2022 (8) TMI 253 - HC - VAT and Sales Tax

Levy of Entry Tax - Tobacco and Tobacco products - non-inclusion of Bidi as a manufactured finished product in the schedule of the Orissa Entry Tax Act - whether the same constitutes casus omissus on the part of the legislature and for this reason the impugned second appeal order is liable to be set aside? - express language of Entry 16 in Part 1 of Orissa Entry Tax Act which dealt with Tobacco and Tobacco products which were genus and species of tobacco and not different manufactured commodity like Bidi, Gudakhu, Cigarette, Pan Masala Zarda etc. - HELD THAT - Although learned counsel for the Petitioner sought to contend that under Entry 31 cigarette and lighter is a separate item and therefore unless there is a separate entry for bidi it would not be amenable to entry tax in terms of the OET Act, the Court is unable to agree with the above contention. The expression tobacco and tobacco products is wide enough to include bidi and therefore, the Tribunal has not committed any legal error in coming to the conclusion. The questions framed are accordingly answered in favour of the Department and against the Assessee - The revision petition is dismissed.

Summary

Issues Involved: Interpretation of the Orissa Entry Tax Act regarding the inclusion of Bidis as a manufactured finished product, applicability of common parlance theory in defining tobacco products, consideration of judicial mind in interpreting the Act, justification of levy of entry tax on sale of Bidis, imposition of penalty for non-payment of entry tax.

Analysis:

1. Interpretation of the Orissa Entry Tax Act: The main issue in this case revolves around the interpretation of the Orissa Entry Tax Act to determine whether Bidis should be considered as a manufactured finished product falling under the entry "Tobacco and Tobacco products" in the Schedule. The Tribunal held that Bidis, being handmade country cigarettes composed of tobacco inserted in Kendu leaves, should be considered as a tobacco product under the Act. The Tribunal relied on common commercial parlance and trade use to include Bidis within the scope of the Act despite the absence of a direct entry for Bidis in the Schedule.

2. Applicability of Common Parlance Theory: The Tribunal justified its decision by applying the common parlance theory, stating that Bidis are commonly known as a tobacco product used in rural India, even though there is no specific mention of Bidis in the Schedule of the Orissa Entry Tax Act. The Tribunal's decision emphasized that Bidis are manufactured tobacco products and should be subject to entry tax under the Act, as they fall within the broader category of "Tobacco and Tobacco products."

3. Consideration of Judicial Mind: The Petitioner argued that since Bidis were not explicitly mentioned in the entry "Tobacco and Tobacco products," they should not be subjected to entry tax. However, the Court disagreed, upholding the Tribunal's decision that the expression "tobacco products" encompasses Bidis. The Court emphasized that the Tribunal had correctly applied the law by interpreting the entry based on common commercial understanding and trade usage, thereby dismissing the Petitioner's contention.

4. Justification of Levy of Entry Tax: The Tribunal's decision to uphold the levy of entry tax on the sale of Bidis was deemed justified by the Court. The Court agreed with the Tribunal's interpretation that Bidis are included in the broader category of "Tobacco and Tobacco products," making them liable for entry tax under the Orissa Entry Tax Act. Consequently, the questions framed in favor of the Department and against the Assessee, resulting in the dismissal of the revision petition.

5. Imposition of Penalty: Additionally, the Tribunal's decision to impose a penalty equal to twice the amount of tax assessed for non-payment of entry tax on the sale of Bidis was upheld by the Court. The Court reiterated that the penalty provision under the Orissa Entry Tax Act is mandatory in such cases, emphasizing the importance of complying with tax obligations to avoid penalties.

In conclusion, the judgment highlights the significance of interpreting tax laws based on common commercial parlance and trade practices, ultimately leading to the inclusion of Bidis as taxable products under the Orissa Entry Tax Act.