\x‘ A HIGH COURT OF CHHATTISGARH, BILASPUR D.B. HON’BLE SHRI RAJEEV GUPTA, C.J. £5 HONB’LE SHRI SUNIL KUMAR SINHA, J. W.P. No. 4024 of 1999 ETITIONERS 1. South Eastern Coalfields Ltd., Gavera, Distt. Korba, represented by S.G. Dhawan, ChiefgGeneral Manager 2. S.G. Dhawan, Chief General Manager, South Eastern Coalfields Ltd., Gavera Area, Distt. Korba (C.G.) Versus RESPONDENTS 1. Assistant Commissioner of Commercial Tax, Bilaspur. 2. Addl. Commissioner of Commercial Tax, Raipur 3. Vanijiyik Kar Adhikari, Bilaspur W. P. No. 433 of 2001 P PETITIONERS 1. South Eastern Coalfields Limited, Gevra, Distt. Korba (Chhattisgarh) represented by Shri K.M.Lal, Chief General Manager 2. K.M.Lal, Chief General Manager, South Eastern Coalfields Limited, Gevra, Distt. Korba (Chhattisgarh) Versus RESPONDENTS 1. Assistant Commissioner of Commercial Tax, Bilaspur (CG) 2. Additional Commissioner, Commercial Tax, Raipur (Chhattisgarh) 3. State of Madhya Pradesh through Secretary Vaniijya Kar Vibhag, Vallabh Bhawan, Bhopal (M.P) W.P.No.4024/1999, W.P.No.433/2001 & ‘ W.P.No.5 1 3/2001 And W.P.No. 513 of 2001 PETITIONERS 1. South Eastern Coalfields Limited, Gevra, Distt. Korba (Chhattisgarh) represented by Shri K.M.La1, Chief General Manager 2. K.M.Lal, Chief General Manager, South Eastern Coalfields Limited, Gevra, Distt. Korba (Chhattisgarh) Versus RESPONDENTS 1. Assistant Commissioner Commercial Tax, Bilaspur (C.G) 2. AdditionalCommissioner, Commercial Tax, Raipur (Chhattisgarh) 3. State of Chhattisgarh, through Secretary, Vanijya Kar Vibhag, Raipur (Chhattisgarh) WRIT PETITIONS UNDER ARTICLES 226/227 OF THE CONSTITUTION OF INDIA Appearance: Shri H.S. Shrivastava, Sr. Advocate with Shri Ashish Shrivastava, Shri R.P. Jain and Shri S.P. Shrivastava, counsel for the petitioners. Shri Kishore Bhaduri, Addl. Advocate General, for the State / re spondents JUDGMENT ( 9 04.2008) Following Judgment of the Court was delivered by SUNIL KUMAR SINHA, J. 3 (@ WVPVNnr4074/1 099 WVPVNn 412/7001 Xx W.P.No.513/2001 (1) Since these 3 writ petitions involve a common question of law, therefore, they are being disposed of by this common judgment. (2) In sum and substance, it has to be determined as to whether, in these cases, the petitioner(s) (s.E.C.L) was liable to pay the entry tax u/s 3(1) of the MP.(C.G) Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (for / short ‘the Entry Tax Act’) or not P (3) The facts, briefly stated, are that the petitioner(s) South Eastern Coal Fields Limited (S.E.C.L., a subsidiary of the Coal India Limited, C.I.L) is a government undertaking. The petitioner(s)’ Company carries on Coal Mining in various coal fields in the State of Chhattisgarh and is engaged in business of its sale. National Thermal Power Corporation (N.T.P.C), being set up at Korba, for generation of power, requires coal in a large quantity for which initially Gevra project of the petitioner Company was conceived. The Madhya Pradesh Electricity Board (M.P.E.B) now Chhattisgarh State Electricity Board (C.S.E.B) is another bulk purchaser of the coal. As per the pleadings in W.P.No.4024/1999, there were written agreements for supply of coal with N.T.P.C. and M.P.E.B. The coal mines are nationalized and supply of coal is regulated by the Central Government. The method is that the industries requiring coal in their factories, for supply of coal, have to W.P.No.4024/1999. W.P.No.433/2001 & W.P.N0.5 13/2001 apply to linkage-committee constituted for the purpose of allotment of coal. The linkage committee sets out progamme periodically for allotment of coal for their consumption in their industries from specified area/collieries. The smaller consumers of coal apply for allotment of coal to the area headquarters of the petitioner(s) which issues permits for coal, sold to them? The permit/delivery orders specify the colliery, quantity of coal, grade of coal and the name and address of the consumer. Such small consumers bring their own trucks and take delivery of the coal at the pit mouth and carry the coal in their vehicles to their places. For supply of coal to N.T.P.C., a Silo has been created by the petitioner(s) Company Where the coal is carried from the coal mines and at the Silo, delivery is given to N.T.P.C. to transport it through their MGR system of coal transportation to their own power houses. Likewise supply to M.P.E.B. is made through Railway wagons from the railway s iding. In respect of cement factories, iron and steel industries and such other industries, coal is loaded in the wagons at the s iding and in this manner the sale/supply is regulated. In all above cases of coal supply the coal is taken by the purchasers to their places for their consumption or use. In case of sale/supply to N.T.P.C. and M.P.E.B (C.S.E.B) the agreements themselves stipulate that the coal is being W7“ W.P.No.4024/1999. W.P.No.43 3/2001 & W.P‘No.5 1 3/2001 purchased by them for consumption at the place or location of such power houses. At the places of Silo point and at the railway s iding or at the weighment site purchasers did not have any consumption, use or sale of coal whatsoever it may be therein i.e., in the local area of these places. The coal destinated to places outside the local area of Silo and the railway siding did actually move out to their work places outside that area in a continuous journey to their ultimate places. The coal which is not delivered at the pit mouth is at first transported by trucks to the Silo or the railway station and then put into Silo or Railway wagons for onward journey of the work places of the purchasers and such journey is continuous from the pit mouth to the work places of the purchasers. (4) The case of the petitioner(s) Company is that it was not assessed to entry tax on sale of coal at any point of time earlier, however, the State authorities assessed them for various years and made them liable for payment of entry tax u/s 3(1) of the M.P. (CG) Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1 976 (Entry Tax Act) and made various demands from them with respect to various assessment years which gave rise to causes of action to them for filing the instant writ petitions for the following main relief(s). W.P.No.4024/1 999 W.P.No.433/2001 & W.P.No.513/2001 (5) W.P.No.4024/ 1999 has been tiled for quashing of the order of assessment levying the entry tax on the petitioner pertaining to the year 1995-96, Annexure P—IO, as also the confirmation of the said order in revision filed as Annexure P—14 and the recovery notice filed as Annexure P-15. . Likewise, W.P.No.433/2001 has been tiled for quashing of the re—assessment proceedings pertaining to the years 1990-91,“. 1991-92, 1992-93 and 1993-94 aiong wit quashment of the order levying penalty vide Annexures P9 11, P-12, P—13, P—14 8t, P-15; Whereas W.P.No.513/2001 has been filed for quashing of the order of assessment and demand notice levying the entry tax on the petitioner for supply of coal by it pertaining to the year 1996-97. (6} The contention of learned Senior Counsel for the petitioner(s) is that the authorities erred in law while holding the petitioner(s) responsible to pay entry tax on coal sold to various parties under prior agreement, allotment orders and delivery orders showing the places of destinations where the coal was to be consumed which shows that the coal was not to be utilized for consumption, use or sale in the local area, for which the petitioner(s) was held to be responsible to pay entry tax. He further contended that the respondents erred in law in holding that since there is an entry into a different local area in the course of journey from the colliery to the place of i ”3 W.P.No.4024/1999, W.P.No.433/2001 & W.P.No.513/2001 purchasers, there is a liability of the petitioner(s) to pay entry tax only because the petitioner(s) entered the coal to the place of Silo or Railway siding which falls in different local area. He argued that there may be a case in which the pit mouth of a coal mine may situate in a different local area and the weigh bridge or Silo or railway siding situate in a different area and if for: the purpose of delivery of coal to its destination, it travels to these local areas for its proper loading or for weighme'nt, the petitioner(s) would not be responsible for payment of entry tax in accordance with the provisions of sub-section (1) of section 3 “of the Entry Tax Act. His submission was that the word “therein” used by the legislature in clause(a) of sub-section (1) of section 3 has got a definite meaning and the respondents have erred in law while not interpreting the clause in its real sense and have made the petitioner liable for payment of entry tax. (7) On the other hand, learned Additional Advocate General appearing for the State opposed these arguments and supported the action of the State on the ground that as soon as the coal is entered into a different local area, the petitioner(s) would be responsible to pay entry tax as per the provisions of clause (a) of sub—section (1) of section 3 of the Act. His contention was that the sale would complete only when a final delivery is made to the punchers, may be after weighing the coal or after getting it finally loaded in 8 W.P.No.4024/1999, W.P.No.433/2001 & W.P.N0.513/2001 / the wagons through Silo point or through the coal handling plant (C.H.P) and if these fall in a different local area the would be liable to pay entry tax. petitioner(s) the parties at gth and have also perused the rec (8) We have heard learned counsel for ords of the writ len petitions. (9) Admittedly, source of levy and collection of entry tax is derived from the provisions of section 3(1) Tax, which reads as follows: 3. Incidence of taxation- (1) There shall b of the Entr; levied an entry tax,— (a) on the entry in the course of of a dealer of goods specified in Schedule II, into each local area for consumption, use or sale therein; and (b) on the entry in the course of goods business business of a dealer of specified in Schedule Ill, into each local area for consumption or use of such goods but not for sale therein; ry dealer liable to and such tax shall be paid by eve tax under the Vanijyik Kar effected entry of such goods; Adhiniyam, who has provided that................... (only relevant portion quoted). A bare perusal of the provisions of the Act would show that a local area for consumption, use or sale in the course of business of a dealer. This tax is not a tax on sale or purchas the Entry Tax is a tax on entry of goods into e of goods ” 3‘\ 3 . e w P Nn 4074/1009 w P Nn 412mm xx W.P.No.513/2001 which is provided in General Sales Tax (GST). The key word used in clause (a) of sub-section(l) of section 3 is “therein” which clearly shows that for the purpose of imposition of entry tax, the goods must have been entered into the local area of the concerned authority for the purpose of consumption, use or sale in that particular area. [10) In the matter of BurmaIL Shell Oil Storage and Distributing Company of India Ltd., Belgaum -Vs- Belgaum Borough Municipality, Belgaum, AIR 1963 SC 906, a similar question arose for consideration before the Supreme Court as to Whether the Burma Shell Company was liable to octroi in respect of goods which it brought into the Municipal area but which were re—exported thereafter. In such case, the Apex Court held that octroi was always understood to be on goods brought for consumption, use or sale and the Company was liable to pay octroi tax on goods brought into local area (a) to be consumed by itself or sold by it to consumers direct and (b) for sale to dealers who in their tum sold the goods to consumers within the municipal area irrespective of whether such consumers brought them for use in the area or outside it. The Company, however, was not liable to octroi in respect of goods which it brought into the local area and which were re-exported. In the context of said case, the Apex Court held that the word “therein” does not mean that all the act 10 w p Nn 4094/1 999 WVPNnmz/Qnm & W.P.No.513/2001 of consumption must take place in the area of municipality. It is sufficient if the goods are brought inside the area to be delivered to the ultimate consumer in that area because the taxable event is the entry of goods which are meant to reach an ultimate user or consumer in the area. 1‘ \ (11) In the matter of M/s. Hiralal Thakorlal Dalal —Vs- ‘Broach Municipality and others, (1976) 3 SCC .398, the Constitution Bench of the Apex Court, with reference t Bombay Municipal Boroughs Act, 1925, again held that the goods brought into a local area and re—exported were not liae to octroi. A prayer was made befor the Constitution bl e Bench to reconsider the law laid down in Burma Shell’s case (supra) and while rejecting such prayer it was eld by h the Constitution Bench that the law on the subject matter has been quite clearly laid down in Buma Shell’s case and there was no necessity of its reconsideration. 1 I!# (12) Further, in the matter of Municipal Council -- Vs A the Apex Parekh Automobiles Limited (1 990) 1 SCC 367, Crt held that there can be no octroi duty levied by the ou concerned Municipality in respect of the goods sold b the y India Oil Corporation within te municipal limit but clearly h intended to be transported for use or consumption outside the municipal limit. (13) Referring to the decisions rendered in the matters of / Burma Shell, Horilal Thakorlal and Parekh Automobiles r 11 W.P.No.4024/1999 W.P.No.433/2001 & W.P.No.513/2001 (supra), the Apex Court held in the matter of Entry Tax Officer, Banqalore and others —Vs- Chandanmal Champalal & Co. and others (1994) 4 SCC 463 as follows: It is true that Burmah Shell, Hiralal Thakorlal and Parekh Automobiles were concerned with State enactments which empowered the municipalities to levy the impost, all the same a close reading of the said decisions does indicate that they have read the words ‘sale therein’ occurring in Entry 52 of List II as meaning ‘a sale of goods within a local area for consumption or use therein’ — though as a matter of fact, in a given case, the goods may be taken out and consumed there. The decisions clearly say that where the goods are sold Within a local area for the purpose of being taken out of that local area and are actually taken out, no levy is permissible under Entry 52. It is not possible to distinguish the said decisions on the grounds suggested by the appellant. Besides, octroi or any impost in the nature of that impost has always been looked upon with certain amount of disfavour. Acceptance of the State’s contention in this case would ultimately result in driving up the price of these goods to the consumer. It would become another sales tax in effect.” (14) Therefore, on the above principles laid down by the Apex Court in various decisions, it is apparent that the liability to pay entry tax u/s 3(1) of the Entry Tax Act only ariseson entry of goods in the course of business of a dealer into a local area for consumption, use or sale therein. This provision clearly states that the entry tax has been levied ) on the entry in the course of business of a dealer of goods J2 W D Nn 4074/1000 W P Nn 411/7001 XI W.P.No.513/2001 specified in schedule to the Act in to each local area for consumption, use or sale therein and the liability to pay tax would arise only if entry of goods into a local area is for consumption or use or sale in the specified local area. Needless to say that if the goods are under transit to their final destination which is not the local area Where the tax is being sought, the local authority would not be justified to . impose entry tax on such goods. (15) In the present matters, the coal which was extracted from different coal mines was either delivered from the pit mouth of the mines or it was carried to weighing bridge and was delivered to its further destination or it was taken to a place of silo point or to the railway siding and then it was taken to the ultimate destination. Admittedly, the local areas in which the silo point, railway s iding or weighment bridge are located are not the areas in which the coal was to be consumed or used or its sale was made, because; as per the agreements, referred to above, as also as per the other materials brought on record it was transported to its ultimate destination where the consumption, use or sale was made and such destination was not the local area in which it has been levied for entry tax. Therefore, we are of the considered View that on the said grounds the imposition of entry tax by the concerned authority on the coal sold by the petitioner(s) under different agreements 13 W.P.No.4024/1999, W.P.No.433/2001 & W.P.N0.5 I 3/200 \x‘ I Consequentfy, the impugned orders contained in Annexure P~ Annexure P— 10, P~ 14 and the recovery notice 15 filed in W.P.No.4024/1999 are quashed. Likewise, reassessment proceedings 1990—91, e also quashed. /Rao/ wwmw‘w” m "‘ WW // I ..u~< i (17) The panies shall Sd/- bear their own costs. Rajeev Gupta Chief Justice .__, J_ 5d]. Sun“ Kumar Sinha Judge