Madhya Pradesh High Court
Commissioner Of Sales Tax And Ors. vs Cigarette Agencies on 16 December, 2004
Equivalent citations: [2006]144STC494(MP)
Author: Dipak Misra
Bench: Dipak Misra, U.C. Maheshwari
ORDER Dipak Misra, J.
1. Invoking the jurisdiction of this Court, under Clause 10 of the Letters Patent, the Commissioner of Sales Tax of State of M.P. and other functionaries of the aforesaid department have called in question the penetrability and tenability of the decision rendered by the learned single Judge in M.P. No. 271 of 1986.
2. The facts which are essential to be stated for the purpose of disposal of the present appeal are that the respondent, hereinafter referred to as "the petitioner", was assessed to entry tax in Entry Tax Case No. 51/1980-81 relating to the period of August 11, 1980 to March 31, 1981 for a sum of Rs. 1,42,524 and Rs. 50,000 as penalty under Section 43(1) of the Entry Tax Act (M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Ahdhiniyum, 1976).
3. The aforesaid order of assessment was affirmed by order dated November 26, 1984 in Revision Case No. 170/R/1984 by the revisional authority, Additional Commissioner of Sales Tax, Jabalpur. It is not in dispute that the petitioner is a registered dealer as a wholesaler at Bilaspur, which was a part of the State of the Madhya Pradesh before Madhya Pradesh Re-organisation Act, 2000 came into force. He has his place of business at the railway area, Bilaspur, which is not a local area as defined under the Entry Tax Act. The petitioner obtained certain cartons of cigarettes at the railway area (Maldhakka) and delivered the same to the retailers of Bilaspur, Ambikapur, Raigarh and Manendragarh. As the sale was effected at Maldhakka, the railway area, the petitioner, as pleaded by him, was not to be held liable for payment of the entry tax as there was no incidence of tax under Section 3 of the Entry Tax Act. It was the case of the petitioner that the cigarettes sold to retail dealers of Rajnandgaon, Raipur, Dhamtari and Jagdalpur were consigned directly to these destinations from Bombay by the Golden Tobacco Company, Bombay. The bilties (M.T. Rs.) for the goods were sent to the petitioner at Maldhakka, who after receiving the bilties endorsed the same in favour of the dealers of Rajnandgaon, Raipur, Dhamtari and Raigarh. The said dealers caused entry of the goods in their respective areas and also paid entry tax.
4. When the matter stood thus, some raid was conducted by the Sales Tax Department and certain bilties and other materials were found. In the assessment proceedings, statements were recorded. The said documents were used in the assessment proceeding and ultimately, it was held by the assessing officer that the petitioner had caused the entry of the goods in the Bilaspur local area and also transferred the goods and sold the goods in favour of the dealers of Rajnandgaon, Raipur, Dhamtari and Jagdalpur within the local area of Bilaspur, therefore, he was liable to pay the entry tax. The petitioner's contention was that after receiving the bilties (M.T. Rs.), he had endorsed the bilties or transferred the title in the goods in favour of those four purchasers within the Maldhakka area which admittedly is not the local area and hence, he could not have been made liable to pay the entry tax. The assessing officer rejected the aforesaid stand of the petitioner and came to hold that as the petitioner had transferred the documents and the transaction had taken place within the Bilaspur local area and, therefore, he would be liable to pay the entry tax. However, the assessing officer expressed the view that the goods which were received in Maldhakka area, even if were sold by the petitioner to purchasers of Bilaspur, Raipur, Ambikapur and Manendragarh, he would not be liable to pay entry tax because the transactions took place at Maldhakka which was not the local area. Being of this view, he granted the exemption to the petitioner in relation to the said transaction. Being aggrieved by the said order, passed by the assessing officer, as has been indicated hereinbefore, the petitioner preferred a revision, which came to be rejected by the Additional Commissioner.
5. Before the learned single Judge, it was contended that if the language of Section 3 of the Entry Tax Act is properly understood, it would be crystal clear that it is the entry of goods which makes one liable to pay entry tax and as, in the case at hand, the goods never entered within the local area of Bilaspur, entry tax could not have been levied, and as a logical corollary the penalty could not have been imposed. Learned single Judge came to hold that mere entry of title deeds in the local area would not be within the ambit of Entry Tax Act. He has also recorded a finding that the sale of bilties took place at Maldhakka, which is not a local area and judged from any spectrum, the petitioner would not be liable for entry tax.
6. Questioning the correctness of the aforesaid judgment, Mr. S.K. Yadav, learned Government Advocate has submitted that in the case at hand, analysis made by the learned single Judge in the second spectrum, namely, that as the transaction had taken place within the railway area which is not the local area, therefore, it would not be covered under the conception of entry tax is correct but the law as has been laid down by the learned single Judge in para graph 8 is not correct. Submission of Mr. Yadav is after the conclu sion arrived at by the learned single Judge that mere transfer of title deeds in the local area would not invite the liability of imposition of entry tax and would not bring the dealer within the ambit of entry tax has not been correctly stated inasmuch as though goods actually are sent directly from the company, the deeds are transferred within the railway area and under this factual matrix the conception of non liability has to be ostracised.
7. Incrementing the submission it is contended by Mr. Yadav that the decision rendered by the learned single Judge that entry of title deeds in the local area would not invite the imposition of entry tax, if accepted to be absolutely presentable, it would cause difficulty since there is a transfer of articles through title deeds within the local area which is defined in the Entry Tax Act and in that event the impost of entry tax though warranted, is defeated. In essence, the submission of the learned counsel for the State is that the entry of title deeds to the local area would attract imposition of entry tax.
8. Mr. Jain, learned counsel appearing for the respondent, countering the aforesaid proponements, contended that the interpre tation made by the learned single Judge cannot be found fault with inasmuch as the sine qua non for imposition of entry tax are consumption, use or sale in the local area and does not mean mere physical entry would attract the imposition of such tax. To bolster the aforesaid submission, learned counsel 1ms commended us to the decision of the apex Court rendered in the case of Tata Engineering & Locomotive Company Limited v. Municipal Corporation of the City of Thane [1992] 86 STC 363.
9. To appreciate the rivalised submissions put forth at the Bar it is appropriate to refer the definition clause in Section 2(b) which defines "entry tax". It reads as under:
Entry tax' means a tax on entry of goods into a local area for consumption, use or sale therein levied and payable in accordance with the provisions of this Act and includes composition money payable under Section 7-A. Section 2(d) defines local area which reads as under:
'Local area' means the area comprised within the limits of a local authority.
At this juncture, we may refer with profit to the definition of "local goods" under Section 2(f), which is as under:
Local goods', in relation to a local area means goods of local origin as distinct from goods which enter into that local area Section 7-A deals with composition. The said provision has fictional purpose of composition. The purpose of the Act is to levy tax on the entry of goods into the local area for consumption, use or sale therein. At this juncture, we think it appropriate to refer to Section 11 which deals with the burden of proof. The aforesaid section reads as under:
Section 11: Burden of proof.--(1) The burden of proving-
(a) that a dealer or a person notified under Sub-section (2) of Section 3 has not effected the entry of any goods specified in Schedule II into a local area for consumption, use or sale therein ;
(b) that a dealer has not effected the entry of any goods specified in Schedule III or a person notified under Sub-section (2) of Section 3 has not effected the entry of any goods specified in Schedule III and notified under Sub-section (2) of Section 3 into a local area for consumption or use therein ;
(c) that a dealer is entitled to deduction in respect of purchase value of local goods for the purpose of the computation of taxable purchase value ;
(d) that goods purchased by a dealer in a local area from a per son or a dealer who is not a registered dealer had not entered into that local area before they were purchased by him ;
(e) that a dealer, is entitled to any other deductions in computing the taxable quantum ;
(f) that a person has not effected the entry of the motor vehicle into a local area for consumption, use or sale therein ;
shall be on the dealer, or such person, as the case may be.
(2) For purposes of claiming deduction in respect of the purchase value of local goods which have been consumed, used or sold in the same local area in relation to which such goods are local goods the dealer shall produce a bill, invoice or cash memo in the manner specified in Section 7 obtained from the registered dealer from whom he has purchased the local goods in that local areas as provided in Sub-sections (1) and (2) of Section 7.
10. Question for consideration is whether entry of title deeds into the local area would attract to the liability of entry tax. In the case of Tata Engineering & Locomotive Company Limited v. Munici pal Corporation of the City of Thane [1992] 86 STC 363, the apex Court while dealing with the certain provisions of Maharashtra Municipal Act, 1965 which related to Maharashtra Municipalities (Octroi) Rules, 1968 expressed the view that in the case of impost of octroi, the taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area and mere physical entry into the octroi limits would not attract levy of octroi. Their Lordships have expressed the view that when the goods are brought in not for consumption within the area but for temporary detention and eventual export, octroi is not leviable.
11. We have referred to the aforesaid decision only to highlight that in the aforesaid case the apex Court has dealt with concept of consumption, use or sale within the municipal area. In the aforesaid case, while dealing with the earlier cases, emphasis was laid on real or actual facet of sale and consumption. At this juncture, we think it useful to refer to the decision rendered in the case of Associated Cement Companies Ltd. v. State of Madhya Pradesh . In the aforesaid case in paragraph 26, it has been held as under:
On a conspectus reading of the aforesaid decisions and understanding the ratio in proper perspective there remains no trace of doubt that transport by rail is not liable to terminal/export tax. Submission of Mr. V.K. Tankha is that as goods are manufactured in the municipal area at Kymore and the goods are transported by vehicle to the railway station they are liable to terminal tax and would be covered under entries 52 and 56 of the List II is not acceptable as such a submission is not in consonance with the law laid down by the apex Court as well as by this Court. It is noteworthy to mention here that the manufacturing of goods within the municipal area is not the acid test. The real test is export of goods or transport from the manufacturing unit outside the limits of municipal area. The submission of Mr. Tankha is acceptable inasmuch as if the goods are to be exported by the rail or carried by the railways they have to be carried to the railway station. By no stretch of imagination it can be said that because they are carried by some vehicle from the manufacturing unit to the railway station terminal tax would be leviable. If such an interpretation is given acceptance, in my considered view entry 89 would be frustrated and entry 56 would be given the meaning beyond its comprehensive connotation. Entry 56 deals with goods 'carried by road'. In the case at hand, as has been stated above goods are taken out from the municipal area by rail. Hence, the terminal tax by the municipality cannot be imposed.
12. We are conscious, in the aforesaid case, a different kind of dispute was involved but the fact remains that it was held therein, even though the goods are manufactured in the municipal area and transported by vehicle, they would not be liable to terminal tax. In the said case the question of terminal tax was involved. The manufacturing of goods within the municipal area is not the acid test. The real test is export of goods or transport from the manufacturing unit outside the limits of municipal area. It was held because the goods were carried from the municipal area by rail, the terminal tax would not be levied. Similarly, when the statute commands that there has to be consumption, sale or use of such goods, it would be far-fetched to hold that if title deeds in local area are brought in respect of goods, it would become liable for entry tax. The assessing officer as well the revisional authority have not guided themselves properly by the language enjoined by the statute, nor considered even the scheme and spirit of the Act as well as the definition clause and Section 3 which deals with incidence of taxation which are absolute and unambiguous and hence in the remotest technical sense, on the bedrock of existing factual matrix, the impost of entry tax would not be attracted.
13. Resultantly, we do not find any error committed by the learned single Judge while expressing the view that mere entry in the local area would not bring the case within the sweep for the purpose of entry tax. We think it apposite at this juncture to state that view has been expressed exclusively in connection with entry tax imposition, realisation, composition and levy of penalty governed by the aforesaid Act. It is a complete enactment in itself. When a defi nition of "entry tax", "local area" and the "incidence of taxation" have been given, the court is not required to travel beyond it to get any other kind of meaning. Therefore, we are of the considered view that mere entry of title deeds in the local area could not attract the liability of entry tax.
14. Consequently, we concur with a view taken by the learned single Judge and dismiss the letters patent appeal. However there shall be no order as to costs.