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Judgment
K.K. Sasidharan, J.—The challenge in this appeal is to the order of the learned single judge dated September 30, 2003 in W. P. No. 39034
of 2002 directing the appellant to pay the entry tax as per the provisions of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act,
1990.
The appellant is a firm and they have purchased an Escort JCB excavator from Pondicherry during the year 1995-96 as per invoice dated May
16, 1995 for a sum of Rs. 12,92,198. Since the excavator was not liable for registration under the provisions of the Motor Vehicles Act, 1988, the
vehicle was not registered. While so, the appellant received a notice from the respondent on November 19, 2001 calling upon them to produce
documents relating to the purchase of the excavator as well as its insurance details and the said notice was issued u/s 8 of the Tamil Nadu Tax on
Entry of Motor Vehicles into Local Areas Act, 1990 (Tamil Nadu Ordinance 1 of 1990). Subsequently an order of assessment was made by the
respondent on September 18, 2002 whereby the entry tax was assessed at Rs. 74,215 and penalty of Rs. 1,48,430 was imposed for their failure
to comply with the provisions of the Act. The said order was challenged in W. P. No. 39034 of 2002 and among other submissions, the appellant
has also contended that the levy and demand of entry tax on the import of Escort JCB excavator after a lapse of seven years was not permissible.
The levy of penalty was specifically challenged on the ground that during the year 1995, when the appellant imported the JCB excavator, there was
no requirement for registration under the Motor Vehicles Act and as such there was no question of filing any declaration before the authorities.
The learned single judge was of the opinion that it was not mandatory on the part of the appellant to register the vehicle during the material time
and only after the judgment of the Supreme Court in the year 2001 which made the position clear that the JCB excavator also requires registration
under the Motor Vehicles Act, that the necessity to register the vehicle arose and as such, it was not proper on the part of the respondent to levy
penalty. However the appellant was directed to pay tax as per the assessment order. Aggrieved by the said order with regard to payment of tax,
the appellant is before us.
The learned Counsel for the appellant vehemently contended that there is no provision in the Tamil Nadu Tax on Entry of Motor Vehicles into
Local Areas Act, 1990 (hereinafter referred to as the ""Entry Tax Act"") for assessment of an importer on his failure to submit a return. According to
the learned Counsel there was no requirement at the material point of time either for registration of the vehicle under the provisions of the Motor
Vehicles Act or for filing a return before the adjudicating authority. Therefore there was no legal obligation on the part of the appellant to file the
return immediately after the purchase of the JCB excavator. The learned Counsel further contended that it was only after the judgment of the
honourable Supreme Court clarifying the position that the JCB excavator is also liable for registration under the Motor Vehicles Act that the
respondent has chosen to pass the assessment order, which is not legally sustainable, in the absence of provision conferring such right on the
Department.
The learned Special Government Pleader (Taxes) justified the order of the respondent as well as the learned single Judge. According to the
learned Special Government Pleader there is no period of limitation prescribed for passing the assessment order under the Entry Tax Act. It was
his further contention that Rule 12 of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Rules, 1990 (hereinafter referred to as ""the
Entry Tax Rules"") permits the assessing authority to call for information from a person for the purpose of proceeding under the Entry Tax Act and
as such, the notice calling upon the appellant to produce details as well as the subsequent assessment order on the basis of such details furnished
by the appellant was clearly done as per the Act and as such, no interference is called for in the order of the learned single judge directing the
appellant to pay entry tax.
The Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 was enacted to curb the evasion of sales tax on the sale of motor
vehicles, which are purchased outside the State and brought into the State of Tamil Nadu. According to Section 2(i) of the Entry Tax Act ""motor
vehicle"" means a motor vehicle as defined in Clause (28) of Section 2 of the Motor Vehicles Act, 1988. Section 3 of the Entry Tax Act provides
for levy and collection of tax on entry of any motor vehicle into any local area for use or sale therein which is liable for registration or for the
assignment of a new registration mark in the State of Tamil Nadu under the provisions of the Motor Vehicles Act, 1988. Section 7 provides that
every person liable to pay tax under the Entry Tax Act shall furnish returns in such form, for such period, by such dates, and to such authority, as
may be prescribed. Section 7A gives power to the officer empowered by the Government to call for accounts, registers, records, etc., from any
person liable to pay tax under the Act. Section 8 deals with the assessment on the basis of returns as well as by resorting to best judgment
assessment. There is a statutory period of limitation for a best judgment assessment under Sub-section (3) or (4) of Section 8. Sub-section (5) of
Section 8 clearly provides that no order of assessment shall be made u/s 8(3) or 8(4) after the expiry of three years from the last date prescribed
for filing of returns of the particular period. Section 9 provides for reassessment and the same is permissible only in case proceedings are initiated
within five years from the date of the order of assessment for the particular period.
The purchase of the JCB excavator by the appellant and the entry of the said vehicle into the local area was in the year 1995 and more
particularly on May 16, 1995. The Entry Tax Act provides for filing return only by a person liable to pay tax under the Act. Therefore the liability
arose only in the event of the assessee importing the motor vehicle within the meaning of Section 2(28) of the Motor Vehicles Act, 1988. It was
the case of the appellant that the registering Department was not registering the JCB excavators on the ground that the excavator does not come
within the meaning of the ""motor vehicle"" as defined u/s 2(28) of the Motor Vehicles Act, 1988. When there was no requirement for registration of
a vehicle under the Motor Vehicles Act and as Section 3 provides that tax shall be levied only on the entry of a motor vehicle liable for registration
or for the assignment of a new registration mark, naturally the JCB excavator imported by the appellant was not liable for entry tax. The issue was
settled only by the judgment of the honourable Supreme Court in Bose Abraham v. State of Kerala [2001] 121 STC 614. In the said judgment the
honourable Supreme Court clarified the position with respect to Section 2(j) of the Kerala Tax on Entry of Motor Vehicles into Local Areas Act,
1994, by holding that excavators and road rollers were also motor vehicles and therefore would attract tax u/s 3 of the Kerala Tax on Entry of
Motor Vehicles into Local Areas Act, 1994. It was further held that merely because the motor vehicle was put to a specific use such as being
confined to an enclosed premises, will not render the same to be a different kind of vehicle. The judgment of the Supreme Court in Bose
Abraham''s case [2001] 121 STC 614 was delivered on February 1, 2001. It was only on November 19, 2001 long after the judgment of the
Supreme Court that the respondent has chosen to issue notice to the appellant which culminated in passing the order of assessment on September
18, 2002.
Though section 7 requires every person liable to pay tax under the Entry Tax Act to file a return to the designated authority, there is no specific
provision in the Entry Tax Act for assessing a person, who has failed to furnish the return. Section 8 of the Act provides for assessment on the
basis of the return furnished by a person liable to pay tax and the related proceedings for passing the assessment order on best judgment basis.
When the Act does not make a specific provision for assessment of an importer, who failed to furnish the return u/s 7, it was not within the powers
of the assessing authority to assess the importer long after the import made by him, by making use of the details furnished by such importer
consequent to the notice of demand made by the assessing authority.
There was no requirement on the part of the appellant to submit a return during the year 1995 under the provisions of the Entry Tax Act as the
vehicle purchased by him was not a ""motor vehicle"" liable for registration under the Motor Vehicles Act, 1988. Therefore no return was filed by
the appellant in respect of the import made by him. It was long after the import that the respondent has passed an order of assessment presumably
on the ground that the JCB excavator was also a vehicle coming under the purview of the Motor Vehicles Act. When there was no liability to pay
tax by the importer in respect of a vehicle which is not liable to be registered under the Motor Vehicles Act, it cannot be said that such importer is
also liable to pay tax consequent to the subsequent clarification as to whether an excavator was also a ""motor vehicle"". The Entry Tax Act provides
time-limit for making a best judgment assessments, as well as reassessment. When there is no specific provision in the Entry Tax Act for assessing
a person who fails to furnish returns, the respondent was not entitled to make an assessment after a considerable point of time. It is trite that in case
the words used in a taxation statute are plain and unambiguous they have to be interpreted in such a manner so as to give full effect to the wording
of the statute. It is not permissible for including something in a taxing statute so as to give it a different meaning. In the absence of a provision
enabling the tax collector to levy tax, it would be impermissible to levy tax, even if equity is in favour of the State. Therefore there should be an
express provision authorising the assessing authority to collect tax from an importer, who failed to file returns as provided u/s 7 of the Entry Tax
Act. However there is no such provision which enables the authority to make an assessment for the purpose of recovery of entry tax. Therefore we
are of the opinion that the respondent was not justified in demanding entry tax from the appellant.
The honourable Supreme Court in State of Punjab v. Bhatinda District Coop. Milk P. Union Ltd. [2007] 10 VST 180 while interpreting the
provision of the Punjab General Sales Tax Act, 1948, which gives power to the assessing authority for reopening the order of assessment
considered the question of limitation, even where no statutory period of limitation has been prescribed for reassessment and observed thus (at page
185):
It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What,
however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors.
Since there is no provision in the Entry Tax Act for assessing a person who failed to furnish the return u/s 7 of the Act, the only course open to
the assessing authority was to levy penalty not exceeding twice the amount of tax due as provided u/s 15(1) of the Act. However in the present
case, the levy of penalty has already been set aside by the learned single judge on the ground that there was no requirement to file a return or to
pay entry tax on the motor vehicle into the local area as on the date on which the vehicle was imported by the appellant. No appeal has been
preferred by the respondent against the order setting aside the imposition of penalty by the learned single judge and as such, the said order has
become final. In such circumstances, we are of the considered view that it is not permissible for the respondent to collect penalty also in the present
case.
In the result, the writ appeal is allowed and the direction of the learned single judge for payment of entry tax is set aside. No costs.