Gauhati HC stays levy & collection of Entry tax by Autonomous Council

Instakart Services Pvt. Ltd Vs North Cachar Hills Autonomous Council (Guwahati High Court)

A reading of the provisions of Clause 8(3)(c) of the 6^th Schedule to the Constitution of India makes it discernible that the District Council of the NCHAC is authorised to levy and collect tax on the entry of goods into a market for sale therein. In other words, the two conditions precedent are that the goods must enter into the market and it must enter into the market for the purpose of effecting the sale from such market. In the instant case, it has come to our notice that the transactions involved are such that the original invoice of companies who are selling their respective goods to the end user customers through the technology platform of M/s. Flipkart Internet Private Limited specifically provide that goods sold by them are exclusively for end user customers and not meant for re-sale. In other words, the goods for which the logistic support are being provided by the petitioner company are for the purpose of end user consumption and not for re-sale. If it is not for re-sale, prima facie, we have to understand that the tax for entry of goods into a market for sale cannot be imposed on a sale transaction. Further under the North Cachar Hills Autonomous District Council Code, a ‘market’ is defined as a local area declared as such by the Executive Committee under Section 5 thereof. In other words, a particular local area within the District Council area would have to be declared to be a market by the Executive Committee. In the instant case, no material is produced that the goods for which logistic support are provided by the petitioner company enters into any local area which is declared to be a market. Further we have also been told that no regulation as such has been prepared under Clause 8(4) of the 6^th Schedule to the Constitution of India for regulating the levy and collection of entry tax of goods and as such as per the provisions of Clause 8(4) no such regulation would have been given any effect.

Accordingly, considering the balance of convenience and irreparable loss that the petitioner may suffer, in the interim, until further order(s), we direct that the authorities under the NCHAC shall not levy and collect any entry tax on the goods for which logistic support are provided by the petitioner company for the end user buyers.

In order to facilitate further, we also direct the petitioner company to maintain a strict account of all such logistic support transactions that they may provide to any such goods as indicated above so that in the event, the decision in the writ petition goes against the petitioner, the authorities in the NCHAC can levy and collect the taxes, if otherwise entitled under the law.

FULL TEXT OF THE JUDGMENT/ORDER OF GAUHATI HIGH COURT

Heard Dr. A Saraf, learned senior counsel assisted by Mr. Kishore Kunal, learned counsel for the petitioner. Also heard Mr. RM Das, learned counsel for the respondents No.1 and 2 being the authorities under the North Cachar Hills Autonomous Council (for short, the NCHAC). Also heard Mr. B Choudhury, learned counsel for the respondents No.4 and 5 being the authorities in the Finance and Taxation Department, Government of Assam and Ms. DD Barman, learned Additional Senior Government Advocate for the respondent No.6 being the State of Assam through the Printing & Stationery Department.

2. As regards the array of respondents No.1 and 2, a correction is sought for that instead of Member Secretary, Executive Committee of the NCHAC, the same may be corrected as Executive Member, Executive Committee of the NCHAC. The petitioner may incorporate the necessary correction in the cause-title in respect of respondents No.1 and 2. Although we are yet to issue notice on the respondent No.3, but Mr. NK Kalita, learned counsel states that he has the instruction to appear on behalf of the said respondent and accordingly, the notice be served on the respondent No.3 through Mr. NK Kalita.

3. Issue notice to be made returnable on 04.04.2022.

4. Extra copies of the writ petition be served on the learned counsel for the respondents as indicated hereinabove within three days.

5. The petitioner is a company engaged in the business of providing logistic services to the sellers who undertake sale transaction through online market place platform of M/s. Flipkart Internet Private Limited (Flipkart Internet). The nature of the transaction that take place is that certain companies in order to sell their products, utilizes the services of the technology platform to reach out to the end user buyers and to enable the goods to reach out to the end user buyers, the logistic services of the petitioner company is utilized in the NCHAC.

6. The petitioners are aggrieved by the communication dated 30.12.2021 of the respondent No.3 Sanjay Ardao who is a contractor under the NCHAC informing the petitioner that as per the order of the NCHAC dated 30.12.2021 the goods entry tax are to be collected from every shop operating at Haflong,

7. The order dated 30.12.2021 of the Secretary, Executive Committee of the NCHAC has provided the right of collection of entry tax to the respondent No.3 Sanjay Ardao on entry of the scheduled goods into the markets for sale therein etc., from 01.01.2022 to 31.12.2022. In other words, we have to understand that by the communication of the respondent No.3 and the order of the authorities under the NCHAC dated 30.12.2021 certain entry taxes would be levied and collected on the petitioner company. Admittedly, the NCHAC is an entity under the 6^th Schedule to the Constitution of India.

8. Clause 8(3)(c) of the 6^th Schedule to the Constitution of India inter alia provides that a District Council for an autonomous district shall have the power to levy and collect all or any of the taxes within such district which also includes the tax on the entry of goods into a market for sale therein.

9. Further Clause 8(4) of the 6^th Schedule to the Constitution of India provides that a Regional Council or District Council, as the case may be, may make regulations to provide for levy and collection of any of the taxes specified in sub-paragraphs (2) and (3) which includes the tax on entry of goods into the market for sale and further that such regulation shall be submitted forthwith before the Governor and until assented by the Governor, the Regulation shall have no effect. The provisions of Clauses 8(3)(c) and 8(4) of the 6^th Schedule to the Constitution of India are extracted as below:

“8(3). The District Council for an autonomous district shall have the power to levy and collect all or any of the following taxes within such district, that is to say—

(c) taxes on the entry of goods into a market for sale therein, and tolls on passengers and goods carried in ferries; and (d) taxes for the maintenance of schools, dispensaries or roads   ”

“(4) A Regional Council or District Council, as the case may be, may make regulations to provide for the levy and collection of any of the taxes specified in sub-paragraphs (2) and (3) of this paragraph 2 [and every such regulation shall be submitted forthwith to the Governor and, until assented to by him, shall have no effect].”

10. A reading of the provisions of Clause 8(3)(c) of the 6^th Schedule to the Constitution of India makes it discernible that the District Council of the NCHAC is authorised to levy and collect tax on the entry of goods into a market for sale therein. In other words, the two conditions precedent are that the goods must enter into the market and it must enter into the market for the purpose of effecting the sale from such market. In the instant case, it has come to our notice that the transactions involved are such that the original invoice of companies who are selling their respective goods to the end user customers through the technology platform of M/s. Flipkart Internet Private Limited specifically provide that goods sold by them are exclusively for end user customers and not meant for re-sale. In other words, the goods for which the logistic support are being provided by the petitioner company are for the purpose of end user consumption and not for re-sale. If it is not for re-sale, prima facie, we have to understand that the tax for entry of goods into a market for sale cannot be imposed on a sale transaction. Further under the North Cachar Hills Autonomous District Council Code, a ‘market’ is defined as a local area declared as such by the Executive Committee under Section 5 thereof. In other words, a particular local area within the District Council area would have to be declared to be a market by the Executive Committee. In the instant case, no material is produced that the goods for which logistic support are provided by the petitioner company enters into any local area which is declared to be a market. Further we have also been told that no regulation as such has been prepared under Clause 8(4) of the 6^th Schedule to the Constitution of India for regulating the levy and collection of entry tax of goods and as such as per the provisions of Clause 8(4) no such regulation would have been given any effect.

11. Accordingly, considering the balance of convenience and irreparable loss that the petitioner may suffer, in the interim, until further order(s), we direct that the authorities under the NCHAC shall not levy and collect any entry tax on the goods for which logistic support are provided by the petitioner company for the end user buyers.

12. In order to facilitate further, we also direct the petitioner company to maintain a strict account of all such logistic support transactions that they may provide to any such goods as indicated above so that in the event, the decision in the writ petition goes against the petitioner, the authorities in the NCHAC can levy and collect the taxes, if otherwise entitled under the law.

13. Consequent to the interim order, it is also provided that the respondent No.3 shall not in any manner seek to impose levy and collection of entry tax from the petitioner.

14. List on 04.04.2022, on which date, an endeavour would be made to give a final consideration to the disputes raised in this writ petition.

15. In the meantime, the respondents may file their respective affidavits, if so advised.