TaxTMI 
TaxTMI 
2021 (7) TMI 329
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....r" and therefore the product is covered under Entry-5[ii] of the Notification dated 30.03.2002 in No.FD.11.CET.2002[I] [hereinafter referred to as 'Notification dated 30.03.2002'] and amended by the subsequent Notification dated 01.10.2013 in No. FD.208.CSL.2013[III] [hereinafter referred to as 'the amended Notification dated 1.10.2013']. Consequentially, the first respondent has also opined that the petitioner will be liable to pay entry tax at the rate of 5% on the entry into the local area for consumption, use or sale therein. The petitioner has further challenged the consequential Rectification Orders dated 17.08.2020 [Annexures-L, L1 and L2] under Sections 17[5], 5-B and 20-B of the KTEG Act for the taxable periods 2014-15, 2015-16 and 2016-17 levying entry tax at the rate of 5% and penalty with interest as per the computation mentioned in these Rectification Orders. The petitioner has also sought for declaration that the unmanufactured tobacco imported by the petitioner in paper pouches do not fall under Entry-5[ii] of the Notification dated 30.03.2002 as amended by the amendment notification dated 01.10.2013 and therefore not subject to entry tax. 2. The Government by Notif....
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....cation with the first respondent under Section 12(7) of the KTEG Act and the proceedings must be kept in abeyance until the disposal of such application. The petitioner also filed representations for deferring the scheduled personal hearing. 4. The second respondent issued the Endorsement dated 18.01.2020 stating the authorities could initiate proceedings under Section 17(5) of the KTEG Act for rectifying the apparent mistake in treating the unmanufactured tobacco as "Non assessable". The assessment proceedings were concluded by order dated 12.04.2019 subject to reopening of assessment based on the final judgment in WP No. 55380-81/2013, and the failure to mention the provision as section 17(5) of the KTEG Act in the proposition notice dated 17.12.2019 was an inadvertent error, and such notice must be noted as initiated under sections 17(5), 5-B and 20-B of the KTEG Act. 5. The petitioner, after the Endorsement dated 18.01.2020 submitted another representation dated 22.01.2020 detailing its objections inter alia as to the initiation of the proceedings under section 17(5) of the KTEG Act, and requesting for deferring finalisation of the rectification proceedings until the clarific....
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....s as under: "16.5 There is no evidence on record to show that anything is added to the product and it is only tobacco leaves powder which is packed. The label in the packet also shows the contents as "unmanufactured tobacco". In the absence of any evidence to the contrary, it may be held that the product is "unmanufactured tobacco" going by the applicant's contention as recorded in the judgment of the Hon'ble High Court of Karnataka in the case of the applicant." 9. Further, there is no dispute about the manner in which the unmanufactured tobacco is packed and received by the petitioner. The unmanufactured tobacco, which is beaten and sieved, are packed in retail paper pouches with each such pouch containing about 16 gms, and 20 of these retail paper pouches are packed in wholesale packs of coarse glued paper packets. These wholesale packs will have to be, even as described on the wholesale packs, cut open using scissors. The wholesale packs, 40 in number, are put in a high density polyethylene bag, and such polyethylene bags are stitched. The petitioner has received the unmanufactured tobacco so packed at its place of business in Antharasanahalli, Tumkur i.e. within the local ar....
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....tion order dated 29.06.2020 (Annexure-F) reads as under: "18. The instant case is verified in the background of the above judgments and it is found that the applicant is using a paper cover as container and puts the unmanufactured tobacco into it. He folds the paper cover in such a fashion that the contents do not spill. Later he pastes a label containing the brand name and other contents on the paper fold. Further, it is seen that these individual packets are put into bulk containers which consists of 10 pouches and on the container, it is clearly seen that the same needs to be cut to access the contents. It is clear that the contents can be accessed only after breaking open the containers by cutting the cover and tearing of the label and hence should be treated as "in sealed containers". It should also be noted that the applicant is bringing the goods in bulk containers which needs to be cut open to access the smaller packets. The applicant is actually causing the entry of goods i.e. unmanufactured tobacco in such sealed containers." 14. Sri. K P Kumar, the learned Senior Counsel who appears for the petitioner, submits that the first respondent has erred in issuing the impugne....
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....le of the KTEG Act into a local area nor for the consumption, use or sale of such goods can be ignored. 16. Sri. K. P. Kumar further submits that because of these twin requirements, though it is generally understood that for Octroi/entry tax the taxable event is the entry of goods into a local area, given the provisions of section 3(1) of the KTEG Act and Entry 5 (ii) of the Notification dated 30.03.2002 as amended by the amendment Notification dated 01.10.2013, the test to apply is the nature and type of the container at the point of consumption, use or sale. For these purposes, if only the nature and type of the container at the point of entry into the local area is considered, the nature of the goods and the nature of the container at the point of consumption, use or sale (the second condition) is ignored, and this would be in violation of the statutory provisions. 17. In continuation of these submissions, Sri K. P. Kumar submits that the first respondent has erred in reading the decision of the Hon'ble Supreme Court in Balakrishna Hatcheries v. Clarification and Advance Ruling Authority supra. This decision is an authority for the proposition that it cannot be said that a con....
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....ss that the taxable event for the imposition of tax under the KTEG Act is the entry of the goods into the local area and the nature and type of the goods at the point of entry is the relevant factor in determining the tax and not how the goods are used thereafter. 20. Sri. Hema Kumar elaborates that this proposition should also apply on deciding the taxability of unmanufactured tobacco brought into a local area, and only because unmanufactured tobacco in a sealed container becomes taxable in terms of Entry 5 (ii) of the Notification dated 30.03.2002/ amendment Notification dated 01.10.2013, it would not be permissible in law, by an erroneous reading of the settled proposition, to shift the taxable event. The acceptance of the argument on behalf the petitioner would tantamount to shifting the taxable event to the petitioner's advantage contrary to the settled proposition. 21. Sri. Hema Kumar further submits that in the present case there cannot be any dispute that at the point of entry into local area, the unmanufactured tobacco was in sealed container inasmuch as the unmanufactured tobacco is packed in wholesale packs indicating weight and MRP thereof, and these wholesale packs a....
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....cere, non dare), and for that purpose, the provisions in the statutes, even in tax statutes, when they are plain and unambiguous must be applied as they stand to give true effect to the intendment of the legislature, a proposition expounded by the Constitutional Bench in Commissioner of Customs (import), Mumbai vs Dilip Kumar and Company and others (2018) 9 SCC 1. The Hon'ble Supreme Court had held as follows: "21. The well settled principle is that when the words in a statute are clear, plain and unambiguous and only one meaning can be inferred, the courts are bound to give effect to the said meaning irrespective of consequences. If the words in the statute are plain and unambiguous it becomes necessary to expound those words in their natural and ordinary sense. The words used declare the intention of the legislature. 22. In Kanai Lal Sur v. Paramnidhi Sadhukhan, it was held that if the words used are capable of one construction only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such construction is more consistent with the alleged object and policy of the Act." 26. The definition of certain important expressions a....
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....local area by a person other than a dealer, the dealer who takes delivery of the goods from such person shall be deemed to have brought or caused to have brought the goods into the local area. (3) Notwithstanding anything contained in sub-section (1) or subsection (2), no tax shall be levied on and collected from a dealer who brings or causes to be brought into a local area any goods,- (i) in respect of which tax has been paid or has become payable in any other local area under subsection (1), or (ii) other than Gutkha] in respect of which tax has been paid or has become payable under section 4- B of the Karnataka Tax on Luxuries Act, 1979 (Karnataka Act 22 of 1979). (4) The provisions of sub-sections (3) shall not apply unless the dealer preferring claim under the said subsection furnishes to the assessing authority declaration in the prescribed from [issued] by the dealer who is liable to pay tax on such goods under this Act or the stockiest who is liable to pay tax on such goods under the Karnataka Tax on Luxuries Act, 1979 (Karnataka Act 22 of 1979), as the case may be.] (4A) Notwithstanding anything contained in sub-sections (2) and (3), where a dealer purchases any ....
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....e or sale in such local area. The legislature imposes liability to pay entry tax, under all circumstances, on a "registered dealer" or dealer liable to get himself registered under the Act. Even when the goods are taken delivery of on its entry into local area or being brought into a local area by a person other than a dealer, the dealer who takes delivery of the goods from such person is made liable by deeming that such dealer has caused the entry of goods into the local area. All the references are qua the registered dealer (or dealer liable to be registered or the dealer) and the point of entry into the local area, and there is no reference to point of sale in section 3 of the KTEG Act. The place of business is defined to be the place where dealer is doing business and the value of goods is the purchase price at which the dealer purchases the goods. There is no reference to retail price or retail place of business. Thus, it is obvious on a plain reading of these provisions that the legislature intended the point of entry into the local area as the taxable event for the purposes of levy of entry tax and not the point of sale. If the intendment of the legislature, as is obvious fr....
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....ection 3 (1) of the KTEG Act. Question No. 2: 30. Sri K. P. Kumar, submits that under section 17(5) of the KTEG Act, an assessment or reassessment order can be rectified, but subject to certain conditions mentioned therein, when such orders are found to be erroneous i.e., prejudicial to the interest of the public revenue by a judgment or an order of a court notwithstanding anything contained in the KTEG Act. However, in the present case the impugned rectification orders dated 17.08.2020 (Annexure is-L, L1 and L2) have been issued because of the clarification order as per Annexure-F issued by the second respondent in exercise of the jurisdiction under section 12(7) of the KTEG Act. As such, these impugned rectification orders are without jurisdiction. 31. On the other hand, Sri Hema Kumar submits that in the assessment order under section 5(3) of the KTEG Act, the manufactured tobacco brought into the local area in sealed container, which would attract entry tax at the rate of 5% because of the notification dated 30.03.2002 and the amendment Notification dated 01.10.2013, was declared as "Non-assessable" as this Court had granted interim order staying the operation of the amendme....