Supreme Court start hearing petitions against entry tax by states on goods


New Delhi: A nine-judge constitution bench of the Supreme Court headed by Chief Justice TS Thakur will begin listening to petitions on Tuesday by corporate houses testing the inconvenience of passage duty by state governments, contending it disregarded their sacred right to complete organized commerce and business. Entry tax is imposed by state governments on movement of goods from one state to another. It is levied by the state that receives goods.

Various corporate houses and business entities have contended that the imposition of entry tax is violative of the right to freedom of trade and commerce in India, guaranteed under Article 301 of the Constitution. The bench comprising chief justice T.S. Thakur, justices A.K. Sikri, S.A. Bobde, Shiva Kirti Singh, N.V. Ramana, R. Banumathi, A.M. Khanwilkar, D.Y. Chandrachud and Ashok Bhushan will hear the case on a daily basis.

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Senior counsel Harish Salve will lead the arguments against entry tax, while the government’s top law officer Mukul Rohatgi will defend the state law. The earliest plea against entry tax was moved by Jindal Stainless Steel Ltd in 2002, challenging the entry tax law imposed by Haryana. Scores of petitions have followed thereafter.

In 2003, the plea was referred to a larger constitution bench and in 2008 the apex court formulated questions to be considered by the Constitution bench. In 2010, the then chief justice S.H. Kapadia referred the case to a nine-judge bench. The court will have to reconsider two Constitution bench judgements delivered in 1961 and 1963, five- and seven-judge bench verdicts, respectively. The two cases laid down tests to determine if states have the power to levy taxes.

With Parliament pushing for the passage of the goods and services tax (GST) Bill in the current session, the issue surrounding entry tax will be a thing of the past. GST would create a national market for goods and services in India, replacing various state taxes. The tax revenue from 2000 would, however, benefit states like Odisha and Uttar Pradesh that require infrastructure development.

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