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of <h1>Chhattisgarh entry tax law upheld as constitutional despite higher rates on imported goods versus local products</h1> <h3>M/s Vodafone Spacetel Limited, Nokia India Pvt. Ltd., Ambuja Cements Limited, Micromax Informatics Ltd., M/s Jayaswal Neco Industries Ltd., Ultratech Cements Limited, ACC Ltd., Shri Sumit Banerjee, Century Textiles And Industries Limited, M/s Bharti Airtel Ltd., M/s Maithan Alloys Ltd., Versus The Assistant Commercial Tax Officer And Ors. Raipur, The Commissioner Of Commercial Tax Raipur C.G., State Of C.G. Thru Its Principal Secretary, Commercial Tax Deptt. Govt. Of C.G. Raipur, State Of Chhattisgarh, Commissioner, Commercial Tax, Chhattisgarh.</h3> M/s Vodafone Spacetel Limited, Nokia India Pvt. Ltd., Ambuja Cements Limited, Micromax Informatics Ltd., M/s Jayaswal Neco Industries Ltd., Ultratech ... Issues Involved:1. Constitutional validity of the Chhattisgarh Sthaniya Kshetra me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (Act of 1976).2. Notification dated 04/03/2014 issued under Section 4-A of the Act of 1976.3. Whether the entire State can be declared as a 'local area' under Entry 52 of List II of the Constitution of India.4. Whether the Act of 1976 and the notification are discriminatory and violate Articles 14 and 304 of the Constitution of India.5. The concept of compensatory tax and its application.Detailed Analysis:1. Constitutional Validity of the Act of 1976:The petitioners challenged the Act of 1976, claiming it was ultra vires to the Constitution of India, specifically Articles 14 and 304. They argued that the Act imposed discriminatory rates of entry tax on goods imported from other states compared to those produced within the state. The court referred to several precedents, including the Supreme Court's judgment in Jindal Stainless Ltd. (2017) 12 SCC 1, which upheld the validity of similar entry tax laws by various states. The court reaffirmed that non-discriminatory taxes do not per se violate Article 301 of the Constitution. It also noted that the Act of 1976 had been previously upheld by the Supreme Court in cases like Bhagatram Rajeevkumar and Geo Millers Co. Pvt. Ltd.2. Notification Dated 04/03/2014 Issued Under Section 4-A of the Act of 1976:The petitioners sought to quash the notification dated 04/03/2014, arguing it conferred arbitrary and unguided powers on the executive to enhance the rate of entry tax up to 50%. The court examined the legislative framework and found that the notification was within the permissible limits set by the legislature. It referred to the Supreme Court's guidelines on the delegation of legislative powers, emphasizing that the legislature can delegate subsidiary powers to the executive as long as it provides clear guidance and objectives.3. Whether the Entire State Can Be Declared as a 'Local Area':The petitioners argued that the entire state could not be declared a 'local area' for the purposes of Entry 52 of List II of the Constitution. The court referred to the Supreme Court's judgment in Jindal Stainless Ltd. (2017) 12 SCC 1, where it was observed that the term 'local area' could cover the whole state or specific areas as notified in the legislation. The court found that the definition of 'local area' in Section 2(d) of the Act of 1976 was precise and did not support the petitioners' claim.4. Whether the Act of 1976 and the Notification are Discriminatory:The petitioners claimed that the Act and the notification imposed higher entry tax rates on goods imported from other states, which was discriminatory and violated Articles 14 and 304(a) of the Constitution. The court noted that different tax rates for goods imported from outside the state and those produced within the state do not per se constitute discrimination. It emphasized that the burden of proving discrimination lies on the petitioners, who failed to provide substantial evidence. The court referred to the Supreme Court's judgment in Malwa Bus Service (1983) 3 SCC 237, which held that a difference in tax rates does not necessarily imply discrimination.5. The Concept of Compensatory Tax:The court discussed the concept of compensatory tax, which was judicially evolved as an exception to the provisions of Article 301 of the Constitution. It referred to the Supreme Court's judgment in Jindal Stainless Ltd. (2017) 12 SCC 1, which clarified that compensatory taxes are permissible if they provide direct and substantial benefits to the taxpayers. The court found that the revenue realized from the entry tax under the Act of 1976 was used to compensate local bodies for the loss of revenue due to the abolition of octroi, thus meeting the criteria for compensatory taxes.Conclusion:The court dismissed the writ petitions, upholding the constitutional validity of the Act of 1976 and the notification dated 04/03/2014. It found no violation of Articles 14 and 304(a) of the Constitution, and the petitioners failed to substantiate their claims of discrimination. The court emphasized that the legislative framework provided sufficient guidance and objectives, and the concept of compensatory tax was appropriately applied.
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