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<h1>Goa Tax on Entry of Goods Act Upheld: Court Confirms Validity of Tax Provisions Ensuring Equal Burden on All Goods.</h1> <h3>M/s MRF Limited, and M/s Sesa Sterlite Ltd., Versus The State of Goa, Secretary to Government. Finance Department, State of Goa, Commercial Tax Officer, Ponda, Goa The Asst. Commissioner Tax Officer, Panaji</h3> The HC dismissed the Petitions challenging the Goa Tax on Entry of Goods Act, 2000. The Court upheld the constitutional validity of Sections 2(g), 2(m), ... Refund of entry tax recovered by the State from the Petitioners - constitutional validity of Sections 2(g), 2(m), and Section 3 of the Goa Tax on Entry of Goods Act, 2000 as being ultra vires Articles 14, 19(1)(g), 265, 301 and 304(a) of the Constitution of India - HELD THAT:- The scheme of the impugned Act and the charging section stipulate that there shall be a levy and collection of tax on the entry of goods into the State of Goa into a local area for consumption, use or sale therein. Schedule I lists the goods taxable under Section 3(1) of the impugned Act - Section 3(2) of the impugned Act makes it obligatory for the dealer and manufacturers to pay the tax. Section 3(3) of the impugned Act provides certain exemptions from the levy of entry tax for the dealer alone regarding goods on which tax has been paid or becomes payable. Schedule II, read with Section 3(4), provides a general exemption on entry tax for certain goods. Recently, in OCL India Ltd. vs State of Orissa and ors. [2022 (11) TMI 287 - SUPREME COURT], the Hon'ble Supreme Court considered the scope of interpretation of 'local area' occurring under Entry 52 of List II of the Seventh Schedule to the Constitution. This was in the context of the Orissa Entry Tax Act, 1999, which defined local area to include industrial townships, including areas within the industrial township constituted under Section 4 of the Orissa Municipal Act, 1950, subjecting goods entering into such areas to entry tax - The Court held that reliance upon Diamond Sugar Mills Ltd. vs State of Uttar Pradesh [1960 (12) TMI 83 - SUPREME COURT] was misplaced because, in that decision, the Apex Court had to deal with a different set of facts. The levy on sugarcane imposed by the State of U.P. was on the incidence of entry into factory premises. The Court, therefore, correctly concluded that factory premises per se could not constitute a local area. Further, the Hon'ble Supreme Court held that it is also a cardinal rule of interpretation that words of a taxing statute should be read in their ordinary, natural, and grammatical meaning. Further, in construing the words in a constitutional enactment that confers legislative power, a liberal construction should be placed upon them to have effect in their widest amplitude. The object of the levy, i.e., entry tax, is the regulation of entry of goods in a regular area for consumption, i.e., manufacture, use or sale. There is no dispute that entry of goods into an industrial area or estate is for their use for manufacturing or processing or the purposes of their delivery as their ultimate destination, i.e. for consumption, use or sale within that area. It could even be that the goods enter within the industrial area or estate as the ultimate point of destination for their use. In any case, the levy would be attracted because the incidence is the entry into the local area. The limited surviving challenges in this Petition based upon the alleged violation of Articles 14, 301 and 304 or the entire State being declared as a local area and, consequently, the legislation being ultra vires for such reasons cannot be accepted - Petition dismissed. Issues Involved:1. Constitutional validity of Sections 2(g), 2(m), and Section 3 of the Goa Tax on Entry of Goods Act, 2000.2. Whether the impugned levy ensures equal tax burden on goods imported from other States and goods produced within the State.3. Whether the entire State can be notified as a local area.Summary:Issue 1: Constitutional Validity of Sections 2(g), 2(m), and Section 3 of the ActThe Petitioners challenged the constitutional validity of Sections 2(g), 2(m), and Section 3 of the Goa Tax on Entry of Goods Act, 2000, alleging they were ultra vires Articles 14, 19(1)(g), 265, 301, and 304(a) of the Constitution. The Court noted that the provisions were designed to levy and collect tax on the entry of goods into Goa for consumption, use, or sale. The Petitioners' reliance on previous judgments was addressed by the Supreme Court's decision in Jindal Stainless Limited and another vs. State of Haryana and ors. - (2017) 12 SCC 1, which rejected most of the Petitioners' contentions. The Court concluded that the constitutional validity of the provisions was upheld by the Supreme Court, except for specific questions left open for determination in appropriate proceedings.Issue 2: Equal Tax Burden on Imported and Locally Produced GoodsThe Petitioners argued that the impugned levy discriminated against goods imported from outside Goa, violating Articles 14, 301, and 304. They contended that the absence of provisions for exemption or refund of taxes for goods moved out of the local area rendered the provisions invalid. The Court referred to the Division Bench's decision in Hindusthan National Glass & Industries Limited vs. State of Maharashtra and Ors. - (2019) 3 Bom CR 625, which dismissed similar contentions. The Court also cited the Supreme Court's ruling in State of Bihar and ors. vs. Bihar Chamber of Commerce and ors.- (1996) 9 SCC 136, which held that entry tax was compensatory and did not violate Article 301. The Court concluded that the provisions ensured a level playing field and did not discriminate against imported goods.Issue 3: Entire State as a Local AreaThe Petitioners contended that declaring the entire State of Goa as a local area invalidated the 'local area' aspect of the levy. The Court referred to previous decisions, including OCL India Ltd. vs. State of Orissa and ors. - 2022 SCC OnLine SC 1518, which upheld the inclusion of industrial townships within the definition of local areas. The Court held that the levy was attracted upon the entry of goods into the local area for consumption, use, or sale. The Court concluded that the challenges based on the entire State being declared a local area were not tenable.Conclusion:The Court dismissed the Petitions, holding that the limited surviving challenges based on alleged violations of Articles 14, 301, and 304 or the entire State being declared as a local area were not acceptable. The Petitions were dismissed with no order for costs.