SC dismisses pleas against UP entry tax levy

The Supreme Court has dismissed petitions filed by major companies such as ITC, Birla Corp and public sector Oil India Corporation challenging imposition of entry tax on goods entering Uttar Pradesh.

A bench headed by Justice S H Kapadia while dismissing their pleas ordered that status quo should be maintained till next Friday. It also asked the petitioners to challenge the constitutional validity of the ordinance in the High Court.

"...It would be open to the petitioners to move the High Court challenging the UP Entry Tax of Goods into Local Area Ordinance 2007... We make it clear that this order of status quo will be there for one week. We do not wish to express any on the merits or on the question as to whether status quo should continue or not on expiry of one week," the court observed.

The petitioners had challenged the constitutional validity of the Ordinance 2007 on the ground that it was violative of their fundamental rights under Article 14 and 19 of the Constitution of India.

According to senior counsel Harish Salve, the levy of tax was a mere revenue raising measure and had nothing to do with the service or benefit provided to the traders paying the tax.

"The Ordinance is nothing but a colourable exercise of the powers under Article 213 of the Constitution of India and a blatant attempt to clothe with some respectability with retrospective effect to a tax already collected and spent by the state purely as a budgetary provision and which is not compensatory in any manner," the companies stated.

Only a few traders dealing in few goods have been selected randomly to bear the burden, the petitioners alleged, adding they have been discriminatingly picked and taxed to pay for all the infrastructural and developmental activities in the state.