Nakoda Textiles and Others vs Deputy Commissioner of Commercial Tax and Others

P.K. Jaiswal, J.—This order shall also govern the disposal of W.P. No. 356 of 2004. Since it involves the same issue on the same factual background. For the sake of convenience the facts are borrowed from W.P. No. 1573 of 2006. By this writ petition, the petitioner is challenging the order dated September 6, 2005 (annexure P/3) passed by the revisional authority and assessment order dated November 23, 2004, annexure P/2 passed by the respondent No. 2 under the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976, for the period from April 1, 2001 to March 31, 2002. According to the petitioner, he is not a registered dealer under the Central Sales Tax Act, 1956 and is not purchasing any goods from outside of M.P. and, therefore, as per Notification No. A-3-8-95-ST-V (69) dated August 7, 1995, he is entitled to get exemption from payment of entry tax.

The learned counsel for the petitioner has drawn our attention to order of the revisional authority dated September 6, 1995 and submitted that on the basis of some statement made by the authorized representative of the petitioner the said order has been passed. Later on an application under section 71(1)(ii) of the Madhya Pradesh Commercial Tax Act, 1994, has been filed for rectification of the order and by deemed provision the order stands automatically rectified and, therefore, the impugned orders be set aside and the matter be remitted back to the learned authorities for deciding the matter afresh. He has also drawn our attention to the return and submitted that the fact of issuance of C form to the petitioner was taken for the first time in the return and, therefore, the matter has to be remitted to the learned revisional authority for deciding the question of grant of exemption afresh.

In reply, learned panel lawyer has submitted that with effect from April 1, 1995 handloom and powerloom weavers were exempted from operation of sections 5 and 10 of the Act subject to satisfaction of two conditions (a) the raw material purchased should be utilized as such and (b) such purchases should be made from the dealers registered under the Act unless these conditions are satisfied immunity from operation of sections 5 and 10 is not available to a dealer.

We have heard the arguments of the learned counsel for the parties at length.

Section 5 of the Madhya Pradesh Commercial Tax Act, 1994 provides that if a dealers whose turnover exceeds the limit prescribed in section 5(5), such a dealer is liable to pay tax. In cases where the turnover of the dealer exceeds the limits prescribed under section 5(5) yet the dealer choses not to get itself registered, then on detention the authorities have been granted power to fix the liability of such unregistered dealer for the purpose of assessment which cannot be exceeded five years immediately preceding the date of detection.

On the other words whenever, it is found that an unregistered dealer though liable to pay tax, does not pay the tax, first step to be taken is fixation of period for which the dealer is to be assessed, thereafter, the other provision of the Act follow for the purpose of assessment and realization of tax. Section 10 imposes the liability on a dealer to pay purchase tax if the goods which axe purchased are not sold as such or are not utilized as raw material. In any of the circumstances, the exemption provided by the notification is only from operation of sections 5 and 10. The charging section for levy of commercial tax is section 9 of the Act. Similarly under the Entry Tax Act, the charging section is section 3. In absence of any mention in the notification regarding exemption from operation of either the commercial tax under section 9 or entry tax under section 3 of the Entry Tax Act, it cannot be a gain-said that the petitioner having satisfied the conditions of the notification, would be exempted from payment of commercial tax and as a necessary corollary would be further exempted from payment of entry tax. In otherwords unless the petitioner establishes that the notification affords exemption from payment of commercial tax, it cannot necessarily follow that the petitioner would be immune from levy of the entry tax.

In the matter of W.P. No. 356 of 2004 (Nutan Synthetics v. Addl. Commissioner of Commercial Tax) the deductions claimed and disallowed to the tune of Rs. 17,61,372 on the ground that these purchases of raw material were made from the dealers situated at Biaora (Rajgarh) and Pithampur should be allowed as deduction from payment of entry tax. Since the petitioner had purchased the goods/yarn from the dealers situated in Biaora (Rajgarh) Pithampur area, the entry of these goods by the petitioner in the local area of Dewas would certainly attract the provisions of the Entry Tax Act. In absence of any exemption, being available to the petitioner from levy of commercial tax, it does not automatically follow that the purchase is made by the petitioner of goods entered into the local area, would be immune from entry tax as a consequence of exemption of Commercial Tax Act.

As per annexure R/1, filed in W.P. No. 356 of 2004 during the relevant period the petitioner therein purchased the goods from dealers situated at Ahmedabad and issued C form to various purchaser situated at Ahmedabad. A list of such C form issued under rule 8 of the Madhya Pradesh Sales Tax (Central) Rules, 1975 is annexed along with the return. Thus, the petitioner therein is liable to pay entry tax for entry of these goods in local area. In the case in hand, the petitioner-Nakoda Textiles is purchasing the goods from outside the State of Madhya Pradesh and therefore, is liable to pay the entry tax, and is not entitled to take the benefit of the notification. In the relevant period the petitioner therein purchased the goods from dealers situated at Ahmedabad and issued C form to various purchaser situated at Ahmedabad. A list of such C form issued under rule 8 of the Madhya Pradesh Sales Tax (Central) Rules, 1957 is annexed along with the return.

As per certificate issued by the Department (annexure R/1), it is clear that the petitioner is a registered dealer under the Central Sales Tax Act, 1956. The respondents-Department has issued C form to the petitioner from time to time right from October 16, 1986 to December 25, 2003. As per photocopies of the C form register (annexure R/2), the petitioner is purchasing the goods from outside the State of Madhya Pradesh and, therefore, liable to pay the entry tax. From the record, it is clear that prior to relevant order and after the relevant order, the petitioner has already purchased the goods from outside the State of Madhya Pradesh for which C forms were issued to the petitioner from time to time. The petitioner after its registration under the Central Sales Tax Act, 1956 purchased the goods from outside the State of Madhya Pradesh and therefore, is liable to pay the tax as per the Act and is not entitled to take the benefit of notification. For the above mentioned reasons, both the writ petitions have no merit and are accordingly, dismissed but without any orders as to costs.