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In the backdrop of a legal tussle over entry tax collection, West Bengal, which saw nearly a 30 per cent revenue growth last fiscal, might have to brace for lower tax collections this fiscal.
Last year, the state saw a revenue collection increase by Rs 7467 crore. However, almost 16 per cent or Rs 1200 crore was fresh revenue collection on account of entry tax.
A more pronounced impact in revenue collection might be felt by the commercial tax department, which saw an overall growth by Rs 2562 crore or 16 per cent, in fresh collections in 2012-13 over the last fiscal. In the commercial tax department, almost 47 per cent, or Rs 1200 crore increase in tax was solely on account of entry tax.
This year, the commercial tax department has so far collected nearly Rs 600 crore as entry tax, according to sources in the commercial tax department. However, in the last few months, collections have dropped due to non- compliance by a number of dealers.
According to Sumit Kumar Chakraborty, president, West Bengal Taxation Tribunal Bar Association, about 600 assesses, who had filed cases against the tax department, are not paying entry tax.
The West Bengal Entry of Goods into Local Areas Act, 2012 was passed in the Assembly last year in March, under which 1 per cent tax was levied on specific goods entering West Bengal. The petition, challenging the constitutional validity of the Act, was filed in 2012 by several companies, including Tata Steel, Hindalco, Godrej Consumer, Whirlpool, Ranbaxy, Marico, Cadbury, Glaxo Smithkline Consumer, Bharti Airtel and several others.
In June this year, a single bench order under Justice Indira Banerjee, said that the act was unconstitutional as it did not have the assent of the President. She also observed that the levy was not compensatory in nature, as the government had not stated the end use of the revenue generated through the tax.
The state government next appealed to the Calcutta High Court’s Division Bench against a Single Bench order of the High Court. The division bench under Chief Justice Arun Mishra and Joymalya Bagchi directed that he assessment process would continue, but also said that there was no need to file for refunds.
“There is no question to pay tax for an Act that is unconstitutional. An order has been stuck down and an order has been passed by the division court,” said Chakraborty.
However, according Binod Kumar, Commissioner of Commercial Tax of West Bengal,“ The collection of tax is constitutional. How can a court direct a government to continue assessments on an unconstitutional law?”
Commercial Tax Collection
| Year | Collection (Rs crore) | Growth % |
| 2012-13 | 1,8541.96 | 16.04 |
| 2011-12 | 1,5979.06 | 19.53 |
| 2010-11 | 13,368.44 | 25.84 |
| 2009-10 | 10,623.68 | 18.28 |
| 2008-09 | 8,981.74 | 10.99 |
