States cannot withdraw tax incentives
Denial of fiscal incentives offered to industries set up in certain states to encourage development and generate employment continues to be a matter of dispute reaching the Supreme Court. In the latest case, Bajaj Auto Ltd vs Union of India, the two-wheeler manufacturer in Uttarakhand challenged the demand of three levies — the National Calamity Contingency Duty, the Education Cess and the Higher Education Cess. It cited the exemptions granted to special category states, including those in the northeast, to claim that it was not liable to pay the three levies. The high court rejected