SC quashes luxury tax on gutkha

The Supreme Court on Monday quashed a decision of the state government imposing luxury tax on gutkhas and set aside the Bombay High Court judgement, which had upheld the legislative competence of the state goverment to enact a law in this regard.

Referring to the apex court's constitution bench verdict on the issue, Justice Y K Sabhrwal and Justice P P Naolekar allowed the appeal filed by some gutkha manufacturers against the imposition of luxury tax.

The bench said state government has no power to impose luxury taxes on items such as gutkhas under Maharashtra Tax On Luxuries Act.

A constitution bench in January had ruled that the states had no power to enact a law imposing luxury tax on goods having no service component attached to them.

The judgement was delivered on a bunch of petitions challenging the luxury tax imposed on cigarettes and gutkhas by the Uttar Pradesh, West Bengal, Haryana and Andhra Pradesh.

The court had said the state governments had no legislative competence to enact a law to impose luxury tax under entry 62 of list II.