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PETITIONER: STATE OF M.P. & ORS.

       Vs.

RESPONDENT: M/S. INDORE IRON & STEEL MILLS PVT. LTD.

DATE OF JUDGMENT:       12/08/1998

BENCH: S.P. BHARUCHA, V.N. KHARE

ACT:

HEADNOTE:

JUDGMENT:                             WITH           C.A. NO. 2306/1996, C.A. NO. 11871/1996                       J U D G M E N T BHARUCHA, J.      The order  under appeal,  of the  High Court  of Madhya Pradesh,  allowed   the  writ   petitions   filed   by   the respondents, following  the High Court’s earlier judgment in the case  of M/S.  New Sakti  Iron & Steel Re- rolling Mills vs. State  of M.P.  The State is in appeal by special leave. The State  is in  appeal by  special leave.  The  State  had preferred a petition for special leave to appeal against the judgment in  the Case  of New Sakti Iron & Steel Re- rolling Mills but  this Court  had declined  to interfere in view of the comparatively small amounts involved in the assessments. It left  it open  to the State to urge its contentions in an appropriate case      By a  notification dated  8th October,  1978 issued  in exercise of  powers conferred  by Section  12  of  the  M.P. General Sales Tax Act, 1958, the State exempted "in whole or in part  the purchases  of the  class of  goods specified in column (1)  of the  Schedule ....  from the  payment of  tax under Section  7 of  the State Act so as to reduce it to the total rate  of tax  specified in  column (2) for the periods specified in  column 93) of the said Schedule subject to the restrictions  and   conditions  specified   in  column   (4) thereof". What  were are  concerned with is item 2(b) of the Schedule. it  relates to  the purchase  of iron and steel as specified in  clause (4)  of Section 14 of the Central Sales Tax Act, 1956. Under column 2, relating to the reduced total rate of  tax, it  is said "Zero per cent (exemption from tax under Section  7 in  whole)." Column (4) in relation to item 2(b) reads:      "Subject  to  the  same  conditions      specified against  serial No.  2(a)      and   subject    to   the   further      condition that  the goods  referred      to in  column 1  had suffered entry      tax   under   the   Madhya   Pradeh      Sthaniya Kshetra  Me Mal Ke Pravesh      Par  Kar  Adhiniyam,  1976,  before

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    they  were   purchased  by      the      registered    dealer."    (Emphasis      supplied).      By reason  of a  notification issued  on 9th  February, 1977 under  Section 10  of the M.P. Pradesh Sthaniya Kshetra Me Mal  Ke  Pravesh  Par  Kar  Adhiniyam,  1976,  the  State exempted in  whole the  class of dealers specified in column (1) of  the Schedule  thereto from  the payment of entry tax for the period and subject to the conditions stated therein. The exemption  thereunder applied  to new industries and, by reason thereof,  the  respondents  were  exempted  from  the payment of  entry tax in respect of the period with which we are concerned.  The petitioner  in the earlier matter before the High  Court, New  Sakti Iron  & Steel Re- rolling Mills, stood in  the same situation as the petitioners. In its writ petition it  contended hat  it was, therefore, exempted also from the  payment of  purchase tax  under item  2(B) of  the Schedule to  the notification under the State Sales Tax Act. The High  Court took  the view  that it  was "a matter of no consequence that  the petitioner had not actually to pay, by virtue of  the exemption  granted under  Section 10  of  the Entry Tax  Act any  amount by  way of  entry tax. That means that although  the petitioner  would other  wise  have  been liable to  pay entry tax under the provisions of that Act at the rate  of 2.5%, it is exempted from doing so by virtue of the special  Notification issued  by  the  State  Government granting such  an exemption  to a  class of dealers to which the petitioner  belong for  a period of 5 years by virtue of incentive. When  the provisions of the sales Tax Act talk of the rate  on which  the purchase  tax would  be payable by a registered dealer  as  on  which  is  prescribed  under  the Notification (Annexure  ’C’ for our present purpose) it is a different matter  altogether that  the  petitioner  has  not actually had to discharge the liability of payment under the Entry Tax Act." The writ petition was, accordingly, allowed.      Learned counsel  for the appellant-State contended that the words  of the notification under the state Sales Tax Act were clear. For the purposes of the exemption thereunder the condition that  had to  be satisfied  was that the goods had "suffered" entry  tax  under  the  Entry  Tax  Act.  Learned counsel  submitted   that  there   was  no   room,  in   the circumstances,  for   the  argument  that  "suffered"  meant "deemed sufferance".  Our attention  was invited  by learned counsel to  the judgment  of   a Constitution  Bench of this Court in  M/s. Gannon  Dunkerley and Co. & Ors. Vs. State of Rajasthan &  Ors. [  1993 (1)  SCC 364],  to which  we shall advert.      Learned counsel  for the respondents submitted that the word "suffered"  referred to  the charge  of tax  under  the Entry Tax  Act and not to the actual payment of that tax. It was also  submitted that the goods could be required to have suffered entry tax under the Entry Tax Act only if they were subjected to  tax by  reason of inclusion under the Schedule in the  Entry Tax  Act. Our  attention was  invited  to  the Judgment of this Court in Collector of Central Excise, Patna vs. Usha  Martin Industries  [ 1997 (94) ELT 460] and of the Patna High  Court in  Tata Yodogawa  Limited and Another vs. Union of India and others [1987 (32) ELT 521].      In our  view, the  words of the said notification under the States  Sales Tax  Act are  so clear  that they leave no doubt whatsoever and cannot be subjected to any construction but one,  namely, that only goods upon which entry tax under the entry  tax  Act  has  been  paid  are  entitled  to  the exemption thereunder.  There  has  to  actual  payment.  The impact of  the entry  tax  upon  the  goods  for  which  the

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exemption is  sought has  to  be  felt;  only  then  is  the exemption available.  The use  of the  word  suffered" makes this plain.      "appropriate" or  any other  similar word. The judgment of the Patna High Court, dealing with the words "has already been  paid",   is   no   assistance   in   construing   this notification. The  provisions of  the  Entry  Tax  Act  that learned counsel  for the  respondents referred  to are of no relevance  in  the  construction  of  the  language  of  the notification under the States Sales Tax Act.      The respondents  had raised  other objections  to their assessments. There  shall now  be considered  by appropriate authorities.      The appeals  are allowed. The order under appeal is set aside. No order as to costs.