NAVDEEP INDUSTRIES Vs. STATE OF C.G

JUDGEMENT

(1.) THE Petitioner is a Small Scale Industry registered with Directorate of Industries, Punjab, and manufactures engineering items including drill rods in the state of Punjab and has been supplying such drill rods to South Eastern Coalfields/Respondent No. 2 in Madhya Pradesh, now Chhattisgarh, since 1972. The case of the Petitioner in the writ petition is that no entry tax was payable on such entry of drill rods into the State of Chhattisgarh under the Chhattisgarh Sthaniya Kshetra Me Mal Ke pravesh Par Kar Adhiniyam, 1976 (for short "the Act, 1976"). But by the Chhattisgarh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar (Sanshodhan) Adhiniyam, 2002, the Act 1976 was amended so as to include "drill rod" in Schedule III of the Act 1976. As a consequence, entry of drill rod manufactured outside the State of Chhattisgarh has become liable to entry tax @ 10% on taxable quantum. The Petitioner has prayed for declaring the said amendment in so far as it includes "drill rod" in Schedule III of the Act, 1976 as ultra vires the constitution.

(2.) MR. V.G. Tamaskar, learned Counsel for the Petitioner submitted that while entry tax is payable on drill rods manufactured by the Petitioner outside the State of Chhattigarh and supplied to Respondent No. 2 in the State of Chhattisgarh, no such entry tax is payable on drill rods manufactured by a local industry located at Korba in the State of Chhattisgarh. He submitted that the impugned amendment is, therefore, discriminatory and violative of Article 304 (a) of the constitution of India which prohibits the legislature of a State to discriminate between the goods imported and goods manufactured inside the State while imposing taxes. In support of this contention, he cited the decision of the Supreme court in the case of Shree Mahavir Oil Mills and Anr. v. State of Jammu and Kashmir and Ors. : (1996) 11 SCC 39, in which the Supreme Court has held that exemption from tax under the Jammu and Kashmir General Sales Tax, 1962 on edible oil produced and sold within the State of Jammu and Kashmir when such edible oil produced outside the State of Jammu and Kashmir was liable to tax under the said Act was discriminatory and violative of Article 304(a) of the Constitution of india.

(3.) MR. N.K. Agrawal, learned Dy. Advocate General for the State of Chhattisgarh, on the other hand, relying on the averments in paragraph 8 of the return filed by Respondent, submitted that drill rods produced by the local industry namely Mining Machine Tools in Korba may not be liable for entry tax when the drill rods produced by it are consumed and used in the local area of Korba; but will be liable to entry tax if the drill rods produced by it are consumed and used in local area of Bilaspur to South Eastern Coalfields Ltd. He submitted that the contention that the local industry at Korba namely Mining Machine Tools is not liable for entry tax on drill rods supplied to Sough Eastern Coalfields Ltd. In Chhattisgarh is, therefore, factually not correct. In support of the aforesaid submission, he relied on the provisions of the Act 1976.