The Supreme Court refused to entertain Tata Sponge Iron Limited’s challenge to constitutional validity of the Odisha Entry Tax Act, 1999, upholding Orissa High Court’s dismissal. A Bench of Justices Aravind Kumar and Prasanna B Varale found no infirmity.
NEW DELHI: The Supreme Court decided not to entertain Tata Sponge Iron Limited’s challenge regarding the constitutional validity of the Odisha Entry Tax Act, 1999. This move upheld the Orissa High Court’s decision to dismiss the company’s plea and rejected its request for a refund of the entry tax paid to the state.
A Bench comprising Justices Aravind Kumar and Prasanna B Varale stated that there were no grounds for interference with the high court’s ruling.
The SC remarked,
“We do not find any infirmity in the impugned order,”
The specific amount of the tax has yet to be determined.
Factual Background Of the Case:
Tata Sponge Iron approached the Orissa High Court in 2017, questioning the legitimacy of the entry tax law and its associated regulations, which impose a tax on goods brought into Odisha from other states for consumption, use, or sale.
The company argued that the tax unfairly discriminated against interstate goods, violating Article 304(a) of the Constitution, and imposed an unconstitutional restriction on the free trade and commerce guaranteed by Article 301.
They sought to have the law annulled and requested a refund of the taxes already collected.
The petitioner in a W.P. (C) No. 25440 of 2017 before the High Court of orissa claimed following reliefs:
- To issue appropriate writ by striking down the Odisha Entry Tax Act, 1999 and consequently, the rules framed thereunder.
- To issue a writ of mandamus to the opposite parties to grant refund of amount collected towards entry tax from the petitioner.
In State of Kerala & Ors. v. Fr. William Fernandez (09.10.2017), the Supreme Court clarified that a plea of discrimination under Article 304(a) in matters of entry tax must be tested strictly in accordance with the principles laid down by the Nine-Judge Bench in Jindal Stainless Ltd..
While noting that the petitioners had not earlier pleaded discrimination, the Court balanced procedural discipline with substantive justice by granting limited liberty to revive dismissed writ petitions before the High Court without permitting fresh writ petitions subject to filing a proper application within 30 days. This ensured finality of litigation while allowing adjudication in light of settled constitutional law.
That writ petition was dismissed in 2002 and the High court was of opinion that,
“It will not be appropriate to entertain the writ petition since earlier the petitioner was not before this Court. The Supreme Court has granted revival of those writ petitions which were filed before this Court earlier. It is true that the petitioner was a party to the proceeding before the Hon’ble Supreme Court but he was not a party in the earlier writ petitions before this Court. Therefore, the relief claimed in this writ petition cannot be granted.”
Observations of the Supreme Court:
The Supreme Court noted that the Odisha Entry Tax Act had previously undergone constitutional scrutiny, where the law was contested on various grounds, including legislative competence and violations of Articles 301, 304(a), and 304(b) of the Constitution.
The Bench also dismissed Tata Sponge Iron’s reliance on the 2021 ruling in State of Kerala v. Fr. William Fernandes.
Clarifying the extent of that ruling, the Court indicated that the opportunity provided to raise new challenges based on discrimination was specifically limited and applicable only to writ petitioners who were before the relevant high courts at that time. As Tata Sponge Iron was not part of those proceedings, it could not claim the benefits of that limited relief.
Before concluding the case, the Bench emphasized that its remarks were strictly related to the current matter and “shall not have any bearing” on other pending cases before the high court.
Senior Advocate Kavin Gulati and Advocate Sunil Kumar Jain (AOR) represented the petitioners, while Additional Solicitor General KM Nataraj and Advocate Samapika Biswal (AOR) appeared for the respondents.
Case Title: M/S.TATA SPONGE IRON LTD. Versus STATE OF ORISSA
Read Order of the High Court of Orissa