2025-VIL-48-SC
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VAT Supreme Court Cases

M.P. Entry Tax Act, 1976 – Levy of Entry Tax on beer and IMFL – Challenge to the levy of Entry Tax under M.P. Entry Tax Act on the entry of IMFL and beer into the local area - The appellants contended that the transactions are between the Government warehouses and the retailers, and the manufacturers do not cause the entry of goods into the local area - The State contended that the manufacturers are liable to pay the Entry Tax as they cause the entry of goods into the local area - Whether the appellants have "caused to be effected the entry of goods" into the local area under Section 3(1) of the M.P. Entry Tax Act, rendering them liable for the payment of entry tax – HELD - In case a canalising agency or intermediary agency is involved, unless their role is merely that of a name lender, the sale will not be treated as an inseparable or an inseverable sale. If an independent canalising agency enters into back-to-back contracts and there is no direct linkage or causal connection between the export by foreign exporter and the receipt of the imported goods in India by local users, then the integrity of the entire transaction would be disrupted and would be substituted by two independent transactions – In the present case, there were two independent transactions, one between the appellant – manufacturers and the State Warehouse and the other between the State warehouse and the retailers. Hence, it not possible to accept the contention of the State that the role of the State is only supervisory and the warehouses didn’t purchase beer and IMFL from the manufacturer - the appellants by the sale to the warehouse caused to be effected the entry of goods and the entry was occasioned on the account of the sale into the local area for consumption, use or sale therein - The levy of entry tax on the appellants is justified as they had "caused to be effected the entry of goods" into the local area, which is the incidence of taxation under Section 3(1) of the M.P. Entry Tax Act – Further, the appellants' contention that a notification under Section 3B of the Act was necessary for the levy, is rejected as the Section 3B is an enabling provision and the levy can be made under the general machinery provided in Section 14 of the Act – There no grounds to interfere with the impugned order. The appeals are dismissed
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