Supreme Court Upholds Odisha Entry Tax Act, Dismisses Tata Sponge Iron's Challenge

The Supreme Court on Tuesday dismissed Tata Sponge Iron Limited's challenge to the constitutional validity of the Odisha Entry Tax Act, 1999, and upheld the Orissa High Court's refusal to entertain the plea. The company had also sought a refund of entry tax collected by the State of Odisha.

A bench of Justices Aravind Kumar and Prasanna B. Varale said there was no reason to interfere with the High Court's order.

“We do not find any infirmity in the impugned order,” the court said.

Tata Sponge Iron had approached the Orissa High Court in 2017, challenging the Odisha Entry Tax Act and the rules framed under it. The law imposes an entry tax on goods brought into local areas of Odisha from outside the State for consumption, use or sale.

The company argued that this levy discriminated against goods imported from other States and violated Article 304(a) of the Constitution, which prohibits States from imposing discriminatory taxes on inter-State trade.

It also contended that the tax restricted the freedom of trade and commerce guaranteed under Article 301, which ensures the free flow of trade across India. On that basis, it sought to have the statute struck down and asked for a refund of the entry tax already paid.

The Supreme Court noted that the same challenge to the Odisha Entry Tax Act had been raised earlier. In that earlier round, the constitutional validity of the law had been questioned on multiple grounds, including lack of legislative competence and violation of Articles 301, 304(a), and 304(b) of the Constitution.

That writ petition was dismissed in 2002. The dismissal was later affirmed by the Supreme Court in 2017.

The bench also rejected Tata Sponge Iron's reliance on the Court's 2021 judgment in State of Kerala v. Fr. William Fernandes. Clarifying the scope of that ruling, the court said the liberty granted there to raise fresh challenges on the ground of discrimination was limited.

It applied only to writ petitioners who were already before the respective High Courts at the time. The court noted that Tata Sponge Iron was not a party to those proceedings and therefore could not claim the benefit of that limited relief.

Before dismissing the petition, the bench clarified that its observations were confined to this case alone and would have no bearing on other matters pending before the High Court.

For Petitioner: Senior Advocate Kavin Gulati; Advocate Sunil Kumar Jain (AOR); Advocates Mohith S. Kumar, Dushyant Sharma And Rashika Swarup.

For Respondents: Additional Solicitor General K. M. Nataraj; Advocate Samapika Biswal (AOR); Advocates Mehak Kumar And Nikita Capoor.