Entry Tax is levied on the goods which are brought into a local area from outside the Local Area. The basic question which arises is whether entry tax shall be levied on entry of goods into local area from a place outside the local area. In this regards, it is pertinent to note that the amount of capital expenditure involved during this period is huge and therefore answer to this question is of utmost importance.

Kindly note that in the state of Madhya Pradesh, Section 3 of the Entry Tax Act states that

“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 but not for sale therein; and such tax shall be paid by every dealer liable to tax under the Vat Act who has effected entry of such goods.”

 [Emphasis supplied]

It is pertinent to note that levy of entry tax shall be on the goods which are purchased during the “course of business”. This phrase “Course of Business” has been interpreted by Hon’ble MP High Court in a plethora of judgements, a few of which are mentioned here-in-below for ease-of-reference:

a)      NTPC Limited v The State of Madhya Pradesh [WP No. 2024/2008]

b)      Maihar Cement vs ACST 1985 60 STC 210 MP

c)      M/s Sagar Mines Pvt. Ltd. V The State of Madhya Pradesh [W.P. No. 16148 of 2007]

The decisions have been made on the underlying principle that the building activity is prior to commencement of business. Besides it is not incidental or ancillary for the purpose of business. Hence, such expenditure is not liable to entry tax.

– Aditya Singhania & Nischal Agarwal

Click here to Read Other Article of Aditya Singhania & Nischal Agarwal

More Under Goods and Services Tax

Posted Under

Category : Goods and Services Tax (6824)
Type : Articles (16951)

16 responses to “Levy of Entry Tax on entry of Goods before commencement of business – Madhya Pradesh”

  1. Abhishek Pritmani says:

    Will any one can help me what is entry tax rate in madhya pradesh on purchase of machinery outside the state of m.p.?
    Please quote section number from the mp act .

  2. neelima says:

    sir, I want to know is it mandatory to pay entry tax on the vehicles being bought for personnel use
    if so how much tax is levied?

  3. Pooja says:

    Sir, Can you please let me know the entry tax rate on electrical goods(Transformer) in the following states :

    Bihar

    Chhatisgarh

    Haryana

    Himachal Pradesh

    J & K

    Jharkhand

    Kerala

    MP

    MAHARASHTRA

    Mizoram

    Odisha

    Punjab

    Rajasthan

    Tripura

    Uttarakhand

    Uttar Pradesh

    West Bengal

    Manipur

    Thanks,

    Pooja Sharma

  4. Sanjay Sharma says:

    sir can you please tell me the exact Entry Tax % ( is it 2% or 10% ?) need to be paid before applying for Car RTO registration at Satna(MP) ? I brought Grand i10 diesel from CSD Army Canteen Depo Ahmedabad
    Can I pay Entery Tax direct online to CTD without going to local office bcoz it seems local office are giving wrong information that Entry Tax is 10%, although “Entry Tax Act of MP”, says it to be 2%. Please sir can u clear confusion as easliest.

    Thanking you

    • Navin says:

      Sir,
      Same situation with me,, is there any scope of paying entry tax less than 10%. Tomorrow I’ll meet with some agent, do share any important info if u get,,, I ll share the same with u.

      Navib

  5. Vijay says:

    We have ordered Sand crusher (A capital item). Capital item from Tamil Nadu for Karnataka state, in quotation he has not mentioned whether ENTRY Tax inclusive or Extra.?? Whether Entry tax has to be paid?? If it is not in the quotation??

    Kindly revert me as soon as possible.

    Awaiting for precious reply

    Regards:
    Vijay

  6. Defence person says:

    Dear sir,

    I work in Min. of defence and eligible for purchase of CSD items.
    CSD cars are not sold in M.P.
    I would like to purchase a car from Canteen store Department, Ahmedabad.
    Bring it to M.P with temporary registration number.
    Shall I pay the Entry tax for getting the vehicle registered?
    How much will be entry tax ?
    Is there exemption for CSD items?

    thanks in advance

    • Sanjay Sharma says:

      sir can you please tell me the exact Entry Tax % ( is it 2% or 10% ?) need to be paid before applying for Car RTO registration at Satna(MP) ? I brought Grand i10 diesel from CSD Army Canteen Depo Ahmedabad
      Can I pay Entery Tax direct online to CTD without going to local office bcoz it seems local office are giving wrong information that Entry Tax is 10%, although “Entry Tax Act of MP”, says it to be 2%. Please sir can u clear confusion as easliest.

      Thanking you

  7. sreedharjeekuti says:

    Dear sir,
    Please let me know the rate of Entry Tax on Current Transformers entering Madhya Pradesh from andhra pradesh state

  8. Mithlesh Kumar says:

    dear sir,
    i maintain a accounts of manufacturing company . but company is not on production. we are purchasing machinery parts from other state. before production applicable entry tax

    thanking you

    Mithlesh kumar

  9. Sushil Agarwala says:

    Dear sir,
    Please let me know the rate of Entry Tax on Current Transformers entering Madhya Pradesh from West Bengal.

  10. imran khan says:

    SIR I WANT KNOW THAT,

    I MAINTAIN A ACCOUNT OF CONSTRUCTION COMPANY IN M.P.
    IF I PURCHASE A BUILDING MATERIAL FROM OTHER STATE WHICH TAX ARE APPLICABLE ON ME. IF I HAVE CST NO. OR IF I HAVE NOT CST NO.

    AND

    IN THIS PURCHASE I HAVE TO PAY ENTRY TAX ?

  11. neeraj says:

    sir my question is about entry tax

    If we purchase the goods from outside the state (m.p.) & goods direct sold to party in the state (m.p.) then who is liable to pay entry tax on these transaction

  12. United Technical &Economic Services says:

    Dear Sir,

    We have to quote for a tender where dispatch of electrical equipment/material are to be done from Maharashtra -Mumbai to Vishakapatnam-Andhra Pradesh. The rate of levy of taxes excluding service tax -octroi,sales tax, toll tax,etc % may be given .
    A reply is expected .
    Thanking you,
    for UNITES.

  13. L.RADHAKRISHNAN says:

    Dear Sir/s,

    First of all, I really thank you for the posts which is really useful for me and to improve my knowledge.

    I have a question. Could you please tell me whether we can appoint a foreigner as a Director in an existing private limited company? If so, what are all the formalities to be fulfilled? And, can the Foreign Director can invest in existing private limited company? If so, any limitations for that?

    Your answers along with mentioning of Acts and Rules are welcome.

    Thanking you,

    Yours,

    L.RADHAKRISHNAN.

  14. AK Bhargava says:

    In Madhya Pradesh there is flaw in the system an urgent necessity is being felt to re structure the entry tax regime in the light of decision and interpretation given by the superior courts binding on the Commercial Tax tribunal, State Government and Tax Administration.

    There is intermingling and Taxing officers are imposing tax based on subjective interpretation leading to undeserved bargain, arbitrariness and lack of fairness and transparency in computing the tax on purely CAPITAL GOODS, INCIDENTAL GOODS OR TRADING GOODS. People are suffering severely and severally.

    Entry Tax on trading Goods and lack of understanding the mandate given in the Act and Rules is creating havoc. During the course of Trading of Goods within STATE as long as there is chain of Registered dealers of Traders transferring/selling/trading the goods, there is complete immunity and exemption on the payment of Entry Tax. The Only condition to be essentially complied with it is mention of Fact of fact that sale made under the relevant Invoice bears ” ENTRY TAX NOT PAID GOODS.” This exemption is in addition to within local area trading sale.

    The Liability begins or the transaction attracts Entry Tax payment Liability the moment : (1) Last purchasing dealer is Unregistered then Last selling dealer needs to Collect entry tax and pay it under departmental head. (2) Last Purchasing dealer takes the delivery of the goods after entry into local area from outside the Local area and resells it to others who are unregistered. (3) In case Selling Registered dealer sells the goods to a consumer or end user in its process/Mfg.who is presumed to be registered dealer then It is liability of the said consumer/ens user to pay the entry tax.

    But what is happening any babu/Inspector/Assessing officer is expecting every Traders to pay entry Tax show Entry Tax Paid purchases and in absence creating havoc. There is definitely flaw and loop holes and this is an area where there is an urgent need for reforms, rectification and removal of discrepancies streamline the things. In absence of clearer amendments and directions, people concerned can not get rid of unwanted arbitrariness in shape of fair/foul at the sweet will of Tax man and othr losses losses and harassment.

Leave a Reply

Your email address will not be published. Required fields are marked *