1994 (10) TMI 272 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of provisions of the M.P. Entry Tax Act, 1976 regarding the liability of purchasing dealers to pay entry tax on goods purchased from registered dealers in another local area.

Analysis:

The High Court of Madhya Pradesh was tasked with deciding whether entry tax is leviable on purchases of goods listed in Schedule II of the M.P. Entry Tax Act, 1976, made by dealers from another local area. The Board of Revenue referred the question of law to the Court for interpretation. The case involved three assessees who purchased pulses from registered dealers in a different local area but contested their obligation to pay entry tax under the Entry Tax Act.

The crux of the matter was the interpretation of Section 3(1)(a), (b) of the Entry Tax Act, which stipulates the levy of entry tax on goods entering a local area for consumption, use, or sale. The provision exempts the purchasing dealer from paying entry tax if the selling dealer has already paid the tax. Furthermore, Section 7 of the Act imposes obligations on registered dealers to issue statements in bills or invoices when selling goods to other dealers, specifying if entry tax has been paid on local goods.

The Court held that while a penalty may be imposed on a selling dealer for not making the required statement, the purchasing dealer cannot evade liability for entry tax on goods brought into a local area if the selling dealer has not paid the tax. The Court emphasized that the provisions of the Act do not absolve the purchasing dealer from their responsibility to pay entry tax on such goods.

Ultimately, the Court ruled against the assessees, stating that the Board was not justified in holding that entry tax is not leviable on purchases of goods from a registered dealer in a different local area when such goods are local goods. The decision favored the department, and each party was directed to bear their own costs as the assessee was not represented in Court.

In conclusion, the judgment clarified the obligations of purchasing dealers under the M.P. Entry Tax Act, emphasizing that the failure of a selling dealer to make the necessary declaration does not exempt the purchasing dealer from paying entry tax on goods brought into a local area.