- (1.) Leave granted in the SLP.
(2.) Entry 52 in List II of the Seventh Schedule to the Constitution, says Shri Narasimha Murthy, should not be confined to an impost, formerly known as 'octroi'. He submits that since it is a legislative entry, it must be liberally construed and full effect must be given to the words used therein, He says that when 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 a sale for the purpose of consumption or use of the goods sold within the limits of the local area concerned. The submission is urged with reference to the scope and ambit of the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale therein Act, 1979.
(3.) The High court of Karnataka has held following the decisions of this court in Burmah Shell Oil Storage and Distributing Co. India Ltd. v. Belgaum Borough Municipality , Hiralal Thakorlal Dalal v. Broach Municipality and Municipal council v. Parekh Automobiles Ltd that the levy created by Section 3 of the Karnataka Act on the sales effected within a local area is confined only to those sales of goods which are meant for consumption or use within such local area. In other words, it held that where the goods sold are not intended for use or consumption within the local area but are meant to be and are taken out of the area for use or consumption elsewhere, no levy is permissible under the said Act. It is this view Shri Murthy disputes. He submits that Burmah Shetl , Hiralal Thakorlal and Parekh Automobiles' dealt with cases where the levy was by the municipality/local authority, no doubt under an enactment of the State Legislature. In those cases, he says, there may be justification for taking a restrictive view and for construing the levy imposed by the municipality as one in the nature of octroi but where the levy is created by the State Legislature and the assessment and collection is also by the State government, there is no reason to restrict the word 'sale' occurring in Section 3 of the Karnataka Act to sale of goods intended for use or consumption within the given local area. It is true, says the counsel, that the levy is at the stage of entry of goods into a local area but the levy is not by the local authority. The Karnataka Act, he says, bears no resemblance or similarity to a levy in the nature of octroi imposed by the local authoritiesand, therefore, it should not be subjected to the limitations applicable to a levy by the local authorities.;