Tax on imported goods for own use entry into karnataka

This query is : Resolved

Jose (Querist)
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20 December 2013 I have imported goods worth 4 lakhs for house construction in Karnataka, and at the Bangalore/Hosur Checkpost the Sales tax department demanded a penalty for non availability of prior permission from Commercial tax dept. for entry of goods into Karnataka even if it is for own use.
All Customs Duties were paid, CVD, SAD, etc, etc.. everything properly imported in merit and documented, but it is a shame that the tax authorities are penalising for not getting prior permission ???
Is there a way I can fight this. ?

Jose

Jose (Querist)
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20 December 2013 Are the tax authorities right in demanding this ? even after a declaration of own use ?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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26 July 2025 Here’s a clear explanation about your situation on **imported goods for own use, entering Karnataka, and penalty for lack of prior permission**:

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### 1. **Context**

* You imported goods (worth Rs 4 lakhs) for **own use in house construction** in Karnataka.
* Customs duties (Basic Customs Duty, CVD, SAD, etc.) were fully paid, and proper import documentation is in place.
* At the **Karnataka/Bangalore-Hosur Checkpost**, Commercial Tax Department demanded a **penalty** for **non-availability of prior permission** to bring these goods into Karnataka.
* You declared these goods are for **own use**, not for resale or commercial purposes.

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### 2. **Understanding the Law: Entry Tax / Entry Tax Permission**

* Many Indian states, including Karnataka, impose an **Entry Tax** (now mostly replaced by GST Entry provisions, but applicable pre-GST era) on goods brought into the state for **use, consumption, or sale**.
* Some states require **prior permission or filing of declaration** before goods enter the state, even if for own use, especially if goods are imported or brought from outside the state.
* The **Commercial Tax Department's role** is to ensure tax compliance on goods entering the state.
* **Penalty** is often imposed if prior permission/declaration is required but not obtained.

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### 3. **Are Authorities Correct?**

* If Karnataka law requires prior permission or declaration for bringing goods (even for own use), the tax authorities **are within their rights** to demand this.
* Customs duties paid at import relate to central government taxes and do **not exempt** you from state entry tax or permission requirements.
* If you failed to obtain **mandatory prior permission or declaration under Karnataka Entry Tax law (pre-GST)**, penalty can be legally imposed.
* Your declaration of “own use” may reduce certain liabilities but does **not automatically exempt from procedural compliance**.

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### 4. **What to Do / How to Fight**

* **Check Karnataka Entry Tax Act or Commercial Tax circulars** applicable at the time of import to confirm if prior permission/declaration is mandatory for your goods.
* If yes, check the procedure to **regularize the entry retrospectively** by paying applicable Entry Tax and penalty.
* **File a representation with the Commercial Tax Department** explaining the situation, showing you have paid customs duties, and requesting waiver or reduction of penalty if possible.
* If penalty is unjustified or disproportionate, you may approach the **Appellate Authority or Tribunal** under Commercial Tax laws.
* Keep all import documents, customs duty payment receipts, invoices, and correspondence ready for defense.

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### 5. **Key Points**

| Aspect | Position |
| ---------------------------- | -------------------------------------------------- |
| Customs duties paid | Does not exempt Entry Tax rules |
| Entry Tax permission needed? | Usually yes in Karnataka pre-GST |
| Penalty for non-compliance | Legal if permission mandatory |
| Own use declaration | Helps but doesn’t waive permission |
| Remedy | Apply for retrospective permission, appeal penalty |

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### 6. **Summary**

* Commercial Tax Department is **likely correct** in demanding penalty if prior permission was required but not obtained.
* Customs duty payment is a separate matter and does **not substitute Entry Tax rules**.
* You can try to **regularize the entry** and **appeal against penalty** based on facts and mitigating circumstances.

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If you want, I can help you draft a representation letter or guide you on the appeal process. Would you like that?

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