The High Court of Gujarat, while invalidating the notification imposing a high rate of the entry tax, has held that the action of the State Government continuing with the imposition of excess entry tax has been held to be illegal and the bad in law.
The petitioner, Jindal Stainless Hisar Limited is engaged in the business of the manufacturing and sale of stainless steel flats and sheets. The petitioners have manufacturing units at Haryana and from the unit the goods are dispatched by way of a branch transfer to the various branches located in the different States across the country including the State of Gujarat and thereafter such goods are sold locally in the respective States.
The petitioner contended that the rate of tax under the VAT Act for stainless steel flats and sheets is reduced to 1%, the rate of the entry tax on the same goods continues to be 4%.
The tax department has argued that any excess amount of the entry tax paid would be refunded if found eligible as per the provisions of the VAT Act.
The division bench consisted of Justice Harsha Dewani and Justice Sangeeta K. Vishen has rejected the contention and observed that “It is also contended that the legitimate tax calculated and would not be discriminatory as also the dealer would be eligible to a excess tax paid. The said contention does not merit acceptance inasmuch as, as discussed hereinabove, the action of the State Government continuing with the prescription of the higher rate of the entry tax vide notification dated on 15th February 2010, has been held to be illegal and the bad in law, there arises no question of asking the petitioner to make the payment and then seek a refund of the tax amount under the provisions of the VAT Act.”
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