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Gujarat High Court : M/S FLIPKART INTERNET PVT LTD. Versus STATE OF GUJARAT & 1.: 1st December, 2016

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

SPECIAL CIVIL APPLICATION No. 7019 of 2016
With
SPECIAL CIVIL APPLICATION No. 9121 of 2016
With
SPECIAL CIVIL APPLICATION No. 8806 of 2016

M/S FLIPKART INTERNET PVT LTD.
...Petitioner(s)

Versus

STATE OF GUJARAT & 1.
...Respondent(s)

=============================================================

Appearance : [Spl. C.A No. 7019 of 2016]

Mr Venkatraman, Sr. Advocate with Mr. Dhaval Shah for Mr. Vimal  Patel & Mr. Kishor Kunal, Advocates for the Petitioner
Mr. Kamal Trivedi, Advocate General with Ms. S.K Vishen, AGP for the  Respondent(s) No. 1-State

NOTICE SERVED BY DS for the Respondent(s) No. 2

Appearance : [Spl. C.A No. 8806 of 2016]

Mr Venkatraman, Sr. Advocate with Mr. Kishore Kunal, Mr. Parth  Contractor & Manish Rastogi, Advocates for the Petitioner
Mr. Kamal Trivedi, Advocate General with Ms. S.K Vishen, AGP for the Respondent(s) No. 1-State

NOTICE SERVED BY DS for the Respondent(s) No. 2

Appearance : [Spl. C.A No. 9121 of 2016]

Mr Anand Nainawati with Mr. Abhishek Anand, Advocate for the  Petitioner
Mr. Kamal Trivedi, Advocate General with Ms. S.K Vishen, AGP for the Respondent(s) No. 1-State

NOTICE SERVED BY DS for the Respondent(s) No. 2

CORAM: HONOURABLE Mr. JUSTICE M.R. SHAH
and
HONOURABLE Mr. JUSTICE B.N. KARIA

1st December 2016

COMMON JUDGMENT (PER : HONOURABLE Mr. JUSTICE M.R. SHAH)


1. As the common question of law and facts arise in this group of petitions, they are disposed of by this this common judgment and order.
2. In all these petitions, vires of the provisions of the Gujarat Tax on Entry of Specified Goods into Local Areas [Amendment] Act, 2016 [Gujarat Act No. 6 of 2016] published in the Gujarat Government Gazette on 31st March 2016 amending the Gujarat Tax on Entry of Specified Goods into Local Areas Act, 2001, Notification No. (GHN-18) GEA-2016-(S.3)(6)-TH dated 1st April 2016 amending Notification No. (GHN-20) GEA-2008/(S.3)(3)-TH dated 1st April 2008 and Notification No. (GHN-19) GER- 2016-S.3(4)/TH dated 1st April 2016 amending the Gujarat Tax on Entry of Specified Goods into Local Area Rules, 2001 seeking to levy Entry Tax on goods purchased by individual consumers through electronic commerce portals for their personal use and consumption.


3. Shri Venkataraman, learned senior advocate appearing on behalf of the respective petitioners in Special Civil Applications No. 7019 of 2016 and Special Civil Application No. 8806 of 2016 has fairly conceded that in view of subsequent decision of Nine-Judges Bench of the Hon’ble Supreme Court in the case of Jindal Stainless Limited vs. State of Haryana, rendered in Civil Appeal No. 3453 of 2002, challenge to the vires of the aforesaid provisions will not stand. However, he has submitted that since few months, the respective petitioners have already paid entry tax on the goods imported and brought into the State of Gujarat. It is submitted that the concerned importers-petitioners, prior to bringing goods into the State of Gujarat have already suffered/paid the Central Sales Tax to the concerned State, and therefore, according to the learned counsel for the petitioners, the respective importers-petitioners are entitled to the benefit of Section 4[2] of the Entry Tax Act, 2001 ie., while making payment of entry tax, the Central Sales Tax paid is required to be given set off and/or the entry tax levied under the Entry Tax Act, 2001 is required to be reduced to the extent of the amount of tax paid; if any, under the Central Sales Tax Act on the purchase of specified goods in the course of inter-state trade or commerce. Therefore, Shri Venkataraman, learned counsel appearing for the respective petitioners of Special Civil Applications No. 7019 of 2016 & 8806 of 2016 has requested the Court to pass an appropriate order, while upholding the vires of the relevant provisions of Entry Tax Act, 2001 and the Entry Tax Rules, 2001, that the petitioners shall be entitled to reduction under the Entry Tax Act, 2001 and/or are entitled to set off to the extent of Central Sales Tax already paid on purchase of specified goods in the course of inter-state trade or commerce.


3.1 Shri Venkataraman, learned counsel appearing for the petitioners of Special Civil Applications No. 7019 of 2016 & 8806 of 2016, in the alternative has requested the Court to reserve liberty in favour of the petitioners to approach the State Government for computation of the amount of entry tax leviable, after giving benefit of subsection (2) of Section 4 of the Entry Tax Act, 2001.


4. Shri Kamal Trivedi, learned Advocate General appearing on behalf of the respondent-State has submitted that so far challenge to the constitutional validity/vires of the Entry Tax Act, 2001 and the Entry Tax Rules, 2001 is concerned, the issue is as such concluded by a recent decision of the Hon’ble Supreme Court in a 9- Judges Bench decision rendered in case of Jindal Stainless Limited vs. State of Haryana [Civil Appeal No. 3453 of 2002]


4.1 With respect to the submissions made by learned senior counsel Shri Venkataraman appearing for the petitioners in Special Civil Applications No. 7019 of 2016 and 8806 of 2016 that the petitioners are entitled to set off and/or reduction in the amount of tax leviable under the Entry Tax Act, 2001 to the extent of amount of tax already paid; if any, under the Central Sales Tax Act, 1956 on the purchase of specified goods in the course of interstate trade or commerce is concerned, it is submitted by Shri Kamal Trivedi, learned Advocate General appearing for the respondent-State of Gujarat that as such provisions of sub-section (2) of Section 4 of the Entry Tax Act, 2001 are very clear. He has submitted that in fact, in the affidavit in reply, the State has already clarified with respect to the same; more particularly in para 12 [c] of the affidavit-in-reply filed on behalf of the State dated 18th June 2016.


5. Having heard learned counsel appearing on behalf of the respective parties and having gone through and considered the recent decision of the Apex Court rendered in case of Jindal Stainless Limited [Supra], the relevant provisions of the Gujarat Tax on Entry of Specified Goods into Local Areas [Amendment] Act, 2016 [Gujarat Act No. 6 of 2016] published in the Gujarat Government Gazette on 31st March 2016 amending the Gujarat Tax on Entry of Specified Goods into Local Areas Act, 2001, Notification No. (GHN-18) GEA-2016-(S.3)(6)-TH dated 1st April 2016 amending Notification No. (GHN-20) GEA-2008/(S.3)(3)-TH dated 1st April 2008 and Notification No. (GHN-19) GER- 2016-S.3(4)/TH dated 1st April 2016 amending the Gujarat Tax on Entry of Specified Goods into Local Area Rules, 2001 seeking to levy Entry Tax on goods purchased by individual consumers through electronic commerce portals for their personal use and consumption, the constitutional validity which are challenged in the present writ petitions and the levy of Entry Tax on such goods purchased within the State of Gujarat are required to be held intra vires and constitutionally valid. Under the circumstances, so far as challenge to the levy of Entry Tax on entry of specified goods purchased by individual consumers through electronic commerce portals for their personal use and consumption is concerned, the present petitions fail and the same deserves to be dismissed and are accordingly dismissed by upholding the constitutional validity of relevant provisions of the Gujarat Tax on Entry of Specified Goods into Local Areas [Amendment] Act, 2016 [Gujarat Act No. 6 of 2016] published in the Gujarat Government Gazette on 31st March 2016 amending the Gujarat Tax on Entry of Specified Goods into Local Areas Act, 2001, Notification No. (GHN-18) GEA-2016-(S.3)(6)-TH dated 1st April 2016 amending Notification No. (GHN-20) GEA-2008/(S.3)(3)-TH dated 1st April 2008 and Notification No. (GHN-19) GER-2016-S.3(4)/TH dated 1st April 2016 amending the Gujarat Tax on Entry of Specified Goods into Local Area Rules, 2001 on the goods imported and/or brought within the State of Gujarat.


6. Now, so far as submissions made on behalf of the petitioners of Special Civil Application No. 7019 of 2016 and Special Civil Application No. 8806 of 2016 that as on the specified goods brought into the State of Gujarat by the respective petitioners, it has already suffered Central Sales Tax, and therefore, CST paid on such specified goods brought by the petitioners into the State of Gujarat, either there shall be set off to the extent the amount of tax/CST already paid and/or amount of tax leviable under the Entry Tax Act, 2001 is required to be reduced to the extent of amount of tax paid; if any, under the CST on the purchase of specified goods in the course of inter-state trade or commerce is concerned. Sub-section (2) of Section 4 of the Entry Tax Act, 2001 is very clear. Even the observations made by the Apex Court in its decision rendered in case of Jindal Stainless Limited [Supra] in para 161 & 166 also takes care of such a situation.

However, the same shall be subject to the petitioners and/or concerned importers who are bringing the specified goods into the State of Gujarat to prove it before appropriate authority by producing relevant material with respect to the payment of such CST and having satisfied that the goods which are brought by the importers into the State of Gujarat had suffered CST and on such goods, the CST is already paid in other State treating the same as inter-state trade or commerce, the necessary consequence, as provided under sub-section (2) of Section 4 of the Entry Tax Act, 2001 must thereafter follow.

Section 4 of the Entry Tax Act, 2001 and Rule 5 of the Entry Tax Rules, 2001, which are relevant for the aforesaid, are reproduced as under :

“4. Reduction in tax liability :-
[1] The amount of tax leviable under this Act shall, subject to such conditions as may be prescribed, be reduced to the extent of the amount of tax paid, if any, under the law relating to Sales Tax as may be in force in any other State or Union Territory by an importer who has purchased the specified goods in that State.

[2] The amount of tax leviable under this Act shall, subject to such conditions as may be prescribed, be reduced to the extent of the amount of tax paid, if any, under the Central Sales Tax Act, 1956 [74 of 1956] on the purchase of the specified goods in the course of inter-state or commerce.

[3] Where an importer of specified goods liable to pay tax under this Act, being a dealer in the specified goods, becomes liable to pay tax under the Gujarat Value Added Tax Act, 2003 (Guj. 1 of 2005) by virtue of the sale of such specified goods, then his liability under the Gujarat Value Added Tax Act, 2003 (Guj. 1 of 2005) shall be reduced to the extent of tax paid under this Act.”


Rule-5 : Reduction of tax liability :-

The amount of tax shall be reduced under sub-section (1) and (2) of Section 4 of the Act, subject to the following conditions, namely :-

(i) The importer shall produce before the Assessing Authority -  [a] the purchase invoice, along with a copy thereof, wherein the amount of tax payable, under the law relating to Sales Tax in the State or the Union Territory or as the case may be, the Central Sales Tax, was charged by the vendor who is a dealer registered under such law and who had sold the specified goods to the importer from that State or, as the case may be, in the Union Territory, or [b] a declaration, alongwith a copy thereof, from such vendor, declaring inter alia that he had included the amount of such tax in the price charged by him in the purchase invoice.

(ii) The importer shall furnish to the Assessing Officer the copy of the purchase invoice mentioned in clause (a) or as the case may be, the copy of the declaration mentioned in clause (b).”


7. Thus, for the aforesaid purpose, the concerned importers have to make appropriate claim before the appropriate authority claiming the benefit under subsection (2) of Section 4 of the Entry Tax Act, 2001 as required under Rule 5 of the Entry Tax Rules and as and when such claims are made, the appropriate authority is required to consider the same in accordance with subsection (2) of Section 4 of the Entry Tax Act, 2001, however, subject to concern person to prove by producing necessary Challan, the payment of CST in other State on such goods brought/imported within the State of Gujarat and having followed the procedure as required under Rule 5 of the Entry Tax Rules, 2001. Therefore, for the aforesaid purpose and/or computation of the amount of entry tax leviable under the Entry Tax Act, 2001, the petitioners being concerned importers who are bringing specified goods into the State of Gujarat are relegated to approach appropriate authority for the aforesaid purpose and as and when such claim is made, the appropriate authority is directed to consider the same in accordance with law, more particularly, considering the provisions of sub-section (2) of Section 4 of the Entry Tax Act, 2001.


8. With the aforesaid observations and clarification, Special Civil Applications No. 7019 of 2016 and 8806 of 2016 stand dismissed/ disposed of.


9. Now, so far as Special Civil Application No. 9121 of 2016 is concerned, for the reasons stated hereinabove and in light of the recent decision of the Apex Court in the case of Jindal Stainless Limited [Supra], the said petition is dismissed in so far as challenge to the constitutional validity of the relevant provisions of the the Gujarat Tax on Entry of Specified Goods into Local Areas [Amendment] Act, 2016 [Gujarat Act No. 6 of 2016] published in the Gujarat Government Gazette on 31st March 2016 amending the Gujarat Tax on Entry of Specified Goods into Local Areas Act, 2001, Notification No. (GHN-18) GEA-2016-(S.3)(6)-TH dated 1st April 2016 amending Notification No. (GHN-20) GEA-2008/(S.3)(3)-TH dated 1st April 2008 and Notification No. (GHN-19) GER- 2016-S.3(4)/TH dated 1st April 2016 amending the Gujarat Tax on Entry of Specified Goods into Local Area Rules, 2001 seeking to levy Entry Tax on goods purchased by individual consumers through electronic commerce portals for their personal use and consumption are under challenge.


10. Now, so far as the submissions made on behalf of the petitioner of Special Civil Application No. 9121 of 2016 with respect to grant of benefit under sub-section (2) of Section 4 of the Entry Tax Act, 2001 is concerned, for the reasons stated hereinabove while disposing of Special Civil Applications No. 7019 of 2016 and 8806 of 2016, the petitioner of Special Civil Application No. 9121 of 2016 is also relegated to make appropriate claim before appropriate authority and as and when such claim is made, subject to and having satisfied that the specified goods which are brought into the State of Gujarat by the petitioner of Special Civil Application No. 9121 of 2016 has suffered CST, in that case, the same may be considered in accordance with law, more particularly considering the provisions of sub-section (2) of Section 4 of the Entry Tax Act, 2001 and Rule 5 of the Entry Tax Rules, 2001.


11. With the aforesaid observations and clarification, Special Civil Application No. 9121 of 2016 stand dismissed/disposed of in the above terms.


12. Notice issued in each case stands discharged with no separate order as to costs.


(M.R. SHAH, J.)



(B.N. KARIA, J.)


Prakash


Additional Info

  • Date Range: Thursday, 01 December 2016
  • Court/Authority: High Court
  • Tax Type: Sales/Comrcl/TradeTax/VAT/CST
  • Petitioner/Appellant: M/S FLIPKART INTERNET PVT LTD. Versus STATE OF GUJARAT & 1.
  • Respondent: M/S FLIPKART INTERNET PVT LTD. Versus STATE OF GUJARAT & 1.
  • Appl no. or Appl year: SPECIAL CIVIL APPLICATION No. 7019 of 2016, No. 9121 of 2016, No. 8806 of 2016
  • Supreme Court Location: Delhi
  • High Court Location: Gujarat High Court
  • AAR Location: Delhi
  • Authority: Supreme Court

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