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TMI Blog2025 (2) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ollow 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... Steel Limited & Ors., Mittal Technopack Private Ltd & Anr., Tamra Dhatu Udyog Pvt. Ltd. & Anr., Shakambari Ispat & Power Ltd. & Anr., Shakambari Overseas Trades Pvt. Ltd. & Anr., Gagan Ferrotech Ltd. & Anr., Hindalco Industries Ltd. & Anr., Sumo Metallic Pvt. Ltd. & Anr., Bentec India Ltd., Samsung India Electronics Private Limited, Hariom Polypacks Ltd., GSA Retail Ltd., Krishna Alex Pvt. Ltd., Birla Tyres Ltd., Jvl Agro Industries Ltd. & Anr., Mars Fragrance Pvt. Ltd., Om Prakash Agarwal., Modern India Concast Ltd., K.D. Gupta & Co., Kunal Garg, M/S. Maya Automobile., Ritum Jain., Jhilmil Commodities Pvt. Ltd., Deoki Nandan Agarwal., Himadri Chemicals & Industries Ltd. (Hcil), Asansol Polyfabs Pvt. Ltd., Terai Overseas Pvt. Ltd., Sanjeev Kumar Mall., Ganpati Chhajer., S.K. Selim @ Selim Sekh, Ajay Prakash Agarwal, Exclusive Lines & Anr., Asansol Polyfabs Pvt. Ltd., Delsey India Pvt. Ltd., Khokan Motors Works Pvt. Ltd. For the State : Mr. Kishore Dutta, Sr. Adv. Mr. Anirban Ray, Sr. Adv. Mr. T.M. Siddiqui, Sr. Adv. Mr. D. Ghosh, Adv. Mr. S. Sanyal, Adv. For the Respondent (Samsung): Mr. Sujit Ghosh, Sr. Adv. Ms. Mannat Waraich, Adv. Mr. A. Behura, Adv Mr. Pujon Chatterjee, Adv. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect. Vires of the West Bengal Finance Act, 2017 had been challenged by assessees before the Taxation Tribunal. Taxation Tribunal had set aside the amendments introduced to the Entry Tax Act, 2012 by the West Bengal Finance Act, 2017. State has assailed such decisions by way of the writ petitions. 4. Learned Advocate General appearing for the State has submitted that, the Act of 2012 was enacted exercising powers under Article 246 of the Constitution of India read with Entry 52 List II Schedule VII thereof. He has pointed out that, the Governor gave assent to the Act of 2012 on March 31, 2012. 5. Learned Advocate General has contended that, the Act of 2012 provided for levy and collection of taxes on the entry of goods into a local area in the State of West Bengal for consumption, use or sale thereof. He has pointed out that, the West Bengal Tax on Entry of Goods into Local Areas Rules were framed in exercise of powers under Section 22 of the Act of 2012. 6. Referring to the impugned judgement and order dated June 24, 2013 of the learned Single Judge, learned Advocate General has contended that, the learned Single Judge declared the Act of 2012 ultra vires relying upon the ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. State of Haryana) in this regard. He has referred to the issues considered by the Constitution Bench in Jindal Stainless Ltd (supra). 11. Learned Advocate General has contended that, Jindal Stainless Ltd (supra) noted that entry tax legislations are framed in exercise of powers under Article 304 (a) of the Constitution of India. State had retained its sovereign power to levy tax on entry of goods in a local area. Entry tax must be non-discriminatory between imported goods and goods manufactured in the State. Discrimination with valid reasons is permissible. Discrimination if any is to be considered by the appropriate Bench. Article 304 (b) of the Constitution of India does not deal with tax as a restriction to free trade, commerce and intercourse under Article 301 of the Constitution of India. Reasonable restrictions under Article 304 (b) of the Constitution does not comprehend levy of tax as a restriction to free trade, commerce and intercourse. Article 304 (a) and 304 (b) of the Constitution of India are disjunctive. Non-discriminatory entry tax is not a restriction to free trade, commerce and intercourse under Article 301 of the Constitution of India. High rate of tax is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 31, 2013. Jindal Stainless Ltd (supra) had been decided on November 11, 2016. Irrespective of whether the order dated July 31, 2013 of the Appeal Court allowed the Entry Tax Act to operate or not, the impugned judgement and order of the learned Single Judge stood overruled on November 11, 2016. Jindal Stainless Ltd (supra) had revived the Entry Tax Act, assuming that it was inoperative on the expiry of the stay of 6 weeks from June 24, 2013. Thus, according to the learned Advocate General, there was no legal impediment for the state legislature to enact the West Bengal Finance Act, 2017 on March 6, 2017. 15. Learned Advocate General has relied upon Section 19 of the 101st Amendment which mandated every State to amend their respective laws relating to goods or services or both in tandem with the provisions of the Constitution of India within one year of its commencement. The 101st amendment had been published in the Gazette of India on September 18, 2016 after receiving the assent of the President of India. The West Bengal Finance Act, 2017 had been promulgated on March 6, 2017 to amend inter alia the Entry Tax Act following the mandate of Section 19 of 101st Amendment. He has p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Ltd (supra). 20. Learned senior advocate appearing for Samsung has contended that, passing reference to the Act of 2012 of the State was made in Jindal Stainless Ltd (supra) and that, although, State of West Bengal was represented in such proceedings and arguments advanced highlighting certain errors in the impugned judgement and order dated June 24, 2013, nonetheless, the impugned judgement and order of the learned Single Judge dated June 24, 2013 is required to be set aside by a competent Court. 21. Learned senior advocate appearing for Samsung has contended that, Jindal Stainless Ltd (supra) cannot be construed to have overruled the impugned judgement and order of the learned Single Judge dated June 24, 2013. He has pointed out that the transfer petition bearing No. 291/2017 seeking transfer of intra-Court appeals against the impugned judgement and order of the learned Single Judge dated June 24, 2013 was filed before the Supreme Court by the State. However, the same came to be dismissed by the Supreme Court by its order dated March 21, 2017. 22. Learned senior advocate appearing for Samsung has contended that, till such time, the Division Bench in the appeal issues a form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 2017 by which, amendments to the Act of 2012 were introduced. He has pointed out that the amendments effected were given retrospective effect. 27. Learned senior advocate appearing for Samsung has contended that the amendments effectuated to the Act of 2012 by the West Bengal Finance Act, 2017 are not legally valid. He has pointed out that, the initial stay granted to the impugned judgement and order dated June 24, 2013 was for a period of 6 weeks from the date of such order that is August 18, 2013. Division Bench had passed an order dated July 31, 2013 while hearing the intra-Court appeal directed against the impugned judgement and order of the learned Single Judge dated June 24, 2013. Division Bench had issued limited directions with regard to the assessment proceedings and the refund of entry tax already collected. According to him, Division Bench did not stay the operation of the impugned judgement and order and consequently, the unamended Act of 2012 did not revive subsequent to August 8, 2013. 28. Learned senior advocate appearing for Samsung has contended that, once a statute is declared as unconstitutional it is as though, such statute was never passed. In support of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing tax on the intrastate movement of goods for the first time, in the absence of any supervening public interest, is arbitrary and unreasonable. He has contended that, such amendments must be struck down. He has also contended that, when the taxes imposed retrospectively by any legislation by retrospectively withdrawing the relief unequivocally conferred by a valid statutory provision, the amendments in the absence of any larger public interest, have to be held to be arbitrary and unreasonable. He has relied upon 2016 Volume 15 Supreme Court Cases 125 (Jayam And Company Vs. Assistant Commissioner and Another) and 1975 SCC Online Cal 274 (Bengal Paper Mill Co. Ltd. and Another Vs. Commercial Tax Officer, Calcutta and Others) in this regard. 33. Learned advocate appearing for Emami Agrotech Ltd has submitted that, validation acts can only be passed to cure defects are lacuna which are in the nature of small repairs and not to carry out substantial amendments which has the effect of living taxes and transactions for the first time which was never the intent of the legislature when the law was first enacted. In support of such contention, he has relied upon 1973 Volume 1 Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, his client underwent a corporate insolvency resolution process under the provisions of the Insolvency and Bankruptcy Code, 2016. He has contended that, all liabilities of the corporate entity on account of successful resolution, stand extinguished/abated. He has contended that, his client has no liability for the period prior to the order dated April 7, 2022 passed by the National Company Law Tribunal. 39. Learned advocate appearing for Ruchi Soya Industries Ltd and 2 other assessees has contended that, the impugned judgement and order of the learned Single Judge stands overruled in view of the decision of the Hon'ble Supreme Court in Jindal Stainless Ltd. (supra). Nonetheless, he has contended that, the Division Bench before whom the appeals are pending, has to decide on the legality and validity of the impugned judgement and order of the learned Single Judge. Till such time a decision is rendered by the Division Bench, the judgement of the learned Single Judge does not lose its force as a final judgement. In this regard, he has relied upon Father William Fernandez and Others (supra). 40. Learned advocate appearing for Ruchi Soya Industries Ltd has contended that, the content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 to the Entry Tax Act, 2012 discriminatory? v. Are the impugned orders of the learned Tribunal correct? vi. To what relief or reliefs are the parties entitled to? 44. The specially assigned matters before us can be conveniently classified into two categories, with the first category being the appeals directed against the impugned judgment and order dated June 24, 2013, passed by the learned Single Judge and the second category being writ petitions directed against orders of the Tribunal deciding on the vires of the amendments to the Entry Tax Act, 2012, as introduced by the West Bengal Finance Act, 2017. 45. State of West Bengal had enacted the West Bengal Tax on Entry of Goods into Local Areas Act, 2012. Several writ petitions had been filed challenging the vires of the Act of 2012. By the impugned judgement and order dated June 24, 2013, learned Single Judge had held the Act of 2012 to be ultra vires Article 304 (b) of the Constitution of India. Learned Single Judge had also granted stay of the operative portion of the impugned judgement and order for a period of 6 weeks from the date of such judgement and order. 46. State of West Bengal had preferred several appeals a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Jindal Steel Ltd (supra). 54. The issues that Jindal Stainless Ltd (supra) have answered are framed in paragraph 11 thereof which are as follows: - "11. At the hearing before us the learned counsel for the parties agreed after a day long exploratory exercise that the questions that fall for determination by this Court could be reframed as under: 11.1. (i) Can the levy of a non-discriminatory tax per se constitute infraction of Article 301 of the Constitution of India? 11.2. (ii) If answer to Question (i) is in the affirmative, can a tax which is compensatory in nature also fall foul of Article 301 of the Constitution of India? 11.3. (iii) What are the tests for determining whether the tax or levy is compensatory in nature? 11.4. (iv) Is the entry tax levied by the States in the present batch of cases violative of Article 301 of the Constitution and in particular have the impugned State enactments relating to entry tax to be tested with reference to both Articles 304 (a) and 304 (b) of the Constitution for determining their validity?" 55. Jindal Stainless Ltd (supra) has answered the reference in paragraph 1159 as follows: - "1159. By majority the Court answers th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nouncements are to the extent of such reliance, overruled. 57. Learned Single Judge in the impugned judgement and order dated June 24, 2013 has relied upon Atiabari (supra), Automobile Transport (supra) and Jindal Steel Ltd (supra) to hold that the Entry Tax Act, 2012 is ultra vires the Constitution of India. 58. Learned Single Judge having relied upon Atiabari (supra), Automobile Transport (supra) and Jindal Steel Ltd (supra) in arriving at the constitutional validity of the Entry Tax Act, 2012 and subsequently, Jindal Stainless Ltd (supra) having overruled Atiabari (supra), Automobile Transport (supra) and Jindal Steel Ltd (supra) and all other judgements that follow such pronouncements, the impugned judgement and order dated June 24, 2013 does not survive the decision rendered in Jindal Stainless Ltd (supra). 59. Significantly, attention of the Constitutional Bench in Jindal Stainless Ltd (supra) had been drawn to the provisions of the Entry Tax Act, 2012 although, the same was not directly in issue in such reference. 60. The first issue noted in these batch of matters necessarily has raised a question whether, by virtue of the decision in Jindal Stainless Ltd (supra) the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this judgement and order. As on date therefore, the interim order dated July 31, 2012 is still continuing. At least no material was placed before us to suggest otherwise in course of the long hearing of these matters. 67. The Division Bench while passing the interim order on July 31, 2012 obviously considered the Entry Tax Act, 2012 to be valid as the validity of the Entry Tax Act, 2012 was in issue in the appeals. It did not pronounce the Entry Tax Act, 2012 to be invalid at any point of time prior to the date of the amendments introduced to the Entry Tax Act, 2012 on March 6, 2017. Issue of validity of the Entry Tax Act, 2012 was still open at the point of time of the amendments being enacted. 68. 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it considered the Entry Tax Act, 2012 to have been obliterated subsequent to the filing of the appeals and as on the date of framing of its order. 73. In view of the discussions above, we are not in a 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, we are also unable to hold 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. 74. State legislature by the West Bengal Finance Act, 2017 had amended the Indian Stamp Act, 1899, in its application to the State of West Bengal, The West Bengal Taxation Tribunal Act, 1987, the West Bengal Sales Tax (Settlement of Dispute) Act, 1999, the West Bengal Tax on Entry of Goods into Local Areas Act, 2012 and the West Bengal Value-Added Tax Act, 2003 in order to provide for validation in respect of levy, assessment and coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any court or other authority, no levy, assessment including provisional assessment, deemed assessment or summary assessment, reassessment or collection of any tax, interest, late fee or penalty made or purporting to have been made under the provisions of the West Bengal Tax on Entry of goods into Local Areas Act, 2012 (hereinafter referred to as the said Act) before the date of coming into force of this provision, shall be deemed to be invalid or ever to have been invalid on the ground only that such levy, assessment including provisional assessment, deemed assessment or summary assessment, reassessment or collection was not in accordance with law and such tax, interest, late fee or penalty levied, assessed, reassessed or collected or imposed or purporting to have been levied, assessed, reassessed or collected or imposed shall, for all purposes, be deemed to be and always to have been validly levied, assessed, reassessed or collected or imposed as if such levy, assessment including provisional assessment, deeded assessment or summary assessment, reassessment or collection or action or thing, had been made, taken or done under the said Act as amended by section 5 of the principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lications before the learned Tribunal as also the writ petitions before the learned Single Judge of the High Court did not contain such materials. 82. Learned Advocate General has also acknowledged the fact that, in the event, an individual instance of discrimination is brought to the notice of a judicial forum, the same should be considered in light of the law prevailing. 83. In such circumstances, applying the ratio of Bharti Airtel Limited (supra), State of Uttar Pradesh and Others (supra) and Sree Rayalaseema Alkalies and A. Che. And Others (supra), we permit the individual assessees to raise the contention of discrimination if any, before the appropriate forum, in accordance with law, if so advised. 84. Deep Chand (supra) has considered the validity of the UP Transport Services (Development) Act, 1955 in the context of the scheme of nationalisation of State Transport Service formulated by the State Government and the consequential orders made by it and the Motor Vehicles (Amendment) Act, 1956 passed by the Parliament. It has held that, the amending Act occupies the same field in respect of the schemes initiated after the amending Act and therefore to that extent the State A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to the provisions of a law. It has also held that, the fact that the dealer is not in a position to pass on the tax to others does not affect the competence of the legislature to enact a law imposing tax retrospectively since it is a matter of legislative policy. 90. Tata Motors Ltd (supra) has held that, although State has enormous powers in the matters of legislation and in enacting fiscal laws, actions taken by the State cannot be so irrational and so arbitrary so as to introduce one set of rules for one and another set of rules for another, by amending the laws in such a manner as to withdraw the benefit that had been given earlier resulting in higher burdens upon the assessees without any reason. It has struck down section 26 of the Maharashtra Tax Laws (Levy, Amendment and Repeal) Act, 1989. 91. 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. 92. Lohia Machines Ltd (supra) has upheld the validity of the Rule 19 A (3) of the Income Tax Rules, 1961 on the grounds that, same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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