Entry tax valuation principles upheld as machinery provisions valid and wholesale price accepted as a permissible method.

A constitutional challenge to the entry-tax valuation provisions was not barred by constructive res judicata because the earlier judgment had left those questions open, and the provisions were upheld as valid machinery provisions, not as ultra vires enactments. The Court treated the taxable event as entry of goods into the State and held that value must be determined at the time of entry, so later wholesale or retail prices could not control the levy. Wholesale price was accepted as a permissible valuation method where direct evidence of entry value was unavailable, subject to better evidence being produced before the statutory authorities. The writ petition therefore failed in substance.

---

---

Issues: (i) Whether the challenge to Section 2(h)(iv) and Section 4(g) of the U.P. Tax on Entry of Goods into Local Areas Act, 2007 was barred by constructive res judicata, and whether those provisions were ultra vires for want of legislative competence or for violating Article 14 of the Constitution of India; (ii) Whether the assessing authority could adopt wholesale price as the basis for determining the value of goods for entry tax on stock transfer, and whether Section 2(h)(iv) and Section 4(g) were invalid for that reason.

Issue (i): Whether the challenge to Section 2(h)(iv) and Section 4(g) of the U.P. Tax on Entry of Goods into Local Areas Act, 2007 was barred by constructive res judicata, and whether those provisions were ultra vires for want of legislative competence or for violating Article 14 of the Constitution of India.

Analysis: The Court held that a constitutional challenge to a statutory provision on the ground of legislative incompetence or violation of Part III can be raised whenever such a challenge is otherwise maintainable, unless the issue has already been directly decided. The earlier judgment had confined itself to the validity of the Act on the questions of Article 301 and Article 304(b), and had expressly left other questions open. Section 2(h)(iv) and Section 4(g) were treated as machinery provisions intended to determine the value of goods at the time of entry where no sale or purchase price is available, and were not found to be beyond legislative competence or discriminatory.

Conclusion: The challenge was not barred by constructive res judicata, but Section 2(h)(iv) and Section 4(g) were held valid and not ultra vires.

Issue (ii): Whether the assessing authority could adopt wholesale price as the basis for determining the value of goods for entry tax on stock transfer, and whether Section 2(h)(iv) and Section 4(g) were invalid for that reason.

Analysis: The Court applied the principle that the taxable event is the entry of goods into the State, and the relevant value is the value at the time of entry. It accepted that subsequent wholesale or retail prices cannot control the levy. At the same time, it held that the impugned provisions merely supply the mechanism for valuation when the entry value is not directly evidenced, and therefore the assessment authority could use the wholesale price as one permissible method, subject to the assessee producing better evidence before the statutory authorities.

Conclusion: The use of wholesale price as one method of valuation was upheld, and the machinery provisions were not struck down.

Final Conclusion: The writ petition failed in substance, the impugned statutory provisions were upheld as valid machinery provisions, and the assessment was left open to challenge before the appellate forum on available grounds and evidence.

---