Supreme Court Issues Notice In Challenge To West Bengal Taxes On Entry Of Goods Act

The Supreme Court is set to examine the constitutional validity of the West Bengal Taxes on Entry of Goods into the Local Areas Act, 2012, as amended by the West Bengal Finance Act, 2017, along with related Rules and notifications.

A bench of Justice JB Pardiwala and Justice R Mahadevan recently issued notice returnable on April 22, 2025 in a batch of petitions challenging the constitutional validity of the Act. The Finance Act amended various provisions of the Entry Tax Act with retrospective effect.

“We are of the view that we must look into the issue involved in the matter. Issue notice, returnable on 22-4-2025”, the Court said.

The bench also granted interim relief to the petitioners by directing that no coercive steps be taken against them until the next date of hearing on April 22, 2025.

The original petitioners (various companies including Samsung India) had approached the High Court challenging Tax Tribunal orders related to entry tax and seeking a declaration that the State of West Bengal lacked the authority to levy taxes on the entry of goods into local areas when such goods were intended for export outside India.

The Single Judge struck down the Act in 2013, observing that compensatory tax is imposed for specific and identifiable purposes, and the Act violated Article 309 and 304 (a) of the Constitution as it was not compensatory.

The state preferred appeals before the division bench, which granted a stay on the Single Judge's decision. During the pendency of the appeals, and after the 101^st Constitutional Amendment, 2016, that introduced Goods and Services Tax, the state enacted the Finance Act, introducing retrospective amendments to the Entry Tax Act.

Samsung contended that the 101^st Constitutional Amendment does not give the state legislature with the requisite legislative powers to validate the amendment made to the Entry Tax Act.

The division bench ultimately set aside the Single Judge's decision and upheld the Entry Tax Act as well as the 2017 amendment.

Thus, the petitioners approached the Supreme Court.

Senior Advocates Arvind P. Datar, Balbir Singh, Shyam Divan, and Kavin Gulati represented the petitioners.

On behalf of the State of West Bengal, Senior Advocate Rakesh Dwivedi argued that the issue was substantially covered by the Supreme Court's judgment in State of Telangana v. Tirumala Constructions and the 9-judge bench decision in Jindal Stainless Ltd. and Anr. v. State of Haryana & Ors.

In the Tirumala Constructions judgment, the Supreme Court interpreted Section 19 of the Constitution (One Hundred and First Amendment) Act, 2016, which introduced the GST regime. The Court held that Section 19 provided for the continuation, amendment, or repeal of existing tax laws during the transitional period until the new GST laws came into effect.

The Court in Tirumala Constructions explained that Section 19 sought to achieve three primary objectives: maintaining the status quo on indirect taxation, empowering legislatures to amend or repeal pre-existing tax laws, and ensuring a smooth transition to the GST regime. It also clarified that Section 19 was a constitutional provision with temporary effect, enabling both Parliament and State Legislatures to exercise legislative powers during the transitional phase.

After hearing submissions, the Supreme Court decided to examine the issue of validity of the Entry Tax Act and the 2017 amendment.

Case no. – Petition for Special Leave to Appeal (C) No.7295/2025

Case Title – Samsung India Electronics Pvt. Ltd. v. State of West Bengal & Ors.