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2012 (11) TMI 789 - HC - VAT and Sales TaxConstitutional validity of levy of entry tax on imported goods - Entry Tax under Orissa Entry Tax Act,1999 - Whether the imposition of tax on goods purchased from outside the country is ultra vires the Constitution - held that - The Act is a tax in lieu of octroi incident of which are similar to that of entry tax. When the levy of octroi on imported goods was upheld by different courts, there is no reason why entry tax on the imported goods cannot be upheld. - The entry tax is, thus, in essence a tax in lieu of octroi duty. Therefore, the decisions rendered in the context of levy of octroi are applicable to this case. - as the entry tax has been levied on such goods which cross custom barriers by invoking the powers conferred on the State Legislature covered under Entry 52 of List II of the Seventh Schedule, there is no encroachment of the powers of the Parliament. - Decided in favor of revenue. Entry tax on goods from import from outside the country - Whether the interpretation of provision of the Orissa Entry Tax Act itself shows that entry tax is not leviable on the goods imported from outside the country - Held that - By applying the principle of interpretation of the taxing law that charging section is not to be controlled by subservient components, the definition entry of goods cannot be taken help to urge that the entry tax on imported goods cannot be levied. - the argument that entry tax is not leviable on the goods imported through buyers is attractive but is without substance. - Decided in favor of revenue. Levy of entry tax on plant and machinery, which are brought from USA to establish a factory at Balgopalpur for production of papers - held that - Plant, which is brought in knock down condition, is a combination of machinery in a systematic manner so as to produce goods and, therefore, it is coming within the definition of machinery and, hence, it is liable for entry tax. - Decided in favor of revenue. Raw materials and spares - certain raw materials and spares, as described in paragraph-6, which have been imported and purchased from other States out of the country by M/s IFGL Refractories (W.P.(c) No.7 of 2008)having carefully examined the items described in the 3rd sub- paragraph of paragraph 6 - held that - items not included in the schedule are not liable to entry tax. - Decided in favor of assessee.
Issues Involved:
1. Whether the entry tax under Orissa Entry Tax Act, 1999, can be levied and/or imposed on the value of the goods imported by the petitioners from outside the country. 2. Whether such entry tax under the aforesaid Act can be levied and/or imposed on import of plant and machinery for establishing a plant in the State of Odisha. 3. Whether the entry tax can be levied on certain raw materials and goods imported from outside the country and purchased from outside the State when such materials have not been listed in the schedule appended to the Orissa Entry Tax Act. 4. Whether the Orissa Entry Tax Act, 1999, is violative of Entry 83 of List I of Seventh Schedule and Article 246 of the Constitution of India. Issue-wise Detailed Analysis: 1. Levy of Entry Tax on Imported Goods: The court examined whether the imposition of entry tax on goods imported from outside the country is ultra vires the Constitution. The petitioners argued that Article 286 of the Constitution restricts the imposition of tax on goods imported into India. However, the court clarified that Article 286 pertains to sales tax and not entry tax, which is governed by Entry 52 of List II of the Seventh Schedule. The court cited precedents, including judgments from the Kerala High Court and Gauhati High Court, affirming that entry tax is distinct from customs duties and can be levied on goods once they cross customs barriers and enter local areas. The court concluded that the legislative power of the State to levy entry tax on imported goods does not infringe upon the Parliament's exclusive power to legislate on customs duties. 2. Entry Tax on Plant and Machinery: The court addressed whether the entry tax can be levied on the import of plant and machinery for establishing a plant in Odisha, specifically in the case of M/s Emami Paper Mills Ltd. The petitioner argued that the plant, imported in a knock-down condition, does not fall under scheduled goods and thus should not be subject to entry tax. The court referred to Part-II of Schedule-1, Entry 9 of the Act, which includes "machinery and equipment" used for various purposes, including manufacturing. The court interpreted "plant" as a combination of machinery, thus falling under the definition of machinery and liable for entry tax. 3. Entry Tax on Raw Materials and Goods Not Listed in the Schedule: In the case of M/s IFGL Refractories, the court examined whether certain raw materials and goods imported from outside the country and purchased from other States are liable for entry tax. The court reviewed the specific items listed by the petitioner and found that they were not included in the schedule of the Orissa Entry Tax Act. Consequently, the court held that these raw materials and goods are not liable for entry tax. 4. Constitutionality of the Orissa Entry Tax Act: The petitioners contended that the Orissa Entry Tax Act, 1999, violates Entry 83 of List I of the Seventh Schedule and Article 246 of the Constitution, which confers exclusive legislative power on the Parliament to impose customs duties. The court differentiated between the incidence of customs duty and entry tax, stating that customs duty is levied at the point of importation into India, while entry tax is levied on the entry of goods into local areas for consumption, use, or sale. The court concluded that there is no conflict between the legislative powers under Entry 83 of List I and Entry 52 of List II, as the taxable events for customs duty and entry tax are distinct. Conclusion: The court upheld the imposition of entry tax on goods imported from outside the country, including plant and machinery, under the Orissa Entry Tax Act, 1999. However, it exempted certain raw materials and goods not listed in the schedule from entry tax. The court dismissed all writ petitions except for W.P.(C) No.7 of 2008, which was allowed to the extent indicated. All miscellaneous cases arising out of the writ petitions were disposed of accordingly.
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