The Supreme Court on Friday issued notice to 12 major companies, including Honda Siel Cars India, Xpro India, LG Electronics and others, on a batch of petitions challenging the Allahabad high court's judgement that asked the Uttar Pradesh government to refund around Rs 4,000 crore (Rs 40 billion) collected as entry tax from traders.
A bench headed by Justice Arijit Pasayat while seeking reply from the companies also tagged the petitions with other similar petitions pending before it.
It may be noted that more than 100 petitions have been filed from all over the country on the issue.
The Uttar Pradesh government had challenged the high court judgement that held that there was no material sufficient to establish that the amount collected as tax was in proportion to the facilities provided to the traders.
According to the petitions, the state government had started levying and collecting tax from January 2000 on entry of goods into all the local areas including municipal corporations, municipalities, zilla panchayats, cantonments, industrial development areas, etc.
Even the Commissioner, Trade Tax, had clarified that tax was leviable on import of goods from places outside India and imported into a local area, the state stated.
According to Uttar Pradesh, it had given grant-in-aid of more than Rs 3,253 crore (Rs 32.53 billion) from its state consolidated fund and Rs 4,263 crore (Rs 42.63 billion) to the local bodies towards maintenance of roads and bridges respectively, in 2005-06 against Rs 1,082 crore (Rs 10.82 billion) received as entry tax.
It further said that a perusal of data demonstrated that the amount of entry tax collected by state was much less than the expenditure incurred by the state government by way of grant-in-aid and development of infrastructure to facilitate trade and commerce.