SC asks Odisha Govt. to provide entry tax details levied on Vedanta

The Supreme Court Monday asked the Odisha government to give details of the entry tax levied by it on raw materials and machinery equipment imported from outside the country by Vedanta Aluminium limited for its aluminium refinery and smelting plant.

A bench of Justice DK Jain and Justice Madan B. Lokur today asked the state government to respond on a petition moved by Vedanta challenging the levy of entry tax on imported goods entering the state under Orissa Entry Tax Act, 1999.

The Orissa Entry Tax Act, 1999 allows the state government to impose a tax, not exceeding 12 percent 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 entry tax liability of about Rs 130 crore, has challenged an Orissa High Court judgment passed on October 9 that upheld the levy of the entry tax. The company, which is setting up aluminium refinery unit at Lanjigarh and a smelter plant in Jharsuhuda in the state, has been importing goods and machinery.

The company has argued that the state government has no jurisdiction to levy entry tax as under Article 286 of the Constitution a state government is barred from imposing tax on sale and purchase of imported goods.

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 Aluminium, however rejected the companies' plea and upheld the levy.

"The imposition of tax on goods purchased from outside the country does not violate the ban imposed under Article 246 of the Constitution to enact law from Entry 52 of List II of Seventh Schedule," the High Court had observed.

Asking the state government to be prepared with regard to other companies affected by the High Court verdict, the apex court today listed the matter for further hearing on November 5 next.