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2012 Supreme(Ori) 308
ORISSA HIGH COURT, CUTTACK
V.GOPALA GOWDA AND S.K.MISHRA, JJ.
TATA STEEL LTD
ESSAR STEEL ORISSA
M/s. ACC LTD.
M/s. JAYSHREE CHEMICALS LTD.
M/s. GMR KAMALANGA
INDIAN METALS AND FERRO LTD
HINDALCO INDUSTRIES
RUNGTA MINES LTD
MANGILLALL RUNGTA
NAGAR EXPORT PVT, LTD
MIKAGE STONE DEVELOP
M/S. BHARATI TELEMEDI
MAHASWARI COAL
M/S. ACC LTD.
IFGL REFRACTORIES
M/S ADANI ENERPRISE
EMAMI PAPER MILLS
M/S VEDEANT ALUMINIUM
DISHNET WIRELESS LTD
M/S VYOM TRADE LINK - Petitioners
Versus
State of Odisha and others - Opposite parties
WRIT PETITION (C) Nos. 15519/2010, 5737/2010, 7975/2011, 18577/2011, 5186/2012, 5187/2012, 1087/2008, 2959/2008, 3562/2008, 3563/2008, 3775/2009, 3903/2009, 3132/2010, 1963/2012, 5764/2007, 6982/2012, 7/2008, 3010/2012, 13978/2008, 3515/2008, 579/2010 and 5101/2012.
Decided On : 09.10.2012
For Petitioners - Mr. S. Ganesh (Senior Advocate) M/s Jagabandhu Sahoo, N.K. Rout, and P. Mohapatra (WP(C) 15519 & 3132 of 2010) (WP(C) 1087, 2959, 3562 &3563 of 2008) (WP(C) 3775, 3903 of 2009) (WP(C) 1963 of 2012)
M/s Satyajit Mohanty, R.R. Swain, S. Pattanaik and N.K. Dash (WPC 5186, 5187 & 6982 of 2012)
M/s Bibeka Mohanty, S.K. Mishra, S.K. Jena, N.R. Mohanty, C.R. Dash, M.Roul & M. Wright (WP(C) 18577/2011, 3515/2008 &, 579/2010 M/s Pranaya K. Harichandan CH.M.R. Mishra, B. Behera (WPC 3010 & 5101 of 2012)
M/s Subash Chandra Lal, Sumit Lal & Sujit Lal (WP(C) 7 & 13978 of 2008, & 5764 of 2007 M/s Sidhartha Ray and S. Dey (WP(C) 7975 of 2011)
M/s S. Kanunga, CH.S. Mishra, R.N. Pattnaik, N.R. Mohanty, M/s Bibek Mohanty, S.K. Mishra, B.K. Sahool & M.Wright (WP(C) 5737 of 2010)
For Opposite parties -Mr. A. Mohanty (Advocate General) and Mr. R.P. Kar
Headnote:
ENTRY TAX - SUBJECT - ORISSA ENTRY TAX ACT, 1999 - SECTIONS 2(D), 2(J), 3 - CONSTITUTION OF INDIA - ARTICLES 246, 286 - CUSTOMS ACT, 1962 - SECTION 12 - INTERPRETATION OF STATUTES - TAXING STATUTES - LEGISLATIVE INTENT - SCOPE OF TAXATION - IMPORTED GOODS - LEVY OF ENTRY TAX - VALIDITY - RESTRICTIONS ON STATE LEGISLATURE'S POWER TO IMPOSE TAX ON SALE OR PURCHASE OF GOODS - DISTINCTION BETWEEN ENTRY TAX AND CUSTOMS DUTY - TAXABLE EVENT - POINT OF LEVY - LEGISLATIVE COMPETENCE - ENTRY 52 OF LIST II OF SEVENTH SCHEDULE - ENTRY 83 OF LIST I OF SEVENTH SCHEDULE - DOCTRINE OF PITH AND SUBSTANCE - PRINCIPLE OF INTERPRETATION - CHARGING SECTION - MEASURE OF TAX - SCOPE OF JUDICIAL REVIEW - JUDICIAL RESTRAINT - CONSTRUCTION OF STATUTES - PLAIN MEANING RULE - GRAMMATICAL INTERPRETATION - DEFINITION OF 'PLANT' - INCLUSION OF MACHINERY IN THE DEFINITION OF 'PLANT' - LIABILITY TO ENTRY TAX - EXEMPTION OF CERTAIN RAW MATERIALS AND SPARES FROM ENTRY TAX.
Fact of the Case:
The petitioners, operating different industries, imported coal from outside the country for use as raw materials. They were registered under the OVAT Act, CST Act, and the Orissa Entry Tax Act, 1999 (the Act). They brought various goods, including scheduled goods, from within and outside the State and from outside the country. The petitioners claimed that the entry tax levied on imports was illegal and sought exemption from such tax. Some petitioners also challenged the levy of entry tax on plant and machinery imported from outside the country and on certain raw materials and goods imported from outside the country and purchased from outside the State.
Finding of the Court:
1. The levy of entry tax on imported goods is valid and does not violate the ban imposed under Article 246 of the Constitution to enact law from Entry 52 of List II of Seventh Schedule. 2. The provisions of the Orissa Entry Tax Act itself do not reveal the intention of the legislator not to tax goods, which has been purchased from outside the country. 3. The paper plant, which is brought in a knock down condition by Emami Paper Mills, comes within the definition of machinery and is liable for entry tax. 4. The various raw materials and spares, as described in the case of IFGL Refractories Ltd. Vs. State of Orissa, are not liable for entry tax.
Issues: 1. Whether the entry tax under the Orissa Entry Tax Act, 1999, can be levied and/or imposed on the value of the goods imported by the petitioners from outside the country? 2. Whether such entry tax under the aforesaid Act can be levied and/or imposed on import of plant and machinery for establishing a plant in the State of Odisha? 3. Whether the entry tax can be levied on certain raw materials and goods imported from outside the country and purchased from outside the State when such materials have not been listed in the schedule appended to the Orissa Entry Tax Act? 4. Whether the Orissa Entry Tax Act, 1999, hereinafter referred to as ‘the Act’ for brevity, is violative of Entry 83 of List I of Seventh Schedule and Article 246 of the Constitution of India.
Ratio Decidendi: 1. The levy of entry tax on imported goods is permissible as the taxable event of entry tax is the entry of goods into a local area, whereas the taxable event of customs duty is the import of goods into the territory of India. The two imposts are distinct and separate, and there is no overlapping of legislative power. 2. The provisions of the Act do not reflect an intention to exclude imported goods from the levy of entry tax. The definition of “entry of goods” in Section 2(d) of the Act includes goods brought from outside the country. Further, the definition of “purchase value” in Section 2(j) of the Act includes all charges incidental to the purchase of goods, including customs duty. 3. The plant, which is brought in a knock down condition, is a combination of machinery in a systematic manner so as to produce goods and, therefore, it is coming within the definition of machinery and, hence, it is liable for entry tax. 4. The raw materials and spares, which are not included in the schedule appended to the Act, are not liable for entry tax.
Final Decision: All the writ petitions, except W.P.(C) No.7 of 2008, are dismissed. W.P.(C) No.7 of 2008 is allowed to the extent indicated above. All the Misc. Cases, arising out of the writ petitions, are disposed of.
JUDGMENT
S.K.Mishra, J.
The following questions arise for determination in this bunch of writ petitions:-
(i) Whether the entry tax under Orissa Entry Tax Act, 1999, can be levied and/or imposed on the value of the goods imported by the petitioners from outside the country ?,
(ii) Whether such entry tax under the aforesaid Act can be levied and/or imposed on import of plant and machinery for establishing a plant in the State of Odisha ?
(iii) Whether the entry tax can be levied on certain raw materials and goods imported from outside the country and purchased from outside the State when such materials have not been listed in the schedule appended to the Orissa Entry Tax Act ? and
(iv) Whether the Orissa Entry Tax Act, 1999, hereinafter referred to as ‘the Act’ for brevity, is violative of Entry 83 of List I of Seventh Schedule and Article 246 of the Constitution of India.
2. The petitioners, in all these writ petitions except a few, whose cases shall be described separately below, are operating different industries for which they are importing coal from outside the country for being used as raw materials for production of various products. The petitioners, in order to carry out their manufacturing activity both inside the State and the factories located outside the State, import raw materials from outside India, for which they obtained necessary license from the appropriate authority. They have been registered under the OVAT Act, CST Act and the Orissa Entry Tax Act, 1999 and have been allotted TIN number by the Sales Tax Officer. They bring various goods including scheduled goods for their plants from within the State and also from outside the territory of India by way of import. The materials so purchased from various countries are duly supported by bills and other documents, which have been incorporated in the accounts of the petitioner-Companies.
3. The petitioners claim that Section 3 of the Act is the charging Section which only conveys a definite charge of tax on happening of taxable event and not bereft of the said provisions. Section-2 (j) defines ‘purchase value’, which can be termed as measure of tax provided for procedure for ascertaining purchase value for quantification of tax. A conjoint reading of both the provisions indicate that the goods imported from outside the country are not contemplated for taxation under Section 3 of the Act. Section 3 of the Act may not be controlled by the above provision. It is contended that various clauses of Section 2 are inalienable limbs of Section 3, which are not measure of tax but define expression to make impost with element of certainty and definiteness. The petitioners claim that under Article 286 of the Constitution of India there has been a restriction for imposition of tax on the sale or purchase of goods, where such sale or purchase takes place in course of import of goods, into or export of the goods out of the territory of India [Article 286(i)(b)]. It is contended that Entry 52 of List-II of the Seventh Schedule, which provides for tax on entry of goods into the local area for consumption, use or sale, does not include any import made from outside the country and accordingly, the assessment of the taxing authority on the imports so made is contended to be illegal.
4. In course of hearing, the learned Senior Advocate Mr. S. Ganesh, appearing for one of the petitioners placed reliance on the reported cases of Tata Iron & Steel Company Ltd. Vs. State of Jharkhand and others, (2007) 6 VST 587 (Jharkh), FR. William Fernandez Vs. State of Kerala and others, (1999) 115 STC 591(Ker), Thressiamma L. Chirayil Vs. State of Kerala, (2007) 7 VST 293 (Ker) as well as the judgment rendered by the Full Bench of the Orissa Sales Tax Tribunal in the case of Hindustan Aeronautics Ltd. Koraput Vs. State of Orissa and contended that in all the above cases the various High Courts as well as the Sales Tax Tribunal of the State of Odisha has come to the conclusion that entry tax cannot be
