Rajasthan High Court Declares Entry Tax Act Unconstitutional

The High Court of Rajasthan declared the Rajasthan Tax on Entry of Goods into Local Areas Act, 1999 as ultra vires of Article 301 of the Constitution of India. The court ruled that the entry tax on goods imported from outside India was not compensatory and impeded free trade and commerce, falling under Article 301 restrictions. The Act was held to be not enacted in accordance with Article 304(b). The court allowed the petition, stating that demands against the petitioner are unenforceable if not already paid and refunds are applicable if the burden was not passed on. The revision petition was dismissed with no costs awarded.

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Issues involved: Interpretation of the Rajasthan Tax on Entry of Goods into Local Areas Act, 1999 in light of Article 301 of the Constitution of India.

Summary:
The High Court of Rajasthan, in a revision petition, addressed the issue of imposing entry tax on goods imported from outside India under the Rajasthan Tax on Entry of Goods into Local Areas Act, 1999. The Tax Board had previously ruled against imposing the tax. The respondent-assessee argued that a recent Division Bench decision declared the Act ultra vires of Article 301 of the Constitution of India. The Division Bench held that the tax on entry of goods into local areas, impeding free trade and commerce, is not compensatory and falls under Article 301 restrictions. As the Act was not enacted in accordance with Article 304(b), it was deemed ultra vires. The court allowed the petition, declared the Act ultra vires, and stated that demands against the petitioner are unenforceable if not already paid. Any tax collected from customers must be proven not passed on to buyers, consumers, or users to be retained by the petitioner. Refunds are applicable if the burden was not passed on. The petitioner can claim refunds from the Assessing Authority. The revision petition was dismissed in light of the Division Bench decision, with no costs awarded.

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