MAIHAR CEMENT Vs. ASSISTANT COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) BY this petition under Article 226 of the Constitution the petitioner challenges imposition of the tax, known as "entry tax" under the M. P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (hereafter referred as the "entry Tax Act") for the calendar years 1977 and 1978, on the purchase of iron and steel required by the petitioner for construction of its buildings. The short question for decision in this petition is whether the purchase of iron and steel by the petitioner during this period for this purpose was in the course of its business of manufacturing cement, when the petitioner's factory commenced production of cement only from November, 1980. By orders (annexures C and D) dated 28th December, 1981 pertaining to the two calendar years 1977 and 1978, the Assistant Commissioner of Sales Tax, Satna (M. P.), has held that the petitioner is liable to pay entry tax on this material to the extent specified therein. It is the quashing of these two orders of assessment, which is sought in this petition.

(2.) IT is not disputed that the business of the petitioner is manufacture of cement in its factory at Maihar and the manufacture of cement therein commenced from November, 1980 and that the purchase of iron and steel during the calendar years 1977 and 1978, on which entry tax has been imposed by the impugned orders of assessment, was for the purpose of construction of buildings of the petitioner prior to the commencement of its business of manufacturing cement. As earlier stated, the question is whether entry tax could be imposed on the purchase of iron and steel for use in construction of the petitioner's buildings prior to the commencement of its business of manufacture of cement.

(3.) LEARNED counsel for the petitioner places reliance on two Division Bench decisions of this Court, reported in Commissioner of Sales Tax v. Shree Synthetics Ltd. , Ujjain [1982] 49 STC 22 ; (1981) 14 VKN 274 and Commissioner of Sales Tax v. Satna Cement Works (1984) 17 VKN 260, in which it was held that in these circumstances, no entry tax could be recovered on the building material purchased by the assessee. The learned Deputy Advocate-General has attempted to distinguish these decisions on the ground that the definition of "business" contained in Section 2 (bb) of the M. P. General Sales Tax Act, 1958 retrospectively with effect from 15th April, 1965 has not been noticed in these two decisions. There is no dispute that unless there is such a distinction present, in view of the earlier Division Bench decisions, the petitioner's contention has to be accepted.