New Delhi: The Supreme Court on Friday upheld the constitutional validity of levy of entry tax imposed by state governments on the movement of goods from one state to the other.

In a 7:2 majority verdict, it was held that imposing entry tax was not violative of principles of free trade and that states were well “within their rights" to impose it. Justices D.Y Chandrachud and Ashok Bhushan have dissented to the levy of entry tax.

While ruling on the main issue of validity, it was held that smaller state-centric issues will be decided under respective state laws of each state.

Entry tax is imposed as per the laws of each state and is levied by the state that receives goods.

The nine-judge constitution bench comprising Chief Justice T.S. Thakur, justices A.K. Sikri, S.A. Bobde, Shiva Kirti Singh, N.V. Ramana, R. Banumathi, A.M. Khanwilkar, D.Y. Chandrachud and Ashok Bhushan heard the case for over two months before reserving the verdict on 21 September.

The earliest plea against entry tax was moved by Jindal Stainless Steel Ltd in 2002, challenging the entry tax law imposed by Haryana. Scores of petitions have followed thereafter.

In 2003, the plea was referred to a larger constitution bench and in 2008, the apex court formulated questions to be considered by the Constitution bench.

Various corporate houses and business entities, including Vedanta Aluminium Ltd, Essar Steel Ltd, Tata Steel Ltd and Adani Enterprises Ltd, had contended that the imposition of entry tax was violative of the right to freedom of trade and commerce in India, guaranteed under Article 301 of the Constitution.