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Entry Tax not Violative of Freedom of Trade and Commerce, says Supreme Court

In a setback to business entities, the Supreme Court on Friday upheld the entry tax on goods coming into a state

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New Delhi, November 11, 2016: In a setback to business entities, the Supreme Court on Friday upheld the entry tax on goods coming into a state, holding that it was not in violation of the freedom of trade and commerce guaranteed under Article 301 of the Constitution and free trade does not mean “free from tax”.

By a majority verdict of 7:2, the Supreme Court 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.”

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“Only such taxes as (which) are discriminatory in nature are prohibited by Article 304(a). It follows that levy of a non-discriminatory tax would not constitute an infraction of Article 301”, the judgment said.

While majority verdict was by Chief Justice T.S. Thakur, Justice A.K. Sikri, Justice S.A. Bobde, Justice Shiva Kirti Singh, Justice N.V. Ramana, Justice R. Banumathi, Justice A.M. Khanwilkar; Justice D.Y. Chandrachud and Justice Ashok Bhushan in separate judgments dissented from the majority view.

The majority judgment said that “Article 304 (a) frowns upon discrimination (of a hostile nature in the protectionist sense) and not on mere differentiation. Therefore, incentives, set-offs etc. granted to a specified class of dealers for a limited period of time in a non-hostile fashion with a view to developing economically backward areas would not violate Article 304(a).”

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Having said this, the majority judgment said that even though goods on which entry tax is being imposed are not being produced in the taxing State, yet a “tax on entry of goods into a local area for use, sale or consumption therein is permissible although similar goods are not produced within the taxing state.”

However, the court left open the question to be decided at a later stage whether “the entire State can be notified as a local area and whether entry tax can be levied on goods entering the landmass of India from another country …”

The case is rooted in the challenge to the constitutional validity of the laws enacted by the 14 States providing for levy of a tax on the “entry of goods into local areas comprising the States”.

The challenge to these laws was on the grounds of their being violative of the constitutionally recognised right to free trade and commerce guaranteed under Article 301 of the Constitution.

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Haryana law – Haryana Local Development Act, 2000 – providing for the entry tax was assailed by the Jindal Stainless Ltd.

The High Courts of Assam, Arunachal Pradesh, Jharkhand, Kerala and Tamil Nadu struck down the levies imposed by their respective States on the ground that they were discriminatory in nature hence violative of Article 304(a) of the Constitution.

When these States approached the apex court challenging the decision of the High courts, the two judges’ bench referred the same to a Constitution Bench for an authoritative pronouncement on as many as ten questions framed by them. (IANS)

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SC seeks ideas to enforce anti-sexual harassment law at workplace

The court had issued a notice to all the states in the last hearing of the matter on January 4

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The IIF has sought to put in place the guidelines for the implementation of the law at all levels. Wikimedia Commons
The IIF has sought to put in place the guidelines for the implementation of the law at all levels. Wikimedia Commons

The Supreme Court on Friday asked the NGO Initiative for Inclusion Foundation (IIF) to give suggestions for effective implementation of a law to curb sexual harassment of women at workplaces, particularly in the private sector.

Chief Justice Dipak Misra, Justice A. M. Khanwilkar and Justice D.Y. Chandrachud sought the suggestions after the Central government in its affidavit claimed that it has taken steps to enforce the Protection of Women from Sexual Harassment at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Appearing for the IIF, senior counsel Sanjay Parikh said there was no implementation of the law in private companies.

Also Read: One out of Two Children face Child Sexual Abuse: The Growing Problem of Child Sexual Abuse in India

He said a meeting was held with Assocham four years ago but nothing happened after that.

The IIF has sought to put in place the guidelines for the implementation of the law at all levels.

The court had issued a notice to all the states in the last hearing of the matter on January 4. The notice was returnable in four weeks. IANS