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2008 (11) TMI 650 - HC - VAT and Sales TaxEntry tax on entry of coal - Benefit of tax exemption - Held that - The judgment of the Supreme Court in Associated Cement Companies Ltd. 2004 (9) TMI 380 - SUPREME COURT OF INDIA , cannot be read to lay down the proposition that where an assessee is exempted from payment of sales tax under section 7 of the Bihar Finance Act he becomes automatically exempted from payment of entry tax for the goods purchased from outside the State for its use or consumption. In our considered view, the aforesaid decision does not help the case of the petitioner at all. The petitioner is not entitled to any declaration that it is not liable to pay entry tax on entry of coal caused by it after making purchases from, outside the State because of sales tax exemption certificate issued to it exempting it from payment of sales tax on sale of its finished products. Appeal dismissed.
Issues Involved:
1. Whether the petitioner is entitled to exemption from payment of entry tax on coal imported for manufacturing SSF coke due to an existing sales tax exemption on the finished product. 2. Whether the petitioner is entitled to a refund of entry tax paid prior to the 2006 amendment of the Entry Tax Act. Detailed Analysis: 1. Exemption from Entry Tax: The petitioner, a company manufacturing SSF coke, was granted a tax exemption certificate for sales tax on its finished product under the Bihar Finance Act, 1981, effective from August 31, 2000, to August 31, 2010. The petitioner claimed that this exemption should also apply to entry tax on coal imported from outside Bihar, as per the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 (Entry Tax Act). The court examined Section 3 of the Entry Tax Act, which is the charging section for entry tax, and Section 6, which allows the State Government to exempt any class of dealers, persons, or importers from entry tax through a notification. The court noted that no such notification exempting the petitioner from entry tax on imported coal had been issued under Section 6 of the Entry Tax Act. The petitioner's counsel argued that the second proviso to Section 3(2) of the Entry Tax Act should exempt the petitioner from entry tax, as it allows for the adjustment of entry tax paid against sales tax liability. However, the court clarified that this proviso applies only to the adjustment of entry tax against sales tax liability and does not provide an exemption from entry tax. The court emphasized the distinction between "exemption" and "adjustment," noting that the former implies freedom from liability, while the latter involves setting off one liability against another. The court referred to the Supreme Court's decision in Associated Cement Companies Ltd. v. State of Bihar [2004] 137 STC 389; [2004] 7 SCC 642, which allowed for the adjustment of entry tax against sales tax but did not establish that an exemption from sales tax automatically exempts entry tax. The court concluded that the petitioner is not entitled to exemption from entry tax on coal imported for manufacturing SSF coke based on the sales tax exemption on the finished product. 2. Refund of Entry Tax: The petitioner also sought a refund of entry tax paid prior to the 2006 amendment of the Entry Tax Act, citing the decision in Indian Oil Corporation Ltd. v. State of Bihar [2007] 10 VST 140 (Patna); [2007] 1 PLJR 502. In that case, the court held that the Entry Tax Act, before its amendments, was not compensatory in nature and violated Article 301 of the Constitution, but was saved by Article 304(b). The amendments in 2001 and 2004 were invalid due to lack of presidential sanction, and the 2006 amendment made the levy compensatory and valid. The Government counsel informed the court that the Indian Oil Corporation Ltd. decision was under appeal before the Supreme Court. The court agreed that the petitioner could apply for a refund of entry tax paid prior to the 2006 amendment, subject to the outcome of the Supreme Court's decision in the Indian Oil Corporation Ltd. case. The writ petition was dismissed, but the petitioner was allowed to seek a refund of entry tax in accordance with the Supreme Court's final decision on the Indian Oil Corporation Ltd. case. No costs were awarded.
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