The Supreme Court of India is set to review the legality of the West Bengal Taxes on Entry of Goods into the Local Areas Act, 2012, which was later amended by the West Bengal Finance Act, 2017. This review will include scrutiny of the related Rules and notifications associated with the Act.
A bench comprising Justice JB Pardiwala and Justice R Mahadevan has issued a notice regarding the case. The matter is scheduled for further hearing on April 22, 2025. The court is examining the law's constitutionality after multiple petitions were filed challenging its validity. The 2017 amendment had made retrospective changes to the Entry Tax Act, leading to concerns among businesses and legal experts.
“We are of the view that we must look into the issue involved in the matter. Issue notice, returnable on 22-4-2025.” — Supreme Court Bench
The Supreme Court has provided interim relief to the petitioners by ruling that no coercive steps should be taken against them until the next hearing. This means that businesses challenging the law will not face immediate penalties or tax demands while the case is under review.
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Background Of The Case
The original petitioners, including major companies like Samsung India, had initially approached the High Court to challenge the tax tribunal's orders related to the entry tax. They argued that West Bengal does not have the authority to levy taxes on goods entering local areas when these goods are meant for export outside India.
In 2013, a Single Judge of the High Court struck down the Act, ruling that:
“Compensatory tax must serve a specific and identifiable purpose. The Entry Tax Act violated Articles 309 and 304(a) of the Constitution, as it was not compensatory in nature.”
Following this ruling, the West Bengal government appealed before a division bench, which stayed the Single Judge’s order. However, during the legal battle, the 101st Constitutional Amendment (2016) introduced the Goods and Services Tax (GST). The West Bengal government responded by amending the Entry Tax Act retrospectively through the Finance Act, 2017.
Samsung and other petitioners argued that the 101st Constitutional Amendment does not grant state legislatures the power to validate the retrospective amendment made to the Entry Tax Act. They contended that the state exceeded its jurisdiction by enforcing such a tax even after the implementation of the GST framework.
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Despite these arguments, the division bench of the High Court upheld the 2017 amendment, leading the petitioners to escalate the matter to the Supreme Court.
Representing the State of West Bengal, Senior Advocate Rakesh Dwivedi cited two key Supreme Court judgments:
- State of Telangana v. Tirumala Constructions
- Jindal Stainless Ltd. & Anr. v. State of Haryana & Ors.
In the Tirumala Constructions case, the Supreme Court interpreted Section 19 of the 101st Constitutional Amendment, which facilitated the transition to the GST regime. The Court ruled that Section 19 enabled existing tax laws to continue, be amended, or be repealed until the new GST laws were fully in effect.
“Section 19 was a constitutional provision with temporary effect, ensuring a smooth transition and empowering legislatures to exercise necessary tax amendments.” — Supreme Court in Tirumala Constructions
The State of West Bengal argued that this provision allowed it to modify the Entry Tax Act retrospectively. However, the petitioners countered that this interpretation was flawed and that the amendment was unconstitutional.
After hearing all submissions, the Supreme Court has decided to thoroughly examine the validity of the Entry Tax Act and its 2017 amendment.
Case no. – Petition for Special Leave to Appeal (C) No.7295/2025
Case Title – Samsung India Electronics Pvt. Ltd. v. State of West Bengal & Ors.
