2008 (4) TMI 691 - HC - VAT and Sales Tax

Whether, in these cases, the petitioner(s) (S.E.C.L.) was liable to pay the entry tax under section 3(1) of the M.P. (C.G) Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (for short, the Entry Tax Act ) or not? Held that - Imposition of entry tax by the concerned authority on the coal sold by the petitioner(s) under different agreements and transit orders was not in accordance with law. As such, the coal sold was not liable to entry tax by such authority. Thus the petitions are allowed. It is held that in the facts and circumstances of these cases, the petitioner(s) is not liable to pay entry tax under section 3(1) of the Entry Tax Act.

Issues Involved:
1. Liability of the petitioner(s) to pay entry tax under Section 3(1) of the Entry Tax Act.
2. Interpretation of the term "therein" in the context of the Entry Tax Act.
3. Validity of the assessment orders and re-assessment proceedings.
4. Applicability of previous Supreme Court judgments on similar issues.

Detailed Analysis:

1. Liability of the petitioner(s) to pay entry tax under Section 3(1) of the Entry Tax Act:
The primary issue was whether the petitioner(s), South Eastern Coal Fields Limited (S.E.C.L.), was liable to pay entry tax under Section 3(1) of the M.P. (C.G) Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (Entry Tax Act). The court examined the facts, noting that the petitioner(s) was engaged in coal mining and its supply to various entities like N.T.P.C. and M.P.E.B. The coal was transported from the mines to the ultimate destinations, often passing through different local areas.

2. Interpretation of the term "therein" in the context of the Entry Tax Act:
The court focused on the interpretation of the word "therein" in clause (a) of sub-section (1) of Section 3 of the Entry Tax Act. The court held that the term "therein" indicates that entry tax is applicable only if the goods are brought into a local area for consumption, use, or sale within that particular area. This interpretation was crucial in determining whether the petitioner(s) was liable for the tax when coal was merely in transit through different local areas without being consumed, used, or sold there.

3. Validity of the assessment orders and re-assessment proceedings:
The petitioner(s) challenged various assessment orders and re-assessment proceedings for different years, arguing that the authorities erred in law by holding them liable for entry tax. The court quashed the assessment orders and re-assessment proceedings, concluding that the imposition of entry tax was not in accordance with the law since the coal was not consumed, used, or sold in the local areas where the tax was levied.

4. Applicability of previous Supreme Court judgments on similar issues:
The court referred to several Supreme Court judgments, including Burmah-Shell Oil Storage and Distributing Co. of India Ltd. v. Belgaum Borough Municipality (AIR 1963 SC 906), Hiralal Thakorlal Dalal v. Broach Municipality ([1976] 3 SCC 398), and Municipal Council v. Parekh Automobiles Ltd. ([1990] 1 SCC 367). These cases established that goods brought into a local area for re-export or for consumption outside the local area were not liable for octroi or similar taxes. The court applied these principles to the present case, reinforcing that the entry tax could not be levied on coal merely passing through local areas en route to its final destination.

Conclusion:
The court concluded that the petitioner(s) was not liable to pay entry tax under Section 3(1) of the Entry Tax Act. The interpretation of "therein" was pivotal, as it clarified that entry tax applies only when goods are brought into a local area for consumption, use, or sale within that area. The court quashed the impugned assessment orders, re-assessment proceedings, and demand notices, ruling in favor of the petitioner(s). The parties were directed to bear their own costs.

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