Case Law Details
Merino Panel Products Limited Vs State of Haryana And Others (Punjab And Haryana High Court)
The petitions challenge three provisos inserted into Section 174(2) of the Haryana Goods and Services Tax Act, 2017 through the Haryana Goods and Services Tax (Amendment) Act, 2021, as well as the Removal of Difficulty Order dated 11.12.2024 issued by the Government of Haryana. The impugned provisos authorize the Government to remove difficulties in giving effect to or saving actions taken under laws repealed by the Haryana GST Act, 2017. The 2024 Order was issued to facilitate implementation of the Haryana Tax on Entry of Goods into Local Areas Act, 2008, which had already been repealed by the 2017 Act.
The petitioners contended that the 2008 Entry Tax Act had originally been enacted under Entry 52 of List II of the Seventh Schedule to the Constitution. The constitutional validity of that Act had been challenged before the High Court and subsequently became the subject of proceedings before the Supreme Court. Following the Constitution (One Hundred and First Amendment) Act, 2016, Entry 52 of List II was omitted. The petitioners argued that after the omission of Entry 52, the State lost legislative competence to impose entry tax or enact provisions facilitating its collection, particularly under a statute that had already been repealed. They contended that the 2021 amendment and the 2024 Removal of Difficulty Order effectively sought to facilitate collection of entry tax despite the State having lost constitutional competence in that field. Reliance was placed on the decision in State of Telangana v. Tirumala Constructions and an interim order passed by the Supreme Court in proceedings relating to similar issues.
The State opposed the petitions, submitting that the 2008 Act had been repealed by the Haryana GST Act, 2017 within the period contemplated by the Constitution amendment. It argued that Section 174(2) of the 2017 Act, which saves actions already taken under the repealed law, was not under challenge. According to the State, the 2021 amendment and the 2024 Order merely prescribed the procedure for implementing and giving effect to actions already saved under Section 174(2). The State maintained that no new entry tax law had been enacted and that the impugned provisions did not amount to a fresh levy or collection mechanism requiring legislative competence under the omitted Entry 52.
After considering the submissions, the Punjab and Haryana High Court noted that the State had originally enacted the 2008 Act by deriving legislative competence from Entry 52 of List II. The Court observed that Entry 52 was omitted through the 101st Constitutional Amendment and that the Haryana GST Act, 2017 subsequently repealed the 2008 Act while saving actions already taken under it through Section 174(2).
The Court further noted that the 2021 amendment introduced the challenged provisos empowering the Government to remove difficulties in implementing the repealed 2008 Act and that the 2024 Removal of Difficulty Order laid down the procedure for collection of entry tax relating to the period before repeal.
Prima facie, the Court expressed the view that once the 2008 Act stood repealed and only actions already taken under it were saved, the State appeared to have lost legislative competence after deletion of Entry 52 from List II to make provisions facilitating collection of entry tax, whether through legislation or by executive order. However, the Court observed that the issue required further examination.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
In this bunch of petitions, there are several matters in which State has not filed any written response for which learned State counsel seeks more time, which we grant.
While adjourning these matters for final arguments, we have heard learned counsel for the parties on the issue of grant of interim stay.
Under challenge through this bunch of petitions are the three provisos to Section 174 (2) of the Haryana Goods and Services Tax Act, 2017 (for short, ‘2017 Act’) introduced through the Haryana Goods and Services Tax (Amendment) Act, 2021 (for short-‘2021 Act’) which provisos enable the Government, through passing of an executive order, to make provisions to remove any difficulty in giving effect to or saving the actions taken under the Acts repealed through the 2017 Act.
Also under challenge is the Removal of Difficulty Order dated 11.12.2024 (for short ‘2024 order’) issued by the Excise and Taxation Department, Government of Haryana, under the powers conferred upon the Government by the afore referred impugned provisos, to remove difficulties in the implementation of the Haryana Tax on Entry of Goods into Local Areas Act, 2008 (for short , ‘2008 Act’), which Act itself had been repealed by the 2017 Act.
Learned counsel for the petitioners submitted that the 2008 Act was promulgated by the State of Haryana, deriving its legislative competence under Entry 52 of List II of the Seventh Schedule to the Constitution of India; through a bunch of petitions filed before this Court, the Constitutional validity of the 2008 Act was challenged; in ‘Indian Oil Corporation Ltd. Vs. State of Haryana and another’ 2008 SCC online P&H 1263, a Division Bench of this Court declared the 2008 Act to be constitutionally invalid; the judgment of this Court in Indian Oil Corporation Limited’s case (supra) was challenged before the Supreme Court which challenge was referred to a Constitution Bench of five Judges; in Jindal Stainless Ltd. and another Vs. State of Haryana and others, (2006) 7 SCC 241, a Bench of five Hon’ble Judges of the Supreme Court further referred the matter to nine Judges; on 08.09.2016, the Parliament promulgated the One Hundred and First Amendment Act, 2016 (for short, “the 2016 Act”) through which Entry 52 in List II was omitted; Section 19 of the 2016 Act inter alia provided that any provision of law relating to tax on entry of goods or services or on both in force in any State immediately before the commencement of the 2016 Act, which was inconsistent with the provisions of the Constitution, as amended by the 2016 Act, shall continue to be in force until amended or repealed within one year; through Jindal Stainless Ltd. and another Vs. State of Haryana and others (2017) 12 SCC 1, a Bench of nine Hon’ble Judges of the Supreme Court answered the reference and remitted the matters to be decided by Division Benches of the Supreme Court in light of the law laid down by their Lordships; in ‘State of U.P. and Ors. Vs. Indian Oil Corporation Limited and Ors. (2019) 17 SCC 815’, the Division Bench of the Supreme Court remitted the matters to the respective High Courts; on 01.07.2017, the 2017 Act was enacted by the State of Haryana; as per Section 174 of the 2017 Act, the 2008 Act was repealed and under Section 174(2) it was provided that all actions taken under the 2008 Act shall remain saved; through the 2021 Act, the State of Haryana amended Section 174(2) to introduce the impugned three provisos which enabled the State Government to pass an executive order to remove any difficulty in the implementation of the Acts which had been repealed through Section 174 of the 2017 Act; in terms of the 2021 Act the impugned executive order dated 11.12.2024 was issued by the Government of Haryana detailing therein the mode and manner for collection of Entry Tax under the 2008 Act for the period prior to its repealing; as per Article 246 of the Indian Constitution the Legislature of any State has the power to make laws with regard to subjects enumerated in List II of the Seventh Schedule of the Constitution of India; the Parliament and the legislature of any State also have the power to make laws with respect to any of the subjects enumerated in List III in the same Schedule of the Indian Constitution, of course, subject to the law of repugnancy; in the case in hand, through the 2008 Act, the State of Haryana levied Entry Tax on goods entering the State of Haryana; such Act was promulgated by the Legislature of the State in exercise of its power derived under Entry 52 of List II of the Seventh Schedule to the Constitution of India; after the omission of Entry 52 from List II the State lost its competency to impose Entry Tax or to make any law which would facilitate collection of Entry Tax into the State especially under a statute which stood repealed and that though there is no challenge to Section 174(2) of the 2017 Act but since it is a question of law it can always be raised that whether the State, after the omission of Entry 52 in List II of the Seventh Schedule, could amend by introducing provisos and collect entry tax pursuant to the 2008 Act by implementation of removal of difficulty order when the State had lost its competency to pass any law which permitted it to levy Entry Tax on goods entering the State.
In support of the afore submissions, reliance was placed on a judgment of the Supreme Court in State of Telangana Vs. Tirumala Constructions (2023) 15 SCC 578.
Support was further drawn from an interim order dated 24.03.2025, passed by the Supreme Court in Special Leave Petition (Civil) No.7295 of 2025 ‘Samsung India Electronics Pvt. Ltd. Vs. State of West Bengal and others’. While relying on the said interim order, it was brought to our notice that at a later stage Samsung India Electronics Pvt. Limited (supra) had withdrawn its petition but the accompanying bunch of petitions, with their lead case being `BTL EPC Ltd. Vs. State of West Bengal and others’, is still pending before the Supreme Court with interim stay granted by the Supreme Court on 24.03.2025 still continuing.
Per contra, learned State counsel submitted that as soon as the 2008 Act was promulgated, the same was challenged and set aside by a Division Bench of this Court and thereafter the matter remained pending before the Supreme Court; on 08.09.2016 through the 2016 Act the Constitution was amended and thereafter, the matters were remitted to this Court for a fresh decision; in terms of the 2016 Act and within the allocated time, the State promulgated the 2017 Act through which the 2008 Act was repealed with all actions taken under the same saved under Section 174(2) of the 2017 Act; Section 174(2) of the 2017 Act is not under challenge under which all actions under the 2008 Act were saved; the 2021 Act was introduced and the 2024 order was passed which merely lays down the process to implement the saved actions under the 2008 Act which could have not been done earlier due to pendency of proceedings before this Court and then the Supreme Court and that since through the impugned provisions no new Act or provision, with regard to collection of Entry Tax has been made by the State, the argument raised on behalf of the petitioners questioning the State’s competency is misconceived.
Learned counsel for the parties have been heard.
Deriving its legislative competence from Entry 52 of List II in the Seventh Schedule to the Indian Constitution, the State of Haryana had promulgated the 2008 Act levying tax on the entry of goods in the State.
Through the 101st amendment to the Indian Constitution Entry 52 of List II in the Seventh Schedule was omitted and under Section 19 of the said amendment any provision of law relating to tax on entry of goods or services or both in force in any state immediately before the commencement of the 2016 Act, which was inconsistent with the provisions of the Constitution, as amended by the 2016 Act, shall continue to be in force until amended or repealed within one year. In compliance with such provisions the State of Haryana enacted the Haryana Goods and Services Tax Act, 2017 under Section 174(1) of which Act the 2008 Act was repealed but under Section 174(2) the State saved the actions already taken under the said repealed Act.
Through Haryana Goods and Services Tax (Amendment) Act, 2021, the State of Haryana introduced the three impugned provisos to Section 174 of the Haryana Goods and Services Tax Act, 2017 enabling the Government of Haryana to remove difficulties in the implementation of the 2008 Act repealed through the Haryana Goods and Services Tax Act, 2017 and deriving its power under the impugned provisos, the Government of Haryana issued the Removal of Difficulty Order dated 11.12.2024 laying down the procedure which facilitates the collection of entry tax under the 2008 Act prior to its repealing.
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.
However, the afore issue needs to be further looked into.
For final hearing, adjourned to 17.07.2026 before which date the State may file its written response(s).
Only in the meanwhile, no coercive steps be taken against the petitioners.
A photocopy of this order be placed on the connected case files
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