1. This is an application under Section 8 of the West Bengal Taxation Tribunal Act, 1987, praying for setting aside the certificate cases bearing Nos. 26 and 200-ST (CS)/76-77 on the ground, inter alia, that the levy of tax imposed by the authorised officer under the West Bengal Taxes on Entry of Goods into Local Areas Act, 1962 (hereinafter referred to as "the Act, 1962") is unconstitutional and bad in law.
2. The petitioner is an export oriented private limited company incorporated under the Companies Act, 1956. The petitioner imports jute into the local area and exports the same outside India. Though the goods were exported by the Jute Corporation of India Ltd., it was the petitioner who was exporting the goods after obtaining contract for such export. The said contract, the export licence or the letter of credit were opened by the foreign buyers in the name of Jute Corporation of India Ltd., at the instance of the petitioner due to canalisation of export of jute under the order of the Government of India.
3. The petitioner received several notices from time to time under Section 10 of the Act, 1962 into form IX prescribed under Rule 13 of the West Bengal Taxes on Entry of Goods into Local Areas Rules, 1955 (hereinafter referred to "the Rules 1955"). The said notices were received on the ground that raw jute entered into local area during the period from 1st August, 1974 to 31st March, 1977 is liable to tax and penalty.
4. The petitioner imported jute within the local area not for the purpose of sale, use or consumption. Therefore, under the Act, 1962 the authority has no power to levy tax on such goods.
5. The entry of such goods within the local area is exempted under Article 286(1)(b) of the Constitution of India and the State Government, therefore, has no power or jurisdiction to levy or impose tax on such goods. The notices issued by the Commercial Tax Officer, and tax levied therefore, are illegal and without jurisdiction. The order of penalty is also illegal and arbitrary.
6. The petitioner, therefore, preferred an appeal before the Assistant Commissioner of Commercial Taxes against the order passed by the Commercial Tax Officer who also confirmed all the orders without proper application of mind and compliance of the provisions of the Act. Being aggrieved with the order passed by the Assistant Commissioner, an application under Article 226 of the Constitution of India was filed before the honourable High Court, Calcutta being No. CR 412(W) of 1981 and Mr. Nani Gopal Chatterjee was the advocate-on-record. Rule was issued subject to furnishing a bank guarantee for Rs. 70,000 by the petitioner. The respondents thereafter, took no steps for realisation of the demand made in the assessment order.
7. In February 2001, the petitioner was served with a warning notice in connection with certificate Case No. 26-ST(CS)/76-77 asking the petitioner to make payment within 3 days from the date of receipt of such notices. The petitioner, on receiving such notice tried to contact with his advocate Shri Nani Gopal Chatterjee and came to know that he expired on February 17, 1999. On July 10, 2001 an application was filed before the High Court by his newly engaged lawyer Ms. Koyeli Mukhopadhyay and on July 20, 2001 for verification of the records. But the same was not traceable for a long time. On December 19, 2001 it came to the notice of the petitioner's lawyer Ms. Mukhopadhyay that the writ petition was dismissed for default on May 31, 1993 when the honourable Court actually had no jurisdiction to pass such an order since the West Bengal Taxation Tribunal Act, 1987 by this time came into force. The instant application, therefore, has been filed since the new cause of action arose due to service of the notice dated February 1, 2001 issued by the respondent No. 4. Hence, there is no intentional delay in filing this application. Moreover, the certificate proceeding initiated for recovery of demand is a continuing cause of action. The assessment order and the appellate order being illegal and erroneous, the certificate proceedings arising out of those orders are, therefore, also illegal.
8. On behalf of the petitioner, it is submitted that the entire proceedings initiated under the notices in form IX of the Rules, 1955 are illegal and without jurisdiction, since no rule has been framed under Section 23(1) of the Act, 1962 to carry out the purpose and object of the said Act. The Commercial Tax Officer is also not competent to make assessment under the law and to pass any order of penalty. Since rules framed under the Act, 1955 cannot be made applicable to the Act, 1962, relevant rules should have been framed under Section 23 of the Act, 1962 before taking action. It is also argued that jute entered into the local area was not meant for local sale but actually for export outside the territory of India. The CTO has no authority even the sale, if any, was made in course of export in view of Article 286 of the Constitution of India read with Section 5 and Section 14 of the Central Sales Tax Act, 1956. It is submitted that goods are exported by the Jute Corporation of India Ltd. and the petitioner is executing act of exporting after obtaining order of contract for such exports. Such contract, export licence, letter of credit are opened by the foreign buyers in the name of Jute Corporation of India Ltd., at the instance of the petitioner due to canalisation of export of goods under the order of the Government of India. Since after insertion Sub-section (3) of Section 5 of the Central Sales Tax Act, 1956, an attempt to levy any entry tax on the goods entered for consumption, use or sale within the local area is hit by Article 286 of the Constitution of India. Drawing our attention to item No. 52 of the State List to the Seventh Schedule it is submitted that the State Government has been authorised to levy tax on the entry of goods for consumption, use or sale in the local area. Thus, entry tax is not a tax for the entry of goods but for the goods meant for consumption, use or sale. Since the goods admittedly, were brought in the local area was neither for sale nor for consumption or use, no tax under Act, 1962 could be levied. The certificate proceedings initiated for recovery of tax in view of the existing provisions of law are bad and liable to be set aside.
9. On behalf of the respondent it is submitted that the application filed under Article 226 of the Constitution of India on behalf of the petitioner since was dismissed for default, the present application for the same cause of action cannot be entertained by this Tribunal after such a long delay. It is also contended that the petitioner should have taken steps for setting aside the said order of dismissal passed by the honourable Court in higher forum. The certificate proceeding cannot be a fresh cause of action for filing the instant application inasmuch as, it is the continuation of the original proceeding initiated on the notice for assessment. Sub-section (3) of Section 5 of the Central Sales Tax Act, 1956 came into force on and from April 1, 1976.
Therefore, the petitioner is not entitled to get relief for the period in question for which the assessment was held by the CTO. It is, also argued by the learned State Representative that according to Section 24 of the Act, 1962 the Rule 1955 can be made applicable validly under the Act, 1962. Therefore, the contention of non-framing of the rules by Act, 1962 invalidated the whole proceeding initiated by the CTO, is baseless and incorrect. It is, therefore, submitted that dealer is liable to pay tax on entry of goods into the local area and the Article 286 of the Constitution of India has not imposed any restriction. The respondents rightly have passed the order in accordance with law and the instant application therefore, is liable to be dismissed.
10. The points for consideration, therefore, are--(a) if the present application after dismissal of the previous application under Article 226 without considering its merit, on the same cause of action, is maintainable under law, (b) if the assessment orders imposing levy of tax under the West Bengal Taxes on Entry of Goods into Local Areas Act, 1962 are bad in law.
11. In view of the information slip No. 37470 dated April 3, 2002 filed on behalf of the petitioner issued by the concerned officer Central Filing and Enquiry Department, High Court, it appears that rule issued in C.R. No. 412(w) 1982 was discharged for default by the honourable Justice Suhas Chandra Sen on April 8, 1992. Therefore, the writ application filed under Article 226 of the Constitution of India as it appears, was not heard on merits. The question therefore, arose as to whether such order of dismissal debars the petitioner in filing the present application under Section 8 of the West Bengal Taxation Tribunal Act, 1987. In several cases, it has been held that a second petition under Article 226 can be entertained if such petition was dismissed in limine without passing a speaking order or without making any pronouncement on merits (relied on AIR 1961 SC 1457 Daryao v. State of U.P. and AIRP.D. Sharma v. State Bank of India). The present application being in nature and in form of a writ application like that of Article 226 of the Constitution of India, it can be entertained after dismissal of the first one. It is, therefore, maintainable in law. Since the jurisdiction has been shifted to this Tribunal under the West Bengal Taxation Tribunal Act, 1987, the petitioner has, rightly filed such application challenging the impugned orders passed by the learned Commercial Tax Officer before this Tribunal. We, therefore, hold that the present application can be entertained under law, for hearing on merits.
12. It is undisputed that the jute was imported by the petitioner within the local limit not for sale, use or consumption but for export.
It is also undisputed that by a contract for export the petitioner is exporting the goods on behalf of the Jute Corporation of India Ltd., and the export licence or the letter of the credits are opened by the foreign buyers in the name of Jute Corporation of India Ltd., at the instance of the petitioner. The question, therefore, arose for decision as to whether such entry of the goods makes the petitioner liable for payment of tax under the Act, 1962.
13. The tax on entry of goods is levied at the rate mentioned in column 3 of the Schedule of the Act, 1962. Section 4 of the Act, 1962 is the charging section and the dealer is to deliver to the prescribed authority a bill of entry under Section 5(1) of the Act, 1962 on or before the entry of goods within the local area. Under Section 5(2) of the Act, 1962, tax is to be assessed by the prescribed authority.
"4(1). Subject to the provisions of Sub-section (3), there shall be levied on the entry of any goods specified under column (1) of the Schedule, in the local area specified in the corresponding entry under column (2) of the Schedule for consumption, use or sale in such local area, a tax at such rate, not exceeding the rate specified in the corresponding entry in column (3) of the Schedule, as the State Government may, by notification in the Official Gazette, specify in this behalf." 15. Therefore, from the aforesaid provision it is clear that entry tax cannot be levied on the import of the goods within the local area if the same was not meant for consumption, use or sale in such local area.
16. The word consumption in its primary sense means the act of consuming and in ordinary parlance means the use of the article in a way which destroys, waste or uses up that article. But in some legal contexts the word consumption has a wider meaning. Thus when uncrushed salt is crushed in the factory, it is commercially a different article and the uncrushed salt must be held to have been consumed. It is therefore, not necessary that by the act of consumption, the commodity must be destroyed or used up (Kathiawar Industries Ltd. v. Jaffrabad Municipality AIR 17. The legislative entry relating to the constitutional power to levy this tax is found in List II, entry 52 of the Seventh Schedule to the Constitution which reads : "52. Taxes on the entry of goods into a local area for consumption, use or sale therein."Burmah-Shell Oil Storage and Distributing Co. of India Ltd. v. Belgam Borough Municipality AIR 1963 SC 906 the honourable Court considered the meaning of the words "consumption, use or safe therein" and observed : "........The goods must be regarded as having been brought in for purposes of consumption when a person brings them either for his own use or consumption or to put them in the way of others in the area, who are to use and consume......".
19. And it was held that the tax was not payable on the goods which were re-exported. The ratio is thus not a mere sale inside that attracts octroi but a sale intended for consumption of goods inside the octroi area though ultimately the person to whom the goods were sold for consumption does not consume the goods inside, but does the same outside the limit.
20. A plea for review of the decision in Burmah Shell's case AIR 1963 SC 906 was also made in Hiralal Thakorlal Dalal v. Broach Municipality 1976 Supp. SCR 82 and it was rejected by the Constitution Bench and held that the word "sale" in colloquium of the words "consumption, use and sale therein" means sale for consumption within octroi limits. The ratio of these two decisions was considered by the Bombay High Court in Khandelwal Traders' case AIR 1985 Bom 218. In this case also it was held that where a dealer imports goods within the octroi limits and obtains permits for export, he is not liable to pay tax though for the purpose of exports the goods are sold within the local limit.
21. We thus find from the aforesaid decided cases that the entry 52 of List II of the Seventh Schedule to the Constitution of India authorises the taxation of goods brought into a local area where the importer brings it--(a) to be consumed by himself or for sale to consumers direct or (b) for sale to dealers who in their turn sell the goods to the consumers within such area irrespective of the fact whether consumers buy the goods for use in the area or outside it. It would not, however, authorise a tax on goods which are imported into a local area merely for the purpose of re-export or on goods merely passing through a local area by vehicles plying on highways (Town Municipal Council v. Urmilla Kothari AIR 1977 SC 873). The power to tax under the present entry is founded not on the factum of sale of the goods within its local area but its sale for the purpose of consumption or use within such area.
22. The word "therein" in the entry indicates that no tax can be imposed by a State or local authority if the goods merely pass through a local area to a destination beyond and are not consumed, used or sold within that local area.
23. The coupling of three words "consumption, use and sale" connotes that the goods are taxable under this entry only if the title of the owner is transferred to another or the thing or commodity ceases to exist in its original form.
24. In the present case, the ratio of the decisions above referred clearly, therefore, governs the case, even if it were to be assumed that the sale in the general sense took place inside the local limits which however, it admittedly not the case.
25. In view of the findings made above we hold that the goods since were brought within the local area not for consumption, use or sale within such local area but for export of the goods to the foreign countries through the Jute Corporation of India Ltd., no tax is payable on such goods. The assessment, therefore made by the concerned officer and the tax levied under the provisions of the Act, 1962 is had in law and liable to be quashed. The appellate authority has also taken the erroneous view by confirming the order of the learned C.T.O. which is also illegal and thus is set aside. The certificate proceedings initiated on the ground of such levy of tax are accordingly is held to he illegal and liable to be set aside.
26. The impugned orders for the period August 1, 1974 to March 31, 1977 for levying of tax under Act, 1962 are accordingly set aside. The certificate proceedings bearing Nos. 26 and 200-ST (CS)/ 76-77 are declared illegal and invalid and therefore to be set aside. The petitioner is also discharged from the security furnished by way of bank guarantee as per the order of this Tribunal. The application is thus allowed without costs.