M.P. Entry Tax Act, 1976 – s.3(1)(a) r/w ss.2(1)(aa), 2(1)(b) and 2(3) – Incidence of taxation – “entry of goods into a local area”; “entry tax”; “caused to be effected the entry of goods” – Appellants, manufacturers and suppliers of beer and Indian Made Foreign Liquor (IMFL), if caused to effect the entry of goods into the local area as required u/s.3(1)
(a) r/w s.2(1)(aa), 2(1)(b) and 2(3) rendering them liable for entry tax – Plea of the appellants that sales are made by the State Government warehouse in charge to the authorized retailers, who are also license holders for retail sale of IMFL and beer and there is no privity of contract between the appellants and the retailers and; it is only the State Government warehouse which cause to effect the entry of the goods – High Court upheld the levy of entry tax on the appellants – Challenge to:
Held: Impugned order not interfered with – s.3(1) r/w s.2(1)(aa) and 2(1)(b) and 2(3), makes it clear that the appellants by the sale to the warehouse caused to be effected the entry of goods and the entry was occasioned on the account of the sale into the local area for consumption, use or sale therein – Also, it is not disputed that the appellant is a dealer as defined under the Madhya Pradesh VAT Act 2002, as it stood then – The only contention of the appellants is that the State warehouse is also a dealer – That makes no difference since it cannot be disputed that the appellants occasioned the entry of goods and the levy of entry tax on them, which could always be passed on, is justifiable in law. [Paras 31-33, 36]
M.P. Entry Tax Act, 1976 – ss.3B, 14 – Appellants contended that as notification u/s.3B was not issued, no entry tax could be levied:
Held: Contention rejected – High Court rightly held that s.3B is only a machinery provision and in the teeth of s.14, it is not correct to say that there cannot be any assessment or collection of Entry Tax merely because there is no notification u/s.3B – s.3B is an enabling provision – Further, the ‘non-obstante’ in s.3B will not foreclose the operation of s.14, since s.3B will override only if there is a contrary provision – In the absence of any notification u/s.3B, there is nothing contrary in s.14 for the non-obstante in s.3B to be invoked to override s.14. [Paras 32, 33] M.P. Entry Tax Act, 1976 – State canalising the supply of beer and Indian made foreign liquor (IMFL) into the local area – If there is an inseverable link between the manufacturers and the ultimate retailers:
Held: In case a canalising agency or intermediary agency is involved, unless their role is merely that of a name lender, the sale will not be treated as an inseparable or an inseverable sale – If an independent canalising agency enters into back-to-back contracts and there is no direct linkage or causal connection between the export by foreign exporter and the receipt of the imported goods in India by local users, then the integrity of the entire transaction would be disrupted and would be substituted by two independent transactions – Applying the tests to the present canalising transaction, there is no doubt that there are two independent transactions, one between the appellant-manufacturers and the State Warehouse and the other between the State warehouse and the retailers – Contention of the State that its role is only supervisory and the warehouses didn’t purchase beer and IMFL from the manufacturer, not accepted. [Paras 25, 27] Words and Phrases – “caused to be effected the entry of goods”; “Cause” – M.P. Entry Tax Act, 1976. [Paras 29, 31]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Divya Pandey. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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