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2025 Supreme(Cal) 152
IN THE HIGH COURT AT CALCUTTA
DEBANGSU BASAK, MD. SHABBAR RASHIDI, JJ.
State Of West Bengal And Ors. - Appellants
Versus
Pepsico India Holdings Private Limited - Respondent
APO 106 OF 2018
Decided on : 30-01-2025
Important Points
Subject
Taxation Law - Entry Tax
Act Referred
INCOME TAX RULES : R.19(a)(3)
Maharashtra Tax Laws Levy, Amendment and Repeal Act : S.26
WEST BENGAL FINANCE ACT : S.5, S.6
West Bengal Tax on Entry of Goods Act : S.4(1), S.4(5), S.4(5)(b), S.4(5)(c)
West Bengal Tax on Entry of Goods into Local Areas Act : S.22
Headnote
(B) Compensatory Tax Theory - The court reaffirmed that the compensatory tax theory is incompatible with the constitutional framework, and previous judgments relying on it were overruled. (Paras 11, 58)
Facts of the case:
The State of West Bengal enacted the Entry Tax Act, 2012, which was challenged as unconstitutional. The learned Single Judge ruled it ultra vires, prompting appeals from the State. (Paras 2, 3)
Findings of Court:
The amendments to the Entry Tax Act, 2012 by the West Bengal Finance Act, 2017 were found valid and non-discriminatory, thus upholding the Act's constitutionality. (Paras 94, 96)
Issues: The main issues included the effect of the Jindal Stainless Ltd. ruling on the impugned judgment, the validity of the Entry Tax Act, and the constitutionality of the amendments made by the West Bengal Finance Act, 2017. (Paras 43, 94)
Ratio Decidendi: The court held that the Entry Tax Act, 2012 was valid at the time of its amendment, and the amendments were not discriminatory, thus setting aside the previous judgment declaring it ultra vires. (Paras 94, 96)
Result: Appeals allowed; the impugned judgment and order set aside.
For the Appellant : Mr. Kishore Dutta, Sr. Adv., Mr. Anirban Ray, Sr. Adv., Mr. T.M. Siddiqui, Sr. Adv., Mr. D. Ghosh, Adv., Mr. S. Sanyal, Adv.
For the Respondent: Mr. Sujit Ghosh, Sr. Adv., Ms. Mannat Waraich, Adv., Mr. A. Behura, Adv, Mr. Pujon Chatterjee, Adv., Mr. Sutosom Bhattacharyya, Adv., Mr. Boudhayan Bhattacharyaa, Adv., Ms. Stuti Bansai, Adv., Mr. Suman Basu, Mr. Kumarjit Was, Adv., Ms. Mou Saha, Adv., Mr. Avra Mazumdar, Adv., Ms. Alisha Das, Adv., Mr. Jaybrata Mishra, Adv., Mr. Suman Bhowmik, Adv., Mr. Samrat Das, Adv., Ms. Elina Dey, Adv., Ms. Megha Datta, Adv.
| Table of Content |
|---|
| 1. appeals against entry tax act (Para 1) |
| 2. writ petitions challenging act (Para 2 , 3) |
| 3. state's contention on act (Para 4) |
| 4. compensatory tax violation (Para 5 , 6 , 7) |
| 5. judicial review of tax laws (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 97) |
| 6. validity of amendments (Para 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62) |
| 7. appeals allowed (Para 63 , 64 , 65 , 66 , 67 , 68 , 69 , 70 , 71 , 72 , 73 , 74 , 75 , 76 , 77 , 78 , 79 , 80 , 81 , 82 , 83 , 84 , 85 , 86 , 87 , 88 , 89 , 90 , 91 , 92 , 93 , 94 , 95 , 96) |
JUDGMENT :
DEBANGSU BASAK, J.
1. We have heard appeals directed against the impugned judgement and order dated June 24, 2013 passed in a batch of writ petitions assailing the vires of the West Bengal Tax on Entry of Goods into Local Areas Act, 2012 as it stood prior to its amendment. We have also heard writ petitions directed against orders passed by the Taxation Tribunal in respect of entry tax matters. We have heard these matters analogously as similar issues are involved. All these matters have been specially assigned to this bench.
2. Various assessees had assailed the vires of the Act of 2012 prior to its amendment, by way of writ petitions. By the impugned judgement and order dated June 24, 2013, passed in such writ petitions, learned Single Judge had declared the Act of 2012 to be ultra vires the Constitution of India. Aggrieved by such decision of the learned Single Judge, State has preferred various appeals.
3. During the pendency of the appeals, by the West Bengal Finance Act, 2017 various provisions of the Entry Tax Act, 2012 had been amended with retrospective effect. Vires of the West Bengal Finance Act, 2017 had been challenged by assessees before the Taxation Tribunal. Taxation Tribunal had set aside the amendments introduced to the Entry Tax Act, 2012 by the West Bengal Finance Act, 2017. State has assailed such decisions by way of the writ petitions.
4. Learned Advocate General appearing for the State has submitted that, the Act of 2012 was enacted exercising powers under Article 246 of the Constitution of India read with Entry 52 List II Schedule VII thereof. He has pointed out that, the Governor gave assent to the Act of 2012 on March 31, 2012.
5. Learned Advocate General has contended that, the Act of 2012 provided for levy and collection of taxes on the entry of goods into a local area in the State of West Bengal for consumption, use or sale thereof. He has pointed out that, the West Bengal Tax on Entry of Goods into Local Areas Rules were framed in exercise of powers under Section 22 of the Act of 2012.
6. Referring to the impugned judgement and order dated June 24, 2013 of the learned Single Judge, learned Advocate General has contended that, the learned Single Judge declared the Act of 2012 ultra vires relying upon the ratio of All India Reporter 1961 Supreme Court 232 (Atiabari Tea Company Ltd. Vs. State of Assam), All India Reporter 1962 Supreme Court 1406 (Auto Mobile Transport (Rajasthan) Ltd. Vs. State of Rajasthan) and 2006 Volume 7 Supreme Court Cases 241 (Jindal Steel Ltd. vs. State of Haryana).
7. Learned Advocate General has contended that, learned Single Judge observed that, compensatory tax is imposed for a specific purpose or for few specific identifiable purposes. The Act of 2012 has violated Article 309 and 304 (a) of the Constitution of India as it was not compensatory. Moreover, State has failed to obtain Presidential sanction under Article 304(b) of the Constitution of India. Learned Single Judge has also observed that, where the assessee alleges discrimination, it is for the assessee to establish the same and that hardship of an assessee is no ground to challenge the validity of a fiscal statute.
8. Learned Advocate General has submitted that, learned Single Judge was pleased to stay t
