D. Majumdar & Associates

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January 31, 2025

This is an update regarding the order dated 30th January 2025 passed by the Hon’ble Calcutta High Court in State Of West Bengal And Ors vs Pepsico India Holdings Private Limited upholding the validity of entry tax law in West Bengal.

Entry Tax law in West Bengal (the West Bengal Tax on Entry of Goods into Local Areas Act, 2012) has been a subject matter of litigation on various grounds including constitutional validity of the statute. Entry Tax law in West Bengal was first put to challenge before the jurisdictional High Court at Calcutta. The Hon’ble Calcutta High Court declared that the Entry Tax law in West Bengal was unconstitutional vide an order dated 24 June 2013. [Tata Steel Limited & Anr vs The State Of West Bengal & Ors]

The said order was challenged before the Division bench of the Hon’ble Calcutta High Court by the State of West Bengal. In addition, an order of the WBTT (West Bengal Taxation Tribunal) dated 25 March 2022 [Tata Steel Ltd. & Ors. Versus The State of West Bengal & Ors.] was also challenged before the Division Bench under writ jurisdiction of the High Court.

It is notable that by way of amendments to the WBTT Act, jurisdiction to decide issues relating to Entry Tax law in West Bengal was transferred to the WBTT. The WBTT is a body having power to determine constitutional validity of statutes which fall within the scope of its subject matters jurisdiction.

Under such jurisdiction, provisions of the Entry Tax law in West Bengal as well as amendments made in the law to overcome the effect of Jindal Stainless vide West Bengal Finance Act, 2017, were challenged before the WBTT. The tribunal decided that such amendment was not valid and the levy of entry tax was bad.

Such order of WBTT along with the order of the Hon’ble Single Judge of Calcutta High Court were the subject matter of challenge before the division bench of the Hon’ble Calcutta High Court.

On 30th January 2025, the said challenge has been decided and both the judgements have been set aside and resultantly Entry Tax law in West Bengal holds good and valid as on date.

Briefly stating, the division bench of the Hon’ble Calcutta High Court has set aside the 2013 judgment, holding that the same could not survive after the Supreme Court’s Jindal Stainless decision which overruled previous precedents. The court also upheld the validity of the 2017 amendments and allowed individual assessees to separately challenge any discriminatory aspects of the tax law.

Now that the above referred judgements have been declared to be bad, the Commercial Tax Department of West Bengal can initiate recovery of tax under the relevant provisions of Entry Tax law in West Bengal.

It is likely that the assesses which formed part of the appeal proceedings before the Division bench of High Court would be challenging the order of the division bench before the Hon’ble Supreme Court.

Interestingly, there is also a group of assesses which though participated before the WBTT, but did not participate in proceedings before the Division Bench of the High Court for reasons unknown. Department can initiate recovery proceedings against such assessees as well in furtherance to the recent order.

Options available to such assessees is something to explore, i.e., scope of joining litigation before the Hon’ble Supreme Court or assessment/ appeal route, till the entire issue is finally decided by the Hon’ble Supreme Court. Also, is another Settlement of Dispute Scheme on the cards?

The author, Mr. Dipankar Majumdar is an Advocate based out of Kolkata and practices Indirect Tax and Civil Commercial litigation.