The Supreme Court on Wednesday said it is inclined to lift its earlier orders that deprived Odisha of Rs 1,600 crore revenue from entry tax, but only after giving a hearing to the corporates.
A bench headed by Chief Justice TS Thakur said it was inclined to vacate its orders as Rs 1,600 crore is stuck in entry tax dues. “Since the issue has been referred to a nine-judge bench, we don’t know how much time it will take and how many companies will become insolvent/sick by then. We will direct the companies to pay here and we will invest the amount in term deposits. Money will remain secure for successful parties,” the SC bench stated.
It asked the state to give the list of the cases so that response of these companies can be sought before vacating the stay orders.
The apex court posted the matter for further hearing on May 11.
Earlier, the SC had said states like Odisha cannot be made to suffer for lack of funds for infrastructure development.
The Odisha government on Wednesday informed the court that it is supposed to recover entry tax dues worth Rs 1,600 crore pursuant to the apex court directing the companies to pay either 33% or 50% in two different batch of appeals.
In the first batch of 2008 appeals, around 325 companies are supposed to pay outstanding dues of Rs 361.26 crore. The apex court had allowed them to pay dues at the rate of 33% till the disposal of the matter.
A five-judge constitution bench of the Supreme Court in 2010 had ruled that the validity of entry taxes levied by states would have to be decided by a larger bench of nine judges due to conflicting judgments by various high courts, even as the Union government said it wants a goods and services tax to be imposed across the country to rationalise state levies such as entry tax.
In the second batch of 2012 appeals, around 24 companies, including Vedanta Aluminium, Essar Steel, Tata Steel, Adani and others have to clear outstanding entry tax dues to the tune of Rs 779.69 crore, including penalty. The apex court had in 2013 allowed them to pay 50% of entry tax and interest amounts demanded/assessed by the state on goods imported by them for their plants and services in the state.
Various petitions by Vedanta and others had challenged the levy of entry tax on imported goods under Orissa Entry Tax Act. The Act allows Odisha to impose a tax not exceeding 12% of the purchase value on entry of goods for consumption, use or sale in the state. The government levies different rates for different goods. The companies had challenged the Odisha HC judgment, upholding the levy.
Corporates’ stand is 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.
Odisha counsel Rakesh Dwivedi argued that the SC should vacate its earlier order and these firms should deposit the whole tax liability which had arisen prior to filing of the petitions before the Orissa HC.
