1994 (8) TMI 278 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutionality of section 3(1)(a) and clause (4) of the proviso of the Entry Tax Act, 1976.
2. Validity of the levy of entry tax on goods brought into the local area of Durg.
3. Interpretation of "entry for consumption, use or sale" under the Entry Tax Act, 1976.
4. Liability of the petitioner to pay entry tax on goods sold to dealers outside the local area of Durg.

Detailed Analysis:

Constitutionality of Section 3(1)(a) and Clause (4) of the Proviso:
The petitioner initially challenged the constitutionality of section 3(1)(a) and clause (4) of the proviso to the Entry Tax Act, 1976. However, this challenge was not pressed by the petitioner during the proceedings. Therefore, the court did not address this issue in detail.

Validity of the Levy of Entry Tax:
The petitioner, a wholesale textile dealer in Durg, contested the levy of entry tax on goods brought into Durg and sold to dealers in Balaghat and Raipur, arguing these goods were not intended for consumption or use within Durg. The court examined the orders (Annexures B to E and G to M) related to the levy of entry tax and the penalties imposed for non-payment.

Interpretation of "Entry for Consumption, Use or Sale":
The court analyzed the definition and scope of "entry for consumption, use or sale" under section 3 of the Entry Tax Act, 1976. It referred to various precedents, including the Supreme Court's interpretation in cases like Man Mohan Tuli v. Municipal Corporation of Delhi and Burmah-Shell Oil Storage and Distributing Co. of India Ltd., Belgaum v. Belgaum Borough Municipality. The court emphasized that the intention at the time of entry of goods into the local area is crucial. Goods brought into a local area for sale within that area, even if subsequently taken outside, are subject to entry tax.

Liability to Pay Entry Tax on Goods Sold Outside the Local Area:
The court held that the petitioner was liable to pay entry tax on goods brought into Durg, even if sold to dealers outside Durg, as the initial entry was for the purpose of sale within Durg. The court distinguished between goods re-exported by the petitioner and goods sold to dealers who then took them outside the local area. The latter scenario does not qualify as re-export and is subject to entry tax.

The court relied on several precedents to support its decision:
- In Municipal Council, Jodhpur v. Parekh Automobiles Ltd., the Supreme Court held that octroi is not leviable if goods are sold within the local area but intended for consumption outside.
- In Indian Oil Corporation v. Municipal Corporation, Jullundhar, the court emphasized that appropriation of goods should take place outside the local area for the transaction to be considered re-export.

Based on these precedents, the court concluded that the petitioner's case fell within the category where goods were sold within the local area, and the subsequent transport outside by the purchasers did not exempt the petitioner from entry tax.

Conclusion:
The court dismissed the petition, affirming the validity of the entry tax levied on the petitioner. The petitioner's contention that entry tax was not payable on goods sold to dealers outside Durg was rejected. The court ordered no costs and directed the refund of any security deposit to the petitioner.

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