1993 (12) TMI 220 - AT - VAT and Sales Tax

Issues involved:
(a) Taxability of gurakhu under item 41(c) in the Schedule to the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972 (Entry Tax Act).
(b) Legislative competence of the State of West Bengal to impose tax on gurakhu after applicability of sections 10 and 11 of the Tobacco Board Act, 1975.

Issue-wise detailed analysis:

Issue (a): Taxability of Gurakhu under the Entry Tax Act

1. Background and Previous Judgments:
- The applicant, a partnership firm, contends that gurakhu, a tobacco product, is not exigible to sales tax or entry tax. Previous judgments, including the Calcutta High Court's decision in *State of West Bengal v. Gulabchand Harekchand* and *State of West Bengal v. Anil Krishal Paul*, have exempted gurakhu from sales tax and entry tax, recognizing it as a tobacco product.
- The applicant argues that despite these judgments, the Entry Tax Officer has been illegally collecting entry tax on gurakhu since August 5, 1991.

2. Notification and Schedule Inclusion:
- By Notification No. 1805-F.T. dated April 20, 1979, gurakhu was specified in item 41(c) of the Schedule to the Entry Tax Act of 1972. The applicant contends that this inclusion is inappropriate as gurakhu is a tobacco product, not a dentifrice like toothpaste or tooth-powder.

3. Respondents' Argument:
- The respondents argue that the inclusion of gurakhu in the Schedule makes it taxable under the Entry Tax Act, irrespective of its classification as a tobacco product. They assert that the judicial decisions exempting gurakhu from sales tax do not affect its status under the Entry Tax Act.

4. Tribunal's Analysis:
- The Tribunal examined whether gurakhu can be subjected to entry tax following its inclusion in the Schedule on April 20, 1979. It referenced the Supreme Court's decision in *State of Orissa v. Radheshyam Gudakhu Factory*, which recognized gurakhu as a tobacco product.
- The Tribunal noted that the legislative field for entry tax under entry 52 of List II of the Seventh Schedule to the Constitution is distinct from the legislative field of sales tax under entry 54 of the same list. Thus, the Entry Tax Act is not in pari materia with the sales tax laws of the State.

5. Conclusion on Taxability:
- The Tribunal concluded that the inclusion of gurakhu in the Schedule as specified goods makes it subject to entry tax under the Entry Tax Act of 1972. The identity of gurakhu as a tobacco product is irrelevant for its taxability under the Entry Tax Act. The applicant's claim for refund was dismissed as the assessment of entry tax on gurakhu since April 20, 1979, was deemed valid.

Issue (b): Legislative Competence of the State of West Bengal

1. Tobacco Board Act, 1975:
- The applicant argued that the Tobacco Board Act, 1975, which regulates the tobacco industry, precludes the State from imposing entry tax on gurakhu. The Act, a Central legislation, covers the entire field of tobacco, leaving no room for State legislation.

2. Respondents' Argument:
- The respondents contended that the Tobacco Board Act regulates the import and export of tobacco and does not impact the Entry Tax Act of 1972, which is concerned with the entry of specified goods into the Calcutta Metropolitan Area.

3. Tribunal's Analysis:
- The Tribunal noted that the Entry Tax Act of 1972, enacted under entry 52 of List II, is an exclusive State matter. The Tobacco Board Act, 1975, does not interfere with the State's power to levy entry tax on gurakhu. The Tribunal found no repugnancy between the two Acts as they operate in different legislative fields.

4. Conclusion on Legislative Competence:
- The Tribunal concluded that the State of West Bengal has the legislative competence to impose entry tax on gurakhu under the Entry Tax Act of 1972. The tax on gurakhu does not affect the regulation of the tobacco industry by the Tobacco Board Act, 1975.

Final Judgment:
- The application was dismissed. The Tribunal upheld the validity of the entry tax on gurakhu and confirmed the State's legislative competence to impose such a tax. The interim order of injunction was vacated, and no order for costs was made.

← Previous Next →