The Supreme Court on Friday ruled that state governments have the prerogative to levy entry taxes on goods imported from other states, PTI reported. A nine-judge bench led by Chief Justice TS Thakur said that states could impose taxes on goods imported from other states even if similar products are manufactured within its territory.

The apex court listed several preconditions including a test of “economical development and reasonableness” to ascertain the legality of law introduced by a state, The Indian Express reported. The bench observed that state-specific issues could be tested under local laws of each state. The panel said that a state has the power to frame its financial policy under entry 52 of list 2, as long as it does not infringe on the provisions of federal law or other constitutional provisions.

Several businesses including Vedanta Aluminium Ltd, Essar Steel Ltd, Tata Steel Ltd and Adani Enterprises Ltd, had challenged the levying on entry taxes as an infringement of the Right to Freedom of Trade and Commerce in the country, Mint reported.