2023 (5) TMI 180 - HC - VAT and Sales Tax

Goa Tax on Entry of Goods Act Upheld as Constitutional; Petitions Dismissed and Interim Orders Vacated.

M/s Bharti Telemedia Ltd., and M/s Bharti Airtel Ltd., Versus State of Goa, The Commissioner of Commercial Taxes, Panaji,

The HC dismissed the petitions challenging the Goa Tax on Entry of Goods Act, 2000, ruling it constitutional and within the State Legislature's ... Refund of entry tax recovered by the State from the Petitioners - Constitutional validity of the Goa Tax on Entry of Goods Act, 2000 - want of legislative competence - contravention of Articles 14, 19(1)(g), 265, 301 and 304(a) of the Constitution of India - Petitioners challenge the impugned Act on the ground that the same purports to relate to Entry 52 of List II of the Seventh Schedule to the Constitution of India but, in pith and substance, relates to entries in List I and consequently, beyond the legislative competence of the State legislature. HELD THAT:- The argument, based upon the local area and the consequent effect upon the legislative competence of the State, additionally stands answered by the decision of the Division Bench of this Court in Hindustan National Glass & Industries Limited [[2019 (3) TMI 969 - BOMBAY HIGH COURT]]. The Division Bench, in paragraphs 62, 63, 64, 65, 66, 67, and 70, has dealt with this issue and answered the same against the Petitioners and favouring the State. The Division Bench has relied, inter alia, on the State of Kerala and ors. vs. Fr. William Fernandez and ors [[2017 (10) TMI 491 - SUPREME COURT]], in which the contention based upon such legislations being beyond the legislative competence of the State under Entry 52, List II of the Seventh Schedule, was rejected. Having regard to the decision of the Constitution Bench in Fr. William Fernandez and ors, and Hindustan National Glass & Industries Ltd., and by following the reasoning therein - Petition dismissed. Issues Involved:1. Constitutional validity of the Goa Tax on Entry of Goods Act, 2000.2. Legislative competence of the State Legislature.3. Violation of Articles 14, 19(1)(g), 265, 301, and 304(a) of the Constitution of India.4. Refund of entry tax recovered by the State.Summary:Constitutional Validity and Legislative Competence:The Petitioners challenged the constitutional validity of the Goa Tax on Entry of Goods Act, 2000 (impugned Act) on grounds of legislative competence, asserting it relates to Entry 52 of List II but in pith and substance relates to entries in List I, thus beyond the State Legislature's competence. They argued the impugned tax is akin to import duties under Entry 41, read with Entry 83 of List I, and the State Legislature lacks competence to enact it.Violation of Constitutional Articles:The Petitioners claimed the impugned Act contravenes Articles 14, 19(1)(g), 265, 301, and 304(a) of the Constitution. They argued the tax is not compensatory but solely for augmenting State revenue, impeding trade freedom under Article 301. They contended the Act lacks features to save it under Article 304(b) and is discriminatory, thus unconstitutional.Contentions and Precedents:The Petitioners relied on several precedents, including Atiabari Tea Co. Ltd. vs. State of Assam and Automobile Transport Ltd. vs. State of Rajasthan, to support their claims. Conversely, the Respondents cited Jindal Stainless Limited vs. State of Haryana and others, where a Nine Member Constitution Bench clarified that taxes simpliciter are not within the contemplation of Part XIII of the Constitution, and only discriminatory taxes are prohibited by Article 304(a).Judgment:The Court noted that the issues raised by the Petitioners were largely answered by the Constitution Bench in Jindal Stainless Limited, which stated that non-discriminatory taxes do not infringe Article 301, and compensatory tax theory lacks juristic basis. The Bench also clarified that a tax on the entry of goods into a local area is permissible even if similar goods are not produced within the taxing State.Local Area and Legislative Competence:The Division Bench, in Hindustan National Glass & Industries Limited, addressed the argument regarding the local area definition and legislative competence, rejecting the notion that defining the entire State as a local area for entry tax purposes is unconstitutional.Conclusion:Based on the Constitution Bench's decision in Jindal Stainless Limited and the Division Bench's reasoning in Hindustan National Glass & Industries Limited, the Court dismissed the Petitions, ruling the impugned Act constitutional and within the State Legislature's competence. The Court adopted the reasoning from a separate judgment dated 24th April 2023 in related Writ Petitions and dismissed these Petitions, vacating any interim orders and discharging the rule without costs.