TaxTMI 
TaxTMI 
2013 (9) TMI 868
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.... dated 14.2.2013 (Annexure-5 to the writ petition) passed by the Respondent no.3, to the extent it imposes entry tax on the market value of goods; C. Issue any other writ, order or direction which this Hon'ble Court deems fit in the facts and circumstances of the case. D. Award costs of the petition to the petitioner." 3. Brief facts giving rise to this writ petition are that a provisional assessment was made against the petitioner for stock transfer of cement for the months of April, 2009 to February, 2010, under U.P. Tax on Entry of Goods into Local Areas Act, 2007 (the Act of 2007). The petitioner filed a Writ Tax No.1385 of 2010, which was connected with the pending writ petitions challenging the vires of the Act of 2007 on the ground that it is ultra vires the Constitution of India inasmuch as it violates Article 301, and is not saved by Article 304 (b) of Constitution of India. 4. This Court, by a judgment dated 23.12.2012 in Writ Tax No.1484 of 2007 (ITC Limited vs. State of UP and others), dismissed all the writ petitions upholding the constitutional validity of the Act of 2007. Paragraphs 130, 150 and 151 of the judgment are quoted as below:- "130. The petit....
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....e under Art.301 of the Constitution of India. We have not examined the other issues namely the validity of the notices, assessments, rebates, exemption and the liability of the traders, and manufacturers of the scheduled goods to pay entry tax. All other questions, will remain open to be considered by the competent authorities under the Act in accordance with law." 5. Shri C.B. Tripathi, Standing Counsel has taken a preliminary objection to the maintainability of this writ petition. He submits that the grounds taken in this writ petition, namely as to whether the provisions of Section 2 (h) (iv) and Section 4 (g) of the Act of 2007, are violative of Entry 52, List II of 7th Schedule of Constitution of India, Article 14 of Constitution of India, and the other provisions of the Act, might or ought to have been raised in the previous writ petition and thus these questions are barred by principles of constructive res judicata to be considered in this writ petition. He has relied upon the judgments in M/s Builder's Association of India vs. State of Karnataka and others (1993) 1 SCC 409; Commissioner of Income Tax, Bombay vs. T.P. Kumaran (1996) 10 SCC 561; Kopargaon S.S.K. Limited vs....
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....of Article 301 and not saved by the proviso to Article 304. The other questions were left open to be considered by the Competent Authority in accordance with the law. 8. Shri Bharat Ji Agarwal submits that Section 2 (h) (iv) and Section 4 (g) are ultra vires the Constitution of India inasmuch as these provisions are beyond the legislative competence of the State to legislate under under Entry 52 of List II of 7th Scheduled of Constitution of India and further that they are also violative of Article 14 of Constitution of India. He submits that the Assessment Authority has under Section 2 (h) (iv) read with Section 4 (g) used the whole sale price to the value of the goods of stock transfer at the time of entry into the State as a thumb rule to determine the value of the goods at the time of their entry into the State of UP. He has relied upon judgments in State of Karnataka and others vs. M/s Hansa Corporation AIR 1981 SC 463 and State of Rajasthan vs. Rajasthan Chemists Association 2006 (202) E.L.T. 217 (SC) in submitting that the value of goods on which they are sold after their entry into the State is not the value on which entry tax can be levied. 9. In State of Karnataka a....
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.... fact that it would be computed at a later date when the dealer submits his return as required by the other provisions of the Act, would be the price for computation of tax. And there is no ambiguity or any vagueness in this behalf. There is thus specific guideline in the charging section itself for taking into account the price according to which tax would be computed. The Hight Court negatived this contention by observing that it would be open to the dealer to choose either the sale price or the purchase price whichever is favourable to him for computation of his liability to tax. This approach overlooks the specific language of s. 3 which clearly indicates what price is to be taken into account for computing the tax. When the goods are brought within the local area they have a certain price. The price may be the price which the importer of goods has paid before bringing the goods within the local area. Even if the dealer is the manufacturer of goods at a place outside the local area and brings the goods within the local area he must have determined the price of the goods. Therefore, the dealer has some specific price of the scheduled goods which are being brought within the loca....
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....xcluding excise duty, if any), minus sixteen per cent thereof in the case of scheduled drugs" Applying the principles enunciated above, the inevitable conclusion is that when the wholesaler sells any formulation to a retailer in bulk quantity, taxable event of sale of goods takes place where wholesaler and retailers are the parties to contract, the goods in question are the formulations and the consideration is one which is agreed to between the parties to that transaction within the limits permissible by law. By substituting the assumed quantity of goods or a price which is not subject matter of that contract of completed sale for the purpose of measuring tax the legislature assumes existence of contract of sale of drugs by legal fiction which has not taken place and which cannot be considered to be a sale in the manner stated in the Sales Act, which alone can be subject of tax under Entry 54 in List II. Substitution of assumed price or the assumed quantity in place of actual price/quantity in a completed sale transaction, for the purpose of levy of tax on the subject matter of tax results in taking away from it the character of 'sale of goods' as envisaged under the Sales Act.....