The Executive Officer, Selection Grade Town Panchayat vs The Joint Commissioner of Commercial Taxes, The Assistant Commercial Tax Officer and The Deputy Commercial Tax Officer

P.D. Dinakaran, J.—The unsuccessful writ petitioner has preferred the above appeal against the order of the learned single Judge dated

26.2.2004 made in W.P. No. 2895 of 2004.

The facts which paved way for filing of the above appeal, in a nutshell, are as under.

(a) The appellant purchased one Swaraj Mazda mini lorry from M/s. Swaraj Mazda Ltd., Chandigarh during the assessment year 1997-98

through M/s. Natesan Auto Agency, Tirunelveli, a dealer of Swaraj Mazda Vehicle. The third respondent, by proceedings dated 29.10.1999

assessed Entry Tax for the said vehicle amounting to Rs. 56,105/- with penalty of Rs. 1,12,210/-. Hence, the appellant preferred an appeal before

the second respondent and the same was rejected on the ground that the appellant had not fulfilled the conditions for filing the appeal. Aggrieved

by the same, the appellant preferred a revision petition before the first respondent and the same was rejected confirming the order of the appellate

authority. Infuriated, the appellant has preferred W.P. No. 2895 of 2004.

(b) The learned single Judge, by order dated 26.2.2004, dismissed the writ petition observing that the learned Counsel for the petitioner, without

referring to a particular provision, had argued as a general proposition that as and when any vehicle had been purchased by any person, all

liabilities to make payment in respect of the tax would fall on the dealer who sold the vehicle and not on the petitioner. Hence, the present appeal.

3.1. According to the learned Counsel for the appellant, since the appellant had purchased the vehicle from one M/s. Natesan Auto Agency,

Tirunelveli, who is a dealer of Swaraj Mazda Ltd., M/s. Natesan Auto Agency alone is responsible to pay the entry tax, but not the appellant.

3.2. Alternatively, the learned Counsel for the appellant contends that the appellant, being the local body, are exempted from the payment of entry

tax as per the Government letter No. 269 dated 4.5.1990.

4.1. On the other hand, learned Special Government Pleader contends that the Entry tax is liable to be paid by the importer as per Section 2(g) of

the Tamil Nadu Tax on Entry of Goods Act, 2001. As per Section 3(2) of the Act, such tax on entry of any scheduled goods into any local area

for consumption shall be payable by the importer in accordance with the provisions of the Act.

4.2. With regard to the alternative contention that the appellant, being the local body, are exempted from the payment of entry tax as per the

Government letter dated 4.5.1990, the learned Special Government Pleader contends that if that be so, the local body is at liberty to approach the

Assessing Officer for such exemption.

We have given careful consideration to the submissions of both sides.

6.1. In order to appreciate the rival contentions of both the parties, we are constrained to refer the Sections 2(g) and 3(2) of the Act, which read

as under.

Section 2(g):

importer"" means a person who brings or causes to be brought any scheduled goods whether on his own account or on account of a principal or

any other person, into a local area, from any place outside the State for consumption, use or sale therein or who owns the scheduled goods at the

time of entry into the local area.

Section 3:

Levy and collection of tax:

(1) Subject to the provisions of this Act, there shall be levied and collected a tax on the entry of any scheduled goods into any local area for

consumption, use or sale therein. The rate of tax shall be at such rate not exceeding thirty per cent on the value of the scheduled goods, as may be

fixed by the Government, by notification and different rates may be fixed for different scheduled goods.

(2) The tax shall be payable by an importer in accordance with the provisions of this Act.

6.2. A perusal of Section 3 of the Act makes it clear that the dealer is not referred to for the purpose of payment of tax on the entry of any

scheduled goods into any local area for consumption and there shall be levy and collection of tax on the entry of the scheduled goods into any local

area for consumption, use or sale therein. In other words, not necessarily the consumer alone be a importer, but a dealer who sells the scheduled

goods to the consumer is also an importer. As per charging Section 3(2), the importer of the scheduled goods alone is responsible to pay the tax

on entry of any scheduled goods into any local area for consumption, use or sale therein.

6.3. As per Section 2(g) of the Act, where the importer is defined, an importer means a person who brings or causes to be brought any scheduled

goods whether on his own account or on account of a principal or any other person, into a local area, from any place outside the State for

consumption, use or sale therein or who owns the scheduled goods at the time of entry into the local area.

According to the respondents, the appellant is the importer who had placed the orders before M/s. Natesan Auto Agency for the purchase of

mini lorry for their consumption and M/s. Natesan Auto Agency was acting only as an agent of Swaraj Mazda Ltd. at Chandigarh and there is no

evidence to show that M/s. Natesan Auto Agency had acted as a dealer. On the other hand, according to the appellant, the order was placed only

to M/s. Natesan Auto Agency, who is a dealer under Swaraj Mazda Ltd., Chandigarh and not directly to the Swaraj Mazda Ltd., Chandigarh and

M/s. Natesan Auto Agency alone supplied the vehicle to the appellant at Tirunelveli itself.

The above undisputed facts would go to show that the scheduled goods, viz. the mini lorry was owned by M/s. Natesan Auto Agency at the

time of entry into the local area, might be either for consumption or use or sale. Accordingly, M/s. Natesan Auto Agency alone sold the vehicle to

the appellant. Therefore, as per the definition of importer u/s 2(g), the action should have been initiated not only against the appellant, but also

against the importer who owned the scheduled goods at the time of entry into the local area, viz. M/s. Natesan Auto Agency. The Assessing

Officer thus, having rightly initiated action, merely because M/s. Natesan Auto Agency had not raised any objection, had chosen to proceed only

against the appellant, which vitiates the impugned demand of entry tax and penalty.

The order of the learned single Judge is, therefore, set aside. The writ appeal is allowed. The impugned demand of entry tax and the penalty is

set aside, with liberty to the respondents to proceed against both the appellant and M/s. Natesan Auto Agency. However, if the appellant is

entitled to any exemption, based on any Government letter, they are at liberty to work out their rights, if they are so advised.