Court Questions Legislative Competence of Uttar Pradesh's Amendment; Orders Status Quo on Bank Guarantees
In a significant judgment, the Allahabad High Court at its Lucknow bench has granted interim relief to Instakart Services Pvt. Ltd., challenging the legislative competence of the Uttar Pradesh State Amendment imposing Entry Tax on e-commerce transactions. The court, comprising Justices Sangeeta Chandra and Syed Qamar Hasan Rizvi, expressed prima facie satisfaction that the U.P. Act No. 18 of 2016 was beyond the state's legislative authority and likely unconstitutional.
The court's decision came after Instakart Services Pvt. Ltd. filed multiple writ petitions challenging the amendment, which sought to impose a tax on online purchases, particularly for personal use. The court noted the lack of legislative competence and directed that the status quo be maintained regarding the financial years 2016-17 and 2017-18.
Counsel for the petitioner, led by Senior Advocate Tarun Gulati, argued that the amendment introduced a levy not present in the original act, making it constitutionally unsound. The court also observed the State Government's poor litigation management, citing delays in briefing the Advocate General and failure to appoint a Nodal Officer.
Significantly, the court directed the Special Secretary, Institutional Finance, and the Deputy Commissioner (Assessment) to submit personal affidavits explaining the lapses in the state's litigation conduct. The Deputy Commissioner, who invoked bank guarantees during the pendency of the writ petition, was specifically asked to justify his actions.
The court also took note of a contempt petition filed by the petitioner for alleged non-compliance with earlier court orders. The matter is scheduled for further hearing on January 8, 2026, with the court maintaining the status quo on demands made for the contentious financial years.
Bottom Line:
Interim relief granted in writ petition challenging legislative competence of State Amendment imposing Entry Tax on E-Commerce transactions, with directions for personal affidavits from State officials explaining invocation of bank guarantees and detailing lapses in litigation conduct.
Statutory provision(s): Article 246 of the Constitution of India, U.P. Act No. 18 of 2016, Constitution (One Hundred and First Amendment) Act, 2016.
