1993 (8) TMI 285 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the demand notice for entry tax.
2. Classification of goods as steel scrap or rejected axles.
3. Verification and inspection of goods at the check-post.
4. Applicability of Section 14(3) of the Act of 1972.
5. Relevance of subsequent sale and excise duty in assessing entry tax.
6. Validity of the proceeding under Section 14(3) of the Act of 1972.

Detailed Analysis:

1. Legality of the Demand Notice for Entry Tax:
The applicant challenged a demand notice dated February 24, 1992, demanding Rs. 1,00,054 as entry tax under the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972. The applicant argued that the demand was illegal and arbitrary as the goods were exempted from entry tax by a Notification No. 1089-F.T. dated April 5, 1990.

2. Classification of Goods as Steel Scrap or Rejected Axles:
The applicant declared the goods as steel scraps in form IV to claim exemption. However, the respondents contended that the goods were rejected axles, a marketable commodity, and not steel scraps. The respondents argued that the applicant falsely declared the goods as steel scraps to avoid tax.

3. Verification and Inspection of Goods at the Check-Post:
The applicant claimed that the goods were physically verified by the Entry Tax Inspector at Hosenabad check-post and endorsed as exempted. The respondents, however, denied that the goods were inspected at the time of entry. The tribunal noted that there was no full denial of the applicant's assertion of verification and inspection.

4. Applicability of Section 14(3) of the Act of 1972:
The applicant argued that since declarations were made under Section 13 and the goods were verified and exempted by the Entry Tax Inspector, a proceeding under Section 14(3) was not legally permissible. The tribunal agreed, noting that Section 14(3) applies when goods enter without tax payment and are not covered by Sections 14(1) or 14(2).

5. Relevance of Subsequent Sale and Excise Duty in Assessing Entry Tax:
The respondents argued that the goods were sold as rejected axles to the applicant's sister concern and excise duty was included in the price, indicating they were not steel scraps. The tribunal found these arguments irrelevant after the prescribed authority's verification under Section 14(1).

6. Validity of the Proceeding under Section 14(3) of the Act of 1972:
The tribunal found the proceeding under Section 14(3) and the subsequent demand notice contrary to the provisions of the Act of 1972. The notice was issued based on the claim that the goods were assessed as nil tax through inadvertence, but the tribunal dismissed this reasoning as inconsistent with the respondents' affidavit.

Conclusion:
The tribunal allowed the application, quashing the demand notice dated February 24, 1992, and ordered the refund of the security deposit of Rs. 50,027 to the applicants. The tribunal's decision was unanimous, with all members agreeing on the judgment. The operation of the order was stayed for six weeks on the respondents' request.