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TMI Blog1995 (9) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to prove that entry tax had been levied on such goods in the hands of the selling registered dealers where no seal required by section 7(1) of the Entry Tax Act was affixed on the sales bills?" (iii) M.C.C. No. 520 of 1986: "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee is not entitled to claim that no entry tax should be levied on him under clause (iv) to the first proviso of section 3(1) of the Entry Tax Act? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the burden was upon the assessee to prove that entry tax had been levied on such goods in the hands of the selling registered dealers where no seal required by section 7(1) of the Entry Tax Act was affixed on the sales bills?" (iv) M.C.C. No. 557 of 1986: "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee is not entitled to claim that no entry tax should be levied on him under clause (iv) to the first proviso of section 3(1) of the Entry Tax Act? (ii) Whether, on the facts and in the circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods specified in Schedule II to the Act. Entry tax will be levied under section 3 on the entry in the course of business of a dealer, of goods specified in Schedule II into each local area for consumption, use or sale therein. Such tax shall be paid by every dealer liable to tax under the Sales Tax Act who has effected entry of such goods. Sub-section (1) has several provisos. The relevant proviso is (iv). According to this proviso, no tax under sub-section (1) shall be levied in respect of goods specified in schedule II other than local goods purchased from registered dealer on which entry tax is payable or paid by the selling registered dealer. This is the proviso as it stands after the Amending Act No. 24 of 1982. Before the amendment, according to the proviso, as it stood before the amendment, no tax shall be levied in respect of goods specified in Schedule II other than local goods which are purchased from registered dealers. We are in this case concerned by the proviso as it stood prior to its amendment by Act No. 24 of 1982. 6.. "Local area" means an area comprising the limits of a local authority. "Local goods in relation to a 'local area' means goods of local origin as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to in sub-section (1): Provided that where the goods are purchased by a registered dealer who effects the entry of such goods into a local area other than the local area in relation to which such goods are local goods, it shall not be necessary for him to make the statement referred to in sub-section (1). (3) Every registered dealer referred to in sub-sections (1) and (2) shall maintain a separate account of purchases and consumption, use or sale of local goods and separate bill books and invoice for the sales of local goods effected by him in the same local area in relation to which the goods are local goods. (4) ........(Omitted). (5) Where a registered dealer referred to in sub-section (1) or sub-section?(2) has, in the course of his business, sold local goods to other registered dealers and has failed to make the statement referred to in sub-section (1), it shall be presumed that he has facilitated the evasion of entry tax on the local goods so sold and accordingly he shall be liable to pay penalty equal to ten times the amount of entry tax payable on such goods as if they were not goods of local origin. (6) Where any registered dealer referred to in sub-section (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mal Ramesh Kumar v. State of M.P. 1984 MPLJ 585, considered the question elaborately and repelled the contention that the purchasing dealer (assessee) had to establish further that the goods in the hands of selling dealer were not of local origin. The selling registered dealer had to be presumed to have prepared the bill in accordance with law and if the goods were local goods, it was the duty cast on him to affix the rubber stamp as required under rule 7 and as rubber stamp had not been affixed, it was not open to the selling dealer to turn round and say that the goods were of local origin. The purchasing dealer, therefore, was not expected to establish anything further when he had produced the bill which showed that the goods were not of local origin. It was observed that the burden of proof provided in section 11 that the dealer has not effected entry of any goods specified in Schedule II into a local area for consumption, use or sale therein, shall be on the dealer. The burden of proving that a dealer is entitled to deduction in respect of purchase value of local goods for the purpose of "computation" of taxable purchase value is on the dealer. The burden of proving that the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecade ago by this Court in Jothani Cloth Stores, Bilaspur v. Assistant Sales Tax Officer, Bilaspur (1982) 15 VKN 280. The Division Bench in M.C.C. No. 291 of 1986 [Commissioner of Sales Tax v. Garg Dal Mill [1995] 99 STC 137 (MP); (1995) 28 VKN 65] also summarised the proviso (iv) to section 3(1) as stating that no entry tax is payable in respect of Schedule II goods other than local goods purchased from registered dealer if such tax has already been paid by the registered dealer, ignoring that even under amended proviso, the condition is "on which entry tax is payable or paid" by the selling registered dealer. The emphasis is not only on actual payment, but also on the liability to pay. 13.. There is some degree of confusion in regard to the scheme of provisions of the Entry Tax Act. Clarity requires that basic principles of entry tax law are kept in mind. Entry tax is a tax on entry of goods into a local area for consumption, use or sale in the course of business of a dealer of schedule II goods. Entry tax is a single point tax, i.e., once entry tax has been paid or liability incurred on the entry of Schedule II goods into a local area, entry tax is not leviable thereafter, tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and, therefore, where the goods are moved from that local area to another local area by the assessee, entry tax would be payable. 14.. The question next arises for consideration is the burden of proof in this regard. Undoubtedly according to section 11 of the Act, the initial burden is on the assessee to prove that the assessee did not effect entry of Schedule II goods into local area for consumption, use or sale therein, or that he is entitled to deduction in respect of purchase value of such goods. The Legislature has envisaged the difficulties and complications arising in the working of the Act which provides for entry tax. When goods enter a local area, there is no knowing the place of origin of the goods and whether taxable event had occurred already. Goods may be brought into local area openly with necessary declarations and payment of entry tax. There may also be attempts to cause entry of goods in the local area clandestinely without paying entry tax. The purchasing registered dealer has no way of proving that the goods had already incurred liability to pay entry tax. That is why the Legislature enacted section 7 providing a convenient device to protect honest dealers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he burden on him. 16.. Absence of rubber stamp endorsement cannot, of course, be conclusive. There may be a variety of reasons why the rubber stamp has not been affixed. One is that the goods are really not local goods and tax had been paid or tax liability had been incurred. Another is that seal had not been affixed on account of negligence or carelessness. The assessee certainly can take advantage of the prima facie import of absence of rubber stamp. It is then for the Revenue to collect materials to indicate that the goods had not subjected entry into the local area and taxable event had not occurred earlier and that absence of rubber stamp is not deliberate and is accidental or negligent. 17.. We are respectfully of the opinion that the decision in Commissioner of Sales Tax, Madhya Pradesh v. Garg Dal Mill, Lashkar [1995] 99 STC 137 (MP); (1995) 28 VKN 65 did not consider the earlier decisions of the court and does not lay down the correct law. The decision in Renomal Ramesh Kumar v. State of M.P. 1984 MPLJ 585 lays down the law correctly. 18.. For the reasons indicated above, we hold that the question referred to in M.C.C. No. 454 of 1986 and the first question referred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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