TaxTMI 
TaxTMI 
2010 (8) TMI 844
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.... as he holds permission for composition under section 11A of the Madhya Pradesh Value Added Tax Act, 2002. Prayer has also been made in the alternative that the petitioner be held liable to pay tax at one per cent under Notification Nos. 79-80 dated September 30, 1997. Order (P7) dated October 6, 2008 passed by the Commissioner, Commercial Tax be quashed, and refund of the tax collected at 27 per cent be ordered along with the interest. It is averred in W.P. No. 12952 of 2008 that the petitioner is a joint venture between Italian-Thai Development Public Company Ltd., Thailand and ITD Cementation India Ltd. The petitioner has undertaken the construction package EW-II (MP-2) Rehabilitation and upgrading of KM 15 to KM 50 on NH-25 including Ghat Road and Sindh Bridge. The said contract is liable to tax under the provisions of the Madhya Pradesh Value Added Tax Act. The petitioner is a registered dealer under the provisions of the Madhya Pradesh VAT Act, 2002 and is also deemed to be a dealer for the purpose of provisions of Madhya Pradesh Entry Tax Act, 1976. It is further averred that the petitioner has adopted a composition scheme in accordance with the provisions of section 11A ....
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....ition dealers have always been treated as a class by themselves for the purpose of Entry Tax Act and the exemption has always been granted to the entire class of such dealers and all the composition dealers have always been exempted from payment of entry tax without any reference/distinction as to the commodities entered by them for the purpose of execution of their works contract. All commodities have also been exempted in their hands. The classification is not valid and is violative of article 14 of the Constitution of India. The classification of the commodities for exemption or for taxation cannot be based upon the blind approach. Hence writ petition has been preferred. In W.P. No. 14160 of 2008, the petitioner, M/s. B. Seenaiah & Co. (Project) Ltd., has contended that the petitioner is involved in the construction of four lining Jhansi-Lakhnadone section from KM 255 to KM 297 up to the end of Grade-Separator at Rajmarga Chauraha on National Highway No. 26. The petitioner-company is registered under the Madhya Pradesh VAT Act. The State Government has issued Notifications Nos. 79 and 80 dated September 30, 1997 under section 3(2) of the Entry Tax Act prescribing the rate of ....
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.... diesel at 27 per cent in terms of Notification No. 14 dated November 1, 2007 and No. 16 dated April 1, 2007. The validity of entry tax has been upheld by the Division Bench of this court in Godfrey Philips India Ltd. [2008] 17 VST 465 (MP). Even if the goods are consumed within the local area, entry tax under section 4A shall be liable at the rate notified under section 4A. Thus the petition is bereft of merit. Shri H.S. Shrivastava, senior counsel, Shri P.M. Choudhary, Shri Sumit Nema and Shri Sandesh Jain, learned counsel appearing for the petitioners, have submitted that the State Government has made discrimination between same class by specifying certain classes of persons to be exempted from entry tax. The exemption from entry tax on petrol and diesel has been illegally withdrawn. The said goods are specified in Schedule II of the Entry Tax Act. The classification which has been made by the impugned notification dated April 11, 2007 is discriminatory and violative of article 14 of the Constitution of India. There is no rational or intelligible differentia made for the purpose of classification. State cannot pick and choose the commodities for exemption or for tax without a....
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....7 is quoted below: Notification No. F. A-3-11-07-1-V(16), dated April 11, 2007 Works contractor who has opted for composition under section 11A of the VAT Act-exempted from entry tax with effect from April 1, 2006. In exercise of the powers conferred by section 10 of the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (No. 52 of 1976) (hereinafter referred to as, the Entry Tax Act), the State Government, hereby, exempts the class of goods specified in column (1) of the Schedule below from payment of tax under the said Adhiniyam, to the extent specified in column (2), subject to the restrictions and conditions specified in column (3) of the said Schedule: SCHEDULE Class of goods Extent of exemption Restrictions and conditions subject to which exemptions is granted (1) (2) (3) Goods specified in Schedule II and Schedule III appended to the Entry Tax Act, other than petrol and diesel Whole of entry tax (1) When the goods specified in column (1) are entered into a local area by a contractor for supply in the course of execution of a works contract, in respect of which permission to pay a lump sum by way of composition under ....
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....persons are still entitled for exemption from payment of entry tax except with respect to petrol and diesel. It is not the submission that it is a case of discrimination vis-a-vis to similar class of goods or category. Section 10 of Entry Tax Act is quoted below: "10. Power to exempt.-The State Government may, by notification, and subject to such restrictions and conditions as may be specified therein exempt, whether prospectively or retrospectively, in whole or in part,- (i) any class of dealers or persons, or any goods or class of goods, from the payment of entry tax under this Act, in respect of all or any of the local areas, for such period as may be specified in the notification; (ii) any dealer or class of dealers, from any provision of the Act as may specified in the notification: Provided that in respect to the period during which the Ordinance repealed under section 24 was in force, the retrospective effect may be given from the date of the commencement of the said Ordinance as if the liability to pay tax arose under this Act and for that purpose it shall and shall always be deemed that the provisions of this Act to the extent they correspond to the provisions ....
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....ia in the facts of the instant case. Another decision has been relied upon by the learned counsel for the petitioners in State of U.P. v. Deepak Fertilizers & Petrochemical Corporation Ltd. [2007] 7 VST 535 (SC) in which the apex court has laid down that every law has to pass through the test of constitutionality, which is nothing but a formal name of the test of rationality. Whenever any type of law is to be made for the purpose of levying taxes on a particular commodity or for exempting some other commodity from taxation, a sort of classification is to be made. But this classification cannot be the product of a blind approach by the administrative authorities on whom the responsibility of delegated legislation is vested. In our opinion, the classification of goods which has been made in the instant case cannot be said to be illegal, arbitrary or irrational. Petrol and diesel being altogether different commodities and no commodity is shown to be identical to the same with respect to which exemption is availed of, in our opinion, the impugned notification cannot be said to be discriminatory. Reliance has also been placed on a decision in Marico Industries Ltd. v. State of Kar....