2025 (2) TMI 99 - HC - VAT / Sales Tax

Vires of the West Bengal Tax on Entry of Goods into Local Areas Act 2012 as it stood prior to its amendment - constitutional validity of the original Act and the amendments. What is the effect of the ratio of Jindal Stainless Ltd. 2016 (11) TMI 545 - SUPREME COURT (LB) on the impugned judgment and order of the learned Single Judge dated June 24 2013? - HELD THAT - Although Jindal Stainless Ltd has held that all judgements that follow Atiabari 1960 (9) TMI 94 - SUPREME COURT Automobile Transport 1962 (4) TMI 91 - SUPREME COURT and Jindal Steel Ltd 2016 (11) TMI 545 - SUPREME COURT (LB) stands overruled nonetheless the appeals directed against the impugned judgement and order of the learned Single Judge remained pending without a formal order of disposal of the same. The appeals therefore are required to be formally disposed of an Appeal Court. A finding has to returned as to whether the impugned judgement and order of the learned Single Judge following the overruled decisions of the Supreme Court rendered in Atiabari Automobile Transport and Jindal Steel Ltd in deciding the constitutional validity of the Entry Tax Act 2012 should be sustained or not. A finding is returned that learned Single Judge in the impugned judgement and order dated June 24 2013 proceeded on the basis of the ratio laid down in Atiabari Automobile Transport and Jindal Steel Ltd to decide on the constitutional validity of the Entry Tax Act 2012. Consequently the impugned judgement and order dated June 24 2013 cannot survive subsequent to the pronouncement of Jindal Stainless Ltd. - the impugned judgement and order dated June 24 2013 passed by the learned Single Judge is set aside. Are the impugned orders of the learned Tribunal correct? - HELD THAT - Interim order passed by the Appeal Court on July 31 2013 had permitted the assessment under the Entry Tax Act 2012 to be continued. It had also restrained refund of the tax already collected. Appeal Court did not vacate the stay granted by the learned Single Judge in the impugned judgement and order. Appeal Court had regulated the implementation of the Entry Tax Act 2012 in the manner noted in its order dated July 31 2013. Therefore it cannot be said that the Appeal Court had decided on the vires of the Entry Tax Act 2012 finally on either side of the divide. In fact Appeal Court had made the interim arrangements as done by the interim order dated July 31 2013 on the basis that the Entry Tax Act 2012 subsists. It had therefore allowed the assessment under the Entry Tax Act 2012 to continue with no refund being made. Shree Chamundi Mopeds Ltd. 1992 (4) TMI 183 - SUPREME COURT has considered the provisions of the Sick Industrial Companies (Special Provisions) Act 1985 and held that when the High Court passes an interim order staying the operation of the order of the Appellate Authority exercising powers under the provisions of the Act of 1985 the same does not revive the appeal which had been dismissed as no such proceedings was pending before the Appellate Authority. There are no position to arrive at a finding that the Entry Tax Act 2012 came to be declared ultra vires on the expiry of 6 weeks from the date of the impugned judgement and order of the learned Single Judge being June 24 2013 and consequently stood obliterated. Consequently it cannot be held that the amendments sought to be introduced by the West Bengal Finance Act 2017 to the Entry Tax Act 2012 are invalid simply on the basis that the Entry Tax Act 2012 stood obliterated on the expiry of 6 weeks from the date of the impugned judgement and order. In the facts and circumstances of the present case the amending act does not take away any benefit which has accrued to any assessees by the amendments introduced retrospectively. At least now materials have been placed before us to suggest so. Was the Entry Tax Act 2012 in force at the time of its amendment on March 6 2017 in view of the impugned judgment and order dated June 24 2013 of the learned Single Judge? - HELD THAT - Entry Tax Act 2012 was in force at the time of its amendment on March 6 2017. Are the amendments introduced to the Entry Tax Act of 2012 by the West Bengal Finance Act 2017 valid? - HELD THAT - The amendments introduced to the Entry Tax Act 2012 by the West Bengal Finance Act 2017 are valid. Are the amendments introduced by the West Bengal Finance Act 2017 to the Entry Tax Act 2012 discriminatory? - HELD THAT - The amendments introduced by the West Bengal Finance Act 2017 to the Entry Tax Act 2012 are not discriminatory. Conclusion - i) The Entry Tax Act 2012 was valid at the time of its amendment and the amendments introduced by the West Bengal Finance Act 2017 were lawful and non-discriminatory. ii) The taxes are not inherently unconstitutional unless proven discriminatory. iii) The decision in Jindal Stainless Ltd. was pivotal in shaping the Court s conclusions particularly regarding the overruling of earlier precedents. The writ petitions are disposed of by setting aside the impugned order of the Tribunal.

Summary

The judgment involves a series of appeals and writ petitions concerning the West Bengal Tax on Entry of Goods into Local Areas Act, 2012, and its subsequent amendment by the West Bengal Finance Act, 2017. The core issues revolve around the constitutional validity of the original Act and the amendments, primarily in light of the Supreme Court decision in Jindal Stainless Ltd.

Issues Presented and Considered

The Court considered several key issues:

i. The impact of the Jindal Stainless Ltd. decision on the judgment of the learned Single Judge dated June 24, 2013.

ii. The status of the Entry Tax Act, 2012 at the time of its amendment on March 6, 2017.

iii. The validity of the amendments introduced by the West Bengal Finance Act, 2017.

iv. Whether the amendments were discriminatory.

v. The correctness of the Tribunal's orders.

vi. The reliefs to which the parties are entitled.

Issue-wise Detailed Analysis

First Issue: Effect of Jindal Stainless Ltd. on the Single Judge's Judgment

The Single Judge had declared the Entry Tax Act, 2012 unconstitutional, relying on precedents like Atiabari and Automobile Transport, which were later overruled by Jindal Stainless Ltd. The Court concluded that the Single Judge's judgment could not survive post-Jindal Stainless Ltd., as it relied on now-overruled decisions. Thus, the judgment was set aside.

Second to Fifth Issues: Status and Validity of the Entry Tax Act and Its Amendments

The interim order dated July 31, 2013, allowed the assessments under the Entry Tax Act, 2012 to continue, indicating the Act's validity was still an open question. The Court found that the Act was in force at the time of its amendment in 2017. The amendments were deemed valid and non-discriminatory, as no substantial evidence suggested otherwise. The Court allowed assessees to raise discrimination issues in appropriate forums if advised.

Sixth Issue: Reliefs and Tribunal's Orders

The Tribunal's orders were set aside as they were based on the now-invalidated Single Judge's judgment. The appeals by the State were allowed, and the writ petitions were disposed of accordingly.

Significant Holdings

The Court emphasized that the Entry Tax Act, 2012 was valid at the time of its amendment, and the amendments introduced by the West Bengal Finance Act, 2017 were lawful and non-discriminatory. The judgment reinforced the principle that taxes are not inherently unconstitutional unless proven discriminatory. The decision in Jindal Stainless Ltd. was pivotal in shaping the Court's conclusions, particularly regarding the overruling of earlier precedents.

In conclusion, the appeals against the Single Judge's judgment were allowed, and the writ petitions challenging the Tribunal's orders were disposed of, with no costs awarded. The decision underscores the necessity of a formal judicial order to set aside a judgment, even when precedents it relied on are overruled. The Court's ruling provides clarity on the application of entry tax laws in West Bengal, aligning them with constitutional requirements and Supreme Court jurisprudence.