Entry tax validity upheld under Article 304, with compensatory tax theory rejected and State levy sustained.

A levy of entry tax was not invalid merely because it was not shown to be compensatory, as the compensatory tax theory was no longer a valid basis to sustain the charge. The High Court's view that goods imported from outside the State and not manufactured or produced within the State could not be subjected to entry tax under Article 304(a) was displaced by the later binding larger Bench ruling in Jindal Stainless Ltd., which upheld the levy in favour of the State. The State's appeals succeeded to that extent, while the remaining appeals were left to be decided on their own merits.

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Issues: (i) Whether the levy could be sustained on the compensatory tax theory; (ii) whether the High Court was correct in holding that the State could not impose entry tax on goods imported from outside the State that were not manufactured or produced within the State.

Issue (i): Whether the levy could be sustained on the compensatory tax theory.

Analysis: The levy had been upheld by the High Court on the basis of the compensatory tax doctrine, but that theory was no longer a valid basis for sustaining the levy.

Conclusion: The challenge based on the compensatory nature of the levy did not survive, and the State appeals succeeded on that footing.

Issue (ii): Whether the High Court was correct in holding that the State could not impose entry tax on goods imported from outside the State that were not manufactured or produced within the State.

Analysis: The High Court had proceeded on the view that clause (a) of Article 304 did not permit such a levy, but the question stood covered by the later decision of the larger Bench in Jindal Stainless Ltd., which upheld the levy in favour of the State.

Conclusion: The High Court's conclusion on this issue was not sustained, and the issue was decided in favour of the State.

Final Conclusion: The levy was upheld to the extent challenged by the State, and the State's appeals were allowed while the remaining appeals were left to be dealt with on their own merits.

Ratio Decidendi: A levy of entry tax not shown to be compensatory is not invalid on that ground alone, and the validity of the levy under Article 304 is governed by the later binding larger Bench ruling.

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