The Punjab government will soon file a special leave petition (SLP) in the Supreme Court challenging the constitutional validity of tax holiday schemes announced by the central government in some states without compensating the affected states. Even though Punjab chief minister Prakash Singh Badal had given his seal of approval to challenge the tax holiday schemes in June last year, the industry department has been studying the matter further to make it a foolproof case.

Sources in the Industry department in Punjab said that the government has given its go ahead to the state advocate general to take the matter to the Supreme Court and the SLP will be filed soon.

Punjab is one of the few states which had affected badly due to the tax holiday schemes announced by the central government in 2002 to attract the industries to these industrially backward states. Himachal Pradesh, Uttarankhand, Sikkim and J&K are the tax holiday states declared by the Centre attracting a large number of industrial units to the these states to take advantage of the tax benefits which resulted in draining of state exchequers like Punjab.

As the industries migrated to neighbouring Himachal Pradesh and J&K, the financial position of otherwise industrially rich Punjab became worse and in the industry graph its position slipped sharply to 15th from the second position at one point of time. Gujarat was at number one position in the chart.

Though the Punjab government is challenging the tax benefits to all industries, it will definitely have a bearing on the pharmaceutical industry as a large number of pharma units, not only from Punjab but also from different parts of the country, have migrated to these tax holiday states. If the tax holiday schemes are challenged, it will affect hundreds of pharma units set up in these states, especially areas like Baddi in Himachal Pradesh which has become the biggest pharma hub of the country.