TaxTMI 
TaxTMI 
2011 (6) TMI 687
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....e court was made by V.V.S. RAO J.-The challenge in these writ petitions is to the Andhra Pradesh Tax on Entry of Motor Vehicles into Local Areas Act, 1996 (A.P. Act No. 26 of 1996) ("the Act", for brevity). Though the attack is against the constitutional vires of charging section 3 of the Act, without which the other provisions cannot survive, the entire Act may have to suffer invalidation if the petitioners succeed in these cases. The background The following background of these cases is taken from W.P. Nos. 1564 of 2009, 6713 of 2010 and 2348 of 2011. (A) W.P. No. 1564 of 2009 The petitioner, a company having its registered office at Hyderabad is engaged in the business of civil contracts, consulting and engineering. They are registered dealers under the Andhra Pradesh Value Added Tax Act, 2005 (the VAT Act, for brevity) on the rolls of the Commercial Tax Officer, Jubilee Hills Circle. M/s. Patel Soma JV awarded them works contract of left main canal of Polavaram Project and Hiramandalam Reservoir of Vamsadhara Project. The contract, inter alia, includes excavation, lining the canal and construction of CM and CD works. For these works, the petitioner purchased thre....
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....2008] 13 VST 15 (AP); 46 APSTJ 1. When there is no levy of entry tax on the movement of vehicles produced in Andhra Pradesh entering into local area from another local area within the State, levy of entry tax on the vehicles imported into the State of Andhra Pradesh is discriminatory and is not saved by article 304(a). The State has no legislative competence to enact a law and it is only Parliament which can impose restrictions on the freedom of trade, commerce and intercourse in public interest or on account of scarcity of goods in any part of the country. The tax levied under the impugned Act is not compensatory tax and, therefore, it cannot be sustained. The charging provision would be operative only when the Government notifies the rate of entry tax, no such notification has been issued under section 3 and the levy of tax at 12 per cent is without any authority of law. (C) W.P. No. 2348 of 2011 M/s. Srinivasa Stone Crusher, a proprietary concern engaged in the business of stone crushing is the petitioner in W.P. No. 2348 of 2011 for their quarry operations-excavating earth and crushing the quarried stones. The petitioner purchased Truck Mounted Chain Run Hydraulic Excavat....
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.... is not tax that falls under article 304(b). The Statement of Objects and Reasons appended to the Bill introducing the Act would show that failure of implementation of uniform floor rates by some of the neighbouring States resulted in diversion of trade, crippling the business activities of local dealers and causes loss of revenue. The Act was enacted, in order to prevent such losses, to create a uniform level playing field between the dealers of the State and dealers of outside State, and to ensure that the total tax burden on the locally produced motor vehicles as well as motor vehicles imported from other States is equal. The CCT who is arrayed as respondent in all the cases filed a separate counter. In addition to the pleas taken by the State, a further plea is raised to the effect that the impugned levy is compensatory tax not requiring previous sanction of the President. The CCT further contends that local bodies have been taking up programmes relating to laying of roads, upkeep of roads, installation of street lights, supply of water, maintenance of sanitation within the local area. They need huge funds for implementing these schemes. There is resource crunch. The local b....
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.... to another local area in Andhra Pradesh. (C) The levy under the impugned Act is not compensatory in nature. The State has not discharged the required burden of proof by placing evidence to show that the levy is intended to regulate the business and that the tax collected is spent for providing trade-friendly facilities. (D) Alternatively and at all times, the levy under the Act is unconstitutional. Various machines/vehicles involved, are not "motor vehicles" within the meaning of section 2(28) of the MV Act. The summary of the contentions made by the special counsel for the State is as follows: (A) In Jaiprakash Associates Ltd. v. State of M.P. [2009] 21 VST 1 (SC), the Supreme Court held that precedents dealing with compensatory tax in transportation cases do not apply to general notion of entry tax. Therefore, the three leading decisions of the Supreme Court on compensatory tax are not of any help to test the vires of the impugned Act. (B) The legislative entries have to be given widest meaning. Entry 52 of List II deals with levy of tax on entry of goods into local areas. This includes motor vehicles that are imported from other States. The impugned Act is, there....
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....provisions dealing with filing of returns, appeals/revisions, imposition of penalties and power to check and impound the motor vehicles on import. Chapter VII creates bar for registration of motor vehicles unless there is tax compliance. It also creates offences for certain breaches. Section 30 confers delegated legislative power on the Government of Andhra Pradesh. (2) The objects and reasons In the pre-VAT regime, the rates of general sales tax besides being umpteen slab rates, were not uniform in various States. Depending on the exigencies, the States frequently increased/decreased rate of tax on various goods sold and purchased in the State under the respective sales tax laws. The customer psychology to procure the same quality of goods at lesser rates prompted them to purchase the goods at low tax in the neighbouring States and bring them for use in the State of Andhra Pradesh, inevitably denying it general sales tax in respect of the vehicles purchased in neigh bouring States. To get over the situation, the States of Karnataka, Kerala and Tamil Nadu introduced entry tax on motor vehicles as well as other goods. In 1987, the Andhra Pradesh Entry of Goods into Local Areas....
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....s the area of jurisdiction of a local authority; (i) 'local authority' means the area within the limits of, a city as declared under the Hyderabad Municipal Corporation Act, 1955, or the Visakhapatnam Municipal Corporation Act, 1979, or the Vijayawada Municipal Corporation Act, 1981 or any other Municipal Corporation in the State, as in force or a municipality as constituted or deemed to have been constituted under the Andhra Pradesh Municipalities Act, 1965, or any notified area, as declared under section 389A of the Andhra Pradesh Municipalities Act, 1965 or the area within the limits of Gram Panchayats, under the Andhra Pradesh Panchayat Raj Act, 1994; (j) 'motor vehicle' means a motor vehicle defined in clause (28) of section 2 of the Motor Vehicles Act, 1988 (Central Act 59 of 1988); (n) 'purchase value' means the value of a motor vehicle, as ascertained from the original invoice and includes the value of accessories fitted to the vehicle, insurance, excise duties, countervailing duties, sales tax, transport fee, freight charges and all other charges incidentally levied on the purchase of a motor vehicle: Provided that, where the purchase va....
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....uch authority, as Commissioner may notify within fifteen days from the date of entry of such vehicle into a local area or before an application is made for registration of the said vehicle or assignment of a new registration mark to such vehicle under the Motor Vehicles Act, 1988, whichever is earlier. (3) Where an importer who, not being a dealer in motor vehicles, had purchased a motor vehicle for his own use in any Union Territory or any other State, then the tax payable by him under this Act, shall, subject to such conditions as may be prescribed, be reduced by the amount of tax paid, if any, under the law relating to general sales tax, in force in that Union Territory or State." The charging provision, section 3, indicates the character of imposition, the person who is liable to pay the entry tax and the measure of the tax as well as the rate of tax. The tax is leviable only on a motor vehicle liable for registration in the State under MV Act, and as per section 2(j), "motor vehicle" will have the same meaning as in section 2(28) of the MV Act. Levy is on the "entry of any motor vehicle" into local area, which means the area of jurisdiction within the limits of a city or....
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....pose of levy of entry tax. These are the motor vehicles registered either in the Union Territory or any other State under the provisions of the MV Act prior to period of fifteen (15) months or more from the date on which it is registered in the State of Andhra Pradesh and second category is those vehicles owed by the Central Government and used exclusively for the purposes relating to the Defence of India. The measure of tax is further dealt with by section 4. It is to the effect that if an importer of motor vehicle pays the general sales tax, the said amount shall be given credit while levying and collecting the entry tax. Further, when an importer for his own use had paid sales tax in Union Territory or any other State where it was intended to be used, the entry tax shall be reduced by the amount of such tax already paid. Other provisions are mainly machinery provisions. The enforcement of the Act is entrusted to the machinery under the Sales Tax Act including the appeal/revision system as well as recovery procedures. It may be noticed that tax machinery by which entry tax is assessed and collected adopting procedures under the Sales Tax Act, is no indication regarding the cha....
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....quisite legislative competence to enact the law, the enquiry must end there. The court cannot extend its enquiry into the issue of transgression of limitations of constitutional power merely because the legislation incidentally covers the subject-matter of another legislative entry in the Union List or Concurrent List. "The distinction in regard to the power of a law making authority which is of qualified character and the power granted to the legislative authority which is absolutely without any limitation and restriction being plenary in character" cannot be ignored (State of Kerala v. Peoples Union for Civil Liberties (PUCL), Kerala State Unit [2009] 8 SCC 46). (ii) Legislative competence There is no gainsaying that under article 246(2) and (3) subject to other provisions of the Constitution, State has the power to make laws with respect to any matters enumerated in the Concurrent List subject to article 246(1) and/or exclusive power to make laws with respect to any of the matters enumerated in the State List of the Seventh Schedule to the Constitution. The court's scrutiny for the requisite competence is based on well evolved principles or tests. In Gujarat Ambuja [20....
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....ent is to be ignored. The pith and substance and legislative competence is to be determined with reference to the object of the enactment and on a scrutiny it is found that the law has substantial connection with a legislative entry, it should be taken as legislation on the topic (Praphullakumar Mukherjee v. Bank of Commerce AIR 1946 PC 60, Thakur Amar Singhji v. State of Rajasthan AIR 1955 SC 504, Delhi Cloth & General Mills Co. Ltd. v. Union of India [1983] 4 SCC 166; AIR 1983 SC 937 and All India Federation of Tax Practitioners v. Union of India [2007] 9 VST 126 (SC); [2007] 7 SCC 527; AIR 2007 SC 2990). (iii) Interpretation of legislative entries The Parliament and Legislature of the States are empowered to make laws on the subjects enumerated in Union List and State List, respectively. Both of them are also competent to make laws with regard to the entries in the Concurrent List. All the four clauses of the article 246 use the phrase "with respect to any matters". The use of "any matter" indicates two things. It is certainly with regard to the subject-matter which is mentioned in the entry and secondly it could be any or more number of things about the subject of the ....
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....table for use on roads, including the tramcars subject to the provisions of entry 35 of Concurrent List". Indisputably, the MV Act is a Parliament law made under entry 35 of the Concurrent List. There is also no dispute before us that the MV Taxation Act falls within the ambit of entry 57 of the State List. To recall, the submission of the petitioners is that though entry 52 deals with levy of tax on entry of goods, there is no entry for levy of tax on motor vehicles and as the impugned law does not fall within entry 57 in respect of which the State has already enacted the M.V. Taxation Act, the impugned Act is beyond legislative competence. This argument would ignore the settled principles of interpretation of the legislative entries. Article 366(12) of the Constitution defines "goods" to include all materials, commodities and articles. The term "goods" used in entry 52 should be given the same meaning as in article 366(12). Whether the motor vehicles come within the scope of "goods"? article 366(12) defines goods in inclusive manner. It is well-settled that when a word is defined to "mean" something, the definition is prima facie restricted and exhaustive, but where, the word ....
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....rdinary meaning. All the articles, materials and commodities, which are either used as such or used as raw material for manufacturing other articles or materials, are certainly goods within the meaning of article 366(12) of the Constitution. The goods may be tangible property or intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of being transmitted, transferred, delivered, stored and possessed (Tata Consultancy Services v. State of Andhra Pradesh [2004] 137 STC 620 (SC); [2004] 271 ITR 401 (SC); [2005] 1 SCC 308; AIR 2005 SC 371 and Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST 95 (SC); [2006] 145 STC 91 (SC); [2006] 282 ITR 273 (SC); [2006] 3 SCC 1; AIR 2006 SC 1383). These attributes are in abundance when one look at motor vehicles. In Circle Inspector (Excise) v. K. Mukundan AIR 1976 Ker 120, a Division Bench of the Kerala High Court construing section 34 of the Kerala Abkari Act held that the words "other article" in that section which empowered the competent officer to arrest a person and/or seize any liquor, drug or other article include the motor v....
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....ate is competent to legislate under entry 52 even with regard to the motor vehicles or any goods. (v) The plea of colourable legislation (a) State's power to tax inter-State trade Article 286(1) bars the States from imposing tax on the sale or purchase of goods when they take place (a) outside the State and (b) in the course of import or export of goods into or from India. The Explanation to article 286(1) created a legal fiction regarding situs of sale in the case of transactions coming within that category. In Bengal Immunity Co. Ltd. v. State of Bihar [1955] 6 STC 446 (SC); AIR 1955 SC 661, the Supreme Court held that the prohibitions created under various clauses of article 286 on the taxing power of the State are independent or separate and each one of them had to be got over by the State before imposing tax on inter-State trade. By Constitution (Sixth Amendment) Act, 1955, the Explanation to the said article was omitted and entry 54 of the State List was substituted so as to make the State law imposing tax on sale or purchase of goods subject to the provisions of entry 92A of the Union List, which deals with taxes on the sale or purchase of goods other than newsp....
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....e sale or purchase of motor vehicles. The tax is attracted when the motor vehicle enters a local area. It is to be a motor vehicle and it should be a motor vehicle liable for registration in the State of Andhra Pradesh. Section 39 of the MV Act prohibits any person from driving any motor vehicle unless the same is registered in accordance with Chapter IV thereof. It is altogether a different question as to whether a particular thing is a motor vehicle and whether such motor vehicle is liable for registration in the State of Andhra Pradesh. So far as the nature of levy under the impugned Act is concerned, any person who imports the motor vehicle into any local area is liable to pay entry tax at the rate fixed by the Government on the purchase value of the motor vehicle not exceeding the rate specified for motor vehicles in the Sales Tax Act. A lengthy discourse is not required to say that the entry of motor vehicle for use or sale in the State of Andhra Pradesh is the taxable event. The sale of such motor vehicle in the State subsequently and the payment of tax thereon under the Sales Tax Act/VAT Act have nothing to do with the levy of entry tax under section 3 of the Act. To say th....
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.... The Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979 (the Karnataka Act) suffered invalidation in the Karnataka High Court. The State's appeal, however, was allowed by the Supreme Court in State of Karnataka v. Hansa Corporation [1980] 4 SCC 697; AIR 1981 SC 463. The charging section 3 therein authorised levy and collection of tax on entry of scheduled goods into local areas. The Supreme Court held that the taxing event under the statute is entry of scheduled goods and that it does not contravene article 14 of the Constitution. Dealing with this aspect, the Supreme Court observed that, "entry 52 in State List read with article 246 of the Constitution confers power on the State Legislature to enact a law to levy tax on the entry of goods into a local area. The tax is levied on entry of the goods. Though it had broad features of octroi, the obnoxious features of octroi stand removed by the manner of levy, the method of collection and the persons liable to pay the entry tax". In Suresh Chand Sri Gopal v. Union of India [1989] 72 STC 241 (AP), a Division Bench of this court repelled the challenge to the vires of the Andhra Pradesh ....
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....01] 3 SCC 157; AIR 2001 SC 835 , inter alia, it was contended that the incidence of payment of entry tax before the registration under the MV Act is not proper. This plea did not find favour with the apex court which rejected the same observing as under (page 617 in 121 STC): "In the light of the conclusions reached by the High Court and the contentions urged on behalf of the appellant before us, what we have to bear in mind is the scope of entry 52 of List II of the Seventh Schedule to the Constitution which provides for tax on entry of goods into local area for sale, use or consumption. This court in the decisions referred to by the learned counsel to which we have adverted to earlier was concerned only with those cases where tax arising under the motor vehicles tax enactments coming under entry 57 of List II of the Seventh Schedule to the Constitution fell for consideration. Under entry 57 of List II of the Seventh Schedule to the Constitution, what is required to be considered is a tax on vehicle which is suitable for use on roads. But the incidence of taxation in the context of entry 52 of List II of the Seventh Schedule to the Constitution is entry of goods into a local ar....
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....consisting of articles 301 to 307, also places limitation on the legislative jurisdiction of the Union and the States. Any law is subject to the other provisions of the Constitution including articles 301, 302 and 304 which form the core text of what some scholars call "commerce clause". The constitutional litigation during the last more than six decades in a number of cases focused on the free trade clause. All the other articles in Part XIII rally round article 301, which reads, "subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free". What is guaranteed is throughoutness of trade and commerce in the territory of India and not restricted to interState trade and commerce. It imposes a general limitation on all legislative power to ensure freedom of trade and commerce. The guarantee is, however, not absolute nor the freedom envisaged is free from regulations. The dissection of article 301 shows three interdependent phrases, namely, "subject to the other provisions of this part", and "trade, commerce and intercourse throughout the territory of India" and "shall be free". Whatever way one reads, the plain meani....
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....c interest is subject to the previous sanction of the Pres ident. The requirement of the Presidential assent, however, does not in any manner dilute the plenary legislative power of the State nor curtail it. As the law made under article 304(a) and the one falling under article 304(b) are basically distinct, if a law is saved under article 304(a), it is unnecessary to test it with reference to article 304(b) although a tax law "directly and immediately" restricting the freedom of trade would be a restriction. In other words, if a law under article 304(a) imposing tax does not create barrier for free movement of goods, in the course of trade and commerce, such law does not require Presidential assent even though it is a restriction in limited sense. A law under article 304(a) imposing discriminatory tax is not saved, in which case, article 301 is not relaxed. The State Legislatures should not impose taxes at different rates on imported and locally manufactured goods. Non-discriminatory tax alone is saved under article 304(a), and a law which only exempts locally manufactured goods from the levy would be suspect of article 301. Further, as article 304(a) contemplates imposition of....
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.... may beneficially quote from the leading cases. The precedents In Atiabari Tea Co. Ltd. v. State of Assam AIR 1961 SC 232 and Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan AIR 1962 SC 1406, Constitution Benches of the Supreme Court dealt with Part XIII of the Constitution. Both the judgments are "opus classicus". They have been distinguished, explained, followed, referred to and relied on in about half a score of subsequent Supreme Court decisions, namely, Salonah Tea Company Ltd. v. Superintendent of Taxes [1988] 69 STC 290 (SC); [1988] 1 SCC 401, B.R. Enterprises v. State of U.P. [2000] 120 STC 302 (SC); [1999] 9 SCC 700, Jindal Stripe Ltd. v. State of Haryana [2004] 134 STC 303 (SC); [2003] 8 SCC 60, State of H.P. v. Yash Pal Garg (Dead) by Lrs. [2003] 9 SCC 92, Geo Miller & Co. Pvt. Ltd. v. State of M.P. [2004] 136 STC 241 (SC); [2004] 5 SCC 209, State of Punjab v. Devans Modern Breweries Ltd. [2004] 11 SCC 26, Godfrey Phillips India Ltd. v. State of U.P. [2005] 139 STC 537 (SC); [2005] 2 SCC 515, Jindal Stainless Ltd. v. State of Haryana [2006] 145 STC 544 (SC); [2006] 7 SCC 241 and Jaiprakash Associates Ltd. v. State of M. P. [2009] 21 VST 1 (SC); [2009] 7....
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.... integral part. If the transport or the movement of goods is taxed solely on the basis that the goods are thus carried or transported that, in our opinion, directly affects the freedom of trade as contemplated by article 301. If the movement, transport or the carrying of goods is allowed to be impeded, obstructed or hampered by taxation without satisfying the requirements of Part XIII the freedom of trade on which so much emphasis is laid by article 301 would turn to be illusory. When article 301 provides that trade shall be free throughout the territory of India primarily it is the movement part of the trade that it has in mind and the movement or the transport part of trade must be free subject of course to the limitations and exceptions provided by the other articles of Part XIII. . . Besides, it is not irrelevant to remember in this connection that the article we are construing imposes a constitutional limitation on the power of the Parliament and State Legislatures to levy taxes, and generally, but for such limitation, the power of taxation would be presumed to be for public good and would not be subject to judicial review or scrutiny. Thus considered we think it would be r....
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....h as, police regulations, provision for services, maintenance of roads, provision for aerodromes, wharfs, etc., with or without compensation; (3) Parliament may by law impose restrictions on such freedom in the public interest; and the said law can be made by virtue of any entry with respect whereof Parliament has power to make a law; (4) the State also, in exercise of its legislative power, may impose similar restrictions, subject to the two conditions laid down in article 304(b) and subject to the proviso mentioned therein; (5) neither Parliament nor the State Legislature can make a law giving preference to one State over another or making discrimination between one State and another, by virtue of any entry in the Lists, infringing the said freedom; (6) this ban is lifted in the case of Parliament for the purpose of dealing with situations arising out of scarcity of goods in any part of the territory of India and also in the case of a State under article 304(b), subject to the conditions mentioned therein; and (7) the State can impose a nondiscriminatory tax on goods imported from other States or the Union territory to which similar goods manufactured or produced in that State ar....
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....a) Limitation is relaxed in favour of the Parliament under article 302, in which case Parliament can impose restrictions in public interest. Although the fetter is limited enabling Parliament to impose by law restrictions on the freedom of trade in public interest under article 302, nonetheless, it is clarified in clause (1) of article 303 that notwithstanding anything contained in article 302, the Parliament is not authorised even in public interest, in the making of any law, to give preference to one State over another. However, the said clarification is subject to one exception and that too only in favour of the Parliament, where discrimination or preference is admissible to the Parliament in making of laws in case of scarcity. This is provided in clause (2) of article 303. (b) As regards the State Legislatures, apart from the limitation imposed by article 301, clause (1) of article 303 imposes additional limitation, namely, that it must not give preference or make discrimination between one State or another in exercise of its powers relating to trade and commerce under entry 26 of List II or List III. However, this limitation on the State Legislatures is lifted in two cases,....
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.... whereas under the impugned Act, entry tax is levied on the purchase value which includes the value of accessories fitted to the vehicle, insurance, excise duties, countervailing duties, sales tax, transport fee, freight charges, which is discriminatory; and (3) the levy is only on the motor vehicles into local area from other States, and there is no such levy when the vehicles move from one local area to another local area within the State. We will consider these submissions one after the other after noticing the applicable legal principles in this regard. Theory of classification There is no constitutional embargo especially on taxing statutes to classify goods and persons for the purpose of levying and collecting different rates of tax in respect of different taxable events. The sovereign power to tax is wide enough to choose things and persons and exclude others from the levy. The burden is always on the person who impeaches a tax law as discriminatory. If the initial burden is discharged, the onus then shifts to the State to justify the classification. At the happening of these two things, there would be two situations rendering the impugned law defective, in that the cl....
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....sification may be mentioned here. It is true that a State may classify persons and objects for the purpose of legislation and pass laws for the purpose of obtaining revenue or other objects. Every differentiation is not a discrimination. But classification can be sustained only if it is founded on pertinent and real differences as distinguished from irrelevant and artificial ones. The constitutional standard by which the sufficiency of the differentia which form a valid basis for classification may be measured, has been repeatedly stated by the courts. If it rests on a difference which bears a fair and just relation to the object for which it is proposed, it is constitutional. To put it differently, the means must have nexus with the ends. Even so, a large latitude is allowed to the State for classification upon a reasonable basis and what is reasonable is a question of practical details and a variety of factors which the court will be reluctant and perhaps ill-equipped to investigate. In this imperfect world perfection even in grouping is an ambition hardly ever accomplished. In this context, we have to remember the relationship between the legislative and judicial Departments of ....
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.... goods in the State are not subjected to tax? Article 304(a) is an exception to article 301 which prohibits any barriers to free trade in the territory of India. If the goods manufactured in the State are subjected to tax, the State legitimately can impose any tax on the goods imported from other States. The entry tax is not defined in the impugned Act. The charge under the Act is on the entry of any motor vehicle into the local area. The measure of the tax is on the purchase value as defined under section 2(n). The tax so levied, let us say, entry tax-shall not however be more than the sales tax levied on motor vehicles in the State under the relevant entry of the First Schedule to the Sales Tax Act. It is nobody's case that the motor vehicles manufactured and produced in Andhra Pradesh are immune from sales tax or VAT or that they are not liable to pay tax under MV Taxation Act. All the motor vehicles are liable to pay different taxes under the State laws. The entry tax payable on the vehicle imported into local area is equal to the sales tax payable under the State law. Further, a person who brings a motor vehicle into the local area for use or sale, described in the Act ....
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....evied on the vehicles in the State of Andhra Pradesh, whereas such entry tax is levied on the importer (use or consumption) when he causes entry of motor vehicles into a local area, cannot be countenanced. Article 304(a) enables the State to make a law imposing any tax on the goods imported from other States or Union Territories. Such tax, however, cannot be discriminatory in the sense that similar goods manufactured and produced in the State cannot be given any differential treatment in the matter of levying tax. It is settled law that when a taxing statute does not impose rates of tax on imported goods different from the rates of tax on goods manufactured or produced, article 304 had no application so long as the rate is the same (Rattan Lal and Co. v. Assessing Authority [1970] 25 STC 136 (SC); AIR 1970 SC 1742). If the general rate applicable to the goods locally made and on those imported from other States is the same, nothing more normally and generally is to be shown by the State to dispel the argument of discrimination. The variation of the rate of inter-State sales tax does not affect free trade and commerce nor create a local preference contrary to the scheme of Part X....
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..... Hence examples of this nature would not carry the argument to any logical conclusion. Having noticed the fact that the area of judicial review is considerably limited in testing the validity of a taxing statute and considering the impugned classification in its factual background, it seems the two permits are different from the very nature of their operation: while one allows operation within the State only the other allows operation beyond the boundaries of the State. Even though in generic terms both are contract carriages, there are individual restrictions and advantages attached to each of these permits which could be exclusive to themselves. As argued on behalf of the respondents, even the types of vehicles used by the holders of these permits, in most cases, if not in all cases, are different. The carrying capacity of the vehicles concerned covered by these two permits is different. Thus in many factual ways these vehicles covered by two different permits do form a separate and distinct class. So long as this classification is not arbitrary or unreasonable, the courts will not interfere with this classification which is the prerogative of the Legislature. Now coming to the ....
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....ication of motor vehicles for the purpose of section 3 has also a rational relation with the object sought to be achieved, i.e., to plug the leakage of revenue by reasons of low tax paid by the owners of imported vehicles. We accordingly reject the submission of the petitioners that the impugned Act violates article 304(a) and that it seeks to give discriminatory protection to the motor vehicles manufactured and produced in the State of Andhra Pradesh. Whether measure of tax is discriminatory? The levy of entry tax under the Act is on the purchase value of the motor vehicle, which means, "the value of a motor vehicle as ascertained from the original invoice and includes the value of accessories fitted to the vehicle, insurance, excise duties, counterveiling duties, sales tax, transport fees, freight charges and all other charges incidentally levied on the purchase of the motor vehicle". If the purchase value cannot be ascertained due to non-availability or non-production of original invoice or due to a false invoice, purchase value shall be the value or price at which a motor vehicle of like mind or quality is sold or is capable of being sold in open market. Under section ....
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....to tax. We have already held that the State law does not grant any exemption to the goods and therefore, on that score, the plea of discrimination is not available. For the purpose of levy of entry tax, the purchase value is not only the value of the motor vehicles but also includes value of accessories, fittings, transport facilities and other items of expenditure that may have incurred by the importer of the vehicle. On the contrary, the turnover under the sales tax or the sale price under the VAT Act means the price of the goods as mentioned in the invoice or bill. The first impression one gathers is that the measure of tax is different. But, a closer look does not support any such contention even remotely. When one considers the measure of tax, the method and manner while determining the quantum of the taxable value cannot be ignored. Section 3(1) bars the Government from notifying the rate of tax exceeding the rate specified for motor vehicles under the Sales Tax Act. To give an illustration, we will assume two motor vehicles of similar make; one imported into local area for use or sale (imported vehicle) and the one produced or sold in the State of Andhra Pradesh (local vehic....
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....ment of sales tax was assailed by a dealer who was engaged in the business of selling similar imported products, on which there was a net rate of tax at 8.8 per cent. The levy of differential rate of tax by the State of Punjab under its Sales Tax Act on the electronic goods imported from other States was also subject-matter of challenge in another case. The apex court noticed that what constitutes an economic barrier at one point of time often ceases to be so at another point of time and it will be wrong to denude the people of the State of the right to grant exemptions which flow from the plenary powers of legislative heads in the State List. If all the States have provisions to exempt or reduce the rates, on the locally manufactured goods, the question of economic war does not arise. If any law levies differential rates of taxes on the imported goods and locally manufactured goods, the question of discrimination has to be examined in the light of article 14 of the Constitution by interpreting various entries in the legislative Lists widely, liberally and harmoniously, so as to include ancillary and incidental powers including the one to grant exemption inherent in all tax legisla....
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....titioners have not placed any material to demonstrate the discrimination meted out in assessing the entry tax on the vehicles purchased by them admittedly for their own use. Movement of goods within the State The submission of the petitioners is that the levy, being on the motor vehicles entering the local area from other States, in the absence of any such levy on the internal movement of motor vehicles from one local area to another local area, the levy is discriminatory. The submission need not detain us even for a while. "An importer" means a person who bring a motor vehicle into local area from any place outside the State for use or sale therein, or the person who owns the vehicle at the time of entry into local area. The local area could be either a Municipal Corporation, Municipality or Gram Panchayat. Entry of motor vehicle into a local area means, "entry of motor vehicles into local area from any place outside the State for use or sale therein" (sections 2(d), (h) and (i)). Section 3(2) makes importer liable to pay tax. A reading of all these provisions would clearly show that the object of the impugned Act itself is to levy tax on the entry of a motor vehicle into lo....
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....y 54 of the State laws. But, we have adverted to this issue, as the counsel pressed the same before us. Article 304(b) does not bar a State law imposing reasonable restrictions in public interest. Indeed, article 19(6) also permits, in the interests of the general public, reasonable restrictions to curtail the fundamental right to practice any profession, or to carry on any occupation, trade or business. The term "restriction" means, "to restrain by prohibition". It also means to regulate the exercise of right under a contract or a statute or the one that may be regulated by conditionalities or subjected to discharge of obligations under the same contract or statute. The tests applicable to determine the reasonableness under article 19(6) are also applicable to a law under article 304(b) (Tika Ramji v. State of Uttar Pradesh AIR 1956 SC 676). In considering the reasonableness of the restrictions, various factors have to be kept in mind. Whether a law totally prohibits the exercise of right? Whether it is necessary in public interest? Whether the restriction amounts to total prohibition? And whether a lesser alternative would have been adequate? These are some of the questions to....
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....en the restrictions and the object of the Act, then a strong presumption in favour of the constitutionality of the Act will naturally arise." (M.R.F. Ltd. v. Inspector Kerala Government [1998] 8 SCC 227). The expression "in the public interest" in article 304(b) and the expression "in the interests of general public" in article 19(6) of the Constitution convey the same meaning. The object of a law to increase its revenue by itself may not be always regarded as the law enacted in public interest. The court has to consider the totality of facts, without giving undue importance to the rival pleadings. But a law levying a tax to compensate the loss of tax by any reason is certainly in public interest. A law which is regulatory or compensatory in nature not being confiscatory is a reasonable restriction even if the business is rendered uneconomical by such tax (Automobile Transport AIR 1962 SC 1406 and Malwa Bus Service (Private) Limited v. State of Punjab [1983] 3 SCC 237; AIR 1983 SC 634). The burden of proving that the restrictions imposed under a law made under article 304(b) are reasonable, that they do not hinder or restrict the free trade and commerce and that there is require....
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....evenue. To achieve the above object, Government have decided to enact, a separate law for the purpose." This would reveal the background, the antecedent state of affairs and the conditions prevalent at the time of proposing the Bill. In addition, it also reveals the evil which the impugned Act seeks to remedy and legislative judgment thereon. In the absence of any material contra, on these aspects, our conclusion is as follows: Motor vehicles were being purchased at low tax in the neighbouring States and used in the State of Andhra Pradesh. Since the sales took place outside the States, proper tax could not be realized as a result of which the State has been losing revenue. So as to plug the leakage of revenue and arrest tax evasion, the Legislature chose to levy entry tax on motor vehicles exempting those vehicles which suffer tax under the local Sales Tax Act. The law thus is enacted only "to arrest tax evasion" and "mainly meant to plug the leakage of revenue". There can therefore be no doubt that the impugned Act levies entry tax to prevent revenue loss to the State by reason of the motor vehicles being purchased in the neighbouring States at the low tax. In so far as the ve....
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....AIR 1961 SC 232 and Automobile Transport AIR 1962 SC 1406. Koteswar Vittal Kamath [1969] 1 SCC 255; AIR 1969 SC 504 arose out of a civil suit instituted by the appellant for recovery of damages for breach of contract in respect of goods sold by him to the respondents therein. The suit was opposed relying on a State order prohibiting forward contracts in vegetable oils. A question arose whether the said prohibitory order which virtually prevented the free movement of goods during inter-State trade violated article 304(b) of the Constitution. The apex court found that Government order prohibiting forward contract directly affects "commercial transaction relating to an essential article", and such a law without complying with the requirements of the proviso to article 304(b) would be void. The relevant observations are as follows: "The first point that was urged by learned counsel for the appellant was that section 3 of the Act 5 of 1950, did not require compliance with the proviso, because it was not a piece of legislation for purposes of clause (b) of article 304; but we are unable to see any force in this submission. It is enough to refer to clause (f) of section 3(2) which i....
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.... duties of a modem Legislature to utilise the measures of taxation introduced by it for the purpose of achieving maximum social good and one has to trust the wisdom of the Legislature in this regard. Unless the fiscal law in question is manifestly discriminatory the court should refrain from striking it down on the ground of discrimination. These are some of the broad principles laid down by this court in several of its decisions. . ." Harihar Prasad Debuka [1989] 73 STC 353 (SC); [1982] 2 SCC 192; AIR 1989 SC 1119 is the case wherein the Patna High Court quashed the Bihar Government's notification as violating articles 301 and 304 of the Constitution. The notification issued under section 31(2a) of the Bihar Finance Act, 1981 prescribed two forms in which a person transporting goods shall have to carry a declaration that the goods transported suffered tax at the place of origin of the goods. The plea of the respondent therein, that it would effect inter-State trade and commerce, found favour in the High Court. The Supreme Court reversed. Reiterating that regulatory measures cannot be regarded as violative of article 301, it was held that, "the reasonableness (of regulatory ....
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.... vehicles in the neighbouring States. If a State for valid reasons enacts the law for levy of entry tax to plug the revenue loss, it is not a restriction which directly or immediately impacts inter-State trade. Therefore, article 304(b) is not at all attracted. Further, as we have already held when once a law is justified under article 304(a), the question of testing such law on the anvil of article 304(b) would not arise. When the impugned levy is not a restriction, the question of obtaining the prior sanction of President does not arise nor it can be invalidated on that ground. On this point, therefore, we hold in favour of the State. Compensatory tax? It is now well accepted that compensatory taxes do not impinge article 301 of the Constitution. Such tax is not a restriction contemplated by article 301 and, therefore, there is no requirement of a law for levying compensatory tax to be compliant with the proviso to article 304(b). The CCT, in the counter-affidavit filed earlier in point of time, specifically raised the plea that the impugned levy is compensatory in nature intended to defray the expenditure of local bodies incurred for providing, maintaining infrastructural ....
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.... 145 STC 544 (SC); [2006] 7 SCC 241; AIR 2006 SC 2550). Here, we may quote following pertinent observations from Jindal Stainless Ltd. [2006] 145 STC 544 (SC); [2006] 7 SCC 241; AIR 2006 SC 2550 (pages 572 and 573 in 145 STC): "To sum up, the basis of every levy is the controlling factor. In the case of 'a tax', the levy is a part of common burden based on the principle of ability or capacity to pay. In the case of 'a fee', the basis is the special benefit to the payer (individual as such) based on the principle of equivalence. When the tax is imposed as a part of regulation or as a part of regulatory measure, its basis shifts from the concept of 'burden' to the concept of measurable/quantifiable benefit and then it becomes 'a compensatory tax' and its payment is then not for revenue but as reimbursement/recompense to the service/facility provider. It is then a tax on recompense. Compensatory tax is by nature hybrid but it is more closer to fees than to tax as both fees and compensatory taxes are based on the principle of equivalence and on the basis of reimbursement/recompense. If the impugned law chooses an activity like trade and commerce as th....
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.... is only such provision of the facilities within the State that would attract more traders from other States to dispatch the goods. The infrastructure facilities within the local area are the real attraction for more flow of goods from other States. It all needs substantial allocation of funds. The present levy of entry tax is therefore totally compensatory and regulatory in nature. It is therefore submitted that these submissions are sufficient to negative the plea of the petitioners as regards the Constitutional validity of Entry Tax Act on the grounds of violation of article 304(b) of the Constitution of India." The CCT has not placed any material before this court to justify the stand. The burden of proof has not been discharged much less an attempt has been made. Therefore, the plea of the State that the impugned Act levies compensatory tax is rejected. Part VI After completion of the arguments, Sri S. Dwaraknath, counsel appearing for some of the petitioners placed a compilation of eighteen decisions of various High Courts. In all these decisions, the respective State enactments levying tax on entry of goods into local areas were declared ultra vires. The Senior Stan....
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....e Court in Shaktikumar M. Sancheti [1995] 96 STC 659 (SC); [1995] 1 SCC 351. Two grounds were urged, viz., that the incidence of tax being on the purchase value of the motor vehicles, it was in nature of purchase tax and that it is violative of article 286 because it is in addition to the tax levied and collected as octroi by a local authority. Both these grounds did not find favour with the apex court. After noticing the objects and reasons of the Maharashtra Act, the Supreme Court observed that, "the charge is on the entry of vehicle into local area for use or sale and not on its purchase", that it cannot be invalidated merely because the measure of tax is purchase value and that when the Legislature intended to avoid any loss of legitimate sales tax revenue by the State, the same is not invalid. In Eagle Corporation Pvt. Ltd. v. State of Gujarat [2007] 6 VST 560 (Guj), a Division Bench of the Gujarat High Court examined the vires of the Gujarat Tax on Entry of Specified Goods into Local Areas Act, 2001 (Gujarat Act) with reference to articles 301 and 304 of the Constitution. The State defended legislation as levying non-discriminatory tax immune from the vice of unconstitutio....
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....ed (Cement Division) v. State of Arunachal Pradesh [2009] 22 VST 310 (Gauhati), the Gauhati High Court refused to uphold the constitutional validity of the Assam Entry Tax Act, 2001 and the Arunachal Pradesh Goods Tax Act, 2005, respectively. In Thressiammal Chirayil v. State of Kerala [2007] 7 VST 293 (Ker), ITC Limited v. State of Tamil Nadu [2007] 7 VST 367 (Mad), Bharat Earth Movers Ltd. v. State of Karnataka [2007] 8 VST 69 (Karn), L & T Case Equipment Pvt. Limited v. State of Karnataka [2010] 27 VST 447 (Karn), Indian Oil Corporation Limited v. State of Uttar Pradesh [2007] 10 VST 282 (All), Jindal Strips Limited v. State of Haryana [2008] 12 VST 149 (P&H), R. Gandhi v. State of Tamil Nadu [2008] 13 VST 390 (Mad), National Aluminium Company Limited v. State of Orissa [2008] 15 VST 296 (Orissa), Dinesh Pouches Ltd. v. State of Rajasthan [2008] 16 VST 387 (Raj) and Indian Oil Corporation Limited v. State of Haryana [2009] 21 VST 10 (P&H), the High Courts considered the vires of the respective State enactments levying tax on entry of goods into local areas. In all these cases, it was held that the levy violates article 301 and that not being a compensatory tax, it is not save....
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....otification in the Official Gazette but not exceeding the rates prescribed for motor vehicles in the Schedules appended to the Bombay Sales Tax Act, or fifteen paise in the rupee whichever is less: Provided that, no tax shall be levied and collected in respect of a motor vehicle which was registered in any Union Territory or any other State under the Motor Vehicles Act, 1939, for a period of fifteen months or more before the date on which it is registered in the State under that Act. (2) The tax shall be payable and paid by an importer within 15 days from the entry of motor vehicle into the local area or before an application is made for registration of the vehicle under the Motor Vehicles Act, 1988, whichever is earlier in the manner laid down under section 10 of this Act. (3) Omitted here as not relevant.) The Andhra Pradesh Tax on Entry of Motor Vehicles Into Local Areas Act, 1996 3. Levy of tax.-(1) Subject to the provisions of this Act, there shall be levied and collected tax on the entry of any motor vehicle into any local area for use or sale therein which is liable for registration in the State under the Motor Vehicles Act, 1988. The tax levied shall be at such rate or r....
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.... of the effort of the petitioners' counsel-do not feel compelled to countenance the contention. The legislations enacted by two independent States in exercise of the same constitutional power with reference to the same legislative entries, are different. But, a decision of the Supreme Court upholding the vires of any one of the two legislations is certainly a binding precedent specially when the two legislations are in pari materia. In other words, if there is a decision of the Supreme Court on the constitutional validity with reference to the legislative powers and legislative entries, the same is binding while dealing with a legislation of another State, if it is in pari materia with the law upheld by the apex court. Any attempt to ignore the decision of the Supreme Court on the plea that a particular issue was not raised or a point was not urged or a question was not considered, would be futile. In Ballabhadas Mathurdas Lakhani v. Municipal Committee, Malkapur [1970] 2 SCC 267; AIR 1970 SC 1002, the Municipality of Malkapur in State of Maharashtra levied certain tax on the appellant. The same was successfully challenged in a suit filed for permanent injunction restraining....
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....at forms the ratio and not any particular word or sentence. . . . A judgment of the court has to be read in the context of questions which arose for consideration in the case in which the judgment was delivered . . . The law which will be binding under article 141 would, therefore, extend to all observations of points raised and decided by the court in a given case . . . The decision in a judgment of the Supreme Court cannot be assailed on the ground that certain aspects were not considered or the relevant provisions were not brought to the notice of the court". Our conclusion that a decision of the Supreme Court in relation to a State legislation which is in pari materia, is binding on the High Court in a subsequent case derives support from the observations of the Supreme Court in Sudesh Kumar v. State of Uttarakhand [2008] 3 SCC 111; AIR 2008 SC 1120. Therein, the interpretation of section 6 of the Probation of Offenders Act, 1958 was involved. The appellant in that case was convicted for an offence under section 392 read with section 34 of the Indian Penal Code, 1860 and sentenced to five years rigorous imprisonment. The High Court confirmed the conviction and sentence. Befo....
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....o be a decision on interpretation of section 6 of the Act. Section 6 of the Act would apply to the accused who is under 21 years of age on the date of imposition of punishment by the trial court and not on the date of commission of the offence. If on the date of the order of conviction and sentence by the trial court the accused is below 21 years of age the provisions of section 6 of the Act applies in full force." The submission that the question of the effect of articles 301 and 304 was not adverted to in Shaktikumar M. Sancheti [1995] 96 STC 659 (SC); [1995] 1 SCC 351 may not be fully correct. In the very first paragraph of the judgment, the Supreme Court summed up various submissions made before the Nagpur Bench in Jaika Automobiles [1994] 92 STC 248 (Bom) and focused attention only on two questions to which we have already made reference supra. From this an inference can be drawn that the appellants did not specifically press the argument based on articles 301 read with article 304 and therefore, the view of Nagpur Bench on the question which was specifically considered as issue (c) stands affirmed. Even otherwise as held by the Supreme Court in B.M. Lakhani [1970] 2 SCC 26....
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....unsel would submit that the notification is not issued under section 3 of the impugned Act and, therefore, levy and collection of entry tax on motor vehicles at the rates fixed by the notification issued under section 12 is invalid and unconstitutional. This submission ought not to detain us long, nor we feel compelled to take serious note of it. It is axiomatic that if authority is conferred under the Act, while exercising such power if the provision is not specifically mentioned or a reference is made to a wrong provision of law in the Act, the same does not lead to an inference that there is an improper exercise of power nor mention of wrong provision invalidates or vitiates the exercise of power. The same is also true when something has to be done by issuing a notification under law. The precedents are galore. We may refer to some of them. In Pournami Oil Mills v. State of Kerala [1987] 65 STC 1 (SC); [1986] (Supp) SCC 728, the Government of Kerala issued notifications exempting small-scale industries set up after April 1, 1989 from the payment of sales tax for a period of five years from the date of commencement of production. Notifications were purportedly issued in exerci....
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.... Nadu Cinemas (Regulation) Rules, 1957 instead of section 11 of the parent Act. The appellant therein was owner of touring talkies, which was granted exemption in 1988 under section 11. After expiry of the period of exemption, he again applied. In the meanwhile, rule 14 was amended imposing certain restrictions for grant of licences to permanent touring cinemas. As a result of which the appellant's touring cinema could not have been operated as per restrictions under the Regulations. Therefore, the Government granted exemption to the appellant from the operation of rule 14. The learned single judge dismissed the respondent's writ petition but the order was reversed by the Division Bench holding the exemption as illegal. The Supreme Court, however, reversed, reiterating that, "if an authority has a power under the law merely because while exercising that power the source of power is not specifically referred to or a reference is made to a wrong provision of law, that by itself does not vitiate the exercise of power so long as the power does exist and can be traced to a source available in law." In Kedar Shashikant Deshpande v. Bhor Municipal Council [2011] 2 SCC 654, it w....
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....d be entitled to claim refund. PART VIII Nature of the vehicles The petitioners purchased excavators (which allegedly move either on99 wheels or iron chain plates), wheel loaders, JCBs, truck mounted chain run hydraulic excavators, crawter driller, rear dumpers, road rollers, compactors, etc. All of them would contend that the various construction/mining equipment is machinery and do not fall within the definition of "motor vehicles" as defined under section 2(28) of the MV Act. They would, therefore, contend that they are not exigible to tax under the impugned Act. The State opposes relying on Bose Abraham [2001] 121 STC 614 (SC); [2001] 3 SCC 157; AIR 2001 SC 835 . When a motor vehicle can be said to enter "for use" and when such motor vehicle is liable for registration? The consideration of this issue needs reference to the MV Act, Central Motor Vehicles Rules, 1989 ("the CMV Rules", for brevity), A.P. Motor Vehicles Rules, 1989 ("the APMV Rules", for brevity) and MV Taxation Act As per section 2(j) of the Act, "motor vehicle" means "a motor vehicle asioo defined in clause (28) of section 2 of the MV Act". The charging section levies tax on the entry of any motor veh....
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.... the State". Section 3(2) thereof stipulates either life tax or periodical tax. When a vehicle can be said to be "used or kept for use"? Sections 39 to 65 in Chapter IV of the MV Act deal with registration of motor vehicles. A perusal of these provisions and rules 33 to 61 of the MV Rules as well as rules 79 to 129 of the APMV Rules would reveal the position as follows. A owner of a motor vehicle shall not ply it in any public place or in any other place unless a vehicle is registered by registering authority in whose jurisdiction the owner has residence or in place of business where the vehicle is normally kept. In cases where motor vehicle is registered in another State but is kept or used in Andhra Pradesh for a period exceeding thirty days, as per rule 96 of the APMV Rules, the owner shall send the intimation to registering authority. If the owner intends so, he has to obtain a new registration in Andhra Pradesh, within a period of twelve months. A question arose whether the registration or re-registration of a motor vehicle in the State is relevant for the purpose of levying tax under the MV Taxation Act. The apex court held that a motor vehicle cannot escape liability to tax ....
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....hich is incidental to the main off-highway function and for a short duration at a speed not exceeding 50 kms per hour, but such vehicle does not include other purely off-highway construction equipment vehicles designed and adopted for use in any enclosed premises, factory or mine other than road network, not equipped to travel on public roads on their own power." The law regulates the manufacturing of construction equipment and their movement from place to place on the roads. Every manufacturer of construction equipment is required to submit the prototype of equipment/ vehicle manufactured and while on the roads, the movement is regulated by rule 126B and rule 108A of the Central Motor Vehicles Rules, 1989, respectively. These vehicles are also required to comply with the emission standards and the rules. We are only making a passing reference to these rules to show that under the MV Act itself various types of construction equipment are subjected to regulatory controls by appropriate authorities. These regulations are intended to keep the public safe. This has also some bearing when we consider the submissions of the counsel in the light of various precedents referred to infra.....
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....777; AIR 1975 SC 17 was relied to hold that dumpers and rockers are vehicles adapted or suitable for use on the roads, and therefore, motor vehicles. It is necessary to excerpt the following observations from the said judgment: ". . . which indicate prominently one factor that these dumpers run on tyres, in marked contrast to chain plates like caterpillars or military tanks. By the use of rubber tyres it is evident that they have been adapted for use on roads, which means they are suitable for being used on public roads. The mere fact that they are required at places to run at a particular speed is not to detract from the position otherwise clear that they are adapted for use on roads. The very nature of these vehicles make it clear that they are not manufactured or adapted for use only in factories or enclosed premises. The mere fact that the dumpers or rockers as suggested are heavy and cannot move on the roads without damaging them is not to say that they are not suitable for use on roads. The word 'adapted' in the provision was read as 'suitable' in Bolani Ores case [1974] 2 SCC 777; AIR 1975 SC 17 by interpretation on the strength of the language in entry 57....
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....ds "adapted for use upon roads" have to be interpreted as "is suitable or fit for use on the roads". It was further noticed that the excavators and road rollers are fitted with four rubber tyres, that move from one place to another, that they are required to be registered and obtain certificate of road worthiness under the MV Act and, therefore, they are suitable for being used on the roads. It is apt to extract the following passage from the judgment: "The excavator loader mounted on four wheels is mobile digging and loading machines. It is suitable to move from one place to another. This vehicle is fitted with four rubber tyres. It is capable of being driven at a speed of 30 kms., per hour. It is provided with brakes and parking brakes as in the case of any other vehicles. It has a steering system, road lights, direction indicators, rear view mirror, front screen viper, horns, etc. The above provisions make it suitable for being used on the roads. Any reasonable person looking at these vehicles could think that the plying of the vehicles on the road would be one of the normal uses of the vehicles. Therefore, accepting the decision of the Division Bench we find that the excavat....
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....h tyres and wheel loaders. This third category of vehicles are purchased by the petitioners in W.P. Nos. 12455 of 2005, 23253 of 2007, 1564 of 2009, and 6231, 6713, 6864, 15012 of 2010. In these matters, a submission is made across the Bar that though they are fitted with tyres, they are used in the factory or enclosed premises and come within the exclusionary part of section 2(28) of the MV Act. As we have opined supra, there is a serious disputed question of fact regarding the nature of these vehicles and/or regarding their user. As was held in Bose Abraham [2001] 121 STC 614 (SC); [2001] 3 SCC 157; AIR 2001 SC 835 , "the question whether any motor vehicle has entered into local area to attract tax under the Entry Tax Act will have to be dealt with in the course of assessment under the Act". Such an enquiry, in our considered opinion, would also take in its fold the physical verification, if necessary, with the assistance of an expert in the field to know whether the vehicle is a motor vehicle for the purpose of levying entry tax under the Act. Any order of the assessing officer would, of course, be subject to appeal under section 13 of the impugned Act. In all these cases the....