Entry Tax – The Quandary Continues…

The constitution validity of Entry Tax has faced a series of challenges. It was hoped that once the constitutional bench took control of the matter, the controversy would be resolved once for all. However, even after the constitutionality of the levy of Entry Tax per se was upheld by the majority of a nine judge bench of the Hon'ble Supreme Court (SC) in the case of Jindal Stainless Steel v. State of Haryana, Civil Appeal No. 3453/2002 (Jindal Case), the impending disputes weren't put to rest.

The SC in the Jindal Case opined that non-discriminatory taxes do not interfere in the free movement of goods across the territory of India and therefore levy of Entry Tax by states does not violate Article 301 of the Constitution of India. The SC also laid down certain touchstones to be considered while analysing whether a levy is discriminatory against goods coming from outside the state vis-a-vis goods produced locally in the said state.