Entry taxes: India
Supreme Court upholds entry tax
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The Supreme Court partly solved a 14-year-old litigation on Friday with a nine-judge bench upholding the constitutional validity of state legislations levying entry tax on goods coming into their territory from other states.
Entry tax on goods brought into a `local area' for use, sale or consumption therein will be permissible when similar goods are not produced within the tax-levying state, said the majority judgment by Chief Justice T S Thakur and Justices A K Sikri, S A Bobde, Shiva Kirti Singh, N V Ramana, R Banumathi and A M Khanwilkar.Justices D Y Chandrachud and Ashok Bhushan wrote separate dissenting judgments.
However, the majority judgment put an important caveat. It barred a state from imposing entry tax on goods with the intention of rendering it non-competitive with similar goods produced locally .
The judgment will cheer cash-strapped states. In April, the court had capped entry tax at 50%. About Rs 30,000 crore is due from corporate houses as entry tax for raw material entering states to reach their manufacturing units.