Entry tax on imported motor vehicles upheld as a local levy, with Articles 14 and 286 challenge rejected.

The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 was construed to apply to motor vehicles brought from foreign countries as well as from other States, because the charging provision taxes entry into a local area for use or sale there. The definitions of "entry of motor vehicle into a local area" and "importer" were read broadly, and the taxable event was held to be local entry rather than the import transaction or any sale in the course of import. The levy was found not to intrude into customs duty or Parliament's field, and the distinctions in the proviso to Section 3(1) and Section 4(2) were held to have a rational basis, so the Article 14 and Article 286 challenge failed.

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Issues: Whether the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 applies to motor vehicles imported from foreign countries and whether the levy is unconstitutional under Articles 14 and 286 of the Constitution of India.

Analysis: The charging provision levies tax on the entry of any motor vehicle into a local area for use or sale therein, and the definitions of "entry of motor vehicle into a local area" and "importer" are framed broadly enough to cover vehicles brought from any place outside the State, including foreign countries. The object of the enactment was to curb evasion of sales tax on vehicles brought into the State, and the taxable event is entry into the local area, not the import transaction or the sale in the course of import. The levy therefore does not trench upon customs duty or the field reserved to Parliament. The differentiation made in the proviso to Section 3(1) and in Section 4(2) was held to have a rational basis and was not discriminatory. Article 286 was also held inapplicable because the tax is not on the sale or purchase that occasions import, but on entry into the local area.

Conclusion: The Act validly applies to imported motor vehicles as well as vehicles purchased from other States, and the constitutional challenge under Articles 14 and 286 fails.

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