SC to decide if states can tax Railways

The Supreme Court will decide whether a state can levy entry tax on properties, including engines and wagons, bought by the Railways.

The Centre has sought its intervention into the decision of the Uttar Pradesh (UP) government to impose tax on entry of goods by the Railways.

The Union government challenged the state government’s notice issued on August 31, 2004, to the Railways directing it to deposit tax on entry of goods with interest.

The Centre approached the Allahabad High Court for relief, but the court dismissed its plea on February 12 last year, forcing it to file a petition in the apex court in this regard.

In its special leave petition, the Centre contended that the high court had failed to appreciate that in view of Article 285 of the Constitution, the properties of the Union government were exempted from state taxation.

Besides, Article 286 stated that there were restrictions on imposition of tax on the sale or purchase of goods which took place outside the state.

It also referred to Section 184 of the Indian Railway Act, which specifically prohibited any taxation on the Railways by local authorities unless the Centre declared that it was liable to pay tax.

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