Manoj Kumar Gupta, J. - (1.) These petitions filed under Article 226 of the Constitution call into question the vires of the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 The Act. The petitions have been filed on basis of liberty granted by the Supreme Court by order dated 21 March 2017, while disposing of a batch of Civil Appeals and other connected matters, the leading case being Civil Appeal Nos.997-998 of 2004 by State of U.P. and others against M/s. Indian Oil Corporation Ltd. The judgement opens by noticing that the theory of compensatory tax propounded in Seven Judges' Bench judgement in Automobile Transport (Rajasthan) Ltd. etc. vs. State of Rajasthan and others, 1963 1 SCR 491, being doubted by a Bench of two Hon'ble Judges of the Supreme Court in Jai Prakash Associates Ltd. vs. State of M.P. and others, 2009 7 SCC 339, the matter was placed before a Nine Judges' Bench. The Nine Judges' Bench, in Jindal Stainless Ltd & Anr vs. State of Haryana & ors, 2016 11 Scale 1, (for short "Jindal Stainless-II" or "Nine Judges"), while answering all major constitutional and legal issues, left open three issues for decision by regular benches of the Supreme Court. When the appeals were taken up for hearing by regular Bench, it found that the necessary factual foundation to answer the questions left open had not been laid in the petitions nor there was discussion regarding the same in the impugned judgements of the High Courts. Consequently, with the consent of counsel for the parties, the regular Bench allowed the parties to file fresh petitions in High Court by 31 May 2017 raising those issues with necessary factual background or any other constitutional/statutory issue which arise for consideration. The issues framed and left for this Court to be decided, read thus: (1) Whether the entire State can be treated as 'local area' for the purposes of entry tax? (2)Whether entry tax can be levied on the goods which are directly imported from other countries and brought in a particular State? (3) In some statutes enacted by certain States, there was a provision for giving adjustment of other taxes like VAT, incentive etc paid by indigenous manufacturers and it was contended by the assessees that whether the benefits given to certain categories of manufacturers would amount to discrimination under Section 304? 1A. While disposing of the appeals/writ petitions, as aforesaid, the interim orders, which were passed therein, were continued till 31 May 2017. Thereafter, fresh interim orders were passed by this Court. By consent of learned counsel for the parties, the entire batch of petitions was taken up for final disposal and learned counsel for the parties were heard at length. Since the entire batch arises out of the common factual matrix involving same or similar questions, we dispose of the same by this common judgement. It would be advantageous to reproduce the following observations made by the Supreme Court so as to understand the exact scope of hearing of these petitions: "During the hearing of arguments, counsel for both sides submitted that since the main challenge in the writ petitions, which were filed by the writ petitioners before the High Court, was predicated on the law laid down by the Constitution Bench in 'Atiabari Tea Co. Ltd. , the High Court essentially confined its discussion only on "compensatory tax theory", as propounded in the aforesaid judgment so the High Courts looked at the issue by only keeping in mind the principle propounded in the aforesaid judgment and decided as to whether the tax imposed by a particular statute is compensatory in nature or not. Thus, when other issues are to be dealt with, as indicated above, we find that in many cases there is no adequate factual foundation and there is no discussion in the impugned judgments as well. It is also agreed by counsel for both the sides that in the absence thereof, it may not be possible for this Court to decide these issues. According to us, in the aforesaid scenario, appropriate course of action would be to permit the appellants to file fresh petitions by May 31, 2017, raising the aforesaid issues with necessary factual background or any other constitutional/ statutory issue which arises for consideration.
(2.) Before we advert to the submissions advanced by learned counsel for the parties, we would like to state the facts and circumstances against which the petitioners in two writ petitions, namely, Writ-C No 25283 of 2017 and Writ-C No 25730 of 2017 have approached this Court. This would enable us to answer the submissions canvassed by learned counsel for the parties. We also note that the impugned Act stood repealed since 1.7.2017 upon enforcement of the Uttar Pradesh Goods and Service Tax Act, 2017 and thus the dispute is confined to the period prior to it only. Writ Petition No 25283 of 2017 : M/s. Birla Corporation Ltd. vs. State of U.P. & others
(3.) The petitioner - M/s Birla Corporation Limited is a public limited company, being incorporated under the Companies Act, 1956, having its registered office in Kolkata (for short, "the Company"). The Company, inter-alia, owns cement manufacturing units in the States of Madhya Pradesh, Uttar Pradesh and Rajasthan, known as Satna Cement Works and Birla Vikas Cement in Madhya Pradesh, Birla Corporation Limited, Unit Raebareli in Uttar Pradesh (since 30 August 1968) and Birla Cement Works, Chittor Cement Works in Rajasthan, wherein it is engaged in the manufacture and sale of cement. The Company has its sales and marketing offices in various places in Uttar Pradesh in respect of all its aforesaid units. One of such principal marketing and sales offices is also situated in Allahabad. 3A. The Company is a registered dealer under the provisions of the Uttar Pradesh Trade Tax Act, 1948 (for short, "Trade Tax Act") and since 2008 under the Uttar Pradesh Value Added Tax Act, 2008 (for short, "UPVAT Act") and has been conducting its business of sale of cement in the State of Uttar Pradesh from its aforesaid units. 3B. The respondent - State of Uttar Pradesh (for short, "State") promulgated the Uttar Pradesh Tax on Entry of Goods Ordinance, 1999, which was, later on, enacted as Uttar Pradesh Tax on Entry of Goods Act, 2000 (for short, "Act, 2000") with a view to augmenting the revenue of the State and decided to make law to provide for levy of tax on entry of goods. The State, in exercise of its powers under the proviso to sub-section (1) of Section 4 of the Act, 2000, issued a notification on 9 May 2003, amending the Schedule to the Act and inserting therein various entries including 'cement'. Another notification was issued on the very same date under the said provision prescribing the rate of entry tax on cement at the rate of 2 percent of the value of goods. 3C. The validity of levy of entry tax under the Act, 2000, on bringing cement within the local area of Uttar Pradesh, was challenged by the Company in a writ petition bearing Writ Petition No 1374 of 2003. Several writ petitions were filed raising the same challenge including Civil Misc Writ Petition No 251 of 2003 (Tax) by M/s Indian Oil Corporation & Ors Vs State of Uttar Pradesh and & Ors, and Civil Misc Writ Petition No 486 of 2001 (Tax) by M/s Moser Baer India Ltd Vs State of Uttar Pradesh & Ors. This Court, vide judgment and order dated 27 January 2004 allowed the aforesaid writ petitions filed by the Indian Corporation Ltd and M/s Moser Baer India Ltd. Insofar as the writ petition filed by the Company is concerned, that also came to be disposed of in terms of judgment dated 27 January 2004, vide order dated 8 January 2007. The said judgment dated 27 January 2004 was carried to the Supreme Court by the State by way of special leave petitions being Special Leave Petition (Civil) Nos 2757-2758 of 2004, which were, after grant of special leave, registered as Civil Appeal Nos 997-998 of 2004. The judgment dated 8 January 2007 was also carried to the Supreme Court by the State by way of special leave petition bearing Special Leave Petition (Civil) No 14070 of 2007. The Supreme Court, in Civil Appeal Nos 3453 of 2002 and Civil Appeal Nos 997-998 of 2004 and connected matters, passed the order on 17 April 2007, inter alia, in the following terms: "The High Courts' orders wherever it has been passed in favour of the payers shall operate so far as the concerned writ petitions are concerned". In view of this order of the Supreme Court, the Company became entitled for the benefit of the judgment and order dated 8 January 2007 of this Court. Consequently, the Company also became entitled for refund of Rs 23,90,66,714/- towards entry tax deposited by them. 3D. On 24.9.2007, the State promulgated the Uttar Pradesh Tax on Entry of Goods into Local Areas Ordinance (U P Ordinance No 35 of 2007) with retrospective effect from 1 November 1999. The Ordinance was thereafter replaced by the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 (for short, "Act, 2007") on 16 November 2007. The new legislation seeks to remove the defects pointed out by the High Court in the old enactment on the subject and purports to be in line with the compensatory theory propounded by the Supreme Court in the Constitution Bench judgement in Automobile Transport, to which we shall advert to in the latter part of the judgment. 3E. In October 2007, the Company filed a petition bearing Civil Misc Writ Petition No 1515 of 2007 challenging the constitutional validity of the Ordinance/Act. An interim order was passed by this Court in the writ petition (1515 of 2007) to the effect that the realisation of entry tax for the period between April 2007 and 24 September 2007 would not be made from the Company, provided they furnish security other than cash or bank guarantee, for the entire tax in respect of the transaction during this period. The interim order further provided that the entry tax for the future period, i.e. after 24 September 2007, which is the date of promulgation of Ordinance, would not be realised from the Company in respect of the transaction, subsequent to the promulgation, provided the Company furnishes bank guarantee for the entire dues. The writ petition filed by the Company (Writ Petition No 1515 of 2007) was dismissed by the judgment and order passed by this Court on 23 December 2011, holding that the State legislature did not lack legislative competence in enacting the Act, imposing entry tax on the entry of scheduled goods into local areas for consumption, use or sale therein. This Court also observed that the provisions of the Act patently and facially indicate that there are sufficient guidelines and guarantees under the Act for ensuring that the entire amount of entry tax collected and credited to the Uttar Pradesh State Development Fund is utilized only for the purposes of its reimbursement to facilitate the trade, commerce and industry. The State, it was further observed, also established that the entire amount of entry tax by way of reimbursement/recompense to the trade, commerce and industry in the local areas of the State of Uttar Pradesh, provides quantifiable/ measurable benefits to its payers. The argument that the Act was discriminatory, unreasonable, against public interest, violates the freedom of trade, commerce and intercourse guaranteed under Article 301 of the Constitution of India was repelled. Section 17 of the Act, validating the amount of entry tax levied, assessed, realized and collected under the Act, 2000 was also held to be valid. The provision authorising the State to keep the entire amount for the purposes of its utilisation for facilitating trade, commerce and intercourse in the local areas of the State was upheld. 3F. The judgment of this Court dated 23 December 2011 passed in Writ Petition No 1515 of 2007 was carried by the Company to the Supreme Court in Special Leave Petition (Civil) No 193 of 2012. On 12 January 2012, the Supreme Court granted special leave to appeal in Special Leave Petition No (Civil) No 193 of 2012 and also granted interim stay of the impugned judgment and order, subject to the Company depositing 50 percent of the accrued tax liability/arrears under the Act, 2007 and furnishing of bank guarantee for the balance amount within four weeks from the date of the order. The Company complied with the order of the Supreme Court. Consequent to the grant of special leave, the SLP was converted into Civil Appeal No 322 of 2012. This appeal was also heard alongwith bunch of appeals not only from the State of Uttar Pradesh but from other States also by the Bench of Nine Judges' of the Supreme Court in Jindal Stainless-II and decided the questions referred to it by its order dated 18 December 2012. Thereafter, the appeal filed by the Company and connected matters were placed before the Two Judges' Bench of the Supreme Court which disposed of the bunch of matters vide order dated 21 March 2017 granting liberty to the Company to file fresh petition before this High Court challenging the legality/validity of the Act, 2007 and the notice of demand dated 25 September 2007. Thus, the Company has filed the instant writ petition before this Court for the following reliefs: "(i) Issue a suitable writ, order or direction declaring the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 as invalid, void and unconstitutional being beyond the legislative competence of the State Legislature and ultra vires Articles 245, 246, 304 (a) read with Entry 52 of List-II of the Seventh Schedule to the Constitution, as the same do not fall within the scope of Entry 52 of List-II of the Seventh Schedule to the Constitution. (ii) Issue a suitable writ, order or direction in the nature of mandamus commanding the respondents not to give effect to the provisions of Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007. (iii) Issue a suitable writ, order or direction in the nature of certiorari be issued calling for the records and quashing the impugned notice dated 25th September, 2007; and 21.3.2017. (iv) Issue a suitable writ, order or direction in the nature of Prohibition be issued restraining the Respondents, their servants, agents or representatives from in any manner collecting any entry tax from petitioners pursuant to the Act No. 30 of 2007. (v) Issue a suitable writ order or direction in the nature of mandamus commanding the respondents to refund the amounts paid by the Petitioner No.1 towards the entry tax together with interest; (vi) Issue a suitable writ order or direction in the nature of mandamus commanding the respondents to release and discharge the bank Guarantee furnished by the Petitioner No.1 pursuant to the order passed by this Hon'ble Court and the Hon'ble Supreme Court of India;" Writ Petition No 25730 of 2017 : M/s. Indian Oil Corporation Ltd. vs. State of U.P. & others :-;