W.P.No.3969/2005

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AFR

HIGH COURT OF CHHATTISGARH, BILASPUR

Writ Petition No.3969 of 2005

Order reserved on: 21-6-2017

Order delivered on: 7-7-2017

Steel Authority of India Ltd., Registered as Government

Company under the Companies Act, with registered office at

Lodhi Road, New Delhi and work at Bhilai Steel Plant, District

Durg.

Represented by: Managing Director.

---- Petitioner

Versus

1. The Additional Commissioner, Commercial Tax, Raipur.

2. The Assistant Commissioner, Commercial Tax, Durg.

3. State of Chhattisgarh, through the Secretary, Commercial Tax

Department, Mantralaya, Raipur.

4. State of Madhya Pradesh, through the Secretary, Commercial

Tax Department, Mantralaya, Bhopal.

---- Respondents

For Petitioner:

Mr. M.C. Jain and Mr. Ashok Patil, Advocates.

For State of Chhattisgarh/Respondents No.1 to 3: -

Mr. Arun Sao, Deputy Advocate General and

Mr. Shashank Thakur, Government Advocate.

Hon'ble Shri Justice Sanjay K. Agrawal

C.A.V. Order

1. Impugning legality, validity and correctness of the order passed

by the Additional Commissioner, Commercial Tax, Raipur,

whereby and whereunder the said revisional authority has

affirmed the order of the assessing authority relating to

assessment of entry tax for the period from 1-4-1990 to 31-3-

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1991 levying penalty under Section 17 (3) (b) (ii) of the M.P.

General Sales Tax Act, 1958 (for short, 'the Act, 1958') and the

Rules made thereunder read with Section 13 of the M.P.

Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976

(for short, 'the Act, 1976') and thereby affirmed the levy of

penalty to the extent of 4,09,09,903/-.

₹

2. Essential facts leading to passing of the impugned order are as

under: -

2.1)

The petitioner is a company incorporated and registered

under the provisions of the Indian Companies Act, 1956. It is a

Government company within the meaning of Section 617 of the

Companies Act, 1956. It has an integrated steel plant at Bhilai

where iron and steel are manufactured. For manufacture of iron

and steel, various raw materials including iron ore, coking coal,

lime stone etc., are used as raw materials. These goods are

specified as raw materials in the registration certificate of the

petitioner.

2.2)

It is the case of the petitioner that in conformity with the

policy to tax raw materials at a lower rate under the Sales Tax

Act and also under the Act, 1976, general rate of entry tax on

raw material was 7% under Section 4 of the said Act. The State

Government could specify local area or areas and the goods for

levy of entry tax at a rate not exceeding 10% by notification

under Section 4A of the Act, 1976. The petitioner Company

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purchased low silica lime stone as one of its raw materials for

production of steel and they were paying entry tax regularly on it

on the entry of low silica lime stone into the local area of Bhilai

up to December, 1990. For the month of January, 1991, tax was

due on 10-2-1991, but the M.P. High Court on 6-2-1991

delivered a judgment in the case of Makers Development

Service (Pvt.) Ltd. v. State Govt. of Madhya Pradesh and

others¹ declaring the levy of entry tax on lime stone as

unconstitutional on the ground that entry tax on lime stone was a

tax on royalty on mineral right and was beyond the legislative

competence of the State Legislature while following the decision

of Their Lordships of the Supreme Court in the matter of The

India Cement Ltd. etc. etc. v. State of Tamil Nadu². Likewise,

the cess on mineral was declared ultra vires by the M.P. High

Court in the matter of A.C.C. Ltd. v. State of M.P.³ decided on

16-2-1991. Therefore, the petitioner Company in view of the

decision in Makers Development Service (supra) discontinued

payment of entry tax on lime stone from the month of January,

1991, though payment for the month o