In Brief
This judgment concerns the constitutional validity of entry tax levied by various states on goods entering local areas. The Supreme Court's Two-Judge Bench, following a Nine-Judge Bench's decision in Jindal Stainless Ltd. v. State of Haryana, held that the compensatory tax theory has no legal basis and is rejected. Non-discriminatory entry taxes are permissible under Article 304(a) of the Constitution. However, three specific issues—whether an entire state can be a local area, whether entry tax applies to foreign imports, and whether incentives to certain manufacturers violate Article 304(a)—were left open for determination. The appeals are remanded to High Courts with liberty to file fresh petitions with adequate factual foundation by 31 May 2017."
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