2019 (1) TMI 1714 - HC - VAT and Sales Tax

Levy of entry tax on vehicles - goods imported by the petitioners from out side the country - Constitutional validity of Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act 1990 - HELD THAT - The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act 1990 was an act to provide for the levy of tax on the entry of the motor vehicles into local areas for the use of sale therein. This Act was in replacement of an Ordinance No. 1 of 1990 promulgated by the Governor on February 19 1990 and published in the Gazette on February 20 1990 and deemed to have come into force from February 20 1990 - The Statement of Objects and Reasons attached to the Bill introduced in the legislative assembly in respect of the said Act was with a view to curb the evasion of sales tax on the sale of motor vehicles which are purchased outside the State and brought into this State the Government have decided to levy tax on entry of motor vehicles into local areas of this State either for use or sale therein which is liable for registration in the State under the Motor Vehicles Act 1988. On a reading of both the Statement of Objects and Reasons it is evidently clear that both the enactments have been enacted for a common purpose that is to curb evasion of sales tax on motor vehicles purchased from outside the State and brought into the State for use or sale therein which are liable for registration under the Motor Vehicles Act 1988. The legal principles which flow from the observations contained in the above paragraphs is that the well established principle of statutory interpretation to help finding out as to whether particular category of assessee is to pay particular tax or not. The court makes endeavour to find out the intention of the Legislature. At the same time the very principle is based on fairness doctrine as it lays down that if it is not very clear from the provisions of the Act as to whether the particular tax is to be levied to a particular class of persons or not the subject should not be fastened with any liability to pay tax. Statutory interpretation cannot be done as by process of interpretation the provision cannot be re-written nor any word can be introduced. Further it was held that the expression any place before the words outside the State is also indicative of wide extent. The words any place cannot be limited to a place within the territory of India when no such indication is discernible from the provisions of the Act. Further it was pointed out that the origin of goods has no relevance with regard to chargeability of entry tax. The writ petitions are dismissed and it is held that the petitioners are liable to pay entry tax on imported vehicles brought into the State of Tamil Nadu for use or for sale - decided against petitioner.

Issues Involved:
1. Entitlement of respondents to impose entry tax on vehicles imported from outside the country.
2. Interpretation of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990.
3. Applicability of the Supreme Court decision in Fr. William Fernandez to the Tamil Nadu Act.
4. Consideration of administrative waiver of taxes.

Detailed Analysis:

1. Entitlement of Respondents to Impose Entry Tax on Imported Vehicles:
The primary issue in these cases is whether the respondents are entitled to impose entry tax on vehicles imported by the petitioners from outside the country. The petitioners argued that since the imported vehicles already suffer border tolls such as customs and other duties, sales tax and entry tax are not leviable. They contended that the Tamil Nadu Act was intended to prevent evasion of sales tax on vehicles purchased from neighboring states within India and not on imported vehicles. They emphasized that the Tamil Nadu Act does not purport to levy entry tax on imported motor vehicles as it is aimed only at goods brought in from other states within India.

2. Interpretation of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990:
The petitioners' counsel argued that the provisions of the Act should be interpreted in light of the statements of objects and reasons appended to the bill, which indicate that the enactment does not intend to levy entry tax on imported vehicles. They referred to sections 3, 4, and 12 of the Tamil Nadu Act and contended that section 4, which speaks about reduction in tax liability, should be read into the charging section, viz., section 3. They argued that the Tamil Nadu Act intended to prevent evasion of tax and not for the purpose of augmenting revenue. The petitioners also relied on the principles of statutory interpretation, emphasizing that the words of a statute should be construed in their context and that the plain meaning rule applies when the words are susceptible to only one meaning.

3. Applicability of the Supreme Court Decision in Fr. William Fernandez to the Tamil Nadu Act:
The respondents contended that the issue raised in these writ petitions was considered by the Supreme Court in the case of State of Kerala v. Fr. William Fernandez, where it was held that entry tax can be levied on goods entering the land mass of India from another country. They argued that the provisions of the Kerala Act are in pari materia with the Tamil Nadu Entry Tax Act and that the decision of the Supreme Court covers all these cases. The court noted that the statements of objects and reasons of both the Kerala and Tamil Nadu Acts are identical, indicating that both enactments were enacted to curb evasion of sales tax on motor vehicles purchased from outside the state and brought into the state for use or sale therein. The court held that the judgment in Fr. William Fernandez applies with full force to the cases on hand, as the Tamil Nadu Act is pari materia to the Kerala enactment, which was considered by the Supreme Court.

4. Consideration of Administrative Waiver of Taxes:
One of the petitioners' counsel argued for administrative waiver of taxes, citing previous instances where different views were taken by different benches of the court regarding the levy of entry tax on imported vehicles. The court, however, held that no court can compel the government to exercise its power to grant administrative waiver, as it is a policy decision to be taken by the government. The court also noted that the facts of the case in which the government granted administrative waiver were entirely different and cannot be applied to the present cases. The court found no merit in the submissions for administrative waiver and dismissed the writ petitions, holding that the petitioners are liable to pay entry tax on imported vehicles brought into the state of Tamil Nadu for use or for sale.

Conclusion:
The court dismissed the writ petitions, holding that the petitioners are liable to pay entry tax on imported vehicles brought into the state of Tamil Nadu for use or for sale. The court found that the Tamil Nadu Act is in pari materia with the Kerala Act, and the Supreme Court's decision in Fr. William Fernandez applies to the cases on hand. The court also rejected the argument for administrative waiver of taxes, stating that it is a policy decision to be taken by the government.

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