UNION OF INDIA UOI Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THE Union of India, owning and administering the Southern Railway, and the Divisional railway Manager of Bangalore Division of Southern Railway, are the petitioners ; and the State of Karnataka and the Assistant Commissioner of Commercial Taxes, XIII Circle, Bangalore, are the respondents in this petition.

(2.) THE second respondent issued a notice dated January 19, 1999 (annexure B) to second petitioner under Section 5 of the Karnataka Tax on Entry of Goods Act, 1979, ("the Act", for short ). The notice stated that Southern Railway is causing the entry of HSD (High Speed Diesel)from outside Karnataka into Bangalore city local area ; that petitioners should therefore file monthly statements indicating the quantity and value of HSD, entering the Bangalore city local area and also pay tax on such value of goods at the notified rate of 2 per cent and that as petitioners failed to do so, it was proposed to levy entry tax on HSD caused to be entered by the southern Railway between April 1, 1997 to March 31, 1998 at the rate of 2 per cent. After considering the objections dated February 11, 1999 and March 2, 1999, the second respondent has passed an order of assessment dated March 26, 1999 (annexure "e") under Section 5 (4) of the Act, confirming the proposal in the notice and holding that the petitioners are liable to pay entry tax on the HSD caused to be entered from outside the State into Bangalore local area. Second respondent held that during the period from April 1, 1997 to March 31, 1998, the southern Railway had caused entry of 1,04,100 kilo-litres of HSD and the value thereof at the rate of Rs. 9,283. 09 per kilo-litre works to Rs. 96,63,69,660 and therefore the petitioners are liable to pay entry tax of Rs. 1,93,27,393. The said assessment order was followed by a demand notice dated June 4, 1999 (annexure F), calling upon the Railways to pay the said amount.

(3.) FEELING aggrieved, the petitioners have filed this petition and sought the following reliefs : (a) to quash the assessment order dated March 26, 1999 (annexure E) passed by the second respondent and the consequential endorsement dated June 4, 1999 (annexure F) ; and (b) a declaration that the respondent cannot apply the provisions of the Act to the petitioners and levy the tax thereunder in the matter of HSD purchased and made use of by the petitioners for the locomotives.