M/S Indian Oil Corporation Limited vs The State Of Uttar Pradesh

4. For deciding the issues, which have arisen in these appeals, it is necessary to notice the history of litigation in so far as State of U.P. is concerned. Levy of tax on entry of any goods into a local area was introduced by the U.P. Tax on Entry of Goods Ordinance, 2000, w.e.f. 01.11.1999, which Ordinance was replaced by the U.P. Tax on Entry of Goods Act, 2000, which Act was deemed to have come into force on 01.11.1999. The Entry Tax was also imposed on crude oil. The appellant filed a Writ Petition No. 251 of 2003 before the Allahabad High Court challenging the validity of levy of Entry Tax on crude oil. The Allahabad High Court vide its judgment and order dated 27.01.2004 declared Act No. 1 of 2000 as violative of Articles 301 and 304 of the Constitution of India and, thus, was held to be ultra vires. The State of U.P. filed a Special Leave Petition against the judgment dated 27.01.2004, which 3 was later re-numbered as Civil Appeal Nos. 997-998 of 2004. This Court on 09.02.2004 passed following interim order:-

12. After the judgment of Nine Judges Bench dated 11.11.2016, the matter was taken by the Regular Bench and by judgment and order dated 21.03.2017, this Court granted liberty to the appellant to question the levy of Entry Tax under Act, 2007 on the issues, which are left open in the order of the Nine Judges Bench before High Court by way of a fresh writ petition. The appellant filed a Writ Petition No.25730 of 2017 before the High Court, where assessment orders were also assailed as the consequential relief in (Prayer iii). There were other writ petitions also. The appellant’s Writ Petition No. 25730 of 2017 was heard alongwith the bunch of writ petitions on 09.11.2017 and on 09.11.2017 judgment was reserved. There were few other writ petitions, which were heard alongwith the 15 bunch, one being Writ Tax No. 474 of 2017 – M/s. Birla Corporation Limited Vs. State of U.P., where the validity of the demand of interest was separately challenged. While reserving the judgment on 09.11.2017, High Court de-linked all such writ petitions where validity of demand of interest was separately challenged. On 04.05.2018, the High Court delivered the judgment in Writ Petition No. 25730 of 2017 and other connected matters dismissing the writ petitions upholding the validity of the Act, 2007. Immediately after the decision of the High Court on 04.05.2018, demand notices were issued for the assessment years 2008-2009 to 2011-2012 and demand notices dated 05.05.2018 for the assessment years 2000-2001 to 2007-2008 requiring the appellant to deposit Entry Tax together with interest thereupon. The appellant paid a sum to the tune of Rs. 3,361.55 crores towards Entry Tax for the years 1999-2000 to 2011-2012. The appellant filed a writ petition challenging the demand notices dated 04.05.2018 and 05.05.2018 in so far as demand towards interest was concerned. In one of the writ petitions, Writ 16 Petition No.757 of 2018 filed by the appellant, following prayers were made:-

22. As noted above the liberty was granted by this Court to the appellant by its order dated 21.03.2017. The liberty granted to the appellant was on the issues which were left open by the Nine-Judges Constitution Bench judgment dated 21.03.2017 and noticed. Following are certain other aspects which were argued before the Constitution Bench but left open:

21. The preliminary objection raised by the respondents on the ground of res judicata has been 28 allowed relying on the judgment of the High Court dated 04.05.2018 in Writ Petition No.25730 of 2017. We may first notice the prayers made in Writ Petition No.25730 of 2017. Following are the prayers made in the writ petition:

In view of the above discussion, we are of the view that the High Court in the impugned judgment committed error in upholding the preliminary objection of the respondent. We are of the view that the question relating to nature and extent of liability of interest on Entry Tax under the scheme of Act, 2007 need to be examined and answered in these appeals. The question is answered accordingly. Question No.2

The manufacturer 1[shall not deliver such goods] to the purchaser unless the amount of such tax has been paid by the purchaser. (2) The manufacture receiving the tax under sub-section (1) shall submit to the Assessing Authority a return in respect of the goods supplied, and the tax received, by him under subsection (1) and deposit the tax so received in such manner and within such time as may be prescribed.

(3) Where any manufacturer fails to deposit, the tax under this section he shall be liable to pay the tax along with the interest and penalty, if any, payable thereon which shall be recoverable as arrears of land revenue.

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Question No.2 is answered accordingly.

50. In result, the appeals are allowed. The impugned judgment of the High Court dated 22.11.2018 is set aside. 57 The Writs are revived before the High Court to be considered and decided on merits.

51. The parties shall bear their own costs.