SC rejects Tata Sponge Iron petition against Odisha entry tax law

Supreme Court rejects Tata Sponge Iron's challenge to Odisha Entry Tax Act, upholds High Court ruling and denies refund claim

The Supreme Court (SC) on Tuesday declined to entertain Tata Sponge Iron Limited’s challenge to the constitutional validity of the Odisha Entry Tax Act, 1999, upholding the Orissa High Court’s refusal to examine the plea and rejecting the company’s demand for a refund of entry tax paid to the state.

 

The quantum of the tax has not been determined yet.

 

A Bench of Justices Aravind Kumar and Prasanna B Varale said it found no grounds to interfere with the high court’s decision.

 

“We do not find any infirmity in the impugned order,” the SC observed.

 

Tata Sponge Iron had approached the Orissa High Court in 2017, questioning the validity of the entry tax law and the rules framed under it, which impose a levy on goods brought into local areas of Odisha from outside the state for consumption, use or sale.

 

 

The company contended that the tax discriminated against inter-state goods in breach of Article 304(a) of the Constitution and imposed an unconstitutional restriction on free trade and commerce guaranteed under Article 301.

 

It had sought to have the statute struck down and claimed a refund of the tax already collected.

 

The Supreme Court noted that the Odisha Entry Tax Act had been subjected to an earlier round of constitutional scrutiny, where the law was challenged on several grounds, including lack of legislative competence and violations of Articles 301, 304(a) and 304(b) of the Constitution.

 

That writ petition was dismissed in 2002, a decision which was subsequently affirmed by the apex court in 2017.

 

The Bench also rejected Tata Sponge Iron’s reliance on the Court’s 2021 judgment in State of Kerala v. Fr. William Fernandes.

 

Clarifying the scope of that ruling, the Court held that the liberty granted there to raise fresh challenges on the ground of discrimination was limited in nature and available only to writ petitioners who were already before the concerned high courts at the relevant time.

 

Since Tata Sponge Iron was not a party to those proceedings, the Court said it could not claim the benefit of that limited relief.

 

Before closing the matter, the Bench clarified that its observations were confined strictly to the present case and “shall not have any bearing” on other matters pending before the high court.

 

Senior Advocate Kavin Gulati and Advocate Sunil Kumar Jain (AOR) appeared for the petitioners. 

 

Additional Solicitor General KM Nataraj and Advocate Samapika Biswal (AOR) appeared for the respondents.