Two recent judgments on entry tax by the single and Division Bench of the Calcutta High Court have divided lawyers on the constitutional validity of the tax. In an interview with Namrata Acharya, president of West Bengal Taxation Tribunal Bar Association, Sumit Kumar Chakraborty, talks about the legal implications of the judgments and the constitutional provisions pertaining to entry tax. Edited excerpts:
What is your contention with the entry tax in West Bengal?
The West Bengal Entry of Goods into Local Areas Act, 2012 was challenged by various dealers before the Calcutta High Court on the ground that it violates the Constitution of India. The government can restrict the movement of goods from one state to another but for that there is a need for the President's assent. West Bengal did not take President's assent before imposing the entry tax.
Second, the government had said entry tax was introduced for some purposes or end use. They could not show any purpose of use for the money collected through entry tax. Thus, the single judge Bench had held the Act as ultra vires.
The matter went to the Division Bench of the Calcutta High Court, which directed the dealers not to seek refund on taxes already paid. At the same time, the government was allowed to continue with the assessment for entry tax.
Are the judgments of the single and division Bench in contradiction with each other?
No, they are not. The next hearing is in November. We are of the view the Act is still ultra vires, as the earlier judgment of the single Bench has not been stayed by the division Bench. Hence, the Act is still invalid. So, how can I pay tax?
The commercial tax department is asking how the court can ask for assessment when the Act is invalid.
What is assessment? It is the quantification of the liability to pay the tax. Realisation is a different thing. The court did not ask for realisation.
Assessment is determination of tax. In the case of entry tax disputes, some courts have held that the tax has to be paid. But our court has not said so, so the realisation of tax is invalid.
So, why are the dealers not filing a contempt of court case against the state?
The government is using coercive methods. It is issuing notices for assessment, not realisation. Only if they issue realisation notices does the question of contempt arise.
What are your views on the justification of entry tax?
Entry tax can be levied by state governments. Article 301 says a state can impose tax on the entry of goods into another state. However, for that restriction, you have to have the consent of the President. Several other states are also fighting cases pertaining to entry tax. In case President's assent is obtained, there are several other grounds under which the entry tax can be called unconstitutional.
For example, it is to be seen if the tax violates Article 14, 19, 304 of the Constitution. I've the fundamental right to bring any goods from any state to my state. Suppose, if a person is transferred from Chennai to Kolkata, he will be bringing his goods for use of consumption and use in West Bengal. So, is he liable to pay entry tax? The Act violates the law of equality as some states have imposed entry tax and some have not.
Recently, Punjab changed the name of entry tax as advanced tax on import of goods. Can the tax be retained by changing its name?
Advance tax is equated with self assessment of income tax. It is to be seen how they adjust the entry tax with self assessment.