On Movement Of Goods

It was argued that the enactment of the law that levies sales tax on inter-state sales was beyond competence of the state legislature.The entry tax provisions of various states was challenged by some companies on the ground that they are against the concept of free trade and commerce under Article 301 (freedom of trade commerce and intercourse with the territory of India) of the Constitution.Entry tax is imposed by state governments on movement of goods from one state to another.The bench had commenced the hearing despite the Centre wanting it to wait till the passage of pending GST (Goods and Services Tax) Bill, which according to it, would have subsumed the tax law under challenge.Justice Banumathi, who shared the minority view also read out, a separate verdict expressing her disagreement on some of the points by saying that in her opinion the term local area implied the entire territory of the state.

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.Parliament which was eventually passed in the last session of Parliament.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 apex court on September 26, 2003 had referred the matter to a hexagonal dowel larger bench of five judges which on April 13, 2006 directed hearing of petitions challenging the constitutional validity of the various state laws on entry tax on goods travelling from one state to another. It is levied by the state that receives goods.The bench on September 20 had reserved the judgement after a marathon hearing on the batch of petitions which had been pending since 2002.Justices D Y Chandrachud and Ashok Bhushan delivered the separate minority judgement.

Entry tax is imposed by state governments on movement of goods from one state to another..Jindal Stainless Ltd had brought the matter way back in 2002 when the company had challenged the validity of the Haryana Local Area Development Tax Act, 2000. It is levied by the state that receives goods.Later, the issue was referred to a bench of nine judges by an order of April 16, 2010 and several questions were framed, including the balancing of freedom of trade and commerce in Article 301 vis-a-vis the states authority to levy taxes under article 245 and Article 246 of the Constitution.Besides the CJI, the majority view was held by Justices A K Sikri, S A Bobde, S K Singh, N V Ramanna, R Banumathi and A M Khanwilkar.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.During the hearing, the bench had revisited two judgements passed by the apex court in 1960 and 1962 on the issue.