The Supreme Court on Wednesday issued notice to Reliance Industries, Bharti Airtel, Hindalco, Tata Refractories and others on a plea by Orissa government, challenging a high court ruling which held levy of entry tax under the Orissa Entry Tax Act 1999 was unconstitutional.

A bench headed by Justice S H Kapadia sought reply from the companies as to why tax should not be imposed on goods imported and not manufactured or processed in Orissa.

Earlier, a batch of cross appeals were also filed by Tata Sponge Iron Ltd, Vedanta Aluminium, Bhushan Steel & Strips and others challenging imposition of entry tax on the goods entering the state.

The companies held that the Orissa High Court had erred in not declaring the Act as ultra vires after holding that the state had no jurisdiction to impose tax on imported goods.

According to the state government, while the High Court had sustained the validity of the Act it had also concluded that the state had no jurisdiction to impose tax on such goods.

Besides, the High Court had also directed the state government to make scrutiny of such goods without realising any entry tax on them, it said.

"The Act fulfils the criteria of a compensatory tax... The tax collected is not patently much more than the amount required for providing the facilities," the Orissa government stated in its appeal.

The High Court had given the verdict after Reliance and others in May 2006 challenged such levy on the ground that such legislation restricted free flow of trade and the state government was not providing any facility as was required.