2010 (8) TMI 821 - HC - VAT and Sales Tax

Whether petitioner are not liable to make payment of entry tax? Held that - It is open to the State Government to recover the entry tax from the petitioners in view of section 3, Second Schedule read with section 14 of the Entry Tax Act. Want of issuance of notification under section 3B of the said Act does not come in the way of invoking the general machinery for realisation of the entry tax. Writ petitions being devoid of merits are hereby dismissed.

Issues Involved:
1. Liability of petitioners to pay entry tax.
2. Validity and applicability of Section 3B of the Madhya Pradesh Entry Tax Act.
3. Interpretation of Section 3 and Section 14 of the Entry Tax Act.
4. Requirement of notification for collection of entry tax.
5. Recovery of entry tax from manufacturers versus retailers.

Detailed Analysis:

1. Liability of Petitioners to Pay Entry Tax:
The petitioners argued that they are not liable to pay entry tax and that it should be collected from the retailers. They contended that the absence of a notification specifying the manner and the appointment of a competent authority to collect the entry tax invalidates the demand for such tax from them. Additionally, they claimed that the entry tax should not be collected from manufacturers.

2. Validity and Applicability of Section 3B of the Madhya Pradesh Entry Tax Act:
Section 3B was inserted to specify the manner and appoint the competent authority to collect entry tax on Indian-made foreign liquor and beer. The petitioners argued that without a notification under Section 3B, the State Government cannot collect entry tax. They asserted that Section 3B is a special provision and a charging section for foreign liquor, which requires a specific notification to be operational.

3. Interpretation of Section 3 and Section 14 of the Entry Tax Act:
Section 3(1) of the Entry Tax Act is the charging provision, which levies entry tax on the entry of goods specified in Schedule II into a local area for consumption, use, or sale. The court found that the petitioners, being "dealers" as defined under the VAT Act, are liable to pay entry tax. The court emphasized that Section 3 identifies the taxable event and the person liable to pay the tax. Section 14 provides the machinery for assessment, collection, and enforcement of the entry tax.

4. Requirement of Notification for Collection of Entry Tax:
The petitioners argued that without a specific notification under Section 3B, the entry tax cannot be collected. The court, however, held that Section 3 is the charging section and Section 3B is a machinery provision. The absence of a notification under Section 3B does not invalidate the levy of entry tax, as the general machinery provision under Section 14 can be invoked for its collection.

5. Recovery of Entry Tax from Manufacturers versus Retailers:
The court held that the entry tax is payable by the person who causes the entry of liquor into the local area, which in this case are the petitioners. The court rejected the argument that the entry tax should be collected from the retailers, as the petitioners are the ones causing the entry of goods into the local area for consumption, use, or sale.

Conclusion:
The court concluded that the petitioners are liable to pay the entry tax under Section 3 of the Entry Tax Act. The absence of a notification under Section 3B does not affect the validity of the tax levy, as the general machinery provision under Section 14 can be used for its collection. The petitions were dismissed, and the court upheld the State Government's right to recover the entry tax from the petitioners.

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