THE ENTRY TAX OFFICER, BANGALORE ETC. ETC. versus M/S CHANDANMAL CHAMPALAL AND CO.

Citation: [1994] 3 S.C.R. 545 · Decided: 18-04-1994 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Appeal(s) allowed

Judgment (excerpt)

I 
-~ 
THE ENTRY TAX OFFICER, BANGALORE ETC. ETC. 
A 
~ 
v. 
 
MIS CHANDANMAL CHAMPALAL AND CO. 
APRIL 18, 1994 
[B.P. JEEVAN REDDY AND N. VENKATACHALA, JJ.) 
B 
r .J • 
Constitution of India-Entry 52 in List II of Seventh Schedule/Kw-
I nataka Tax on Entry of Goods into local weas for consumption, use or sale 
therein Act, 1979-Section 3-Words 'sale therein'--Meaning and scope-Tax 
on entry of goods into a local wea-Where goods we sold with in d local c 
wea for purpose of being taken out of that area and we actually taken out-No 
lery permissible under entry 52-0rder of refund of amount paid in excess of 
~ 
legal liability-Held bad as it would amount to unjust enrichment of dealers 
' 
who have passed on burden to pwchasers/consumers. 
.. 
, 
The controversy·in the instant case was with reference to the scope D 
and ambit of the Karnataka Tax on Entry of Goods into local area 
""'-
consumption, use or sale lilereln Act, 1979. It was submitted that when 
1 
Entry 52 speaks of a tax on the entry of goods into a local area for 
consumption, use or sale therein, the words 'sale therein' must be given 
their due and natural meaning and should not be restricted to the sale for E 
i 
the purpose of consumption or use of the goods sold within the limits of 
I 
the concerned local area. 
' 
1 
The High Court held that the levy created by Section 3 of the 
Karnataka Act is confined to entry of goods for consumption, use or sale 
within the particular local area. It held that where the goods brought F 
~ ~ 
within the local areas are not intended for use or consumption within that 
' 
area but are meant to be and are taken out of the area for use of 
consumption elsewhere, no levy is permissible under the said Act. The 
court directed-refund of amount which may be found to have been paid in 
excess of the liability, to the respondents. This appeal by Revenue has been G 
filed challenging the said order. 
Allowing the appeal, this Court 
-~ 
HELD : 1.1. Where the goods are sold within a local area for the 
purpose of being taken out of that local area and are actually taken out, H 
545 
546 
SUPREME COURT REPORTS 
[1994] 3 S.C.R. 
A 
no levy is permissible under Entry 52. Octroi or any impost in the nature 
of that impost has always been looked upon with certain amount of 
disfavour. Acceptance of the State's contention in this case would ultimate-
ly result in driving up the price of these goods to the consumer. It would 
become another sales tax in effect. In the circumstances, the decision of 
B the Karnataka High Court on the meaning of the words 'sale therein' in 
Section 3. of the Karnataka Act, is affirmed. [549-B-D] 
Burma Shell Oil Storage & Distributing Co. India Ltd. v. The Belgaum 
Borough Municipality, [1963) Supp. 2 SCR 216; Hiralal Ihakorlal Dalal .v. 
Broach Municipality & Ors., AIR (1963) SC 1446 and Municipal Council v. 
C Parekh Automobiles Ltd., [1990) 1 SCC 367, relied on. 
1.2. In the instant case, the order of the Karnataka High Court in 
so far as it directed refund of the amount, which may be found to have 
been paid in excess of the legal .liability, is not justified. Any such direction 
would amount to unjust enrichment of the respondents who are merely 
D dealers and have passed on the burden to the purchasers/consumers. It is 
not alleged and I or established that they have not passed on the duty to 
the purchasers/consumers. The normal presumption is that they have done 
' I 
so. In the absence of any such allegation and proof, the direction of refund 
• -4io
E 
F 
is not called for. [549-D-E, 550-C) 
State of MP v. Vyankat Lal, AIR (1985) SC 901; Amamath Om 
Prakash v. State of Punjab, AIR (1985) SC 218 and Indian Oil Corporation 
v. Muncipal Corporation, Jullundhar, [1993) 1 SCC 333, relied on. 
CIVIL APPELLATE JURISD!Cf!ON : Civil appeal Nos. 4263-64 
of 1992 etc. etc. 
From the Judgment and Order dated 1.2.91 of the Karnataka High 
• 1 
Court in W.P. Nos. 2505 and 2506 of 1991. 
G 
R.N. Narasimhamurthy, B.V. Acharya, M.Veerappa and K.H. Nobin 
Singh for the Appellants.· 
Barish N. Salve, Ashok Kr. Sharma, Narender Kaushik, B.P. Gandhi, 
Mukul Mudgal, V. Balachandran and S. Aravindh for the Respondents. 
H 
The Judgment of the Court was delivered by 
, . 
-
E.T.O. v. CHANDANMAL CO .• [JEEV AN REDDY.].] 
547 
8.P. JEEVAN REDDY, J. Leave granted in the S.L.P. 
2. Entry 52 in List-II of the Seventh Schedule to the Constitution, 
says Sri Narsimha Murthy, should not be confined to an impost , form

Excerpt shown. Read the full judgment & AI analysis in Lexace.