Karnataka entry tax on machine imported and sold outside kar

This query is : Resolved

Subramanian G (Querist)
Follow

18 January 2012 Dear Expert,

We are a Trading concern based in Bangalore , trading in Textile materials and machines .

In 2009-10 we had imported Textile machines outside bangalore (in New Delhi and Mumbai)

We do not have any branch in New Delhi and Mumbai.

The machines were imported in our Bangalore address but machines came at New Delhi / Mumbai Customs as our customers were based in Ludhiana / Mumbai

We cleared the machines from the respctive customs at New Delhi / Mumbai

Raised a CST invoice @ 2% against Form C
and sold the same to the customers at New DElhi / Mumbai

Our Address in the invoice was Bangalore Address as we do not have any branch in New Delhi / Mumbai

We rasied the invoice on the same day the machines were cleared from New Delhi / Mumbai customs

The machines were taken delivery by the customers themself at New Delhi / Mumbai

As the machines were imported at places outside KArnataka (ie New Delhi /Mumbai) and sold outside karnataka (Ludhiana / Mumbai) we did not pay Karnataka Entry Tax

Now Sales tx audit department has asked us to produce the books of accounts for 2009 -10

They are saying that the machines will attract entry tax

So my question is

Does these machine imports (Outside karnataka)and Sales (Outside Karnataka) attracts entry tax ?

We have all the proof that the machines landed at customs outside karnataka and also the sales invoice that it has been sold outside karnataka

Is these documents enough or does any other documents required ?

We do not any LR Copy for transport of machines from respective customs (Delhi / Mumbai) to customer place as the delivery of goods from customs were taken by the customer themself

Kindly advice

Regards

Subramanian
Bangalore

annapurna

annapurna (Expert)
Follow

19 January 2012 Entry tax is levied on entry of notified goods within the state of Karnataka. When the goods have not entered within the state of Karnataka then as per our view the entry tax is not leviable. The documentary proof of goods entered in the respective state can be shown to the department.

Message likes : 1 times

Hari Wadhwa

Hari Wadhwa (Expert)
Follow

19 January 2012 Dear Subramanian

Pls read the judgment (link produced below) on Entry Tax with various circumstances along with the definition of "Entry of Goods in the Local Area" under section 2(e) of the Andhra Pradesh Act: -

Section 2(e) – “Entry of goods into a local area” with all its grammatical variations and
cognate expressions, means entry of notified goods into a local area from any place
outside the State for consumption, use or sale therein

Conclusion: -

State Govt is not correct in demanding the Entry Tax in your case provided you have all the necessary documentary proofs to show that the goods NEVER ENTERED THE TERRITORY OF THE STATE PHYSICALLY.

http://www.fapcci.in/note.pdf

Upgrade to CAclubindia Pro. Subscribe Now!

Subramanian G

Subramanian G (Querist)
Follow

20 January 2012 Thanks for the advice

Regards

Subramanian