Mohinder Verma
JAMMU, Aug 9: In a significant order, which may have far reaching consequences as far as imposition and realization of Entry Tax on the goods being imported to the State is concerned, the Division Bench of the State High Court has ordered release of FDR/Bank Guarantee, which comes to about Rs 44 crore, in the favour of Commercial Taxes Department. This whooping Entry Tax was deposited by a renowned cellular company in the shape of FDR/ Bank Guarantee as per the interim orders of the High Court.
This cellular company—Dishnet Wireless Ltd along with several other cellular service providers, which were given license by the Union Government for operations in Jammu and Kashmir, were brought under the purview of J&K Entry Tax on Goods Act, 2000 as they were importing telecom equipment, accessories and other material for towers.
Aggrieved over the imposition of huge tax by the Commercial Taxes Department, Dishnet Wireless and others knocked the doors of the High Court challenging the action on the part of the State Government.
On December 12, 2008, the High Court, while issuing notices and seeking objections from the Commercial Taxes Department, ordered that the amount of Entry Tax imposed by the Government should be deposited in the Registry by the petitioners (cellular companies) and kept in the shape of FDR/Bank Guarantee in the Jammu and Kashmir Bank’s Branch at High Court Complex till the final disposal of the petitions.
On February 6, 2012, the Single Judge dismissed the petitions by imposing costs and with the observation that the claim of the petitioners was untenable. Aggrieved over the judgement of the Single Judge, Dishnet Wireless Ltd and others filed separate appeals in the Division Bench challenging the impugned judgement of Single Judge.
Accordingly, the Division Bench ordered that petitioners would have to deposit the Entry Tax with the Commercial Taxes Department from April 2012 onwards and in the meantime, all the FDRs and Bank Guarantees would be renewed.
In the meantime, Dishnet Wireless Ltd filed an application before the DB seeking permission for depositing left over amount assessed as Entry Tax with the Bank. On this application, the Division Bench sought response of the respondents—Commercial Taxes Department.
Besides filing response to the application of cellular company, the Commercial Taxes Department through its counsel Rohit Kapoor also moved an application seeking release of amount deposited in the shape of FDR/Bank Guarantee.
During the course of arguments before the Division Bench comprising Chief Justice M M Kumar and Justice Hasnain Masoodi, Advocate Rohit Kapoor stated that no Government business or for that matter, no business of any kind can be run on mere bank guarantees.
“Liquid cash is necessary for running the Government or any other enterprise”, he submitted, adding “the State Government requires the amount of tax for meeting various public exigencies and for providing various amenities to the public at large”.
After hearing Advocate Rohit Kapoor for Commercial Taxes Department and Advocate Sindhu Sharma for Dishnet Wireless Ltd, the DB ordered, “there is no need to deposit the tax in any bank. The amount be deposited with the Commercial Taxes Department within a week”, adding “in fact, for depositing of tax due to the department, no orders were required. Applicant should have deposited the amount themselves”.
“The amount mentioned in the latest application shall be deposited within the Commercial Taxes Department within a period of one week”, the DB said.
About the amount deposited with the J&K Bank in the shape of FDR/Bank Guarantee, the DB directed the J&K Bank, High Court Branch to release the amount of FDR/Bank Guarantee in favour of the Commercial Taxes Department preferably within a period of one week.
With these directions, the DB disposed of the application of Dishnet Wireless as well as of the Commercial Taxes Department. Due to these directions of the DB, the Commercial Taxes Department will get Rs 44 crore Entry Tax, which was accrued since 2008.
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