Samanwaya Rautray, ET Bureau Apr 10, 2013,

NEW DELHI: The Supreme Court on Tuesday asked a host of companies including VedantaAdani and Tata Steel and Essar Steel, to pay up 50% of the tax demanded by the state of Odisha by way of entry tax for now.

A bench, comprising Justices HL Dattu and JS Khehar, directed all the companies to pay 50% of the tax and interest amounts demanded/assessed by the state. But the penalty amount would be excluded from the amount, the court said.

Senior counsel Harish Salve argued the case for these companies. He was assisted by Tarun Gulati of Economic Laws Practice. Salve urged the court to restrict the deposit to 33% for now, but the court refused to do so, instead asking them to pay 50% of any demands made by the state.

Salve also urged that the penalty may be directed to be deposited as the case involves a constitutional challenge and that the assessees had already succeeded in the High Court in Reliance’s case.

The Bench agreed with Salve’s suggestion that the penalty amount should be excluded from the total deposits to be made by the companies.

But the bench noted the state was financially poor and that these companies were constrained to bring such goods from outside the state.

Odisha counsel Rakesh Dwivedi demanded that these companies deposit the whole of the tax liability which had arisen prior to filing of the petitions before the Orissa High Court. But Salve objected to this suggestion.

These taxes have been imposed on goods imported by them for their plants and services in Orissa between 2008 and 2012.

Odisha’s Entry Act, which allows levy of entry tax on imported goods, allows the state to levy a tax, not exceeding 12% of the purchase value, on entry of goods for consumption, use or sale in the state. The government levies different rates for different goods. Most states have similar Acts.

Petitions challenging them on the grounds of constitutional validity are now pending before the Supreme Court. Nineteen other companies including ACC and Hindalco Industries and Vedanta, have moved the top court against the Act. They claim that the power to impose a cross state levy only lies with the centre and states have no power to impose them.