1988 (12) TMI 325 - HC - VAT and Sales Tax

Summary

Issues:
Petitions under article 226 to strike down amendments in the Entry Tax Act and claim exemption from entry tax on pulses sold outside the State or in inter-State trade/commerce. Retrospective effect of amendments challenged. Interpretation of provisions in the Entry Tax Act and Central Sales Tax Act regarding taxation on pulses. Validity of amendments in the Entry Tax Act exceeding tax limit under the Central Act. Challenge against reopening assessments under the State Sales Tax Act post-amendments.

Analysis:
The petitions sought to invalidate amendments in the Entry Tax Act by Madhya Pradesh Act No. 33 of 1981, claiming exemption from entry tax on pulses sold outside the State or in inter-State trade/commerce. The amendments were challenged due to their retrospective effect, affecting the taxation incidence under the Entry Tax Act. The amendments omitted crucial provisions linking the Entry Tax Act with the Sales Tax Act, aiming to counter a previous court decision. The petitioners argued that retrospective application would hinder their ability to recover taxes from buyers for past transactions.

The court rejected this argument, citing the Supreme Court's decision in Hira Lal Rattan Lal v. Sales Tax Officer, which upheld the retrospective levy of sales tax. The court clarified that the tax under the Entry Tax Act is on the entry of goods into a local area, not on the sale of goods, thus justifying the retrospective amendments. The contention that the tax could not be passed on to consumers was deemed irrelevant.

Another issue raised was the classification of pulses as declared goods under the Central Sales Tax Act, and the contention that whole and split pulses constituted a single commodity under section 15(d) of the Central Act. The court dismissed this argument, emphasizing that the tax under the Entry Tax Act pertains to the entry of goods, not the sale. The court referenced a previous decision to highlight that the conversion of goods within a local area affects their tax status, denying the petitioners' claim for exemption on whole pulses converted to split pulses.

In one of the petitions, a challenge was made against the reopening of assessments under the State Sales Tax Act post-amendments. The court found no valid reason to prevent the reassessment in light of the amendments to the Entry Tax Act. Ultimately, all petitions were dismissed, upholding the validity of the amendments and denying the claims for exemption from entry tax on pulses. The petitioners were not awarded costs, and any security deposits were ordered to be refunded.