Levy of Entry Tax on say Diesel in Telangana & Andhra Pradesh

[Ashwin Garg]

Dear Experts,

Currently Entry Tax on say Diesel is 23 % , CST is 2 % (agst Form-C) and VAT rate is 27 %.

But pursuant to A.P.High Court decision dtd : 31.12.2007 in Sree Rayalseema Alkalies, levy of Entry Tax on Goods in Andhra was struck down mainly due to 1) entry tax restricts free movement of goods and therefore un-constitutional 2) Prior sanction of President of India not obtained as per prescribed procedure for enacting Entry Tax Act as per proviso to Article 304 (b) of Constitution of India.

Now, the Supreme Court in JINDAL STAINLESS LTD. AND ANR. Versus STATE OF HARYANA AND ORS. Civil Appeal no 3453/2002 vide order dtd : 11.11.2016 has upheld the levy of Entry Tax by state governments with following further observations :

1) Only taxes which are discriminatory in nature are prohibited under Article 304 (a)

2) Clause 304 (a) and (b) have to be read disjunctively.

2) A levy that violates Article 304 (a) cannot be saved even if procedure prescribed under 304 (b) or proviso is followed.

Entry Tax Act on Goods in Andhra Pradesh was enacted in Oct-2001 but the same was not extended to Telangana due to state bifurcation in Jun-2014

Issue :

1) Whether their will be any Entry Tax liability in Andhra Pradesh & Telangana for past periods (say on Diesel, Packing Bags, Cement etc) due to recent supreme court decision mentioned above.

2) Whether their will be any Entry Tax liability in Andhra Pradesh & Telangana in future (say on Diesel, Packing Bags, Cement etc) due to recent supreme court decision mentioned above.

Thanks in advance.

Ashwin Garg

[Ganeshan Kalyani]

Hon'ble Supreme Court upheld the Constitutional validity of entry tax levied by various atates. It says that the provision of entry is rightly framed and entry tax is liable for payment .

In my view there should not accour any liability on past transactions in view of this judgement .

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Ganeshan

AI Summary

Entry tax validity affirmed; discriminatory taxation barred, supporting non discriminatory state levies going forward. Supreme Court in Jindal Stainless upheld the constitutional validity of state entry taxes, holding that only discriminatory taxes are prohibited by Article 304(a) and that Articles 304(a) and 304(b) are to be read disjunctively; a levy breaching Article 304(a) is not saved by compliance with Article 304(b). The document applies that ruling to Andhra Pradesh and Telangana, noting a prior state high-court invalidation and that the Entry Tax Act was not extended to Telangana, and records forum views that the decision supports future levies but likely does not impose past liabilities.