2017 (3) TMI 1916 - SC - VAT and Sales Tax

Levy of Entry Tax - levy is compensatory in nature or not - HELD THAT - The issue decided in the case of JINDAL STAINLESS LTD. AND ANR. VERSUS STATE OF HARYANA AND ORS. 2016 (11) TMI 545 - SUPREME COURT where it was held that States are well within their right to design their fiscal legislations to ensure that the tax burden on goods imported from other States and goods produced within the State fall equally. Such measures if taken would not contravene Article 304(a) of the Constitution. The question whether the levies in the present case indeed satisfy this test is left to be determined by the regular benches hearing the matters, and the issue is decided in favour of the State. These appeals are allowed.

Summary

Issues involved:
1. Appeal against High Court judgment on compensatory levy.
2. Interpretation of Article 301 and Article 304 of the Constitution.
3. Challenge to the High Court's decision on tax imposition on goods imported from outside the State.

Analysis:
1. The State appealed against the High Court's judgment, which declared the impugned levy as not compensatory. The Supreme Court held that since the compensatory theory was legally discarded, the appeals are to be allowed. The delay was condoned, impleadment and interventions applications were allowed, and leave was granted in this regard.

2. The High Court of Orissa, in a separate judgment, discussed the State's alternatives to impose a tax not violative of Article 301. These alternatives included a compensatory levy with quantifiable data and benefits, tax under Article 304(a) without discrimination, and tax under Article 304(b) with the President's sanction. The High Court also addressed the issue of discrimination in the Orissa Entry Tax Act, concluding that the Act did not discriminate between goods imported from outside the State and those manufactured within the State. The State's jurisdiction to impose tax on goods imported from outside the State, not manufactured within Orissa, was also examined. The High Court's decision was challenged by the Government, and the appeals were to be decided on their merits.

3. The issue of imposing tax on goods imported from outside the State was previously decided by a Nine Judges Bench in "Jindal Stainless Ltd. & Anr. vs. State of Haryana & Ors." The Supreme Court noted that the decision in favor of the State in the previous case supported the State's position in the present appeals. Consequently, the appeals challenging the High Court's decision on tax imposition were allowed based on the precedent set by the previous judgment.