High court stays collection of entry tax on goods

In what comes as a big blow to the Punjab government, the Punjab and Haryana High Court today stayed recovery of entry tax on goods into Punjab. The State earns nearly Rs 200 crore on account of entry tax annually.

The stay is interim and will prevail till further orders, till the time the High Court lifts it. A division bench of the High Court passed the directions on a petition filed by Bhushan Power Steels Limited, Ludhiana.

It is pertinent to clarify here that the directions have been passed in an individual case. However, as per legal experts, the remaining bunch of cases challenging the entry tax will avail of the same order passed today which would mean that the government authorities will not be able to recover the entry tax.

While passing the directions, the Bench made it clear that though the government authorities will maintain a record they will not charge the entry tax. This means that at the time a vehicle enters into Punjab from some other state with goods, the owner of the vehicle will give a declaration with regard to goods according to which the entry tax will be calculated but the owner will not have to pay the same.

This direction has been passed so that in case the court finally adjudicates that the levy of entry tax by Punjab is justified, the state can recover the same after final disposal of the petitions.

It might be mentioned here that the High Court in 2009 had quashed the levy of entry tax by the Haryana government. The same was challenged by Haryana government before Supreme Court which stayed the High Court's direction. The case is yet pending before the Supreme Court.

Seeking similar relief, the petitioner had moved the High Court challenging the entry tax levied by the Punjab government. The state stands to lose nearly Rs 200 crore earned by it annually on account of entry tax.

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