SC notice to Bihar on plea against entry tax on Railways

The Centre has contended that state government lacks the legislative competence to enact the law for levying entry tax as it violates the freedom of trade, commerce and intercourse guaranteed under the Constitution.

A bench of justices D K Jain and Madan B Lokur issued notices to the state government and its Department of Commercial Taxes on a petition by Indian Railways questioning the enforcement of Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Act of 1993.

The Centre has challenged the Patna High Court judgement directing it to pay the entire Entry Tax levied by the Bihar government on the High Speed Diesel (HSD) oil which the Railways supplies to the Rail Consuming Depot at Jamalpur near Munger.

The Jamalpur Depot provides fuel to diesel locomotives plying on the Eastern corridor of the East-Central Railway.

The Centre has challenged the April 16 decision of the high court, which had directed it to pay the entire amount of entry tax assessed, within four weeks to avoid coercive recovery of penalty imposed upon it.

Appearing for the Centre, Additional Solicitor General (ASG) Mohan Jain and counsel A Ramesh submitted that the high court "erroneously" disposed of its writ petition without deciding whether the Railways comes within the ambit of the Act of 1993. (More)