BHARTIA ASSOCIATES PVT LTD Vs. STATE OF ASSAM

JUDGEMENT

(1.) THE State Legislature of Assam enacted the Assam Entry Tax Act, 2001 (in short, 'the AET Act, 2001') with a view to levying tax on the entry of goods into any local area, in Assam, for consumption, use or sale therein, the local area having been defined, in the Act itself, as the area comprised within the limits of a local authority including any area which has been or may hereafter be included in the Municipal Corporation of Guwahati, constituted under the Guwahati Municipal Corporation Act, 1969 (Assam Act K of 1973) or in the Municipality or Town Committee constituted under the Assam Municipal Act, 1956 or any area comprised within a Gaon Panchayat or an Anchalik Panchayat constituted under the Assam Panchayat Act of 1994. The entire State has, thus, been divided, under the AET Act, 2001, into local areas as aforesaid. The entry tax, under the AET Act, 2001, is a single point tax as the entry tax can be levied only at one stage. Once entry tax has been paid, or liability has been incurred, on the entry of any of the scheduled goods into any local area, the entry tax cannot be levied thereafter, though the goods, which have been so taxed, may be moved from one local area to another local area and so on irrespective of the fact whether the movement of the scheduled goods, out of the local area, is by way of stock transfer, inter-State sale or sale in the course of export or import. This Act, thus, covers not only the vehicles bringing goods into the State, but also vehicles carrying goods from one local area of the State to another local area. However, those, who pay entry tax on import of goods into a local area of the State, were, initially, exempted from payment of local sales tax, when the goods, so imported, become liable to pay local sales tax. This exemption has been withdrawn in respect of a specified mode of sale of goods and it is such withdrawal of exemption, which forms the subject-matter of challenge in the present set of writ petitions.

(2.) THE petitioners herein, who are largely contractors and importers of 'cement' into the State of Assam, for use in the execution of works contracts, have challenged the provisions of Section 5 of the AET Act, 2001, as amended by the Assam Entry Tax Act, 2002, whereby the benefit of exemption from payment of sales tax is excluded in respect of transactions, which fall under Sub-Clauses (ii), (iii) and (iv) of Section 2 (33) of the Assam General Sales Tax Act, 1993, (in short, 'the AGST Act, 1993'), on two grounds, namely, (i) imposition of entry tax on the use of property for execution of works contract is unconstitutional inasmuch as levy of entry tax is not compensatory and is in violation of Article 304 (b) of the Constitution of India; and (ii) the classification made by Section 5, pursuant to the Assam Entry Tax Act, 2002, is in violation of Article 14 of the Constitution of India inasmuch as the said classification is unreasonable, arbitrary, irrational, unconstitutional and has no nexus with the objects sought to be achieved thereby. In short, the petitioners are aggrieved by exclusion of Clause (ii) of Section 2 (33) of the AGST Act, 1993, for, the effect of this exclusion is that the import of goods, used in execution of works contract, is not exempted from payment of local sales tax, though such use of goods is deemed, in law, as a sale. The AGST Act, 1993, stands, it may be noted, replaced by the Assam Value Added Tax Act, 2005.

(3.) I have heard Mr. G. K. Joshi and Dr. A. K. Saraf, learned Senior counsel, for the petitioners. The other learned counsel, appearing on behalf of the remaining petitioners, have adopted the submissions made by Mr. G. K. Joshi and Dr. A. K. Saraf. I have also heard Mr. K. N. Choudhury, learned Additional Advocate General, Assam, appearing on behalf of the respondents.