Document Fragment View

Matching Fragments

Entry 81 of the notification dated July 30, 1992 reads as under :

"81. Raw materials, component parts and inputs (other than those specified in the Second Schedule) which are used in the manufacture of an intermediate or finished product."

(Explanation is not extracted as it is not necessary for the purpose of this case.)

32. Entry 80 to the First Schedule to the Act is mere topic of legislation and it must receive liberal construction. The entry merely says that the entry into local area the raw materials, component parts and inputs used in the manufacture of an intermediate or finished products other than raw materials, component parts and inputs specified in the Second Schedule are liable to tax under the Act. The expressions "other than those specified in the Second Schedule" refers to raw materials, component parts and inputs and by no stretch of imagination refers to items which are not liable to tax under the Second Schedule. However, Sri R. V. Prasad, the learned counsel appearing for some of the petitioners, would vehemently contend that a liberal construction of the entry 80 of the First Schedule to the Act would only mean that tax under the Act is leviable only on such of those raw materials, component parts or inputs, which are used in the manufacture of "any other goods" other than those mentioned in the Second Schedule. By way of analogy, the learned counsel would submit that "newsprint" is a raw material for the purpose of manufacture of "newspaper" which is exempted commodity since it finds a place in the Schedule to the Act and the causing of entry of the aforesaid raw material namely "newsprint" into the local area was not liable for taxation under the Entry Tax Act in view of the language employed in entry 80 of the Schedule to the Act and then contends entry 81 which has been inserted by a notification dated July 30, 1992 has brought to tax something which the Legislature did not authorise the rule-making authority and therefore, he contends that entry 81 of the notification dated July 30, 1992 is ultra vires of the Act and the notification issued is beyond the competence of the rule-making authority.

33. Though the argument is attractive, I am satisfied that it is not sound. The intention of the Legislature during the relevant period was to levy tax under the Act on all goods which enter into the local area except those goods mentioned in the Second Schedule. In the list under entry 80, the Legislature has authorised the rule-making authority to levy tax on raw materials, component parts and inputs which are used in the manufacture of an intermediate or finished products other than those raw materials specified in the Schedule. The expression other than those specified in the Second Schedule in my view, should be read along with raw materials, component parts and inputs and not along with an intermediate or finished products. Keeping the intention of Legislature in mind, the rule-making authority in my view, has rightly exempted only such of those raw materials, component parts and inputs which are specified in the Second Schedule from levy of entry tax, which are used in the manufacture of intermediate or finished products and not those raw materials which are used in the manufacture of Second Schedule goods. Alternatively, it can be said that it is not the raw material/s used in the manufacture of finished product which finds a place in the Second Schedule is exempted from levy but raw materials, components parts and inputs specified in Second Schedule are exempt from levy. Take for instance "cotton yarn" which is a Second Schedule commodity and this is a raw material used in the manufacture of textiles. Causing of entry of this raw material into local area for the manufacture of a finished product would have been exigible for levy of tax under the Act, since it is a Second Schedule goods exempt from levy, the Legislature has thought fit to exempt it even when it is used as a raw material for the manufacture of finished product. The intention of the Legislature seems to be that goods specified in the Second Schedule are exempt from levy under the Act and they are also exempt from levy even when they are used as raw materials. This intention of the Legislature is truly reflected in entry 81 of the notification dated July 30, 1992 by the rule-making authority while inserting the said entry under the First Schedule. In that view of the matter, it cannot be said that the notification so issued is beyond the competence of the rule-making authority or ultra vires of the Act.