of M.P. & Ors Vs. M/S. Indore Iron & Steel Mills Pvt. Ltd.
 INSC 413 (12
Bharucha, V.N. Khare Bharucha, J.
WITH C.A. NO. 2306/1996, C.A.
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.
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.
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:
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 they were purchased by the registered dealer." (Emphasis
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.
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.
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.
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
Rajasthan & Ors. [1993 (1) SCC 364], to which we shall advert.
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].
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
exemption is sought has to be felt; only then is the exemption available. The
use of the word suffered" makes this plain.
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.
respondents had raised other objections to their assessments. There shall now
be considered by appropriate authorities.
appeals are allowed. The order under appeal is set aside. No order as to costs.