In a reprieve for Vedanta Aluminium, Essar Steel, Tata Steel and other companies, the Supreme Court on Wednesday asked the Orissa government not to resort to coercive actions against them for recovery of entry tax dues amounting to more than Rs 350 crore, till the next date of hearing.
?Let there be no coercive actions till the next date of hearing,? said a Bench led by Justice HL Dattu while fixing the matter for April 2. The Bench passed no formal order but clearly observed this when the counsel for the companies contended that after the notices for recovery of the taxes, allegedly payable on goods imported by them for their plants and services in Orissa between 2008 and 2012, garnishee proceedings were also sought to be initiated. Under the garnishee proceeding, a decree holder (like Orissa in this case), can get an executing court to pass an order against a third party to not pay its debtors (companies in this case) since they were indebted to the garnisher (Orissa).
The Bench had in December last issued notices to the state government on petitions by Vedanta and others, challenging the levy of entry tax on imported goods under Orissa Entry Tax Act. The Act allows Orissa to impose a tax, not exceeding 12 per cent of the purchase value, on entry of goods for consumption, use or sale in the state. The government levies different rates for different goods.
Vedanta, which has an alleged entry tax liability of about Rs 135 crore, challenged the Orissa High Court judgement, upholding the levy. The High Court, while acting on a bunch of petitions filed by 19 companies including Tata Steel, Essar Steel, ACC, Adani Enterprises, Hindalco Industries and Vedanta, had rejected the companies? plea, prompting them to move the apex court.
Vedanta said that goods imported from outside India cannot be made eligible to entry tax, which a dealer is liable to pay on entry of goods into a local area for use, consumption or sale. Vedanta had been procuring capital goods like machinery and equipment from domestic manufacturers. Besides, it imports such goods from the US, Canada and Germany, among others.