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2015 (4) TMI 1082 - HC - VAT and Sales TaxLeviability of entry tax by virtue of statutory provisions as contained under the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 - Different grades of tea is brought into the State of Madhya Pradesh by the petitioner and in the process of blending, different grades of tea is used while conducting the process of blending - Held that - in the light of the judgment delivered by the Division Bench of our own High Court in the case of Badrinarayan Versus State of MP and Others 1987 (4) TMI 465 - MADHYA PRADESH HIGH COURT , the petitioner is certainly not entitled for any relief of whatsoever kind only because blending of tea does not fall within the meaning and term manufacture in the light of the statutory exclusion of the process of blending from the definition of the word manufacture under the Madhya Pradesh Commercial Tax Act. Keeping in view section 3(1) of the Entry Tax Act, as the commodity in question has been used and the words consumption and use are mentioned in the charging section, in the light of the aforesaid Division Bench judgment, the revisional authority was justified in dismissing the revision of the petitioner, therefore the entry tax is to be levied. Imposition of penalty - Non-payment of tax dues - Held that - as per the statutory provision of law and the fact the liability of entry tax was not satisfied in time by the petitioner and the matter was hanging before various authorities and was also pending before this court. The State was certainly deprived of the Revenue which would have fetched interest and would have been used by the State Government and, therefore keeping in view section 69 of the Madhya Pradesh Commercial Tax Act, the authorities were justified in imposing penalty and the penalty is to be imposed. - Decided against the petitioner
Issues Involved:
1. Whether the process of blending different grades of tea constitutes "manufacture" under the Madhya Pradesh Commercial Tax Act, 1994. 2. Whether entry tax is applicable on the unblended tea brought into Madhya Pradesh for blending and then transferred outside the state. 3. The applicability of set-off provisions under section 3(1) of the Entry Tax Act. 4. The imposition of penalty for non-payment of entry tax. Issue-Wise Detailed Analysis: 1. Definition of "Manufacture": The petitioner argued that the process of blending different grades of tea does not constitute "manufacture" as defined under section 2(o) of the Madhya Pradesh Commercial Tax Act, 1994. The petitioner contended that blending does not involve any mechanical or chemical process and does not change the commercial name of the commodity. The court, however, referred to the Division Bench judgment in Badrinarayan [1988] 70 STC 12 (MP), which held that blending tea results in a new commodity. The court concluded that the blending of tea is considered "production" of a new commodity. 2. Applicability of Entry Tax: The petitioner claimed that entry tax should not be levied on unblended tea brought into Madhya Pradesh for blending and then transferred outside the state. The respondent argued that under section 3 of the Entry Tax Act, 1976, entry tax is applicable once goods are brought into the state and used in the blending process. The court upheld this view, stating that the words "use" and "consumption" in section 3(1) of the Entry Tax Act cover the blending process, making the petitioner liable for entry tax. 3. Set-Off Provisions: The petitioner sought a set-off for the entry tax paid on unblended tea brought into Madhya Pradesh and subsequently transferred outside the state after blending. The court referred to section 3(1) of the Entry Tax Act, which allows for a set-off if goods are sold outside the state or in the course of inter-State trade or commerce. However, since blending constitutes "use" or "consumption," the court concluded that the petitioner is not entitled to a set-off. 4. Imposition of Penalty: The court examined section 69 of the Madhya Pradesh Commercial Tax Act, which allows for the imposition of a penalty if a dealer conceals turnover or furnishes false returns. The court noted that the petitioner had not paid the entry tax on time, resulting in a loss of revenue for the state. Therefore, the court upheld the penalty imposed by the authorities, stating that the petitioner had deprived the state of revenue that could have accrued interest and been used by the government. Conclusion: The court dismissed the writ petitions, upholding the applicability of entry tax on the blending process and the penalties imposed for non-payment. The court emphasized that blending of tea constitutes "use" or "consumption" under the Entry Tax Act, making the petitioner liable for entry tax without entitlement to a set-off. The court also upheld the penalties imposed for delayed payment of entry tax, citing the statutory provisions under section 69 of the Madhya Pradesh Commercial Tax Act.
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