TaxTMI 
TaxTMI 
2016 (8) TMI 299
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.... are not liable to the levy of entry tax, and the levy and assessment thereof by the Maharashtra Tax on the Entry of Goods into Local Areas Act, 2002 (for short "The Maharashtra Entry Tax Act, 2002) is ultra vires the Constitution of India, being beyond the legislative competence of the State of Maharashtra. 3. We shall advert to the provisions of The Maharashtra Entry Tax Act, which are challenged in these proceedings, a little later. First, we shall briefly make a reference to the facts. 4. The writ petition is filed by the Tata Power Company Limited and its Head Corporate (Legal) who is also a shareholder of the company against the State of Maharashtra and the Commissioner of Sales Tax, Maharashtra State. It is contended that the 2nd respondent-Commissioner appointed under Section 10 of the Maharashtra Value Added Tax Act, 2002 (for short "MVAT Act") is responsible for administering the Maharashtra Entry Tax Act and reference is made in that regard to section 6 of the Maharashtra Tax Act, 2002. 5. The 3rd respondent is a Tribunal, which, though functional under the then Bombay Sales Tax Act, 1959 and its successor enactment MVAT Act, is also a Tribunal empowered to hear....
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....he levy of entry tax on furnace oil has been removed retrospectively, nothing survives in these Special Leave Petitions. The Special Leave Petitions are accordingly dismissed as infructuous. We, however, clarify that the impugned order of the High Court shall not be used as precedent in any other matter." 9. It is the case of the petitioners that, after this order of the Hon'ble Supreme Court, it was expected that the respondents would not proceed to levy the entry tax. However, the 2nd respondent in the writ petition and his subordinates passed orders of assessment for the financial years 2005-2006 and 2008-2009. The petitioners had, in writing, objected to this exercise by bringing to the notice of the 2nd respondent the order of the Hon'ble Supreme Court of India declaring the levy as being without jurisdiction, unauthorized and unconstitutional. Annexures C and C1 are copies of the letters. 10. It is the case of the petitioners that one of the objections to the assessment was of a time bar or limitation. In that regard, the attention of respondent No.2 was invited to Rule 8 of the Maharashtra Tax on the Entry of Goods into Local Areas Rules, 2002 (for short "Maharashtr....
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.... on 13th March 2014, rejecting the respective appeals and confirming the levy of entry tax as well as interest and penalty. Annexures-O and O-1 are copies of these orders dated 13th March 2014. Aggrieved by these orders, two second appeals, registered as Entry Tax Appeals Nos.6 and 7 of 2014, were preferred before the Tribunal. The copies of these appeals is Annexure-P collectively. The petitioners received the judgment dated 16th April 2015, delivered by the Tribunal. Aggrieved by these orders, the Petitioners filed the present writ petition. Since objections were raised to the maintainability of the writ petition on the ground that there is an alternative and equally efficacious remedy of appeal to this Court, the connected appeals have been filed. 12. The Memo of this writ petition was amended and to enable the amendment to be carried out, ad-interim orders passed by this Court on 7th May 2015, were directed to be continued. The amendment to the writ petition was carried out on 13th October 2015. The petitioners raised legal contentions. Paragraphs 9(a), 9(b), 9(c), 9(d), 9(e) and 9(f) of the writ petition read as under : "9a) Petitioners submit that the definition of the ....
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....icantly lower sulphur content than locally available low sulphur heavy stock. Even internationally low sulphur waxy residue is scarcely available from selected sources like Singapore, Indonesia and Malaysia. The Petitioners therefore submit that the goods imported from outside the country were not covered by the scope of the Act. 9f) Petitioners submit that the State legislature was not competent to levy the entry tax on Low Sulphur fuel oil and Low Sulphur Waxy Residue imported from abroad by the Petitioners. Such a levy therefore is without jurisdiction, bad, illegal, unconstitutional and ultra vires the Constitution." 13. These are the pleadings based on which the petitioners claim the declaration summarised above, together with the relief of quashing and setting aside of the assessment orders and the appellate orders. 14. An affidavit-in-reply to this writ petition is filed by the Additional Commissioner of Sales Tax. In this affidavit, apart from the preliminary objections on merits it is contended that in justifying taxing a transaction of the nature involved in this case, the respondents rely upon Entry 52 of List II of the VIIth Schedule to the Constitution of Indi....
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....VAT Act, which also provides for limitation for completing the assessment. The present periods being from 1st April 2005 to 31st March 2006 and 1st April 2008 to 31st March 2009, in terms of section 23 (3A) the assessment would have had to be completed on or before 30th June 2013 for the year 2005-2006, and, as per the third proviso to section 23(2), on or before 30th June 2013 for the financial year 2008-2009. In paragraph 13 of the Affidavit in Reply it is urged that Rule 8 of the Maharashtra Entry Tax Rules, 2002 would not apply as the Act will prevail over the Rules. In any event, once the assessment has been done by the officers in accordance with the provisions of the MVAT Act, the provisions thereof, including the powers conferred thereunder, would govern the assessments in question. Therefore, there is no substance in the contention that the assessments are time-barred. 17. It is then urged that the challenge based on violation of Article 286 cannot be sustained. Article 286 provides for prohibition for levy of sales tax. It has nothing to do with entry tax. Reliance is placed on a judgment of the Orissa High Court in the case of Tata Steel Limited vs. State of Odisha. A....
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....bmitted that the Legislature is fully empowered to alter or change the basis of the judgment of this Court. In other words, the law on which the judgment of this Court is based can always be amended. That would alter the basis of the judgment. This is not a case of the Legislature overruling a binding judgment of this Court; rather, this is a case of alteration of the basis on which this Court delivered its judgment. That is always a permissible Constitutional exercise. On that count, the levy cannot be declared as unconstitutional. The levy cannot be said to be discriminatory or arbitrary either. No reliance can be placed on the Articles in the Constitution of India relating to the levy of sales tax. It is in these circumstances, and when it is not shown that Articles 269, 286 and 301 have been violated, that the writ petition must fail and should be dismissed. 20. Petitioner No.2 has filed an Affidavit in Rejoinder. Apart from reiterating the averments in the petition, what has been attempted is to invite this Court's attention to Article 246(3) read with Article 286. It is also urged that apart from these Articles, the deponent of the Affidavit in Reply ignores sections 4 and....
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....The petitioners then rely upon Entry 52 of List II of the VIIth Schedule to submit that the levy thereunder will have necessarily to be for awarding specific services to the persons on whom tax is sought to be levied. In the present case, the State is admitting that the levy is noncompensatory. Therefore, the Tribunal should have taken this stand of the State to its logical conclusion and set aside the demand in toto. It is the petitioners' case that expert opinions would demonstrate that the raw material imported from abroad cannot be subjected to entry tax. That is not covered by the wording of the schedule entries. It is in these circumstances that the rejoinder affidavit asserts that there is an attempt to mislead this Court. The entries in the Schedule cannot be misread and misinterpreted. The judgments relied upon by the State and the respondents are of no avail. For these reasons it is submitted that the writ petition be allowed. 23. It is on this material that we must note the submissions of the learned senior counsel appearing for the petitioners. Mr. R.A. Dada, learned senior counsel, would submit that the entire levy is unconstitutional being ultra vires Articles 286,....
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....ercise of power: when the stated period ends, so does the power to assess. Once that is the legal position, then falling on section 23 of the MVAT Act would not save the bar of limitation. In other words, the period of limitation under the MVAT Act would not be the governing one, but the specific stipulation in Rule 8 must, therefore, hold the field. If that is applied for the two assessment years and the date of assessment, then the same was clearly time-barred. On the ground of limitation alone, the petition must succeed. 27. Then Mr. Dada brought in the plea of applicability of the Maharashtra Entry Tax Act and submits that the said Act does not apply to goods imported from out of the country; meaning thereby, imported goods brought in India cannot be subjected to entry tax. If the charging section is looked at very carefully, then the act of import from outside the State is not covered by the enactment in question. In the circumstances, once the petitioners are consuming the subject imported goods as raw materials, then those are out of the purview of the Maharashtra Entry Tax Act. Even if these imported goods are consumed within the local areas, yet their having been brough....
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....ion and the relevant specifications of the Bureau of Indian Standards. The complaint is that none of the contentions of the petitioners have been dealt with by the First Appellate Authority. Therefore, the orders passed by that authority and the Tribunal are assailed and challenged. It is urged that the Revenue relied on Entry No.13 of the schedule before the Tribunal and that has been accepted. However Entry 13 relied upon by the Tribunal reads as "Petroleum Fuel Oil including (a) heavy furnace oil and (b) residue furnace oil". This Entry was deemed to be in force from inception of the Act but till 31st March 2005. Even the revival by the amendment as per section 5 of The Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2007 would denote that, in August 2007, the Act reintroduced Entry 13 retrospectively, but it did so only for the period upto 31st March 2005. This is stated expressly in the Amendment Act itself. Hence the amendment is not relevant to the present period. Even Entry 12 in force for the period post 1st April 2005, covers "Furnace oil (including heavy furnace oil and residual furnace oil)." Now this is erroneously relied upon because the wording of Entry 13....
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....it can be saved only by taking recourse to Article 304. The requirement thereof is not admittedly satisfied. Further, the impugned levy is discriminatory. The Act cannot be saved by reading the impugned provisions thereof together with the MVAT Act. That would not enable this Court to hold that the same is Constitutional. Additionally it is submitted that if a levy is held to be non-discriminatory and thus meets Article 304(a), still it must satisfy the requirements of Article 304(b) as well. For all these reasons, it is submitted that the impugned levy must be declared as unconstitutional and ultra vires the abovenoted provisions or Articles of the Constitution of India. 31. In support of his contentions, Mr. Dada has placed reliance on a number of judgments and which can be taken in the order of his submissions as follows: 1) Father William Fernandex v State of Kerala. (1999) 115 STC 591 (Ker) 2) Primus Imaging Pvt. Ltd. V State of Assam. (2007) 9 VST 528 (Gau.) 3) Batliboi & Co. v. State of Maharashtra. (1981) 47 STC 321 (Bom) 4) Indian Oil Corporation v State of Bihar. (2007) 10 VST 140 (Pat) 5) Banarasi Devi v Income Tax Officer. AIR 2964 SC 1742 6) Diwan ....
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....essing the tax was created by the Legislature under the Maharashtra Entry Tax Act. According to Mr. Sonpal, it would not be a correct and proper reading of the provisions of the Maharashtra Entry Tax Act. Chapter II of the Maharashtra Tax Act is titled "Registration, Levy of Tax and Establishment of Check Posts." Sections 3, 4 and 5 fall therein. Then comes Chapter III which is titled "Tax Authorities, Returns, Assessment, Payments, Recovery and Refund of Tax, Appeals and Review and Revisions." Therein appears section 6. The sub-sections of section 6 would have to be regard together with other provisions of the Act and harmoniously. So read, they would reveal that if there is any separate provision for assessing authorities, returns, assessments, payments recovery and refund of tax and other aspects dealt with by Chapter III, then those would apply, else the whole regime under the MVAT Act touching the above subjects and aspects would govern the proceedings under the Maharashtra Entry Tax Act. If one reads sub-section (1) of section 6 carefully, it would be clear that assessment will have to be done as per the procedure prescribed by the MVAT Act. That Act is specifically referred ....
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....d submit that sub-clause (iv) in section 42 of the Bombay Sales Tax Act, 1979, was inserted retrospectively. It was deemed to have been added with effect from 1st October 2002 by Maharashtra Act No. 13 of 2004 dated 29th June 2004. He then submits that by Maharashtra Act No.XXXII of 2006, the entire Schedule was substituted retrospectively with effect from 1st April 2005. By Maharashtra Act No.XXV of 2007, the Schedule was revived with effect from 1st April 2005 to 31st March 2006. There was a modification of Entry No.13 of the Schedule to the Maharashtra Entry Tax Act. Mr. Sonpal submits that the goods brought by the petitioners were covered and entry tax was leviable thereon with effect from 1st April 2005. In fact, at all material points of time, the petitioners' goods were covered by this Schedule. In any event, the dispute about the goods not falling within the Schedule cannot be a "substantial question of law". It is a mixed question and, therefore, the challenge in that regard cannot be entertained. 36. Mr. Sonpal then relied upon the language of the Maharashtra Entry Tax Act to submit that the legal challenge also has no basis. He would submit that what this Court is dea....
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..... He also relies upon the provisos to sub-section (5) of section 3 in that regard. 37. Mr. Sonpal would submit that the words and expressions used but not defined in the Maharashtra Entry Tax Act but defined in the Maharashtra Value Added Tax Act or Maharashtra Value Added Tax Rules must have the meanings respectively assigned to them under that Act or the Rules. However, Mr. Sonpal would submit that the term "Assessing Authority" is defined in section 2(a). The words "Entry of goods" is also defined, and that would with all grammatical and cognate expressions, mean entry into a local area from any place outside the State for consumption, use or sale therein. Mr. Sonpal submits that the term "import" is defined in section 2(f) to mean bringing or causing to be brought or receiving any goods into a local area from a place outside the State, and the term "importer" is defined accordingly in clause (g) to section 2. The term "local area" is also defined, as also the terms "Schedule", "State", "Tax" and the term "Value Added Tax Act". It is in these circumstances that Mr. Sonpal would submit that there is no qualification or restriction, and goods coming from any part of the world o....
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....ntry Tax on low sulphur fuel oil and low sulphur waxy residue is directly in conflict with Central Sales Tax Act 1956 is not sustainable inasmuch as both levies are under different entries of List II of VIIth Schedule. Item 52 pertains to the Entry Tax and Item 54 pertains to the Sales Tax, and both operate in different and independent fields. The reference to Articles 245(1), 251 and 254 is misconceived and misplaced. 45. The revival of Entry 13 to the old schedule prior to 31st March 20005, i.e., from 1st October 2002 to 31st March 2005 is a validating provision due to retrospective insertion of in section 42 in the BST Act 1959. From 1st April 2005, the new schedule was substituted retrospectively from that date, where Entry 12 covers the products of the appellants, and which reads as "Furnace oil including heavy Furnace oil and residual Furnace oil". 46. So far as concerns the ground that the first proviso to section 3(1) of the Entry Tax Act, which provides for a tax ceiling at the rate prescribed in local sales tax law, means the MVAT Act 2002, it is submitted that the tax on such products is in accordance with residual Entry E-1 at 12.5%, and the Assessing Officer has ....
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....the Maharashtra Entry Tax Act must be decided on the touchstone of the MVAT Act. Mr. Sonpal has, in consonance with the affidavit filed in reply to the petition, prayed that the writ petition be dismissed. 50. For properly appreciating the rival contentions, we will have to refer to the Maharashtra Tax on the Entry of Goods into Local Areas Act, 2002. That Act was enacted by the State legislature to provide for levy and collection of tax on entry of certain goods into the local areas in the State of Maharashtra and for the matters connected therewith or incidental thereto. Chapter I of the Act contains preliminary provisions. Section 2 therein contains the definitions, some of which are very relevant for our purpose and are reproduced hereinbelow: "2. Definitions:- (1) In this Act, unless the context otherwise requires,- (a) ..... (b) "entry of goods", with all its grammatical variations and cognate expressions means entry of goods into a local area from any place outside the State, for consumption, use or sale therein; (c) "General Sales Tax Act" means any Sales Tax Law in force in any State which provides for the levy of taxes on the sale or purch....
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....) ..... (j) ..... (k) ..... (l) "State" means the State of Maharashtra; (m) "tax" means the tax payable under this Act; (m-1) "Value Added Tax Act" means the Maharashtra Value Added Tax Act, 2002 and includes the Maharashtra Value Added Tax Rules, 2005; 51. Chapter II of this Act contains the charging section. It is titled as Levy of Tax. Section 3 thereof requires reproduction and is reproduced hereinbelow: "3. Levy of tax:- (1) There shall be levied and collected a tax on the entry of the goods specified in column (2) of the Schedule, into any local area for consumption, use or sale therein, at the rates respectively specified against each of them in column (3) thereof and different rates may be specified in respect of different goods or different classes of goods or different categories of persons in the local area. The tax shall be levied on the value of the goods as defined in clause (n) of sub-section (1) of section 2. The State Government may, by notification in the Official Gazette, from time to time, add, modify or delete the entries in the said Schedule and on such notification being issued, the Schedule shall stand amend....
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....ch goods in any form or deals with such goods in any other manner except reselling the same, he shall inform the assessing authority before the 25th day of the month, succeeding the month in which such goods are so consumed or dealt with and pay the tax, which would have been otherwise leviable under sub-section (1) or (2). Provided further that, a sale in the course of inter-State trade or commerce or resale in the State shall not include a sale to which clause (b) of section 3 or, as the case may be, sub-section (2) of section 6 of the Central Sales Tax Act, 1956, (74 of 1956) applies. (6) If any dealer having imported the specified goods, for the ostensible purpose of resale or, as the case maybe, sale, deals with such goods in any other manner or consumes the same and does not inform the assessing authority as provided in sub-section (5) or does not pay the tax as required under sub-section (5) within the specified period, the assessing authority shall assess the amount of tax which the dealer is liable to pay under sub-section (1) or (2) and also levy penalty equal to the amount of tax due. (7) The tax levied and collected under subsections (1) and (2) shall be in add....
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....on of such firm or partition of such family, recovery of tax from third parties, appeals, rectification, review, references, refunds, penalties, charging or payment of interest, inspection of business premises, seizure of documents, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly. (2) All the provisions relating to offences, interest and penalties including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment for an offence under the Value Added Tax Act shall, with necessary modifications, apply in relation to the assessment, review, collection and the enforcement of payment of any tax required to be collected under this Act, or in relation to any process connected with such assessment, review, collection or enforcement of payment as if the tax under this Act was a tax under the Value Added Tax Act." 54. In Chapter IV, Offences and Penalties have been provided for, and by Chapter V miscellaneous provisions are enacted, including conferring power to make rules. The rate Schedule under this Act with effect from 1st April, 2005, insofar as is relevant....
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....ssing Officer noted that the petitioner No.1 is engaged in generation, transmission and distribution of electricity. While verifying the purchases, it was noticed that the petitioner has purchased low sulphur waxy residue and low sulphur furnace oil from outside the State of Maharashtra. These goods are covered by the Maharashtra Entry Tax Act. Hence, to verify the correctness of the returns filed by the petitioners and to verify their tax liability under this Act, a notice was issued and in response to which the petitioners' senior Manager appeared and attended. He handed over a letter dated 20th June 2013, stating that the assessment is timebarred. Then the petitioners relied upon a judgment and order dated 16th January 2004, passed by this Court in Writ Petition No. 429 of 2004 and the order dated 26th October 2004, of the Supreme Court of India to urge that no entry tax is payable on the low sulphur heavy stock / low sulphur waxy residue. The Assessing Officer noted all these contentions and held that after amendment to section 42 of the Bombay Sales Tax Act and Rules 41D, 44D of the Bombay Sales Tax Rules, the judgment of this Court would not be applicable. 59. He referred ....
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.... the petitioners to make payment of entry tax on the imports effected from outside the territory of India. That is how the first writ petition was filed challenging this version. Then, the judgment and order dated 16th January, 2004, delivered in the writ petition is relied upon. We shall advert to this aspect a little later. The petitioners thus submitted that this judgment of the Bombay High Court binds the respondents. The petitioners also relied upon some other judgments to submit that the entry tax cannot be demanded. They tendered further written submissions. They also pointed out that a plain reading of the entries in the Schedule appended to the Act would reveal that none of the items dealt with by the petitioners are covered thereby. No specific Entry was pointed out in relation to the tax demanded from the petitioners. That is how it was submitted that the tax is demanded without any authority of law. It was also urged that low sulphur waxy residue is a different commodity, distinct and separate from heavy or residual furnace oil and so is the position of low sulphur furnace oil. Then, the petitioners relied upon the amendments to the Schedule. It was pointed out that the....
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.... tax. Even if the goods are imported from outside the State, such a levy is contemplated. The assessment orders for both years insofar as the tax part is concerned were not, therefore, interfered with. 63. As far as the ground raised on the bar of limitation, the First Appellate Authority relied on section 6 of the Maharashtra Entry Tax Act in arriving at the conclusion that all the provisions of the MVAT Act mutatis mutandis apply to levy, assessment and collection of entry tax. Once this view is taken and Rule 8 cannot be pressed into service, then, the assessment is not time barred. The First Appellate Authority concluded that there was no difficulty in upholding, therefore, the jurisdiction and authority of the Assessing Officer. 64. Some other contentions were considered and eventually the appeals came to be dismissed. 65. These orders of the First Appellate Authority were appealed in the Tribunal and even before the Tribunal we find that elaborate grounds were taken in the Memo of Appeal and detailed submissions came to be canvassed. 66. The Tribunal, in the impugned order dated 16th April, 2015, concluded that the Division Bench judgment of this Court held that t....
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....e that entry tax can be levied on such goods which crossed customs barriers by invoking the power conferred on the State Legislature vide Entry No.52 of List II of the VII Schedule to the Constitution of India. It held there was no encroachment on the powers of the Parliament. It has also been held by the Tribunal in paragraph 16 that all the goods which come from outside the State are liable to entry tax. The definition of the term "import" will have to be construed accordingly. The Tribunal then referred to all the definitions and the relevant provisions of the Maharashtra Entry Tax Act. It rejected, therefore, the argument of the petitioners that the raw materials imported from abroad do not attract entry tax. 71. On the plea of limitation as well, relying on section 23 of the MVAT Act, the Tribunal proceeded to reject the contentions of the petitioners. Thus, by the impugned order, the Tribunal dismissed both the appeals. 72. For appreciating Mr. Dada's contentions on the controversy being covered substantially by the earlier judgment of this Court, it is necessary to refer to that judgment. The Division Bench judgment deals with the constitutional validity of the Maharas....
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.... the State has gone up considerably. This admission on the part of the State clearly establishes that on introduction of entry tax, the manufacturers have opted to purchase raw materials from within the State, because on account of the tax barrier created by the entry tax, bringing raw materials from outside the State works out to be costlier. In other words, by taxing the goods entering the local areas from outside the State while not taxing the goods entering the local area from within the state, free flow of trade, commerce and intercourse is hampered and, therefore, the entry tax is liable to be declared as unconstitutional. 34. In the present case, refund of sales tax paid on the raw materials used in the manufacture of a final product is a rule and not an exception. Where the State policy is not to tax the raw materials which are used in the manufacture of final products in a local area within the State, then, subjecting the raw materials which enter the local area from outside the State to tax to the exclusion of the raw materials entering the local area from within the State would be arbitrary. Where the raw materials entering the local area from outside the State are on....
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....State was rejected so also the other one by referring to the undisputed factual position that the State Government has been allocating amounts towards State Road Fund even prior to the introduction of entry tax. The levy was thus held to be non-compensatory in nature. That is how in paragraph 36 the conclusion has been reached. Then, in paragraphs 37 and 38 the Division Bench held as under: "37. The decision of the Apex Court in the case of Bihar Chamber of Commerce (supra) not support the contention of the State, because, firstly, in that case, the entry tax was levied to compensate the loss of revenue on cess due to the decision rendered by the Supreme Court and secondly, the Apex Court has held that in that case prior consent of the President was obtained by the State. In the present case, admittedly consent of the President had not been obtained till date. Moreover, in the present case, entry tax is levied and collected at 15% on the footing that the sales tax is levied and collected on similar goods at 15% when in fact the sales tax collected thereon is refunded as per the exemption notification issued under the BST Act and Rules. In other words, by the impugned legislation....
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....e State Legislature provides that the entry tax on a commodity shall not exceed the rate specified for that commodity under the BST Act, it would be open to the court to find out whether, effectively any sales tax is levied on that commodity. In the present case, the furnace oil and low sulphur waxy residue oil entering the local area from within the State do not bear sales tax and therefore, entry tax on those goods when enter the local area from outside the State cannot be levied. On the date on which entry tax was introduced on the goods in question, the general exemption granted on those goods under the BST Act and Rules made thereunder were in existence. Therefore, it cannot be said that the levy of entry tax was to ensure that all goods entering the local area bear either the entry tax or the sales tax. Thus the entry tax on furnace oil and low sulphur waxy residue oil instead of striking a balance, in fact creates imbalance between the imported goods and the local goods and in fact has defeated the very purpose of enacting Entry Tax Act." 74. The Division Bench judgment ends in paragraph 39 with a specific finding that Entry No.13 to the Schedule to the Maharashtra Entry ....
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....ld give relevant particulars. The burden is on the person who impeaches the law as violative of a Constitutional guarantee to show that the particular provision is infirm for all or any of the reasons stated by him. The Hon'ble Supreme Court has held that there is always a presumption in favour of the Constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the Constitutional principles. It must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. It is permissible for the Court to take into consideration matters of common knowledge, matters of common report, the history of the times and the Court may assume every set of facts that can be conceived to be existing at the time of legislation in order to sustain the presumption of constitutionality [See: Gauri Shankar vs. Union of India, (1994) 6 SCC 349 and R.K. Garg vs. Union of India. AIR 1981 SC 2138) Nowadays we have been noticing a growing tendency to file looselydrafted petitions without....
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....t definition we have reproduced above [Section 2(f)]. If the Act of bringing or causing to be brought or receiving any goods into a local area from a place outside the State is understood as an "import" for the purposes of the levy, then this definition together with the definition of the expression "entry of goods" makes it evident that what the petitioners have brought from abroad cannot be said to be left out of the purview of the Act. The Act specifically defines the entry of goods to mean entry into a local area from any place outside the State, for consumption, use or sale therein. That is the incident of tax. If the term "importer" is defined to mean a person who imports any goods, whether on his own account or on account of a principal or any other person, into a local area for consumption, use or sale therein then irrespective of the site of origin, and so long as the place from where they are brought is outside the State of Maharashtra, then that is an "import" for the purposes of the Act, and the person would be covered by the above expressions. It is not a levy on the mere entry of goods into a local area. It is a levy on the entry of goods into a local area from outsid....
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....e bearing a meaning similar to transport, i.e., to go across. The dictionary meaning of the words 'import' and 'export' is not restricted to their derivative meaning but bear other connotations also. According to Webster's International Dictionary the word "import" means to bring in from a foreign or external source; to introduce from without; especially to bring (wares or merchandise) into a place or country from a foreign country in the transactions of commerce; opposed to export. 7. Similarly "export" according to Webster's International Dictionary means "to carry away; to remove; to carry or send abroad especially to foreign countries as merchandise or commodities in the way of commerce; the opposite of import ". The Oxford Dictionary gives a similar meaning to both these words. 8. The word "transit" in the Oxford Dictionary means the action or fact of passing across or through; passage or journey from one place or point to another; the passage or carriage of persons or goods from one place to another ; it also means to pass across or through (something) to traverse, to cross. Even according to the ordinary meaning of the words which is relied upon by the respondent, good....
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....erms of the section by mere construction so as to include within its operation goods which are in transit and are being transported across the jurisdictional limits of the Municipality. 34. The Federal Court in 1947 FCR. 17: (AIR 1947 FC 14) (S) considered the meaning of the word " terminal" in a case which was brought from Lahore. There the Municipality of Lahore imposed a terminal tax in 1926 calculated on the gross weight Of Consignments or per tail as the case might be, at the rates and on the articles specified in the schedule, imported into the Municipality by rail or by road. By a notification of 1938 the Municipality in supersession of that tax imposed a new tax called "Octroi (without refund)" which was to be similarly calculated on the gross weightage of the consignments imported into the limits of the Municipality. This in turn was replaced by the imposition of a new tax also called "Octroi (without refund)" on consignments imported into the limits of the Municipality. The appellant's contention in that case was that the tax imposed was a " terminal tax " on goods carried by railway and as such not imposable. The Municipality argued on the other hand that it was a tax....
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....at the terminal tax leviable under cl. (o) properly construed must have reference to some activity within the municipal area i.e., the entry for the purpose of remaining within that area or commencement of journey from that area. 36. We are, therefore, of the opinion that the terminal tax under s. 66(1)(o) is not leviable on goods which are in transit and are only carried across the limits of the Municipality, and would therefore allow this appeal, reverse the decision of the Nagpur High Court. The appellant will have its costs in this court and in the High Court. Appeal allowed." (Emphasis added) 83. In allowing the appeal, the Hon'ble Federal Court held that the goods which are in transit and are only carried across the limits of the Municipality would not attract terminal tax. 84. The decision of the Federal Court is throughout considered to be a locus classicus and a landmark decision. 85. Following it and applying it even to cases of octroi or entry tax, the Hon'ble Supreme Court held conclusively that entry tax is a tax on the entry of goods into any local area for consumption, use or sale therein. So long as the levy is of this nature it is wholly irrelevan....
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.... or escape from the local levy of entry tax. 86. In the case of Burmah Shell Oil Storage and Distributing Company of India Ltd. Belgaum vs. Belgaum Borough Municipality, Belgaum, AIR 1963 SC 906 the Hon'ble Supreme Court was considering a situation where Burmah Shell, was dealing in petrol and petroleum products manufactured in its refineries situate outside the octroi limits of Belgaum Municipality, brought these products inside that area either for use or consumption by itself or for sale generally to its dealers or licencees who, in turn, sold them to others. The company also sold these products directly. The company had a Divisional Office and Depot in Belgaum and filed a writ petition in the High Court of Mysore seeking a writ of mandamus to prohibit the Municipality from charging octroi on its products brought inside the octroi limits for sale. Though the Supreme Court noted the division into four separate categories of the act of bringing in the goods, eventually it was dealing with the controversy as to whether the levy was attracted or not. It reproduced both the Schedules in the Government of India Act, 1935 and the Constitution of India, namely Entry 52 of List II of ....
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....ughs Act, therefore, was prior to the Government of India Act, 1935. Under section 80A (3) (a) of the Government of India Act, the Governor General-in-Council had framed rules; on December 16, 1920, which were known as the Scheduled-tax Rules. Schedule II of these Rules (1) A. I.R. 1958 Bom, 43. dealt with taxes for the benefit of Local Authorities and included : 7. Octroi 8. A terminal tax on goods imported into, or exported from a local area, save where such tax is first imposed in a local area in which octroi was not levied on or before 6th July,1917. (Entry No. 8 quoted above was substituted by dated January 24, 1924, for an entry which read formerly "'A terminal tax on goods imported into a local area in which an octroi was levied on or before July 6, 1917".) 14. The particular tax was 'octroi' and there was no description of the tax. The word 'octroi' comes from the word 'octroyer' which means "to grant' and in its original use meant 'an impost' or 'a toll' or (a town duty' on goods brought into a town. At first octrois were collected at ports but being highly productive, towns began to collect them by creating octroi limits. They came to be known as 'town duties'., ....
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....ption." 87. It is contended before us that this decision was dealing with a different controversy concerning consumption of goods within the Municipal limits. It was urged that the consumption could be beyond the Municipal limits but so long as the sale was within the Municipal limits that attracted the levy and this is the ratio of the judgment. The other discussion on the interpretation of the entries etc will not be of any assistance. 88. We are unable to agree with this argument for the simple reason that even in the later judgments of the Hon'ble Supreme Court of India, Burmah Shell has been followed. In that regard, a useful reference can be made to two decisions of the Hon'ble Supreme Court of India. 89. In the case of Jothi Timber Mart vs. The Corporation of Calicut & Anr. AIR 1970 SC 264 a 3-Judge Bench of the Supreme Court was dealing with validity of levy of timber tax by the Corporation of Calicut on the grounds, inter-alia, that the State Legislature was incompetent to impose that tax under Kerala Act 30 of 1961. The Hon'ble Supreme Court turned down the challenge in the following words: "6. Entry of goods within the local area for consumption, use or sale ....
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....as a dealer in petrol and other petroleum products which it manufactured in its refineries situated out-side the octroi limits of Belgaum Municipality. It brought these products inside that area either for use or consumption by itself or for sale generally to its dealers and licensees who in their turn sold them to others. According to the Company the goods brought by it within the octroi limits could be divided into four categories as follows: 1. Goods consumed by the Company; 2. Goods sold by the Company through its dealers or by itself and consumed within the octroi limits by persons other than the Company; 3. Goods sold by the Company through its dealers or by itself inside the octroi limits to other persons but consumed by them outside the octroi limits; and 4. Goods sent by the Company from its Depot inside the octroi limits to extra-municipal points where they are bought and consumed by persons other than the company. This Court examined the scheme of taxation under the Act and the rules and the bye-laws made by the Municipality for the levy of octroi. It also took note of the fact that the words "use or sale" were substituted for the words "or use" by Bombay ....
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....was the same provided the goods were sold in the local area to a consumer who bought them for the purpose of use or consumption or even for resale to others for the purpose of use or consumption by them in the area. It was only when the goods were reexported out of the area that the tax could not legitimately be levied......" This Court categorically held that the Company was liable to pay octroi on goods brought into the local area (a) to be consumed by itself or sold by it to consumers direct, and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal area irrespective of whether such consumers bought them for use in the area or outside it, but it was "not liable to octroi in respect of goods which it brought into the local area and which were re- exported." 5. The law on the subject matter of the present controversy has thus been laid down quite clearly in the Burmah Shell's case (supra) and the present case squarely falls to be governed by it. We are also in agreement with that interpretation of the law. It may be mentioned that the learned counsel have not been able to advance any new argument justifying a reconsideration of the decisi....
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.... and X after having received the goods at Delhi re-books or reloads the same on a transport for Chandigarh in the name of Y, terminal tax would be leviable by the Corporation at Delhi because the goods in the first instance was Delhi and that by itself would attract the imposition of terminal tax. The fact that X rebooks them to Chandigarh would not make any difference because the act of rebooking by X at Delhi would constitute a fresh transaction by which the goods after having been carried into Delhi are further exported to Chandigarh. On the other hand, when there is one continuous journey of the goods from Patna to Chandigarh without any break, the final destination would be halted in Delhi for the purpose of unloading, sorting and reloading and may have to be kept in Delhi for a reasonable time. In such a case terminal tax would not be exigible." 93. Then, in the case of Kunwar Ram Nath & Ors. vs. The Municipal Board, Pilbhit, AIR 1983 SC 930 a two-Judge Bench of the Supreme Court of India was considering a challenge to a complaint instituted under section 155 of the U.P. Municipalities Act, 1916. This complaint was filed by the Municipal Board of Pilbhit. It alleged that t....
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.... India Act, 1935 which read as '58. Terminal taxes on goods or passengers carried by railway or air; taxes on railway fares and freights' and of entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 which read as '49. Cesses on the entry of goods into a local area for consumption, use or sale therein'. The facts in that case were these: The Lahore Municipality had in the year 1926 imposed under its then existing power of taxation a tax called terminal tax calculated on the gross weight of consignments or per tail as the case might be at the rates and on the specified articles or animals, specified in the Schedule to the notification imposing the levy, imported into its municipal limits by rail or by road. This was superseded by a notification issued in the year 1938 by which the municipality gave notice of the imposition of a new tax called 'octroi (without refunds)' which was to be calculated on the gross weight of consignments and on animals per tail at the rates and on the articles specified in the Schedule to the relevant notification imported into its limits. This notification was superseded by a further notification of the year 1940 by which a tax c....
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....islation over roads and internal waterways and transport thereon (entry No. 18), it should therefore be deduced that all taxation on rail and air borne goods must be imposed, if at all, under the powers conferred by entry No. 58 of List 1 and that powers of taxation conferred by entry No. 49 of List II must be confined to goods that enter by road or internal waterway only. We cannot accept this argument. It is not in our judgment justified by the wording of the various entries in the two Lists and would impose a limitation on local taxation under entry No. 49, in List II, which would often work most inequitably in practice between those importing goods by road or waterway and those who could import by rail or air. In our judgment there is no limitation to be implied in entry No. 49 List II, in regard to the manner in which goods may be transported into a local area. It follows that so far as rail borne goods are concerned the same goods may well be subjected to taxation under entry No. 58 of List I as well as to local taxation under entry No. 49 of List II. The grounds of taxation under the two entries are as indicated above, radically different, and there is no case for suggesting....
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....ble to entries 23 and 66 of List II of the Seventh Schedule to the Constitution having regard to the object and the scheme of that Act and the purpose for which the cess collected under it was to be used. There is no doubt that in entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 the expression 'cesses' is used in the sense of 'taxes'. In entry 52 of List II of the Seventh Schedule to the Constitution, the expression 'taxes' is substituted in the place of the expression 'cesses' which was in the former entry 49 in the Government of India Act, 1935 but the nature and content of the legislative power under both are the same. The decision of the Federal Court in the case of the Punjab Flour and General Mills Co. Ltd. (supra) itself shows that a cess levied in exercise of the power under entry 49 of List II of the Seventh Schedule to the Government of India Act, 1935 was a tax irrespective of any refund allowed or not allowed by the Government as can be seen from the following observation made by the Federal Court at page 26 of the Report: "We can see no cause whatsoever for holding that if cesses are imposed in pursuance of the powers conferred ....
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.... the contract and passed on to the buyer at the depot of IOC at Jullundhar or at the dealers outlets and after considering the submissions made and the pleadings of the parties held that the property in the goods passed on to the dealers as and when the goods were laden in the tank lorries and that the sale was complete at the depot of the IOC and that it did not take place at the respective places of business of the dealers and as such octroi duty was rightly levied and demanded. 7. The High Court after extracting the provisions of section 113 of the Municipal Act and Entry 52 of List II of the VII schedule, which read thus: "113. Levy of octroi.- Except as hereinafter provided, the Corporation shall levy octroi on articles and animals imported into the city, at such rates as may be specified by the Government". Entry 52 of List II provides: "Taxes on the entry of goods into the local area for consumption, use or sale therein." Opined that the words and phrases employed in section 113 of the Municipal Act were of wide content and general connotation and since the power of the state Legislature are circumscribed by List II of schedule VII the state Legislature could ....
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.... List II of Schedule VII. In fairness to the learned counsel for the appellant, it must be recorded, that the finding the High court regarding vires of section 113 of the Municipal Act was not seriously questioned before us. 10. There is no dispute before us on the legal issue, namely, that no octroi is leviable on the goods re-exported by the IOC from its depot inside the octroi limits to outside such limits to its dealers where those goods are meant 'for use, consumption or sale' by the consumers outside the octroi limits. ... ... ... ... 18. In Burmah-shell oil storage and Distributing Co. of India Ltd., Belgaum. v. Belgaum Borough Municipality, Belgaum, AIR 1963 SC 906 a somewhat similar question arose. A Constitution Bench of this Court held that the company which dealt with petroleum products was liable to pay octroi tax on goods brought into the local area (a) to be consumed by itself or sold by it to consumers and (b) for sale to dealers who in their turn sold the goods to consumers within the municipal limits irrespective of whither such consumers brought him for use in the area or outside it but that the company was " not liable to octroi in respect of goods which i....
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....t where it was consumed or used.." 20. The Court then referred to the finding of the High court that the Municipal Corporation had no jurisdiction levy octroi on the goods so exported and accorded its approval of that finding. It upheld the order of the High court restraining the Municipal Corporation to levy octroi on goods reexported by IOC to its dealers or agents for the use of ultimate user outside the octroi limits of Municipal Corporation." 95. Having understood the controversy in the above terms, we think that so long as the import for consumption, use or sale within the local area attracts the levy, it is immaterial whether the goods originally arrived from outside the country or from another state within the country. The expression "any place outside the State" must, therefore, receive an interpretation consistent with the object and purpose of the Act. The levy being on entry of certain goods into local areas in the State of Maharashtra for consumption, use or sale therein, we have no hesitation in concluding that the first submission of Mr. Dada has no merit. In the case at hand, the imported raw material was brought in by the petitioners for consumption within th....
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....se or sale therein". This provision came up for consideration in Burmah Shell case (supra). Two of the categories of transactions which were considered in this case related to transactions under which (1) goods were sold by the Company through its dealers or by itself and consumed within the octroi limits by persons other than the Company and (2) goods sold by the Company through its dealers or by itself inside the octroi limits to other persons but consumed by them outside the octroi limits. The Company contended that the tax could not be collected on goods which were merely sold but not consumed inside the octroi limits. In connection with this contention this Court considered the meaning of words "consumption, use or sale therein" and observed (at pp. 911-12 of AIR): "It is not the immediate person who brings the goods into a local area who must consume them him-self, the act of consumption may be postponed or may be performed by someone else but so long as the goods have been brought into the local area for consumption in that sense, no matter by whom, they satisfy the requirements of the Boroughs Act and octroi is payable". " ..... The goods must be regarded ....
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.... which was referred to in the Judgment under appeal. It was held in this case also that where a dealer imports goods within the octroi limits not for ultimate consumption or sale for consumption within the limits but for the purpose of export and obtain permission for export he is not liable to pay octroi on such goods notwithstanding that in the larger sense for purposes of export he sells the goods within the octroi limits, that is to say even where the situs of the sale could be fixed within the octroi limit. The matter is now put beyond any pale of doubt by the latest decision of this Court in Municipal Council, Jodhpur v. M/s. Parekh Automobiles Ltd. & Ors., (1990) 1 SCC 367. Rule 13 (4) of the Rajasthan Municipal Octroi Rules, 1962 which was one of the provisions considered in this case provided that: "In cases provided for in sub-rule (3) (that is who is given the account current facility) amount of octroi duty payable shall be based on the total amount of the octroi as shown by the entry passes less the total amount of goods transported outside the municipal limits as shown by the transport passes: Provided that in computing the octroi duty payable under s....
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....pplication concluded that the sale in question had taken place in the State of Maharashtra. It was, therefore, a sale within the State of Maharashtra and falls under section 2(28). The matter was carried in appeal before the Tribunal and that appeal was dismissed. At the instance of the dealer, the Tribunal referred a question formulated by the Division Bench at page 323 of the report. 99. It is in that context that we must notice the reliance placed by Mr. Dada on paragraph 7 of this decision. The argument there noted was that a State in India cannot levy sales tax on sales in the course of inter-State trade or commerce, sales outside the State and sales in the course of import or export. Reliance was placed on Article 286 of the Constitution of India and other constitutional stipulations. The Division Bench clarified that it is not concerned in this case with the Central Sales Tax Act and what we have noted from this decision and the paragraphs relied upon that no assistance can be derived by the petitioners before us by these observations. They cannot be read out of context. The Division Bench clarified that the State Government would have no power to levy sales tax when the ....
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....r that the entry tax and imposition of that nature violates the mandate of Article 286 of the Constitution of India. After reproducing Article 286, the Division Bench held that the said Article refers to levy of sales tax. That is a distinct levy and the limitations in that Article will not be of any assistance and on that score the entry tax cannot be struck down. In paragraph 12 this specific contention was negatived. The constitutional entries have been referred and it has been held that entry tax is referable to item 52 of List II of Schedule VII and which levy is not covered by the limitations under Article 286 of the Constitution of India. Yet, the Division Bench held that in cases of goods brought from abroad, their entry into local areas is outside the scope of the Act and the Entry Tax Act is only confined to those goods brought from outside the State. Thus, the goods brought from outside the borders of the country are not covered by the levy. 107. With greatest respect to the Division Bench of the Kerala High Court, we are unable to agree. Having held that Article 286 cannot be pressed into service, then all that was required was presence of words of restriction or lim....
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....in paragraph 13 of the judgment. 110. The petitioners before us have relied upon only the observations at page 83, para 60 to urge that the introduction of the goods imported from other countries in the definition of "Entry of Goods" was bad both for its retrospectivity and for want of previous sanction by the President. This argument has been upheld but, with great respect, we do not find anything in this judgment which would indicate that the said High Court opined in any manner that an Entry Tax Act despite a wide definition of the term "Entry of Goods" would not cover goods imported from abroad. The Division Bench judgment of the Patna High Court, therefore, does not carry the point any further. 111. In the compilation Volume IV, additional cases are referred on this very point. In the case of Central Coal Fields Limited vs. State of Jharkhand, (2007) 6 Value Added and Service Tax Cases 614 the Jharkhand High Court was considering an identical argument as was noted by the Patna High Court, but we do not find anything in paragraphs 27, 28 and 29 of this judgment which would enable us to hold that the definitions of the above noted term or expression can be interpreted othe....
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....own the levy. The purpose of the levy will not assist us in holding that the entry tax on goods imported from abroad is not leviable. 114. Similarly we cannot refer to any legislative practice of other States regarding levy of entry tax. We are concerned here with the levy of entry tax by the competent legislature, namely, the Maharashtra Legislative Assembly and the implementation of the said enactment by the Maharashtra State. We do not think that any legislative practice can be of such assistance as would enable us to hold that the levy in the present case is unconstitutional. 115. Then the argument is that the second proviso to section 3 of the Maharashtra Entry Tax Act conclusively establishes the requirement of entry only from another State or Union Territory in India and not entry on goods imported from abroad. 116. We have, with the assistance of the learned senior counsel, perused section 3 and the proviso thereto carefully. Section 3 sub-section (1) sets out the levy of tax. The levy and collection is on the entry of goods specified in column 2 of the Schedule into any local area for consumption, use or sale therein at the rates respectively specified against eac....
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....a) of the phrase "outside the State" is presumed to be the sense in which the Legislature of the State of Maharashtra has subsequently employed the very same expression in the present Act. For the reasons which are already assigned hereinabove and for distinguishing Batliboi (supra), we do not find any substance in this contention. The paragraph which Mr. Dada reads from Batliboi's judgment cannot be read in isolation and totally out of context. The observations therein must be read in the backdrop of the essential factual controversy. Batliboi lost the matter. Batliboi's contentions have been rejected. It was held categorically in Batliboi's case that a sale which is inside one State is deemed to be outside all other States. In observing thus and rejecting the contention based on applicability of the Central Sales Tax Act,1956, and particularly section 4 thereof that the observations relied upon by Mr. Dada have been made. Once the context is understood and the levy, then, the judgment is clearly distinguishable. This contention need not detain us any further. For these reasons, we do not see that any word of doubtful meaning or interpretation has fallen for interpretation before ....
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....e 301 reads as under : "301. Freedom of trade, commerce and intercourse.-Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free." 120. A bare perusal thereof would indicate that subject to the other provisions of this Part, namely Part XIII, trade, commerce and intercourse throughout the territory of India shall be free. 121. This, therefore, enables imposition of restrictions on this freedom enunciated in Article 301. Articles 303 and 304 read as under : "303. Restrictions on the legislative powers of the Union and of the State with regard to trade and commerce.- (1) Notwithstanding anything in article 302, neither Parliament nor the Legislature of a State shall have power to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. (2) Nothing in clause (1) shall prevent Parliament from making any law giving, or authorising the giving of, any preference or making, or authori....
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....ictions on the freedom envisaged by Article 301 as may be required in the public interest. However, proviso to Article 304(b) states that this shall not be permissible unless previous sanction of the President is obtained. 123. When the freedom guaranteed by Article 301 is impeded or interfered with and when can the mandate thereof be held to be violated has been a subject matter of several decisions rendered by the Hon'ble Supreme Court of India. In a three-Judge Bench decision in the case of reported in The State of Kerala vs. A.B. Abdul Kadir & Ors. AIR 1970 SC 1912 the parameters required to be satisfied and only then can the Court inquire into the question have been succinctly laid down. Paragraphs 6, 7 and 8 of the decision are relevant for our purpose. They are reproduced hereinbelow: "6. It is necessary at this stage to set out the relevant Articles in Part XIII of the Constitution as it stood at the material time: "Article 301: Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free. Article 302: "Parliament may by law impose such restrictions on the freedom of t....
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....and immediately restrict trade that would fall within the purview of Article 301. The argument that all taxes should be governed by Article 301 whether or not their impact on trade is immediate or mediate, direct or remote, adopts, in our opinion, an extreme approach which cannot be upheld. If the said argument is accepted it would mean, for instance, that even a legislative enactment prescribing the minimum wages to industrial employees may fall under Part XIII because in an economic sense an additional wage bill may indirectly affect trade or commerce. We are, therefore, satisfied that in determining the limits of the width and amplitude of the freedom guaranteed by Article 301 a rational and workable test to apply would be: Does the impugned restriction operate directly or immediately on trade or its movement ?" (1) [1961 1 S.C.R. 809. In the Automobile Transport (Rajasthan) Ltd v. The State of Rajasthan (1963) 1 SCR 491 = (AIR 1962 SC 1406) the view of Gajendragadkar, J., was accepted as correct by the majority of the Judges. The principle was reiterated by this Court in Andhra Sugars Ltd. v. State of Andhra Pradesh AIR 1968 Andh Pra 599. In that case the question which aros....
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....not necessarily be deemed to have been obstructed merely because in a particular State the rate of tax on sales is higher than the rates prevailing in other States. 8. On behalf of the appellant it was contended that the High Court was not right in holding that the ratio of Kalyani Stores case (1966) 1 SCR 865 = (AIR 1966 SC 1686) applied to the present case and, that, Kerala Act 9 of 1964 was violative of Article 301 of the Constitution. The view taken by the High Court was that in the absence of any production of tobacco inside Kerala State it was not competent for the Kerala Legislature to enact the impugned Act under Article 304(a) of the Constitution. In support of this view the High Court relied upon the following passage from the judgment of this Court: "Exercise of the power under Article 304(a) can only be effective if the tax or duty imposed on goods imported from other States and the tax or duty imposed on similar goods manufactured or produced in that State are such that there is no discrimination against imported goods. As no foreign liquor is produced or manufactured in the State of Orissa the power to legislate given by Art. 304 is not available and the r....
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....creates a tax barrier, which affects the free flow of goods from outside Maharashtra into Maharashtra on account of the differential rates. The tax burden that furnace oil would have to bear depending from where it is purchased creates a discrimination between persons similarly placed. That is only by virtue of the fact that the petitioners purchase furnace oil outside Maharashtra. The argument then was that there is a direct 12% to 15% difference in the pricing / cost of production in favour of the person who purchases furnace oil in Maharashtra for manufacture of electricity because of the provisions of section 42 read with Rule 41D of the Bombay Sales Tax Act and Rules. The Division Bench in dealing with all these contentions, as observed above, eventually concluded that the imposition of entry tax on furnace oil and low sulphur waxy residue oil covered under Sr. No. 13 cannot be sustained in law. The Division Bench held that the rate of entry tax on a commodity shall not exceed the rate specified for the commodity under the Bombay Sales Tax Act. The rationale in levying entry tax is to ensure that all goods which enter the local area for consumption, use or sale must bear eithe....
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.... In the additional written submissions tendered, all that is stated is that a tax on entry of goods into a local area is patently in violation of Article 301 and no further burden is required to be discharged by the petitioners. With greatest respect, this understanding of the law is erroneous. None of the judgments that have been referred by the learned senior counsel enable us to conclude that nothing more is required to be pleaded and demonstrated. The understanding of the petitioners appears to be that their forensic burden is discharged by simply demonstrating that there is a tax on entry of goods into a local area. We do not think that this is a correct or proper understanding of the question. Ultimately, if the transport or movement of goods is taxed solely on the basis that the goods are carried or transported, that, in the opinion of the Hon'ble Supreme Court of India directly affects the freedom of trade as contemplated by Article 301. The petitioners have reproduced a part of the judgment in the case of Atiabari Tea Company Limited (supra). We have reproduced the relevant paragraphs of this judgment in their entirety. We do not think that such reliance in bits and pieces....
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....pediment or interference with the freedom granted by Article 301 of the Constitution of India, then that should have been specifically averred and established. If the burden is on the petitioners to prove and establish this fact, then, they have miserably failed to discharge it. We do not think that we should assist them despite such failure on their part. We say nothing more. 128. Two contentions remain to be considered. The first is with regard to the time-bar. 129. We have already reproduced the relevant sections of the statute. The specific case of the respondents is that the proceedings for assessment are governed by section 6 of the Entry Tax Act. However, that section refers to the provisions of the MVAT Act. Those are the applicable provisions. If section 23 of the MVAT Act provides for limitation for completing the assessment, then that would be the governing provision and Rule 8 of the Entry Tax Rules is irrelevant according to the respondents. 130. The choice of the word "irrelevant" may be faulted and criticized. However, the argument appears to be that one must look at the Act and particularly section 6 of the Maharashtra Entry Tax Act to decide the question. ....
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....er the Sales Tax Act. Those authorities have been chosen and they are now empowered to assess, review, collect and enforce payment of tax, including any interest or penalty payable by an importer under the Entry Tax Act. That is on the footing as if the entry tax or interest or penalty payable by the dealer or importer under the Entry Tax Act is a tax or interest or penalty payable under the Maharashtra Value Added Tax Act. If, for this purpose the preexisting authorities can exercise all or any of the powers they have under the Value Added Tax Act and the provisions of that Act, including relating to returns, imposition of a tax liability of a person carrying on the business of the transferee or successor etc. to pay tax have been made applicable including provisions relating to appeals, rectification, review, references, refunds, penalties, then they have to apply accordingly. Equally, all provisions relating to offences, interest and penalties, including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or penalty for the offence under the Value Added Tax Act shall, with necessary modifications, apply in relation to the assess....
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....y succeeding the month for which the return-cum-challan is required to be furnished. Thus, without waiting for this return-cumchallan, the assessment will have to be made in the case of a registered importer by the concerned Assessing Authority. 138. We will have to find out if there is a conflict between the rules and the substantive sections. 139. Section 23 of the Maharashtra Value Added Tax Act, 2002, reads as under: "23. Assessment (1) Where a registered dealer fails to file a return in respect of any period by the prescribed date, the Commissioner may assess the dealer in respect of the said period to the best of his judgment without serving a notice for assessment and without affording an opportunity of being heard: Provided that, if after the assessment order is passed, the dealer submits the return for the period to which the said order relates then, the order passed as aforesaid shall stand cancelled and after such cancellation, the dealer may be assessed in respect of the same period under other provisions of this section: Provided further that, such cancellation shall be without prejudice to any interest or penalty that may be levied in respect of the ....
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.... the year containing the said period. Provided that, in respect of the period commencing on or after the 1st April 2005 and ending on or before the 31st March, 2006, an order of assessment under the respective provisions may be made on or before the 30th June 2013. (4) Where the Commissioner has reason to believe that a dealer is liable to pay in respect of any period, but has failed to apply for registration or has failed to apply for registration within the time as required by or under this Act, the Commissioner may after giving the dealer a reasonable opportunity of being heard, proceed to assess, to the best of his judgment, where necessary, the amount of tax, if any, due from the dealer in respect of that period, and any period or periods subsequent thereto: Provided that, no order of assessment under this sub-section shall be made after the expiry of eight years from the end of the said financial year containing the said period. (5)(a)Where the prescribed authority has reason to believe that the tax has been evaded or sought to be evaded or the tax liability has not been disclosed correctly or excess of set-off has been claimed by any dealer or person in respect o....
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.... tax shall be levied or demanded from such dealer or person, at the time of assessment to tax under the other provisions of this section in respect of the said period or periods relating to such transaction or claim. Provided further that, in case a notice is issued under this sub-section or after the expiry of six years from the end of the year, containing the transaction, or, as the case may be, claim. Explanation.-For the purposes of this subsection, "prescribed authority", the said authority", "such authority and "any authority" shall mean the Commissioner or, as the case may be, the authorities appointed under section 10 and other officers or persons to whom the Commissioner has delegated his powers in this behalf. (6) If the Commissioner is of the opinion that, in respect of any period covered by a return, any turnover of sales or of purchases has not been disclosed, or that tax has been paid at a lesser rate, set-off has been wrongly claimed, or deduction has been wrongly claimed, then, notwithstanding anything contained in the other provisions of this section, the Commissioner may serve a notice in the prescribed form on the dealer and proceed to assess him in resp....
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....s required under the Rules, to file more than one return in different forms prescribed, then, such dealer may be assessed separately for each form of return for the said period. (11) Where a dealer has been assessed under sub-section (2), (3), (4) or, as the case may be, (5) and he makes an application in the prescribed form to the Commissioner within thirty days of the date of service of the assessment order, for cancellation of the assessment on the ground that he had not been able to attend or remain present before the Commissioner at the time of hearing when the assessment order has been passed, the Commissioner shall, after verifying that the contention of the applicant is correct and that the prescribed conditions have been fulfilled, cancel, by order in writing, within three months from the end of the month in which such application is made the said assessment including any penalty or interest levied in relation to or in consequence of the said assessment and shall make a fresh assessment in accordance with the provisions of sub-section (2), (3) (4) or, as the case may be, (5), including levy of interest or penalty, as the case may be: Provided that , only one applicat....
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....or the period 2005-2006 and thereafter filed revised application for refund. To verify the correctness of the claim raised and refund already granted, a notice in Form- 301 was issued to the dealer in response to which the books of account etc. were produced. This is not only a case of an assessment pursuant to any return. What appears from the record is that the application in Form- 501 for the period 2005-2006 was filed and revised application for refund in the same form was filed. The dealer was already granted refund under VRS scheme as per Circular No.37A of 2007 and the date in that regard has been specified at page 87 of the paper-book. The dealer in this case filed these applications and raised the claim which was duly verified and considered. On a scrutiny it was discovered that the dealer purchased low sulphur waxy residue and low sulphur oil from outside the State of Maharashtra. These goods are covered under the Entry Tax Act. To verify the correctness of the returns filed by the dealer and to verify the tax liability of the dealer under the Entry Tax Act, notice for assessment of entry tax in Form-5 was issued on 11th June 2013 and served. In response to that, it was s....
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....cords pertaining to the entry tax; and lastly to show cause why penalty should not be imposed. 145. The order of assessment, however, also refers to the communication / letter from the petitioners, copy of which is at page 83 of the paper-book dated 22nd March 2013. The date of the returns has not been mentioned. What we have noted from a perusal of Chapter III of the Entry Tax Rules is that the return-cum-challan has to be filed in Form No.4. This return-cum-challan / revised return-cumchallan under section 23(4) of the Maharashtra Entry Tax Act has to be filed in quadruplicate and must give all the details. Form No.5 is the form in which notice for assessment has to be given by the Assessing Authority. Section 3(4) of the Maharashtra Entry Tax Act states that the tax levied under sub-section (1) of section 2 shall be payable by the importer in such manner and within such time as may be prescribed. The term 'prescribed' means prescribed by Rules. However, sub-section (3) of section 3 states that any importer who is liable for registration under the Entry Tax Act or Rules made thereunder shall not be liable to pay tax under the Entry Tax Act and any importer who during the cours....
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....ferring to the returns filed, we cannot hold that this was a case of a registered dealer and who has registered himself upon admitting the liability to pay tax, namely, entry tax that we must consider this plea of the bar of limitation. The petition does not aver in specific words that the petitioner registered themselves for the purposes of the Entry Tax Act and that being liable to pay the entry tax, they filed their returns-cum-challans. Thus, returns-cum-challans were to be verified and scrutinized for the purpose of amount of tax due from the petitionerimporter. Since the petitioner no. 1 is a registered importer that rule 8(1)(iii) would be the applicable rule. 146B. In any event, we do not find that it is open to the petitioner to raise the bar of limitation because the notice for assessment under the Entry Tax Act in Form No. 5 to the Entry Tax Rules was issued to the dealer-petitioner on 11th June 2013. A copy of that notice is termed by the petitioner No.1 itself as a show-cause notice. The notice is in Form No. 5 and must refer to the returns-cum-challans filed by the petitioner. However, if the order of assessment is carefully perused and though made in Form No. 9 it....
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....ces, then, we do not think any larger controversy is required to be addressed and decided. Which would be the governing provision and which would prevail and override can be decided in an appropriate case. Meaning thereby, whether Rule 8 can be given a goby as contended by the respondents or whether that cannot be given a go-by because of the language of subsection (1) of section 6 can by decided in an appropriate case. Though we are prima facie construing the language of sub-section (1) of section 6 as above, still, our view was based on only the reading of the section. It cannot be said to be decisive in any manner. Once we approach the controversy in a overall perspective and manner, then we do not think that the issue of time-bar or limitation needs to be decided in this case. 148. We, therefore, do not wish to express any opinion on the rival contentions, particularly on the wider question and controversy. Once we take this view it is not necessary to refer to the decisions relied by the parties. 149. The only surviving contention is whether the Schedule Entry can be invoked so as to levy, assess and recover the entry tax from the petitioners. In that regard the contenti....
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....oncerned, Entry No.12 states 'furnace oil, including heavy furnace oil and residual furnace oil'. That entry has not been touched. Entry No.13 was revived and reenacted by Maharashtra Act No.XXV of 2007 dated 6th August, 2007, with effect from 15th August, 2007. The relevant Amendment Acts are also being referred by the parties. Chapter V to the Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2006, refers to amendments to the Maharashtra Tax on Entry of Goods into Local Areas Act, 2002. As far as the substitution of the Schedule is concerned, it states that for the Schedule appended to the Entry Tax Act the Schedule to this Amendment Act shall be substituted and shall be deemed to have been substituted with effect from 1st April 2005. Entry No.12 there also refers to furnace oil, including heavy furnace oil and residual furnace oil. As far as the Maharashtra Act No.XXV of 2007 is concerned, that is Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2007. That states in Chapter IV by section 5 titled as Revival and Enactment of the Schedule to Maharashtra Act IV of 2003 as it existed on 31st March 2005, that during the period commencing from 1st October 2002 and e....
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.... of it, then whether it is Entry No.12 or 13 should not be a matter of concern for us. The entries in the Schedule could describe the product as furnace oil and include therein heavy furnace oil and residual furnace oil, but to rule out any confusion or doubt even in relation to petroleum fuel oils so long as the description of a particular product or goods is of that category, then it would also include heavy furnace oil and residual furnace oil. In our view, therefore, this is not a controversy which should detain us. 156. We are of the view that the assessment of the petitioners' products as done by the Assessing Authority and the order in that behalf stands confirmed throughout, then that concurrent view on facts cannot be termed as perverse, particularly when we notice the Schedule to the entries therein. Eventually, this is a matter wherein in writ jurisdiction we must not interfere. The view taken by the authorities who are implementing the Act and levying, assessing and recovering the tax should not ordinarily be interfered with. The conclusions assailed must be demonstrated to be palpably erroneous, arbitrary and such as no reasonable person placed in their position wou....