ORDER
S.K. Jha, C.J.
1. In this petition purported to have been filed under Articles 226/227 of the Constitution of India, the question that falls for our consideration is as to whether the petitioner is liable to pay any sum by way of purchase tax under the provisions of the M. P. General Sales Tax Act (Sales Tax Act for the sake of brevity), 1958, if it is liable to pay entry tax under the provisions of the M. P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (Entry Tax Act for the sake of brevity) and if so, at what rate.
2. The petitioner is a registered dealer under the Sales Tax Act. It manufactures steel, mild steel, rods and alloyed goods, its factory being located at Indore Estate, Man war Road, Indore. For the purpose of manufacturing the aforesaid goods, the petitioner purchases iron scraps, ingots and billets as raw material. Admittedly sales tax is payable on the finished goods at the rate of 4% under Section 6(1) of the Sales Tax Act, read with Entry 1 of Part II of Schedule II to that Act. The aforesaid schedule and the rate at which tax is payable has been so made payable by the Notification issued by the State Government for that purpose under Section 12 of the Sales Tax Act. By the insertion of the entry tax, the petitioner has also been made liable to pay entry tax on the raw material used for the purpose of manufacturing the aforesaid finished products. Such entry tax has been made payable by virtue of the general provision in the Entry Tax read with Sub-section (b) to Section 3 of the Entry Tax Act. There are certain provisos to Section 3(b) of the Entry Tax Act with which we are not concerned.
3. Admittedly while on one hand the petitioner was to pay purchase tax at the rate of 4% under the Sales Tax Act, it was liable to pay entry tax at the rate of 2.5%.
4. Section 10 of the Entry Tax Act, however, lays down that the State Government may, by notification and subject to such restrictions and conditions as may be specified therein, exempt whether prospectively or retrospectively, in whole or in part:
(i) any class of dealers or persons, or any goods or class of goods from the payment of entry tax under this Act…. as may be specified in the notification,
(ii) any dealer or class of dealers, from any provision of the Act as may be specified in the notification :
By virtue of the power vested in the State Government, a Notification was duly issued exempting, inter alia, the petitioner from the liability to pay the entire entry tax for the unexpired period of 5 years in case of new industry from the date of effecting for the first time on or after the first day of May 1976, the purchase of raw materials in the State. Admittedly again the petitioner, effected for the first time the purchase of raw materials talked of in the Notification. After first May 1976, such an exemption again admittedly was available to the petitioner for the period ending 31-3-1976.
5. With regard to the periods under assessment from 1-4-1981 to 31-3-1982 and from 1-4-1982 to 31-3-1983, the petitioner has been asked to pay purchase tax at the rate of 4% under the Sales Tax Act, because it has not paid entry tax in respect thereof. The contention of the learned counsel for the petitioner is that the petitioner would be liable under law, reading the provisions of both the Sales Tax Act and the Entry Tax Act together, to the difference between the rate of 2.5% payable under the Entry Tax Act and 4% payable by way of purchase tax under the Sales Tax Act which means that the petitioner would be liable to pay at the rate of 15% only, if the petitioner had not got the eligibility certificate. The petitioner, however, in the instant case, holds an eligibility certificate. Therefore, the petitioner would not be liable to pay any purchase tax by virtue of the Notification under Section 12 of the Sales Tax Act, Annexure ‘C’, since it would be deemed to have suffered the payment at the rate of 2.5% by way of entry tax only.
6. On the contrary, the stand of the Revenue is mat since by virtue of the exemption in regard to payment of entry tax under the Entry Tax Act as a result of the Notification under Section 10 of that Act, a copy whereof has been marked as Annexure ‘A’, the petitioner would be liable to pay purchase tax at the rate of full 4% by virtue of the provisions of the Sales Tax Act. We are afraid, we cannot accept the stand of the Revenue and we hold that there is sufficient force in the contention of the learned counsel for the petitioner. As a matter of fact, in all fairness, the learned Addl. Advocate General, we must say, has been fair enough in assisting the Court in the matter of interpreting the provisions of the two Acts in this regard.
7. Since the liability to pay entry tax was by virtue of the provisions of that Act and that the amount, namely 2.5% was exempted by virtue of the Notification issued under Section 12 of the Sales Tax Act, a copy whereof has been marked as Annexure ‘C’, the only payment to which the petitioner could be subjected was at the rate of the difference between the two rates, the resultant being 1.5% only. It is a matter of no consequence that the petitioner had not to pay actually by virtue of the exemption granted under Section 10 of the Entry Tax Act any amount by way of entry tax. That means that although the petitioner would otherwise have been liable to pay entry tax under the provisions of that Act at the rate of 2.5% it is by virtue of the special Notification issued by the State Government granting such an exemption to a class of dealers to which the petitioner belongs for a period of 5 years by virtue of incentive. When the provisions of the Sales Tax Act talk of the rate on which the purchase tax would be payable by the registered dealer as one which is prescribed under the Notification (Annexure ‘C’ for our present purpose), it is a different matter altogether that the petitioner has not actually had to discharge the liability of payment under the Entry Tax Act Taking any contrary view of the matter would render the provision with regard to incentive absolutely nugatory. Even if in spite of exemption the petitioner was liable to pay at the rate of 4%, it would otherwise have been liable to pay at the rate of 1.5% only under the Notification under Section 12 of the Sales Tax Act One cannot visualise any contingency in which such a provision for exemption is made by virtue of the special power vested in the State Government under Section 10 of the Entry Tax Act. That would, in effect, be depriving a person otherwise entitled to the benefit of Section 10 of the Entry Tax Act setting at naught the effect of the exemption under Section 10 if it were made liable to pay at the full rate to which otherwise it would have been liable to pay but for the exemption.
8. In the result, therefore, this writ petition succeeds and is allowed. It is held that the petitioner is neither liable to pay the entry tax as per Notification under Section 10 (Annexure ‘A’) or for purchase tax as per Notification under Section 12 of the Sales Tax Act (Annexure ‘C). Giving any other interpretation to the term ‘suffered entry tax’ under the Entry Tax would be rendering nugatory the provision of exemption under Section 10 of the Entry Tax Act which is not to be done in cases of statutory notifications. We accordingly hold that the petitioner would not be liable to pay any amount either by way of entry tax or by way of purchase tax. The impugned assessment order as contained in Annexures ‘D’ and ‘E’ and the pursuant demand notices are quashed. We, however, make no order as to costs. Security amount, if deposited, be refunded to the petitioner.