31 Years and Counting: The Endless Wait for Justice in India’s Longest-Pending Tax Case before Supreme Court

In the vast chronicles of India’s judicial history, few cases illustrate the slow churn of justice as vividly as Sambalpur Merchants Association v. State of Orissa (1994). Over three decades have passed since the dispute first reached the Supreme Court, yet finality remains elusive. What began as a legal challenge to the Odisha government’s decision to impose a surcharge on sales tax has gradually evolved into one of the longest-standing cases before India’s highest court. As of April 22, 2025, the matter has remained pending for over 31 years, a staggering delay that highlights deeper structural issues in the system.

At the heart of the case lies a fundamental constitutional question about the division of fiscal powers between the Centre and the States. The Sambalpur Merchants Association challenged the constitutional validity of the Odisha Sales Tax (Amendment) Act of 1994, which had introduced a surcharge on dealers. Their contention was that the surcharge did not fit within the powers allocated to states under the State List of the Constitution's Seventh Schedule. Instead, they argued it was an impermissible imposition beyond the state's legislative competence.

Want a deeper insight into the Income Tax Bill, 2025? CLICK HERE

The dispute took on greater complexity when it revealed contradictions between two landmark Supreme Court judgments. In Hoechst Pharmaceuticals Ltd v. State of Bihar (1983), the Court had upheld the validity of a similar surcharge. However, in India Cement Ltd v. State of Tamil Nadu (1989), it struck down a comparable levy, citing constitutional overreach. This direct conflict in precedent demanded clarity from a larger bench, and in 1999, the case was formally referred to a seven-judge bench for authoritative resolution.

However, referral to a larger bench proved not to be the beginning of a final resolution but the start of a long period of judicial inertia. The case remained buried under an avalanche of pending matters for years. Only in recent times, particularly on October 7, 2023, was the case listed again for directions after a gap of nearly seven years. Yet even that appearance proved to be another false dawn, as it was adjourned once more without any significant movement.

The last substantive development occurred on January 9, 2024, when the Court appointed Senior Advocate Anindita Pujari as nodal counsel, tasked with consolidating pleadings and written submissions to enable efficient hearing. A timeline was set, and April 16, 2024, was earmarked for the case to be heard. But as April 2025 has come and gone, no further progress has been made, and the matter continues to languish.

The passage of time has not dulled the significance of the legal issues at stake. The core of the case touches upon the delicate balance of Indian federalism, particularly concerning the financial autonomy of states. If the Supreme Court upholds the Odisha surcharge as a legitimate sales tax, it will strengthen the hands of states by granting them greater fiscal flexibility. Conversely, if it is declared unconstitutional, it could severely constrain states' revenue-raising powers, forcing them to rely even more heavily on central allocations. Beyond Odisha, other states with similar surcharge models have been watching closely, awaiting clarity that remains out of reach.

Know Tax Planning Real Estate Transactions - CLICK HERE

The human cost of the delay is equally staggering. Thousands of businesses and taxpayers in Odisha remain in a state of uncertainty regarding their liabilities. The lack of clarity has spawned a proliferation of parallel litigation in lower courts, each dependent on the outcome of the Supreme Court decision. The longer the apex court delays, the more it sows confusion across the legal and commercial landscapes.

The reasons for the delay are manifold, yet none are particularly excusable. Institutional backlog is one major factor. The Supreme Court currently struggles under the weight of more than 80,000 pending cases, making the scheduling of large bench matters extraordinarily difficult. Seven-judge benches are rare, and finding a window when seven justices can sit together for a complex matter becomes a daunting administrative task.

Complicating matters further are the procedural intricacies of the case itself. Sambalpur Merchants Association is not a standalone appeal; it is entwined with related cases such as Arjun Flour Mills v. State of Orissa, and a resolution demands painstaking harmonization of all facts, submissions, and legal arguments. Such consolidation requires extraordinary preparation and coordination among multiple stakeholders, something that has repeatedly faltered.

Yet institutional overload and procedural complexity only tell part of the story. Perhaps more damaging has been the simple lack of urgency. Despite the Court’s best intentions — such as appointing nodal counsel and setting deadlines — these measures have too often been observed in the breach. Without a culture of strict adherence to internal timelines, even well-meaning reforms fail to produce results.

The implications of this failure stretch far beyond the parties directly involved. Justice delayed, in cases involving constitutional interpretation and taxation policy, risks being justice denied not merely for individual litigants but for entire sectors of the economy. Confidence in the judiciary’s ability to deliver timely, effective remedies is a cornerstone of any functional democracy. Prolonged inaction in such pivotal matters chips away at that confidence, replacing it with disillusionment and legal uncertainty.

The Sambalpur Merchants saga offers a mirror to broader systemic deficiencies and invites reflection on necessary reforms. Time-bound adjudication, particularly in cases involving conflicting constitutional precedents, should be made a reality rather than a distant aspiration. The establishment of specialized benches for tax and economic cases could free the general docket from complex, time-consuming disputes. Further, embracing technological innovations in case management — digitized filings, automatic tracking of compliance with court directions, virtual case reviews — could prevent files from disappearing into administrative black holes.

None of these measures can undo the lost decades for the litigants in this case. But they could prevent future generations from suffering the same fate. The judiciary’s credibility hinges not just on the quality of its judgments but also on its ability to render them within a reasonable time. Thirty-one years is not reasonable by any measure.

Affective Ways Of Tax Planning for HUF, Partnership Firm and Will - CLCIK HERE

As the Sambalpur Merchants Association case creeps toward its uncertain resolution, it is worth remembering that behind the constitutional abstractions and procedural footnotes are real people and businesses who deserve an answer. The Supreme Court owes it not just to them, but to the ideals of justice enshrined in the Constitution, to ensure that this case does not quietly slip into a fourth decade without finality.

Until then, for those caught in its web, the only recourse remains patience, persistence, and a faint hope that the wheels of justice, however slow, have not ground to a complete halt.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates