M/S. BHAGATRAM RAJIV KUMAR versus COMMISSIONER OF SALES TAX MADHYA PRADESH AND ORS.

Citation: [1994] SUPP. 6 S.C.R. 91 · Decided: 25-11-1994 · Supreme Court of India · Bench: KULDIP SINGH · Disposal: Dismissed

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Judgment (excerpt)

--
MIS BHAGATRAM RAnv KUMAR 
A 
v. 
COMMISSIONER OF SALES TAX MADHYA PRADESH AND ORS. 
NOVEMBER 25, 1994 
[KULDIP SINGH, R.M. SAHAI AND B.L. HANSARIA, JJ.] 
B 
Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar 
Adhiniyam, 1976-Section 3 (1) (a) -Entry tax on goods-Nature of levy 
and its ambit-Tax /eviable on all goods specified in Schedule II brought 
for consumptions, use or sale-Whether entry tax on goods such as sugar 
on which no sales tax is leviab/e, could be subjected to levy u!s 3 (1) (a) -
C 
Held, Yes. 
Section 3(J)(a) -Entry tax on goods-Excluding dealers not 
registered under Sales Tax Act-Whether arbitratory and discriminatory-
Held, No. 
Constitution of India-Article 301-Madhya Pradesh Sthaniya Kshetra 
Me Mal Ke Pravesh Par Kar Adhiniyam, 1976-Section 3(J)(a)-Entry tax 
on goods-Compensatory nature of tax-It is immune from challenge under 
Article 301. 
· 
D 
Appellants who were dealers registered under the Sales Tax Act of E 
the State l:frought goods such as sugar which were specified in Schedule 
II of th~ Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par 
Kar Adhiniyam, 1976 from outside the State for consumption, use or 
sale inside the State. They had attacked the validity of the levy 
challenging legislative competence of the State legislature. 
F 
In these appeals filed against judgment and order of the High 
Court, the appellants had mainly challenged the nature of levy, its 
ambit and whether it impeded free flow of trade and commerce in 
violation of Article 301 of the Constitution of India. 
The levy was described in substance to be purchase tax leviable 
under the Sales Tax Act. It was submitted that the language of Section 
3 (1) (a) was vague and discriminatory and it would result in excluding 
those dealers who were not registered under the Sales Tax Act. 
Reliance was placed on the expression 'liable to tax' used in the section 
G 
and it was urged that the liability being co-related with entry of goods H 
91 
92 
SUPREME COURT REPORTS 
[1994] SUPP. 6 S.C.R 
A 
the only reasonable construction of the section was to restrict the levy 
on those goods on which the dealer was liable to pay tax under the Sales 
Tax Act. Relying on the provisions of the Additional Duties of Excise 
Act, 1957, it was urged that sugar was one of the goods on which 
additional excise duty was leviable, therefore, no sales tax could be 
levied on it. 
B 
c 
D 
E 
F 
G 
H 
The question for consideration in these appeals was whether entry 
tax on goods such as sugar on which no sales tax was leviable, could be 
subjected to levy u/s 3 (1) (a) of the Madhya Pradesh Entry Tax Act. 
Dismissing the appeal, this Court 
HELD : 1.1. Under section 3 (1) (a) of Madhya Pradesh Sthaniya 
Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976, the taxable 
event is the entry of goods in a local area of the State by a dealer in 
course of business and not its purchase. To characterise it as purchase 
tax is ignoring the nature of levy. [94 C, 95 BJ 
1.2. If the legislature advertently or inadvertently omits to levy tax 
on any class of persons that by itself cannot result in invalidating the 
levy unless it is found to be discriminatory. Dealers with turnover of 
Rs. 1,000 per annum can be considered to be class of small dealers. · 
Excluding such class of dealers is neither arbitrary nor discriminatory. 
[95Dl 
1.3. Liability to pay sales tax on the goods specified in Schedule II 
is not an essential ingredient of levy. The expression 'liable to tax', has 
been used to identify the person who shall pay the entry tax. If any 
goods mentioned in Schedule II are brought from outside the State by a 
person who is not liable to tax under the Sales Tax Act then entry tax 
shall not be realised from such person. The intention is to levy tax only 
when the goods are brought inside the State by a dealer carrying on 
business whose turnover is not less than Rs. 1,000 annually and not by 
any other person. The tax is leviable on all goods specified in Schedule 
II brought for consumption, use or sale; but it shall be realised only 
from those persons who are dealers registered under the Sales Tax Act 
and are Hable to pay tax. The expression 'liability to tax' is 
determinative of the person from whom the tax shall be realised and 
not of the goods which could be subjected to levy. Any other 
construction would militate against the clear language of the Section as 
the levy being on goods specified in Schedule II, it would also 

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