Satish Chandra, J.
1. This petition has been filed by six firms of Agra. Each one of them buys and sells paper as well as exercise books made from it. They challenge the validity of the notifications issued by the State Government under Sections 4 and 3-A(2-A) of the U. P. Sales Tax Act on 1st December, 1973, under which exercise books are liable to sales tax of 5 per cent except those made from paper purchased within Uttar Pradesh, The petitioners' grievance is that these notifications violate Article 301 of the Constitution and are not saved by Article 304. It is also pleaded that the impugned notifications violate Article 14 of the Constitution.
2. Each of the petitioners buys and sells paper manufactured inside as well as outside Uttar Pradesh. The petitioners import paper from outside Uttar Pradesh in the course of their business. They manufacture and sell exercise books made out of paper purchased inside Uttar Pradesh as well as imported from outside the State. The petitioners also import exercise books manufactured outside the State of Uttar Pradesh and sell them inside this State.
3. By virtue of the notification dated 10th May, 1956, issued under Section 4 of the U. P. Sales Tax Act the sale of exercise books was totally exempt from sales tax in this State.
4. On 1st December, 1973, the State Government issued two notifications, Nos. ST-II-6623/X-1012-1972 and ST-II-6624/X-1012-1972. Notification No. 6623 was issued under Section 4 of the U. P. Sales Tax Act. It stated that no tax under the U. P. Sales Tax Act shall be payable on the turnover in respect of exercise books if made from paper purchased within Uttar Pradesh, provided proof thereof is furnished by the dealer to the satisfaction of the assessing authority. The second Notification No. 6624 was issued on the same date under the first proviso to Sub-section (2-A) of Section 3-A of the U. P. Sales Tax Act, 1948. It provided that the turnover in respect of goods mentioned in column II of the list shall be liable to tax at the point of sale by the manufacturer or importer thereof at the reduced rate specified in column III of the list. Serial No. 4 of the list referred to exercise books other than those referred to in Notification No. 6623 aforesaid. The mentioned rate was 5 per cent.
5. As a result of these two notifications the position was that exercise books made from paper purchased within Uttar Pradesh were exempt from sales tax. The sale of all other kinds of exercise books was liable to sales tax at 5 per cent.
6. Article 301 of the Constitution provides that subject to the other provisions of that part, trade, commerce and intercourse throughout the territory of India shall be free. Article 304 provides :
304. Restrictions on trade, commerce and intercourse among States.- Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law-(a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced ; and....
7. These provisions have come up for consideration before the Supreme Court in several decisions. After considering the decisions in Atiabari Tea, Co. Ltd. v. State of Assam A.I.R. 1961 S.C. 232 and in Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan A.I.R. 1962 S.C. 1406; the Supreme Court in Firm A.T.B. Mehtab Majid & Co. v. State of Madras  14 S.T.C. 355 (S.C.), laid down the following propositions :
(a) Article 301 of the Constitution declares a right of free movement of trade without any obstructions by way of barriers, inter-State or intra-State, or other impediments operating as such barriers.
(b) The said freedom is not impeded, but is, on the other hand, promoted by regulatory measures or measures imposing compensatory taxes for trading facilities, and such measures like police regulations, provision for services, maintenance of roads, provision for aerodromes, wharfs, etc., do not hamper free flow of trade and are outside the purview of Article 301.
(c) Taxes may and do amount to restrictions; but it is only such taxes as directly and immediately restrict trade that fall within the purview of Article 301.
(d) Sales tax, which has the effect of discriminating between goods of one State and goods of another State may affect the free flow of trade, and it will then offend against Article 301, and will be valid only if it comes within the ambit of Article 304(a).
(e) Article 304(a) enables the imposition of tax on goods from other States if similar goods in the State are subjected to similar tax, so as not to discriminate between goods manufactured or produced in that State and goods which are imported from other States. If the effect of the sales tax on goods imported from outside is that they become subject to a higher tax, then the tax is discriminatory and unconstitutional.
8. These principles were reiterated in the State of Madras v. N.K. Nataraja Mudaliar A.I.R. 1969 S.C. 147.
9. The imposition of tax on sale of goods coming from other States will be valid if similar goods manufactured and produced inside the State are also taxed in the same measure and manner.
10. Exercise books are goods which are commercially different from paper which is a commercially known article by itself. An exercise book made from paper purchased within Uttar Pradesh would be an article of the same kind as an exercise book made from paper purchased outside the State. The fact that paper, which is only an ingredient of the exercise book, has been purchased within or outside the State will not render the product, namely, the exercise book, any different. In both cases the article is the same, namely, exercise book.
11. Imposition of tax on the sale of exercise books which have come from outside the State would be valid if similar exercise books manufactured within the State are subjected to similar tax.
12. The effect of the two impugned notifications is that the sale of exercise books made from paper purchased within Uttar Pradesh is exempt from sales tax, but the sale of exercise books which have been imported from outside the State is subject to sales tax of 5 per cent. In the result imported exercise books are subjected to sales tax, while exercise books manufactured or produced within the State are not subjected to such tax. The imposition of sales tax on the imported exercise books thus directly impedes the free movement of trade in exercise books. This imposition violates Article 301. Since similar goods manufactured or produced in the State are not similarly taxed, the imposition is not saved by Article 304(a).
13. It may be said that a dealer can within the State of U. P. purchase paper imported from outside the State, and manufacture exercise books therefrom, and such exercise books would be exempt from sales tax. That may be so ; but this is beside the point. The petitioners have pleaded-and this plea has not been controverted by the respondent-State-that they import ready-made exercise books from outside the State for sale in the State. The imposition of tax on such exercise books being per se violative of Article 301, the illegality will not be saved merely because the locally manufactured exercise books from paper which has at some stage been imported from outside the State may be exempt.
14. It may be said that a dealer can purchase paper inside the State, send it outside for manufacture of exercise books therefrom, and after importing such exercise books may sell them inside the State. Such sale would be exempt from tax. Theoretically this may be possible, but no practical businessman is ever likely to indulge in this kind of venture, because the cost of transport of paper and exercise books so many times would by itself increase the price to an extent that the cost of the exercise books would become very high and uncompetitive. The question whether free movement of inter-State trade has been hampered by the imposition of sales tax is to be adjudged on commercially practical considerations, far-fetched or isolated transactions being neither material nor relevant.
15. The position with regard to exercise books made inside the State of Uttar Pradesh from paper imported from outside was that the import of such paper bore Central sales tax at the rate of 3 per cent. The purchase price of such exercise books would consist of the cost of paper and its importing, plus 3 per cent sales tax thereon, plus the cost of making the exercise book and profit'. On the sum total of all these factors, the sale of such manufactured exercise books would bear sales tax at 5 per cent. On the other hand, the sale price of exercise books made from paper purchased inside the State is the cost of paper, plus 5 per cent sales tax on it, the manufacturing cost and the dealer's profit. The importer of paper pays only 3 per cent Central sales tax, while a manufacturer from locally purchased paper pays 5 per cent sales tax on paper. The advantage in favour of the importer is offset to some extent by the additional expense of importing paper. It can hence be said that the manufacturer of exercise books from imported paper is not adversely affected by the levy of 5 per cent sales tax on the sale of exercise books manufactured by him from paper imported from outside the State.
16. Such a manufacturer of exercise books is also not in an adverse position in comparison to a manufacturer of paper inside Uttar Pradesh manufacturing exercise books from his own paper. Such person would not have to pay sales tax on paper. But he would not be entitled to the exemption granted by Notification No. 6623 on the sale of exercise books made by him from paper manufactured by himself, because such exemption is available only to such exercise books as are made from paper purchased within Uttar Pradesh. Since a manufacturer does not purchase paper, he will not be exempt and will be liable to pay sales tax at 5 per cent under Notification No. 6624. In such cases also there is no disparity between an importer of paper and a manufacturer of paper inside Uttar Pradesh.
17. A dealer who purchases, inside the State, paper imported from outside Uttar Pradesh, and then makes exercise books from it for sale is also entitled to exemption under Notification No. 6623, because he makes exercise books from paper purchased within Uttar Pradesh. The exemption is not confined to exercise books made from paper not only purchased but also manufactured within Uttar Pradesh ; the test of exemption is purchase of paper within Uttar Pradesh.
18. The sum and substance is that the importer of exercise books is discriminated against by the levy of sales tax on sale of such exercise books. Notification No. 6624 levies sales tax on sale of exercise books by the manufacturer as well as by the importer. The imposition on the manufacturer on the one hand and the importer on the other is clearly severable. Notification No. 6624, in so far as it imposes sales tax on the importer of exercise books, is violative of Article 301 of the Constitution and is unenforceable.
19. Since this portion of the notification violates Article 301, it is unnecessary to consider its vires in relation to Article 14 of the Constitution.
20. The learned standing counsel drew our attention to the following observation in the case of Firm A. T. B. Mehtab Majid & Co.  14 S.T.C. 355 (S.C.):
If the quantum of tax had been the same, there might have been no cause for grievance by the dealer of the tanned hides and skins which had been tanned outside the State.
21. Here there is no tax on local article. The observation has no application.
22. The learned standing counsel relied upon Rattan Lal & Co. v. Assessing Authority  25 S.T.C. 136 (S.C.). In that case it was held that where the taxing State is not imposing rates of tax on imported goods different from rates of tax on goods manufactured or produced inside the State, Article 304 has no application. It was also observed that merely because the imported goods might be a little more expensive by reason of freight, etc., the burden of tax will be heavier (sic) will not offend against the equality clause of Article 304 of the Constitution. These observations are also not applicable to the present case.
23. In the result the petition succeeds and is allowed. The term 'importer' occurring in Notification No. ST-II-6624/X-1012-1972 dated 1st December, 1973, is quashed. The respondents are directed not to demand deposit of sales tax from the petitioners in pursuance of the quashed portion of the notification.
24. In view of the divided success the parties will bear their own costs.