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The Supreme Court has referred to a larger bench a batch of over 100 petitions, challenging the constitutional validity of levying entry tax by state governments on goods.
A bench comprising Justices Arijit Pasayat and S H Kapadia, while referring the petitions to the Constitution bench, referred 10 questions of public importance for authentic pronouncement on several issues.
The most important issue, handed in to the larger bench, is if the imposition of entry tax, levied in terms of entry 52, list two, of schedule seven of the Constitution, is violative of its Article 301? Article 301 guarantees freedom of trade and commerce across the country.
The two-judge bench has also sought an authentic pronouncement on the question that if the entry tax violates Article 301, whether such levy can be protected if the tax is compensatory in character and if the answer to the aforesaid question is in the affirmative, what are the yardsticks to be applied to determine the compensatory character of such a tax.
Whether the state enactment relating to levying of the entry tax has to be tested with reference to clauses (a) and (b) of Article 304 of the Constitution for determining their validity and whether clause a is conjunctive with or separate from clause b? Clauses a and b empower the Centre and state to impose reasonable restrictions on trade and commerce in public interest.
The Court has also referred the issue whether the collection of the entry tax, which ordinarily would be credited to the consolidated fun of the state being a revenue received by the government and would have to be appropriated in accordance with the law as per Article 226 of the Constitution? Whether the state can be compelled to spend the tax collected within the local area? The apex court has directed its registry to place the entire case record before the Chief Justice of India for necessary orders, granting liberty to parties to move the CJI for early hearing of the cases.