1993 (10) TMI 340 - AT - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of the Commercial Tax Officer to pass assessment orders under the Act of 1962.
2. Applicability of the Rules of 1955 for assessments under the Act of 1962.
3. Competence of the State to levy entry tax in light of Article 286 of the Constitution and the Central Sales Tax Act, 1956.
4. Whether the entry tax can be levied on goods imported for export and not for consumption, use, or sale in the local area.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Commercial Tax Officer:
The applicant contended that the Assistant Commissioner of Commercial Taxes, not the Commercial Tax Officer, should have passed the assessment orders under the Act of 1962. However, this point was not pursued during the hearing.

2. Applicability of the Rules of 1955:
The applicant argued that the notices issued under the Rules of 1955 were illegal since these rules could not survive for proceedings under the Act of 1962. The respondents countered that Section 24 of the Act of 1962 validated the rules made under the Act of 1955 for the purpose of the new Act. This point was also not pursued during the hearing.

3. Competence of the State to Levy Entry Tax:
The applicant contended that the State lacked competence to levy entry tax due to the restrictions imposed by Article 286 of the Constitution and the Central Sales Tax Act, 1956. The respondents argued that entry tax is levied under entry 52 of List II of the Seventh Schedule to the Constitution, which is distinct from sales tax under entry 54. This argument was not pursued during the hearing.

4. Entry Tax on Goods Imported for Export:
The primary contention was whether the entry tax could be levied on goods imported into the local area for export and not for consumption, use, or sale within the local area. The applicant argued that the goods (raw jute) were imported for export and not for local consumption, use, or sale, and hence, no entry tax should be levied. The respondents contended that the breaking of bulk and repacking of jute into bales within the local area amounted to use, attracting entry tax.

Judgment:
The Tribunal referred to several precedents, including the Supreme Court's decisions in Burmah-Shell Oil Storage, Hiralal Thakorlal Dalal, and Tata Engineering & Locomotive Company Limited, which established that mere physical entry into a local area does not attract entry tax if the goods are intended for export and not for local consumption, use, or sale. The Tribunal concluded that the jute was imported for temporary detention and repacking for export, and not for local consumption, use, or sale.

Therefore, the Tribunal quashed the assessments made by the Commercial Tax Officer for the periods in question and issued a writ of prohibition restraining the respondents from giving effect to the impugned assessment orders. The interim orders were vacated, and the applicants were discharged from the bank guarantees furnished pursuant to these interim orders.

Conclusion:
The applications in both cases, RN-149(T) of 1992 and RN-150(T) of 1992, were allowed, and the assessments for the periods from August 1, 1974, to March 31, 1976, were quashed. The respondents were prohibited from enforcing these assessments, and the applicants were discharged from the interim bank guarantees. No order as to costs was made.

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