1998 (1) TMI 501 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Liability to pay entry tax on motor vehicles imported from outside the country.
2. Validity of the Kerala Tax on Entry of Goods into Local Areas Act, 1994.
3. Interpretation of the Act concerning imported goods.
4. Applicability of Article 286 of the Constitution.
5. Exemption under the proviso to Section 3 of the Act.

Summary:

1. Liability to Pay Entry Tax on Imported Motor Vehicles:
The appellants, non-resident Indians, imported motor vehicles used abroad and obtained customs clearance on payment of customs and levies. They were issued notices demanding entry tax under the Kerala Tax on Entry of Goods into Local Areas Act, 1994 ("the Act"). The court examined whether the appellants were liable to pay entry tax on these vehicles.

2. Validity of the Kerala Tax on Entry of Goods into Local Areas Act, 1994:
The Act was enacted to levy tax on the entry of goods into local areas for consumption, use, or sale. The court referenced a prior decision (Rajan v. State of Kerala, 1995) which upheld the Act as intra vires the powers of the State and not violative of Articles 301 and 304 of the Constitution. The appellants accepted this decision.

3. Interpretation of the Act Concerning Imported Goods:
The court interpreted the Act's provisions, noting that "entry of goods into a local area" means entry from any place outside the State, not outside the country. The definition of "purchase value" did not include customs duties, indicating that the Act did not intend to cover goods imported from abroad. The court concluded that the Act is inapplicable to vehicles imported from outside the country.

4. Applicability of Article 286 of the Constitution:
The appellants argued that under Article 286, no State law could impose a tax on the import of goods into India. The court noted that the limitations in Article 286 were not surmounted and that the Act did not apply to goods brought from abroad. The court held that the entry tax under the Act was confined to goods brought from outside the State, not from outside the country.

5. Exemption Under the Proviso to Section 3 of the Act:
The appellants contended that the exemption granted to vehicles registered prior to 15 months under the proviso to Section 3 was violative of Article 14 of the Constitution. The court, agreeing with the impugned judgment, found no discrimination or arbitrariness in the exemption and upheld its validity.

Conclusion:
The court declared that vehicles brought from abroad are not liable to entry tax and directed that they be registered in Kerala without requiring a clearance certificate under the Act. The writ appeals and original petitions were allowed.