Haryana Entry Tax Demand Notices 2025-26 Under LADT Act 2008: Legal Position, High Court Stay and What Businesses Must Do Before 17 July 2026
Introduction
Businesses across Haryana have been receiving unexpected assessment orders and demand notices under the Haryana Tax on Entry of Goods into Local Areas Act, 2008 (LADT Act / Entry Tax Act, 2008) for assessment years ranging from 2008-09 to 2016-17. These demands — some running into several lakhs — are being issued for a tax that most companies believed had been permanently buried with the introduction of GST in 2017.
This article explains why these demands are being raised, what the current legal position is, what the Punjab and Haryana High Court has held, and — most importantly — what businesses must do right now to protect themselves.
The bottom line upfront: The Punjab and Haryana High Court has, in a batch of over 130 writ petitions, prima facie held that the State Government lost its constitutional power to collect entry tax after 2016. A stay on coercive recovery is in place — but only for companies who are petitioners. If your business has received a demand and has not yet filed a writ petition, you are unprotected today.
Background: The Entry Tax Law and Its Troubled History
The LADT Act, 2008 was enacted by the State of Haryana deriving its legislative competence from Entry 52 of List II of the Seventh Schedule to the Constitution of India. It levied tax at 2% on the value of goods brought into local areas of Haryana for consumption, use or sale.
The law was challenged almost immediately. A Division Bench of the Punjab and Haryana High Court, in Indian Oil Corporation Ltd. vs. State of Haryana and another, 2008 SCC Online P&H 1263, declared the LADT Act, 2008 constitutionally invalid on 1 October 2008 — even before any rules under it could be framed. The State challenged this before the Supreme Court, and the matter was referred first to a five-judge bench and then to a nine-judge Constitutional Bench.
During this entire period — from 2008 to 2017 — the LADT Act existed in a state of constitutional limbo. No valid assessment rules had ever been framed. No assessments were carried out. Businesses carried on without paying or accounting for entry tax under this Act.
On 8 September 2016, the Constitution (101st Amendment) Act, 2016 was passed, introducing GST and omitting Entry 52 from List II of the Seventh Schedule. This is the constitutional entry that gave states the power to levy entry tax. Its deletion meant that states no longer had the constitutional competence to legislate on entry tax at all.
On 11 November 2016, the Nine-Judge Constitutional Bench of the Supreme Court in Jindal Stainless Ltd. and another vs. State of Haryana and others, (2017) 12 SCC 1, addressed the compensatory tax theory but remitted the question of discrimination under Article 304(a) back to the respective High Courts. This remitted challenge — filed before the P&H High Court as CWP-12260 of 2017 (M/s Surya Roshni Limited vs. State of Haryana) — is pending to this day and has not attained finality.
On 1 July 2017, the Haryana Goods and Services Tax Act, 2017 (HGST Act) came into force, repealing the LADT Act under Section 174(1). Section 174(2) saved all actions already taken under the repealed Act. Companies universally understood that the entry tax chapter was closed.
The 2021 Amendment and the ROD of December 2024: The Resurrection
In 2021, the State Legislature introduced the Haryana Goods and Services Tax (Amendment) Act, 2021, which inserted three new provisos to Section 174(2) of the HGST Act. These provisos purported to empower the State Government to issue executive orders to remove difficulties in implementing the repealed Acts, including the LADT Act, 2008.
Utilising these provisos, the Haryana Excise and Taxation Department issued the Removal of Difficulties Order (ROD) No. 40/GST-2 dated 11 December 2024. This ROD, for the first time, laid down a complete framework for assessment and collection of entry tax under the LADT Act, 2008 for the period prior to its repeal — effectively creating the assessment machinery that had never existed in the first place.
Following the ROD, the department began issuing notices and passing assessment orders against businesses across Haryana. Assessment orders in Form ET-4 have been issued under Section 9 of the LADT Act, 2008 for multiple assessment years. Businesses that did not respond to notices have received ex-parte orders with demands computed on the basis of estimated gross turnover without verification of actual books of account.
How the Demand is Computed
The assessment orders follow a standard formula under the ROD:
| Step | Description |
| GTO (Gross Turnover) | Opening stock brought forward from previous year + aggregate value of all goods received on entry into local area during the year. This figure is typically very large. |
| Less: Deductions under Clause 9(1) of ROD | Includes value of goods on which VAT was paid, goods delivered outside local area without consumption or sale, goods specified in Schedule A, plant and machinery used in manufacture, and goods brought in for resale or manufacture remaining in stock. |
| TTO (Taxable Turnover) | GTO minus permissible deductions. |
| Tax @ 2% | 2% of TTO = demand raised. |
| Interest / Penalty | Nil in most orders reviewed — only tax is demanded. |
A critical concern with ex-parte assessments is that deductions have been computed without access to the company’s purchase registers, VAT returns, stock records or accounts. Businesses that appear before the authority with proper documentation may establish that their actual taxable turnover — and therefore their actual tax liability — is significantly lower than what has been assessed.
The Punjab and Haryana High Court: Current Position as on June 2026
The Merino Batch — CWP-3185 of 2025
Following the issuance of the ROD and the demand notices, over 130 companies filed writ petitions before the Punjab and Haryana High Court challenging:
- The three provisos to Section 174(2) of the HGST Act inserted by the Haryana HGST (Amendment) Act, 2021; and
- The ROD dated 11.12.2024.
The lead matter is M/s Merino Panel Products Limited vs. State of Haryana and others, CWP-3185 of 2025, with all connected petitions tagged to it.
Order dated 08.09.2025
An earlier order of the Court directed that the older batch challenging the LADT Act on discrimination grounds (CWP-12260 of 2017, Surya Roshni batch) and the Merino batch be heard together. The Court also permitted assessment orders to be passed in the meantime, but expressly made them subject to the outcome of the writ petitions. This is the direct authority under which the assessment orders against businesses were passed in 2025-26.
Order dated 05.05.2026 — The Key Order
A Division Bench comprising Justice Deepak Sibal and Justice Lapita Banerji heard arguments on the grant of interim stay and recorded the following prima facie finding:
“Prima facie, we are of the opinion that once the 2008 Act had been repealed and only the actions already taken under the 2008 Act, before its repeal, were saved by Section 174(2) of the Haryana Goods and Services Tax Act, 2017, then after the deletion of Entry 52 of List II of the Seventh Schedule to the Indian Constitution was done through the 101st Amendment to the Constitution in the year 2016, the State lost its legislative competency to make any provision to facilitate collection of entry tax, whether through an Act much less through an executive order.”
— Punjab & Haryana High Court, CWP-3185 of 2025, Order dated 05.05.2026
The Court directed:
- Final hearing fixed for 17 July 2026.
- State directed to file its written response before that date.
- No coercive steps to be taken against the petitioners until further orders.
Parallel Proceedings Before the Supreme Court
The petitioners also drew support from the Supreme Court’s interim order dated 24.03.2025 in Samsung India Electronics Pvt. Ltd. vs. State of West Bengal, SLP (Civil) No. 7295 of 2025. While Samsung later withdrew, the companion batch — BTL EPC Ltd. vs. State of West Bengal — continues before the Supreme Court with the interim stay in operation. This confirms that the constitutional question of states reviving entry tax post-101st Amendment is a pan-India issue that the Supreme Court is also seized of.
The Core Legal Arguments
1. Loss of Legislative Competence Post-101st Amendment
Entry 52 of List II — the source of the State’s power to levy entry tax — was deleted by the 101st Constitutional Amendment in 2016. Under Article 246 of the Constitution, a state legislature can only make laws on subjects enumerated in the State List. Once Entry 52 was omitted, the State lost its power to make any law — whether a statute or an executive order — relating to entry tax. The 2021 Amendment and the ROD of 2024 are therefore both constitutionally impermissible.
2. Limits of a Removal of Difficulty Order
The Supreme Court has held in State of Telangana vs. Tirumala Constructions, (2023) 15 SCC 578, that the power under a removal of difficulty clause is confined to implementing existing provisions — it cannot introduce new substantive law or alter the substance of the statute. The ROD of December 2024 created, from scratch, an entire assessment and recovery machinery that had never previously existed. This is far beyond what a removal of difficulty order is constitutionally permitted to do.
3. The Underlying Law Was Never Validly Operative
The LADT Act, 2008 was declared constitutionally invalid by the P&H High Court in the IOCL matter in 2008. No final judicial determination has ever upheld the Act’s validity in Haryana. The challenge on discrimination grounds before the P&H High Court (Surya Roshni batch, CWP-12260 of 2017) is pending and undecided. There is therefore no clean legal foundation on which to base the revival.
4. The State’s Counter-Argument and Why It Falls Short
The State argued that Section 174(2) of the HGST Act saved all actions taken under the LADT Act, 2008, and that the ROD merely provides procedure for implementing these saved actions. The Court considered this argument and still recorded its prima facie view against the State. The State’s position conflates saving past actions (which Section 174(2) validly does) with creating new procedural machinery to collect tax going forward — which is a substantive exercise of legislative power requiring constitutional competence that no longer exists.
Scenarios: What Can Happen and What You Should Do
Scenario 1 — You have received an ex-parte assessment order and have not yet responded
This is the most common situation. The department has passed an order in your absence, computing tax on estimated figures. You should: (a) file a writ petition immediately to join the Merino batch and get covered by the stay; and (b) simultaneously file a statutory appeal challenging the quantum of the demand — the computation of GTO and deductions — based on your actual books. Do not pay.
Scenario 2 — You received a notice but no order has been passed yet
You are in a slightly better position. File a writ petition immediately. Once you are a petitioner, the stay protects you from coercive action. The assessment order, when passed, will be expressly subject to the outcome of your writ petition as directed by the September 2025 order of the Court.
Scenario 3 — You have already paid the demanded tax
This is a difficult position. Amounts voluntarily paid before a legal challenge is filed are difficult to recover even if the court ultimately strikes down the ROD. You should still file a writ petition and a statutory appeal, documenting the payment. Whether it can be set off or refunded will depend on the final order of the Court.
Scenario 4 — You are considering the OTS Scheme
The Haryana One Time Settlement Scheme for Recovery of Outstanding Dues, 2025 covered the LADT Act, 2008 and offered full waiver of interest and penalty. However, it required unconditional withdrawal of all litigation. The scheme’s 180-day window from 1 April 2025 appears to have closed. In any event, given the strong prima facie position in the writ petitions, opting for settlement would mean paying a demand that the court may ultimately set aside entirely — and once settled, you cannot reopen the matter.
Scenario 5 — You are a large company with demands across multiple assessment years
File a single writ petition covering all assessment years and all demand orders. The court is managing 130+ petitions in the Merino batch efficiently. Coordinate with any group companies to file together. Get your records for 2008–2017 organised — purchase registers, VAT returns, stock statements — to support the quantum challenge in the statutory appeal.
Immediate Action Checklist
Every business that has received a Haryana entry tax demand should do the following without delay:
1. Collect all demand orders and notices received under the LADT Act, 2008 for all assessment years.
2. Do not pay any amount demanded without first taking specific legal advice on your matter.
3. Do not ignore the demands — the department can initiate recovery proceedings against companies not protected by the court’s stay.
4. Locate your records for the relevant years — purchase registers, stock statements, VAT returns, audited accounts — as these will be needed for the quantum challenge.
5. Approach a specialist immediately to file a writ petition before 17 July 2026 and to file a protective statutory appeal within the applicable limitation period.
Conclusion
The Haryana entry tax revival through the ROD dated 11.12.2024 is one of the most significant indirect tax disputes currently pending before the Punjab and Haryana High Court. The legal position is strongly contested — the court has prima facie agreed with businesses that the State lost its constitutional power to collect entry tax after 2016. But this protection only extends to those who are in the writ petition.
With the final hearing fixed for 17 July 2026, there is limited time to act. Businesses that join the writ petition now will be covered by the existing stay and will benefit from the final order — whatever it is. Businesses that do nothing remain exposed to immediate recovery action.
The constitutional question is important not just for Haryana but for the entire country — similar issues are pending before the Supreme Court in the West Bengal entry tax context. The final outcome will have far-reaching implications for states’ power to revive repealed tax laws through executive orders.
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About the Author: Anshul Mittal is an advocate and working partner at RSA Legal Solutions, a boutique indirect tax and regulatory law firm based in Gurugram, Haryana. The firm specialises in GST, Customs, Foreign Trade Policy, BIS/QCO compliance, DGFT licences, and tax litigation. The firm has been advising clients on the Haryana entry tax issue. For Feedback on this article contact RSA Legal Solutions, Gurugram, Haryana | info@rsalegalsolutions.com
Disclaimer: This article is intended for general informational purposes only and does not constitute legal advice. The legal position described reflects the situation as of June 2026 based on publicly available court orders. Readers should obtain specific legal advice tailored to their individual facts and circumstances before taking any action. The outcome of CWP-3185 of 2025 and connected matters cannot be predicted and the prima facie observations of the High Court are not a final determination of the legal question. The author and RSA Legal Solutions do not accept liability for actions taken or not taken in reliance on this article without specific professional consultation.
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