The Supreme Court issued notices to the Central government and states of Himachal Pradesh, Uttrakhand, J&K and Sikkim on a petition filed by Punjab government on tax holiday being given to these states. Punjab governments is contesting that the tax holiday in these states have resulted in mass exodus of industries from Punjab.
The Supreme Court has asked the Centre and the state governments to reply within four weeks. After getting the replies from the Centre and the states, the Supreme Court will decide the next date for hearing the issue.
Punjab government had earlier moved the Supreme Court against extending the tax holiday schemes in the nearby states of Himachal Pradesh and Uttrakhand. Punjab claimed the state had witnessed a mass exodus of industries to the neighboring states to take advantage of the tax benefits.
Only recently, the Union Commerce ministry headed by Anand Sharma had advocated extension of industrial package to states like Himachal Pradesh. The Commerce minister was scheduled to visit the state along with a high level team to further formulate opportunities and scope of industrialization in the state. The visit was canceled abruptly at the last minute probably due to the scheduled hearing of Punjab government petition in the Supreme Court.
The central government in 2002 had announced hill states of Himachal Pradesh, Uttarakhand, Sikkim and J&K as tax holiday states to attract industries to the industrially backward states; which has not been well received by the more industrialized states of the Union.