1999 (9) TMI 991 - HC - Indian Laws

Court upholds entry tax on imported vehicles under Tamil Nadu law, dismissing constitutional challenge.

The court dismissed the writ petition challenging the applicability of entry tax on motor vehicles imported from foreign countries under the Tamil Nadu ... - Issues Involved:1. Applicability of entry tax on motor vehicles imported from foreign countries.2. Constitutionality of Section 3(1) proviso and Section 4(2) of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990.3. Alleged violation of Article 14 and Article 286 of the Constitution of India.Issue-wise Detailed Analysis:1. Applicability of Entry Tax on Motor Vehicles Imported from Foreign Countries:The petitioner, a corporation incorporated under Japanese law, imported two Japanese cars for personal use and sought to quash the proceedings levying entry tax on these vehicles under the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990. The petitioner argued that the Act was intended to curb the evasion of sales tax on vehicles purchased outside the state and brought into Tamil Nadu, not on vehicles imported from other countries. The petitioner contended that imposing entry tax on imported vehicles would amount to customs duty, which only Parliament is competent to legislate.The respondents countered that the Act applies to all motor vehicles entering Tamil Nadu, regardless of whether they are imported from foreign countries or purchased from other states within India. The court examined the Act's provisions, particularly Section 3(1), which levies tax on the entry of any motor vehicle into any local area of the state for use or sale therein. The court concluded that the Act intended to levy entry tax on all motor vehicles entering Tamil Nadu, including those imported from abroad. The court rejected the petitioner's argument, stating that the entry tax is distinct from customs duty and is within the state's legislative competence.2. Constitutionality of Section 3(1) Proviso and Section 4(2) of the Act:The petitioner challenged the constitutionality of Section 3(1) proviso and Section 4(2) of the Act, claiming they violated Article 14 of the Constitution by discriminating between vehicles registered in other states and those imported from foreign countries. The court noted that the Act's object was to curb sales tax evasion and that the provisions were designed to achieve this goal. The court found that the Act provided a reasonable classification by exempting vehicles registered in other states or union territories for a specified period before registration in Tamil Nadu. The court held that there was no violation of Article 14, as the provisions were neither arbitrary nor discriminatory.3. Alleged Violation of Article 14 and Article 286 of the Constitution:The petitioner argued that the Act violated Article 286, which bans the levy of tax on the sale or purchase of goods during import. The court clarified that the entry tax under Section 3(1) is levied on the entry of motor vehicles into Tamil Nadu, not on the sale or purchase during import. The court emphasized that the taxable event is the entry of the vehicle into the state, which is distinct from the sale or purchase occasioning import. Therefore, the entry tax did not violate Article 286. The court also referenced the decision in R. Gandhi v. Union of India, which upheld the constitutionality of the Act, reinforcing its stance.Conclusion:The court dismissed the writ petition, holding that the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990, applies to all motor vehicles entering Tamil Nadu, including those imported from foreign countries. The court found no merit in the petitioner's arguments regarding the violation of Articles 14 and 286 of the Constitution. The court upheld the constitutionality of the Act and its provisions, concluding that the state legislature was competent to enact the law. Consequently, the petition and related miscellaneous petitions were dismissed without costs.