NY Court Mulls Order Barring Indian Cigarette Tax

Thursday, Sep 9, 2010 | Updated 7:45 AM EDT

Getty Images

AMSTERDAM, NETHERLANDS - FEBRUARY 07: A woman smokes a cigarette of marijuana in an Amsterdam cafe on February 7, 2007 in Amsterdam, Netherlands. The city council in Amsterdam has recently voted in favour of introducing a citywide ban on smoking marijuana in public areas. A successful trial ban in the De Baarsjes district of Amsterdam has been declared a success after a reduction in anti social behaviour. (Photo by Christopher Furlong/Getty Images)

A New York appeals court is weighing whether to extend an order blocking the state from collecting taxes on cigarettes sold by Native American stores to non-Indian customers.

A state appellate judge in Rochester restored a restraining order last week that barred the state from collecting the $4.35-per-pack tax. The court's five-judge panel is taking up the case Thursday, but it's not clear how soon a decision will be issued.

A federal judge in Buffalo has already temporarily blocked tax collections from two Indian nations — the Senecas and Cayugas — and scheduled a hearing for Tuesday. The appellate court order applies to all nine New York tribes battling to preserve their tax-free cigarette business.