Court orders refund of entry tax on vehicles


The court admitted a petition filed by Messrs L & T Case Equipment Private Limited and 150 others, seeking to quash the notification issued on levy of entry tax under the section 4 (b) along with 4 (6) (6) of the Karnataka Tax on Entry of Goods into Local Area Act-1999.

Accordingly the State had fixed 12 per cent as entry tax on cars, two wheelers, jeeps, trucks, vans, diesel vehicles, eight per cent on three wheelers and earth movers and four per cent on tractors, tillers and agro equipment.  

Justice Kumar observed that the makers of the Constitution had favoured free movement and exchange of goods throughout India, which is necessary for the economy and for improving living standards of the country. In his 200-page judgment, he noted that Article 301 emphasises that the economic unity of the country would provide the main sustaining force for stability and progress of the political and cultural unity of the country. Justice Kumar pointed out that in the present context of globalisation, privatisation and free economy, the national boundaries and barriers should be sidelined for the benefit of economic development of the world, "If a state's economy should be prosperous, because of the tax holidays and lower tax rates, it only shows a mature political leadership vibrant tax planning and marshalling resources available in the state. It is worthy of emulation by other states by free flow of trade and commerce from such a state to neighbouring states."

The Court directed the State to refund the collected entry tax within four weeks.

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