NATIONAL FERTILISERS LIMITED Vs. STATE OF MADHYA PRADESH

JUDGEMENT

(1.) THE petitioners have by this petition prayed that notice, annexure A, may be quashed. It is also prayed that clause (1) (c), (d) and (e) of section 2 of the Entry Tax Act, 1976 may be declared ultra vires and unconstitutional.

(2.) LEARNED counsel for the petitioners has at the outset submitted that he is not challenging the validity of the aforesaid provisions; therefore, we need not examine the same in the instant petition.

(3.) THE petitioners obtain material for construction and setting up the project by various modes, either through the railway freight or by transport also. Goods were purchased from outside the State through the railways and also within the State of M. P. In September/october, 1984, the respondent No. 2 demanded the payment of entry tax at the pain of stopping the goods in transit. The respondent No. 2 issued a notice under clause (3) of section 22-A of the M. P. General Sales Tax Act, 1958 vide annexure A, and raised a demand in the sum of Rs. 5 lacs an entry tax for the period July 1, 1984 to September 30, 1984 and October 1, 1984 to December 31, 1984. It is this notice, annexure A, which is sought to be challenged in this petition on the ground that all the goods were not brought for business but for construction of factory. The factory actually started production in 1987. Hence, it is contended that the goods which were brought for purposes of construction and not for the purpose of business as such they cannot be subjected to entry tax and in this connection, reliance was placed on the decision given by this Court in the case of Maihar Cement v. Assistant Commissioner of Sales Tax [1985] 60 STC 210 wherein it has been held that the assessee purchased iron and steel during the years 1977 and 1978 for construction of buildings to start its business of manufacturing cement. The assessee's factory commenced production of cement only from 1980. But the assessing authority imposed entry tax on those purchases treating them as purchases in the course of business. The Assistant Commissioner in first appeal upheld the order of the assessing authority. On a writ petition, this Court held thus :