The Supreme Court has supported the constitutional validity of Entry Tax imposed by states on goods coming in from other states. A 7:2 majority verdict by the apex court ruled that the tax legislation by the state does not require the consent of the President under Article 304 B of the Constitution. The nine-judge bench headed by Chief Justice T. S. Thakur said though state governments are empowered to impose tax on goods coming from other states there cannot be discrimination between the goods.
Further, the apex court said if a state imposes entry tax on products made within the state it was not empowered to impose higher tax on the identical products entering from other states. The majority view also left it for the smaller regular bench to adjudicate upon the term ‘local area’ whether it would refer to the entire state or some pockets within its territory. The nine-judge constitution bench comprises of Chief Justice T S Thakur and justices A K Sikri, S A Bobde, Shiva Kirti Singh, N V Ramana, R Banumathi, A M Khanwilkar, D Y Chandrachud and Ashok Bhushan.
The bench was handling 2,000 cases filed by various companies against the states levying tax on the movement of goods. Companies argued that the tax levied was against the concept of free trade, they also said that removing entry tax laws would make way for the Goods and Services Tax and its enforcement. On the other hand, states said that their sovereign right to tax the movement of good should not be taken away. States added that it was their Constitutional right to pass laws on subjects mentioned in 'State List' and 'Concurrent List'.
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