MODI GAS SERVICE Vs. STATE OF MADHYA PRADESH

JUDGEMENT

(1.) THIS petition under Article 226/227 of the Constitution of India is directed against the notice dated July 7, 2000, issued by the Commercial Tax Officer, Indore, demanding advance payment of entry tax from October 1, 1997 on the sale of -LPG gas cylinders by the petitioner.

(2.) THE petitioner, a registered dealer is having distributorship of LPG cylinders marketed by the Bharat Petroleum Corporation Limited (BPCL ). It is not in dispute that LPG in bulk containers is brought within the local area of Pithampur, by the BPCL from outside the State. In Pithampur, LPG is refilled in small cylinders of 14. 2 kilograms. Petitioner purchases LPG gas cylinders for sale to customers. It is the case of petitioner that by virtue of the statutory amendments with effect from October 1,1997 in the charging section of the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (hereinafter referred to as "the Entry Tax Act", for short), entry of LPG in the course of business of a dealer for sale, use or consumption in a local area became taxable under Section 3 (1) (a) of the Entry Tax Act. According to the petitioner, LPG in bulk containers is entered into the State of Madhya Pradesh by the BPCL and after refilling, it is sold to the petitioner in small containers, popularly known as gas cylinders. According to the petitioner no entry tax is payable by the petitioner on the subsequent sale of LPG gas cylinders and demand raised by the impugned notice for the payment of entry tax from October 1, 1997 is illegal. The demand for payment of advance entry tax without assessment of tax liability is also illegal and unsustainable. Petitioner also denied the liability to pay entry tax based upon the memo dated June 16,1998 (annexure B) which relies upon the definition of "manufacture of gas" as contained in Rule 2 (xxv) of the Gas Cylinders Rules, 1981.

(3.) THE respondents filed their reply in support of the impugned demand and denied the claim of the petitioner. According to reply, in view of the wide amplitude of definition "manufacture" as given in Section 2 (o) of the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 (hereinafter referred to as "the Commercial Tax Act", for short), the process of refilling from bulk containers into small LPG cylinders amounts to manufacture. Thus, the petitioner cannot escape from the liability to pay the entry tax after October 1, 1997. Hence, the impugned notice demanding advance payment of the entry tax is not illegal.