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The West Bengal Taxation Tribunal Bar Association has alleged that the government of West Bengal has been using coercive methods to collect entry tax, despite the fact that the law to collect the tax has been declared as ultra vires or beyond the scope of legal power or authority, in the Calcutta High Court.
The association has accused the government of using unscrupulous ways like threats to stop issuance of way bills and C forms to importers, in case the dealer fails to pay entry tax. After a single bench of the Calcutta High Court had termed the entry tax as unconstitutional in June, a division Bench had noted that the government can continue with the assessment process, but no refunds are required to be made.
According the bar association, while the Court has allowed assessment, it has not said anything about realisation. Hence the state government is wrong in collecting the tax. Also, since the Court has asked not to file for refunds for the entry tax, it leads to the conclusion that the division bench has upheld the single bench judgment, said Sumit Kumar Chakraborty, president, The West Bengal Taxation Tribunal Bar Association.
However, Binod Kumar, Commissioner of Commercial Tax of West Bengal, told Business Standard, that his department has not received any complains by the dealers on use of threats to collect taxes.
Referring to the judgment of the division bench, Kumar said, “ The collection of tax is constitutional. How can a court direct a government to continue assessments on an unconstitutional law?”
“There is no question to pay tax for an Act that is unconstitutional. An order has been stuck down and an order has been passed by the division court,” said Sumit Kumar Chakraborty, president, The West Bengal Taxation Tribunal Bar Association.
The West Bengal Entry of Goods into Local Areas Act, 2012 was passed in the Assembly last year in March, under which 1 per cent tax was levied on specific goods entering West Bengal. The petition, challenging the constitutional validity of the Act, was filed in 2012 by several companies, including Tata Steel, Hindalco, Godrej Consumer, Whirlpool, Ranbaxy, Marico, Cadbury, Glaxo Smithkline Consumer, Bharti Airtel and several others.
In June this year, a single bench order under Justice Indira Banerjee, said that the act was unconstitutional as it did not have the assent of the President. She also observed that the levy not compensatory in nature, as the government had not stated the end use of the revenue generated through the tax.
The state government next appealed to the Calcutta High Court’s Division Bench against a Single Bench order of the High Court. The division bench under Chief Justice Arun Mishra and Joymalya Bagchi directed that he assessment process would continue, but also said that there was no need to file for refunds.
“Several of our clients have received SMS and emails warning legal action and severe consequences if the tax is not paid. This apart, several of them have been harassed and verbally threatened by the government to pay the tax, without any notice,” said Atish Chakraborty, secretary of the association.
