SC extends stay on levy of enhanced entry tax by MP

The Supreme Court on Monday directed the Madhya Pradesh High Court to dispose by July 3 a matter pertaining to enhanced entry tax collected by Madhya Pradesh, while extending the stay on such a levy till July 25.

A vacation bench headed by Tarun Chatterjee extended the stay -- which comes as a relief to telecom major Bharti Airtel and tobacco firm Godfrey Philips India that had challenged the levy.

The matter is listed for final hearing before the High Court on July 3.

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 acts) and the Sanshodhan Adhiniyam 2004 on the ground that the levy being compensatory in nature was immune from the challenge.

The High Court had directed the petitioners to continue depositing the entry tax on cigarettes and other similar products of tobacco and telecom related goods at the enhanced rate of 10 percent charged pursuant to the adhyadesh of 2006.

Both the companies have challenged the High Court order decision upholding the state government's right to levy tax on raw materials and packaging goods in manufacture of finished goods at higher rates than the rates prescribed under the entry tax act.

Senior counsel U U Lalit appeared for Madhya Pradesh, while A K Ganguli for Godfrey Philips India .

The companies stated that more than 40 petitions were pending before the High Court challenging the levy of entry tax on the goods brought into the state from outside as well as the goods entering from one local area to another.