Writ maintainability and entry tax liability: unilateral deduction from contractor bills was unlawful where purchaser brought the goods into the State.

Writ jurisdiction remained available despite an arbitration clause and alleged alternative remedy because the recovery dispute involved the State and its authorities, who were not parties to the contract, and the issue was not wholly covered by arbitration. On entry tax, liability attached to the respondent-corporation because it purchased and took delivery of goods in Haryana and brought them into Bihar; the contractor was not contractually or statutorily made liable. Deduction of entry tax from the contractor's bills was therefore unsupported by law and contrary to the rule that tax can be collected only by authority of law.

---

---

Issues: (i) Whether the writ petition was not maintainable on the ground of availability of an arbitration clause and alternative remedy. (ii) Whether the contractor or the respondent-corporation was liable to bear the entry tax and whether deduction of that amount from the contractor's bills was lawful.

Issue (i): Whether the writ petition was not maintainable on the ground of availability of an arbitration clause and alternative remedy.

Analysis: The dispute concerning recovery of entry tax involved the State and its authorities, who were not parties to the contract containing the arbitration clause. The subject-matter of the writ petition was not wholly within the scope of that clause, and the existence of an alternative remedy did not bar writ jurisdiction in the circumstances, particularly where the matter had already reached an advanced stage and constitutional issues were involved.

Conclusion: The writ petition was maintainable notwithstanding the arbitration clause and alleged availability of alternative remedy.

Issue (ii): Whether the contractor or the respondent-corporation was liable to bear the entry tax and whether deduction of that amount from the contractor's bills was lawful.

Analysis: The goods were purchased and taken delivery of by the respondent-corporation at Haryana and then brought by it into Bihar. Under the entry tax law, liability rested on the person who brought or caused the goods to be brought into the local area, or took delivery thereof. The contractual clauses did not fasten entry tax liability on the contractor, and the deductions made from the bills were unsupported by any legal authority. Such recovery was also inconsistent with the prohibition against tax collection except by authority of law.

Conclusion: The respondent-corporation alone was liable to pay the entry tax, and deduction of that amount from the petitioner's bills was illegal.

Final Conclusion: The challenge succeeded, and the impugned deduction from the petitioner's bills was held impermissible in law.

Ratio Decidendi: Where the purchaser brings goods into the State and is the person liable under the entry tax law, the seller or contractor cannot be made to bear that burden by unilateral deduction from bills, especially when the contract does not so provide and the deduction lacks authority of law.

---