2007 (1) TMI 522 - HC - VAT and Sales Tax

Summary

Issues involved: Challenge to order u/s 8 of Bihar Tax on Entry of Goods into Local Areas for Consumption Act, 1993 and section 32 of Bihar Value Added Tax Act, 2005 for entry tax and penalty on foodgrains import.

Judgment Details:

1. Challenge to Impugned Order:
The petitioner, Food Corporation of India, challenged the order passed by the Commercial Taxes Officer, Patna, levying entry tax and penalty on foodgrains imported into Bihar. The petitioner contended that it correctly paid entry tax on goods sold, not on total imports, and there was no concealment. The Commercial Taxes Officer imposed penalty and demanded tax on the differential value, leading to bank account attachment.

2. Constitutional Validity of Entry Tax Act:
The High Court examined the constitutional validity of the Bihar Entry Tax Act, 1993. Previous judgments found the Act invalid due to certain amendments until August 28, 2006. The Act was considered discriminatory against goods imported from outside the State, especially paddy, rice, and wheat, due to higher entry tax rates compared to sales tax rates.

3. Validity of Entry Tax Levy on Foodgrains:
The Court found the levy of entry tax on paddy, rice, and wheat imported by the petitioner during April-June 2006 unauthorized, bad, and illegal. The impugned order, demands, and actions for tax realization were quashed as unjustified and arbitrary. The Court emphasized the harm caused by such methods to state revenue collection.

4. Conclusion:
The writ petition was allowed based on the unauthorized levy of entry tax, the Act's discriminatory nature, and lack of justification for penalty imposition and tax demands. The impugned order and related actions were quashed, highlighting the need for fair and legal tax enforcement practices.