit based estimate to reach the taxable value.

Conclusion: The value for entry tax purposes is the prevailing market price of the goods in the local area on the date of entry, not the sale price. The assessee's challenge failed.

Final Conclusion: The revision was dismissed and the assessment based on the statutory valuation method was upheld.

Ratio Decidendi: Where the valuation provision for entry tax expressly requires adoption of the prevailing market price in the local area for goods not purchased by the dealer, tax must be computed on that statutory value and not on a subsequent sale price.

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