1995 (3) TMI 490 - HC - Indian Laws

Summary

Issues Involved:
1. Validity of notifications relating to "lime (stone)" and "limestone."
2. Constitutionality of Section 4(1)(i) of the Entry Tax Act, 1976.
3. Legislative competence of the State to levy entry tax on limestone.
4. Competence of the State Government to issue notifications under Section 4-A of the Act.
5. Applicability of the entry tax to petitioners who quarry limestone but do not acquire or obtain it.
6. Applicability of entry tax to petitioners who are not dealers in limestone.
7. Classification of the factory as a local area for the purpose of levying entry tax.

Detailed Analysis:

1. Validity of Notifications Relating to "Lime (stone)" and "Limestone":
The petitioners contended that the notifications referred to "lime (stone)" and not "limestone," thus they should not be liable for entry tax on limestone. The Court noted that the term "lime (stone)" was corrected to "limestone" in subsequent notifications. The purpose of the notifications was to impose tax on the entry of limestone into local areas, not lime. The Court concluded that the subject matter of the notifications was indeed limestone, not lime.

2. Constitutionality of Section 4(1)(i) of the Entry Tax Act, 1976:
The petitioners challenged the exclusion of limestone from the concessional rate under Section 4(1)(i) of the Act, arguing it constituted hostile discrimination. The Court noted the presumption of constitutionality and the burden on the petitioners to prove otherwise. The Court found that treating limestone differently due to its significant use in cement production was a reasonable classification and did not offend the equality clause of the Constitution.

3. Legislative Competence of the State to Levy Entry Tax on Limestone:
The petitioners argued that the levy of entry tax on limestone was beyond the legislative competence of the State, citing the Mines and Minerals (Regulation and Development) Act, 1957. The Court held that the Entry Tax Act was enacted under Entry 52 of List II of the Seventh Schedule of the Constitution, which pertains to taxes on the entry of goods into a local area for consumption, use, or sale. Therefore, the State had the legislative competence to levy entry tax on limestone.

4. Competence of the State Government to Issue Notifications under Section 4-A of the Act:
The petitioners contended that the notifications issued under Section 4-A violated the first proviso to Section 9(1) of the Act, which limits the increase in the rate of entry tax. The Court found that Section 4-A and Section 12 provided an alternative scheme for entry tax, distinct from the normal scheme under Sections 3, 4, and 9. The limitation in the first proviso to Section 9(1) did not apply to notifications issued under Section 4-A. Therefore, the notifications were within the competence of the State Government.

5. Applicability of the Entry Tax to Petitioners Who Quarry Limestone but Do Not Acquire or Obtain It:
The petitioners argued that since they did not purchase limestone, the purchase price formula was inapplicable, and they did not acquire or obtain it otherwise. The Court held that mining leaseholders acquire or obtain limestone by paying royalty, even if it is not a purchase. Therefore, they were liable to pay entry tax.

6. Applicability of Entry Tax to Petitioners Who Are Not Dealers in Limestone:
The petitioners contended that they were not dealers in limestone and thus should not be liable for entry tax. The Court noted that Section 3(1) of the Act requires the person liable to pay entry tax to be a dealer, but it does not require them to be dealers of the specific goods in question. Therefore, the petitioners, being dealers, were liable to pay entry tax.

7. Classification of the Factory as a Local Area for the Purpose of Levying Entry Tax:
The petitioners argued that their factory could not be regarded as a local area, and thus they should not be liable for entry tax on the entry of goods into the factory. The Court found that the factory was situated within the limits of a local area (Bunnor Panchayat), and the taxable event was the entry of goods into the local area, not the factory premises. Therefore, the petitioners were liable to pay entry tax.

Conclusion:
The petitions were dismissed with costs, and the Court upheld the validity of the notifications, the constitutionality of Section 4(1)(i) of the Act, and the legislative competence of the State to levy entry tax on limestone. The Court also found that the petitioners were liable to pay entry tax, regardless of whether they were dealers in limestone or whether their factory was classified as a local area.