Orissa High Court

Cuttack, July 22: A writ petition has challenged an entry tax enforced in the state nearly 10 years ago at Orissa High Court.

Ajay Agarwal, 41, an entrepreneur, filed the petition raising the legal question on the constitutional validity and propriety of continuance of the levy and has sought that the tax be quashed as “it is not compensatory in nature and has not been legislated in public interest”.

The advocate-general’s office served copies of the PIL to the state finance department and law department yesterday. The petition is expected to be listed for hearing next week, court sources said. The Orissa Entry Tax Act-1999 was promulgated on September 20, 1999, as a substitute for Octroi Tax. The government’s current annual entry tax collection is over Rs 500 crore.

The government while promulgating the levy had stated that the revenue realised by the tax would be utilised for facilitating trade and commerce, directly or indirectly.

The petition, however, contends that the tax cannot be considered “compensatory” only because the government declared it thus and that there should be a reasonable link between the tax collected and the amount allocated for improvement of trade. “It is apparent that the government has no way to show the expenditure incurred on providing facilities to trade and commerce vis-à-vis the amount of funds used or expended for facilities of trade and commerce,” the PIL stated. Besides, the enactment does not indicate quantifiable data.

More so, the amount granted by the government to bodies and panchayati raj institutions have no correlation with the amount realised as tax under the act.

The petitioner further alleged that the Orissa Entry Tax was passed without complying the mandate of Article 304(b) of the Constitution and no specific sanction was obtained from the President before enactment.

“Hence it is unconstitutional and be declared as ultra vires Constitution,” the PIL stated.