Case Law Details
OCL India Ltd Vs State of Orissa (Supreme Court)
Conclusion: The Hon’ble Supreme Court held that the exclusion of an industrial area or areas from the limits of municipal councils or municipalities under the state laws in exercise of statutory power or by virtue of a declaration under proviso to Article 243-Q, would not result in that area ceasing to be a “local area” within Entry 52 of List II.
Facts: In present facts of the case, common questions of law relating to the interpretation of “local area” occurring under Entry 52 of List II of the Seventh Schedule to the Constitution are involved, the Hon’ble Supreme Court by its order dated 26.03.2015 referred the issue for the decision of a larger bench. The reference order took note of a previous Constitution Bench ruling in Diamond Sugar Mills Ltd. & Anr. v. State of Uttar Pradesh & Anr., (1961) 3 SCR 242, where the court held that a “local area” would be an area which is administered by a local body such as a municipality, a district Board, a local board, a Panchayat or the like and that factory premises are not covered by the aforesaid expression. The court also took note of the Constitution (Seventy-fourth) Amendment Act, 1992 which introduced Article 243-Q relating to the constitution and administration of municipal bodies and held that having regard to these developments, the issues which need adjudication in the present appeals have to be considered by a larger bench. Hence, the appeals are listed before this Bench.
In the said case, the State of Orissa enacted the Orissa Entry Tax Act, 1999 which defined the local area so as to include industrial townships among other areas including areas within the industrial township constituted under Section 4 of the Orissa Municipal Act, 1950 (hereafter “the 1950 Act”), thereby subjecting goods entering into such areas, to entry tax. The 1950 Act, by Section 4 provides that the State Government can constitute (a) a notified area council for every “transitional” area; (b) a municipal council for every smaller urban area; and (c) a municipal corporation for every larger urban area. Two of the appellants impugned the Orissa Act especially the levy of entry tax. It was contended that imposition of entry tax violates Article 301 of the Constitution. The basis of writ petition before the High Court was that the levy of entry tax on capital goods and raw-materials imported into India and raw-materials used in the factories or in work was unconstitutional. The High Court by its impugned judgment dismissed writ petition holding that the Orissa entry tax did not violate any constitutional prohibition and was in conformity with Article 304(a) of the Constitution. It was therefore, argued that the inclusion of its industrial township as a local area by virtue of the definition of that term in the Orissa Act was unconstitutional.
Other appeal was directed against the common judgment rendered by the Allahabad High Court dated 23.12.2011, which had negatived the contentions urged by it [along lines similar to those before the Orissa High Court]. The Allahabad High Court by its elaborate reasoning in the impugned judgment noticed not only the provisions of the U.P. enactments but also took note of the definition of local area and referred to the other cognate statutes. It was held by the Allahabad High Court that the inclusion of industrial townships within the definition of the local area for the purposes of entry tax did not exceed any constitutional limit and also did not violate Article 243-Q of Constitution.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
