Reliance group, P&G, Gillette others move SC against entry tax

NEW DELHI: Various companies of the Anil Dhirubhai Ambani Group, Mukesh Ambani-led Reliance Industries and others have moved the Supreme Court challenging the recovery of entry tax imposed by the Madhya Pradesh government on goods entering the state.

A bench headed by S H Kapadia on Monday tagged the petitions filed by various corporates including Reliance Telecom, Reliance Communications, Reliance Infratel, Reliance Communications Infrastructure, Reliance Industries, Procter & Gamble, Gillette India, Smithkline Beecham, NTPC and others.

The companies have challenged the Madhya Pradesh High Court decision upholding the state government's right to levy tax on raw materials and packaging goods used in the manufacture of the finished products at higher rates than the rates prescribed under the Entry Tax Act.

The High Court had upheld the validity of the 'Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam 1976' and 2006 (Entry Tax Act) and the '(Sanshodhan) Adhiniyam, 2004' on the ground that the levy being compensatory in nature was immune from the challenge.

According to the companies, the High Court had failed to notice that the impugned tax being levied, ad valorem on the value of the goods imposed, cannot be compensatory in nature as there cannot be any nexus between the levy based on the value of the goods imported into the state for consumption or use and the trading facilities allegedly proposed to be provided to each class of traders of such goods.

"The impugned levy being based on the value of the goods imported into the state, is per se contrary to the concept of compensatory levy. Such a levy ex facie impedes the trade and commerce in any goods including the goods imported for use within the state," they stated.