Government opposes business giants, says states can levy entry tax

NEW DELHI: Refusing to side with big corporate groups challenging the constitutional validity of state entry tax on goods, the Centre stoutly defended on Wednesday the levy and said imposition of this tax was states' sovereign legislative function.

A nine-judge bench comprising Chief Justice T S Thakur and Justices A K Sikri, S A Bobde, S K Singh, N V Ramana, R Banumathi, A M Khanwilkar, D Y Chandrachud and Ashok Bhushan has taken up a batch of around 2,000 petitions, the first of which was filed nearly 15 years ago, for a decision on the validity of entry tax.

Total liability of all corporate groups and manufacturers stand at around Rs 30,000 crore and if the court affirms the validity, it would spell huge revenue accrual for states with poor finances.

On behalf of the Centre, attorney general Mukul Rohatgi and advocate Madhavi Divan repelled the challengers' arguments articulated by senior advocate Harish Salve and said, "Levy of a non-discriminatory entry tax per se does not constitute infraction of Article 301 of the Constitution." Article 301 provides that "subject to the other provisions of Part XIII of Constitution, trade, commerce and intercourse throughout the territory of India shall be free".

Those opposing entry tax had argued that levy on goods entering a geographical territory was a violation of this constitutional provision and hence illegal.