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Patna High Court quashes entry tax levied on e-tailers in Bihar

The Patna High Court has said that the entry tax on ecommerce companies in Bihar is unconstitutional and illegal. A case opposing the entry tax was filed by Flipkart through its logistics subsidiary Instakart. A Flipkart spokesperson confirmed the development. "The impugned provisions of the Bihar Finance Act, 2015 (Bihar Act 9 of 2015), amending the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 and the Rules made thereunder and Notifications S.O. 176 & 18 both, dated 20.01.2016, are declared as ultra vires to the Constitution and are accordingly quashed," the court's order read. Judges in Patna High Court noted that the entry tax was discriminatory and unconstitutional. Lawyers arguing for the Bihar government said that the entry tax was compensatory in nature and that it had power to impose such a discriminatory tax. However, the court said that the entry tax made a discrimination against the dealer of one state and another and in violation of the constitutional provisions in Article 304 (a). Article 304 (a) of the constitution says that there cannot be restrictions on trade between states which discriminate between goods  imported and goods manufactured or produced. "Even if the levy is compensatory in nature, the compensation cannot be demanded more from an outside dealer than a local dealer," the order read further. In June, Madhya Pradesh  joined seven other states – Uttar Pradesh, Assam, Odisha, Uttarakhand, Rajasthan, West Bengal, and Mizoram – which imposed the tax citing loss of revenues. A statement…

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