- (1.) The question that arises for consideration in these appeals, directed against the judgment and order of the Madhya Pradesh High court, is whether entry tax on goods such as sugar on which no sales tax is leviable, could be subjected to levy under Section 3 (l) (a) of the Madhya Pradesh Sthaniyu Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (hereinafter referred to as 'entry Tax Act').
(2.) Even though legislative competence of the State Legislature was the principal attack on the validity of the levy in the High court but the main thrust of challenge in this court has been on the nature of levy, its ambit and whether it impedes free flow of trade and commerce in violation of Article 301 of the Constitution of India. Since there is no dispute on facts and the appellants whoare dealers registered under the Sales Tax Act of the State have brought goods such as sugar which are specified in Schedule II of the Act from outside the State for consumption, use or sale inside the State, it is appropriate to extract Section 3 of the Entry Tax Act to appreciate the rival submissions: "3.Incidence of taxation. (1 There shall be levied an entry tax- (A) on the entry in the course of business of a dealer of goods specified in Schedule II, into each local area for consumption, use or sale therein; and (B) on the entry in the course of business of a dealer of goods specified in Schedule III, into each local area for consumption or use of such goods as raw material or incidental goods or as packing material or in the execution of works contracts but not for sale therein; and such tax shall be paid by every dealer liable to tax under the Sales Tax Act who has effected entry of such goods: Provided. . "
(3.) The levy was described in substance to be purchase tax leviable under the Sales Tax Act. But it appears to have been prompted by the latter part of the section which identifies the person who shall be responsible for paying the tax. The section is in two parts-one, levying the tax and other fixing the person from whom it shall be realised. The latter is more a part of machinery provision. It cannot control the main or the substantive part of the section. The taxable event is the entry of goods in a local area of the State by a dealer in course of business and not its purchase. To characterise it as purchase tax is ignoring the nature of levy.;