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

AI Summary

Supreme Court upholds state entry tax, clarifies non-discriminatory levy; past diesel tax liabilities remain unaffected. A user inquired about the implications of a Supreme Court decision on entry tax for goods like diesel in Andhra Pradesh and Telangana. The Andhra Pradesh High Court had previously struck down the entry tax on constitutional grounds. However, the Supreme Court later upheld the levy of entry tax by states, clarifying that only discriminatory taxes are prohibited and that certain constitutional clauses should be read separately. The user sought clarity on potential past and future tax liabilities. Respondents agreed that the Supreme Court's decision should not impose liability on past transactions.