1995 (9) TMI 363 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of entry tax on imported machinery and spare parts.
2. Interpretation of the term "consumption" and "use" under the Entry Tax Act.

Detailed Analysis:

Issue 1: The judgment involves the assessment of entry tax on imported machinery and spare parts by the Additional Assistant Commissioner, Ujjain, for the calendar year 1980. The assessee, a manufacturing company, imported machinery and spare parts worth Rs. 26,60,950, on which entry tax was levied at the rate of 1 per cent. The assessee appealed before the Appellate Deputy Commissioner and the Board of Revenue, both of which dismissed the appeals. Subsequently, the assessee sought reference to the High Court under the M.P. General Sales Tax Act, 1958 and the Entry Tax Act. The Board of Revenue rejected the application, leading the assessee to file an application under section 44(2)(b) of the M.P. General Sales Tax Act, 1958, before the High Court.

Issue 2: The interpretation of the term "consumption" and "use" under section 3(1)(b) of the Entry Tax Act was a crucial aspect of the judgment. The Appellate Tribunal rejected the application for reference, stating that the imported goods were consumed or used by the assessee, falling within the ambit of section 3(1)(b) of the Entry Tax Act. However, the High Court disagreed with this interpretation, emphasizing that the real meaning of the words "consumed" and "used" and whether they can be assigned parallel meanings are questions of law. The High Court held that the questions of whether machinery can be categorized as consumption and whether parts used to replace old parts can be considered as used and consumed are essential for determining the applicability of entry tax on machinery and spare parts not intended for specific purposes like raw material or works contracts.

In conclusion, the High Court allowed the application and directed the Tribunal to refer the case for answering the questions of law raised regarding the assessment of entry tax on imported machinery and spare parts and the interpretation of the terms "consumption" and "use" under the Entry Tax Act.