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Delhi Cloth and General Mills Ltd. Vs. the State of Rajtasthan and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution;Other Taxes
CourtRajasthan High Court
Decided On
Case NumberS.B. Civil Writ Petition No. 590 of 1983
Judge
Reported in1983WLN760
AppellantDelhi Cloth and General Mills Ltd.
RespondentThe State of Rajtasthan and ors.
DispositionPetition dismissed
Cases ReferredA.B. Abdul Kadir v. State of Kerala
Excerpt:
constitution of india - articles 19(1), 301 & 304 and rajasthan municipalities act, 1959--imposition of octroi--validity of--similar goods neither produced in rajasthan nor within municipal limits of kota--no details given about its being unreasonable restriction--held, it is tax simplicter on goods imported within municipal limits and it is not unreasonable restriction on trade or commerce.;the goods of the similar nature are neither manufactured nor produced in the state of rajasthan and within the municipal limits of municipality kota. thus, it is a tax simplicter and it cannot be said to be restriction on the freedom or trade. no details have been given in the writ petition as to how and to what extent it is not a reasonable restriction on trade, or commerce. the legislature has a.....d.l. mehta, j.1. by this writ petition filed under article 226 of the constitution of india, the petitioner has prayed that rajasthan municipalities act, 1959 (hereinafter referred to as 'the act') and the notification no. tax. f.114(2) dlb-1961 dated 13-5-68 published in rajasthan rajpatra dated 13-5-68 imposing the duty of octroi do not apply to the goods imported from outside the state of rajasthan which are not manufactured or produced in the state of rajasthan and no tax of octroi can be imposed on such imported goods. thus, he challenged the validity of the notification referred to above and prays for a declaration that the notification may be declared ultra vires as far as it applies to the goods imported from outside the state of rajasthan which are not manufactured or produced in.....
Judgment:

D.L. Mehta, J.

1. By this writ petition filed under Article 226 of the Constitution of India, the petitioner has prayed that Rajasthan Municipalities Act, 1959 (hereinafter referred to as 'the Act') and the notification No. Tax. F.114(2) DLB-1961 dated 13-5-68 published in Rajasthan Rajpatra dated 13-5-68 imposing the duty of octroi do not apply to the goods imported from outside the State of Rajasthan which are not manufactured or produced in the State of Rajasthan and no tax of octroi can be imposed on such imported goods. Thus, he challenged the validity of the notification referred to above and prays for a declaration that the notification may be declared ultra vires as far as it applies to the goods imported from outside the State of Rajasthan which are not manufactured or produced in the State of Rajasthan and that no tax of octroi can be imposed on such imported goods. He has also prayed that directions may be issued restraining the respondents from imposing, realising or demanding payment of duty of octroi on goods imported within the State of Rajasthan which are not manufactured or produced in Rajasthan.

2. Petitioner is an industrial unit located at Kota where 'rayon, tyre-chord fabrics, rayon tyre yarn rayon tyre chord and their ancillary products like sulphuric acid, carbon sulphide, sodium sulphite and sodium sulphate are produced. For the purpose of manufacturing 'tyre-yard, tyre-chord fabric and/or tyre-chord, the basic raw materials and chemicals used are 'tyre chord grade wood pulp, sulphur, stead coas' and chemicals as per annexure A, B and C.

3. The petitioner has further submitted that tyre-chord grade wood pulp or any other like goods which could be used for the manufacture of tyre-chord fabric or tyre-yard as a substitute for tyre-chord grade wood pulp are not produced and/or manufactured in India and the petitioner has to entirely depend upon the import of the sail items from outside India. The petitioner further contends that the steaming coal sulphur and various chemicals as per annexures A, B and C are not produced anywhere in the State of Rajasthan. The petitioner has to depend entirely on these items and raw materials and chemicals to be brought to Kota in Rajasthan from the States and outside India. The petitioner submits that levy and collection of the duty and octroi on the movement of goods by the respondents on goods like tyre chord grade wood pulp, steam coal and various chemicals as per Anx. A, B and C which are not manufactured and/or produced anywhere in the State of Rajasthan and cannot be subject to any tax on the movement of the goods by the State of Rajasthan under the Constitution, it was submitted that the tyre-chord grade wood pulp is not manufactured in India and is imported from U.S.A., steam coal is not produced in Rajasthan and it is imported from Madhya Pradesh and sulphur also not produced in Rajasthan and is imported from other countries and chemicals are imported from France and other States of India and, therefore, the power to legislate for levy of tax is not available. It wan. also contended that the Act and the notification in question being fiscal in nature, cannot be said to constitute a reasonable restriction on the freedom of trade concerned and intercourse within the territory of India. It was also contended that Article 304(b) of the Constitution of India is not applicable and will not save the notification.

4. Mr. M.D. Purohit, learned Counsel for the petitioner has argued the writ petition with all the force at his command and has vehemently submitted that Municipality cannot impose the octroi duty and the notification issued by the State Govt. imposing the octroi is void. He has invited my attention to Article 301 of the Constitution which reads as under:

304. Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free.

Learned Counsel for the petitioner contends that notification and the provisions of Section 104 of the Act puts immediate and direct impediment on trade, commerce and intercourse. Article 304 of the Constitution reads as under:

304. Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may be law, (sic) 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

(b) ..

(c) Provided that no Bill or amendment for the purposes of Clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.

The Rajasthan Municipalities Act, 1959 (Act No. 39 of 1959) received the assent of President on 7th day of September, 1959. Section 104 of the Act imposes tax. It reads as under:

104. Obligatory taxes - (1) Every board shall levy, at such rate and from such date as the State Govt. may in each case direct by notification in the official Gazette and in such manner as is laid down in this Act and as may be provided in the Rules made by the State Govt. in this behalf, the following taxes, namely-

(1) ..

(2) an octroi on goods and animals brought within the limits of the Municipality for consumption, use or sale therein; and....

The octroi can only be levied on goods and animals brought within the limits of the Municipality for consumption, use or sale therein. Thus, it is clear that the power to impose octroi are limited only when the goods are brought within the limits of the Municipality for consumption, use or sale therein. Rule 9 of the Rajasthan Municipalities (Octroi) Rules, 1962 (hereinafter referred to as the 'Rules') is as under:

9. Declaration of goods brought into the Municipal limits. - (1) Every person bringing within the Municipal limits goods liable to payment of octroi shall produce such goods at the octroi outpost and shall declare whether goods are intended:

(i) for consumption, use or sale within the Municipality; or

(ii) for immediate transportation outside the Municipality, or

(iii) for temporary detention witrin the Municipal limits and eventual transportation outside the Municipal limit.

(2) Declaration under Clause (i) of Sub-rule (1) 'may be oral declaration under Clause (ii) and (iii) shall be in writing in Form No. 1 and shall be tendered to the incharge of the octroi outpost at the time of bringing the goods within the Municipality. If no such declaration is made the goods shall be treated as having been brought within the Municipal limits for consumption, use or sale therein.

It makes very clear that if the goods are imported or brought within the Municipal limits for immediate transportation outside the Municipality or temporary retention within the Municipal limits and eventual transportation outside the Municipal limits, then the goods are not liable to payment of octroi. However, a declaration has to be given at the time of the import within the Municipal limits as provided under Clause (2) of Rule 9.

5. Learned Counsel for the petitioner has invited my attention to State of Bombay v. R.M.D. Chamarbaugwalia : AIR1956Bom1 He has submitted that the case has been overruled on other grounds by the Supreme Court but so far as the provisions of Article 301 and 304 of the Constitution are concerned, the case is a good law even to-day. Paras 34, 35, 37 and 38 of the report read as under:

(34) It is suggested by Mr. Seervai that Article 301 is merely a declaration by the Constitution marks and that it does not constitute any restriction upon the legislative competence of the legislature. According to him, the restriction is to be found in Article 30 alone and not under any other article. We refuse to look upon Article 301 as merely declaratory. If Article 301 was intended to be merely a directive for the guidance of the Parliament and the State Legislature, then it would have found a place in Part IV which contains various directives principles of State policy which are not justifiable.

Apart from articles which fall in Part IV, every other article in the Constitution must be given its legal and constitution 1 effect. Every other article is justifiable, and if any right flows under any article other than the articles in Part IV the Court must give effect to that right and grant adequate relief to the person who is entitled to that light.

Therefore, whatever the proper interpretation of Article 301 may be, in our opinion it is entirely untenable to suggest that it was inserted by the Constituent Assembly in the Constitution as merely a pious resolution not intended to be given effect to.

Therefore, if it is intended to be given effect to it constitutes a clear restriction upon the legislative competence both of the Parliament and of the State Legislature, because it should be noted that Article 301 is only made subject to the other provisions of this Part, which is Part XIII, and-not subject to the other provisions of the other parts of the Constitution. Therefore, the legislative competence of Parliament and the State Legislature must be read subject to Article 301.

In other words, neither Parliament LOT the State Legislature can legislate so as to interfere with the freedom of trade, commerce and intercourse throughout India. It is a dear error to suggest that Article 301 is a restriction on any one or other entry in the Seventh Schedule. Article 301 is perfectly general any every legislation under the overriding provisions of Article 301 which makes trade, commerce and intercourse throughout the territory of India free.

(35) Then we come to Article 302 which provides:

Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the interest.

Therefore, having placed an absolute limitation or restriction upon the powers both of the State Legislature and of Parliament, Article 302 relaxes that restriction 'cause' Parliament to the extent contained in this article, and power is given to Parliament to impose restrictions on freedom of trade provided the restrictions are in public interest.

Then we come to Article 303 and it may straightway be stated, with all respect to the fathers of the Constitution, that it may have been better drafted, because although the non-obstante clause refers to Article 302 which as pointed out only deals with the power of Parliament, Article 303(1) deals both with Parliament and a State Legislature, and what Article 303 provides is:

Notwithstanding anything Article 302, neither Parliament nor the Legislature of a State shall have power to make any law giving, or authorising the giving of any preference to one State over another, or making, or authorising the making of, any discrimination between one Mate and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule.

Therefore, having relaxed the restriction in respect of Parliament under Article 302 a restriction is put upon that relaxation to the effect that Parliament shall not have the power of discriminating, as it were, between one State and another or giving preference to one State or another. Now, in Article 303(1) a ban having been put upon Parliament, perhaps the Constituent Assembly felt. Lest it should be suggested that there was no such ban on the State Legislature, that the Legislature of a State should also be included in Article 303(1).

Article 302(2) again carves out an exception to the restriction placed under Article 303(1) and that empower Parliament to give preference or to discriminate between State and State if it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. This exception only applies to Parliament and there is no exception to the restriction put upon the State Legislature under Article 303(1).

Then comes Article 304 which is non-obstante clause both to Article 301 and Article 303 and it empowers the Legislature of a State under Clause (a) to impose on goods imported from other States 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 under Clause (b) to impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within the State as may be required in the public interest.

There is a proviso to Clause (b) and that proviso is that no Bill or amendment for the purposes of Clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.

(37) It is next contended by Mr. Seervai that the provisions of Part XIII are identical with the provisions of Section 297 of the Govt. of India Act, and it has been held that those provisions only constitute a restriction with regard to the entry in the Seventh Schedule relating to trade and commerce and does not constitute a restriction in respect of any other entry.

In other words, Mr. Seevai contends that if the Legislature is legislating under entry 60 and imposing a tax on gambling the inter-State trade and commerce provisions of the Constitution do not constitute a restriction on the legislative activity of the State Legislature.

It is only when the subject matter of the legislation is trade and commerce that Part XIII constitutes a restriction just as Section 297 of the Government of India Act. In our opinion Section 297 of the Government of India Act was much narrower in its application than the provisions contained in Part XIII of the Constitution, and the Government of India Act did not enact freedom of trade throughout the territory of India. Turning to that section, it in turn imposes a restriction on a Provincial Legislature or Government and it provides:

(1) No Provincial Legislature or Government shall:

(a) by virtue of the entry in the Provincial Legislative List relating to trade and commerce within the Province, or the entry in that list relating to the production, supply, and distribution of commodities, have power to pass any law or take any executive action prohibiting or restricting the entry into or export from, the Province of goods of any class or description; or

(b) by virtue of anything in this Act have power to impose any tax, cess, toll, or due which as between goods manufactured or produced in the Province and similar goods not so manufactured or produced, discriminates in favour of the former, or which, in the case of goods manufactured or produced outside the Province, discriminates between goods manufactured or produced in one locality and similar goods manufactured or produced in another locality.

It is pointed out that with regard to Section 294(1)(a) the Fedeal Court in Bhola Prasad v. Emperor A.I.R. 1942 FC 17(K), and in 'Miss Kishori Shetty v. The King A.I.R. 1960 FC 69(L), have cnnstrued Section 297(1)(a) to mean that the restriction contained in that sub-section only relates to the entry of trade and commerce or production, supply and distribution of commodities, and this view has been taken by the Federal Court by reason of the fact that Section 24(1)(a) expressly refers to these entries End uses the expression 'by virtue of', and the Legislature was dealing with 'excise', any restriction that it may impose against any State would not come, within the mischief of Section 297(1)(a), because it was not dealing with trade or commerce.

This decision is requisitioned in order to support the argument that there is no general restriction embodied in Part XIII of the Constitution, but the restriction is only with regard to certain topics of legislation. That submission is obviously untenable because there is no provision in the Government of India Act corresponding to Article 301. If our view is right as to the interpretation of Article 301, then anew additional and important right has been conferred by the Constitution, which right did not exist in the Government of India Act, and that right is the right of trade, commerce and intercourse through the territory of India being free.

Therefore, it is erroneous to suggest that in construing Article 301 we should look to the language of Section 297 of the Government of India Act which right did not exist in the Government of India Act and that right is the right of trade, commerce and intercourse through the territory of India being free.

Therefore, it is erroneous to suggest that in construing Article 301 we should look to the language of Section 297 of the Government of India Act which is in entirely different language. It is equally erroneous suggest that we must construe Act. 301 in the light of Section 297 of the Government of India Act, when we must bear in mind, as we said before, that Section 297 was of a limited application whereas Article 301 deals with a very important and wide subject, viz. freedom of trade.

(38) It is next urged by Mr. Seervai that the only article which we must look at for the purpose of determining what are the restrictions upon the legislative competence of the Legislature is Article 303 and that article merely prevents the State Legislature from passing any law of a discriminatory or preferential character. In our opinion, to accept that submission would be totally to ignore Article 301.

It would also be to ignore Article 204 because Article 304 partly removes the restriction imposed upon the competence of the State Legislature by Article 301. It was rather faintly suggested that Article 304 was merely enacted 'ex majore cautela'. Undoubtedly there are articles in the Constitution which the Constituent Assembly may well have thought of enacting for greater caution, but looking to the language of Article 304 it is impossible to accept that contention.

Article 304 in terms deals with Article 301 and constitutes a non-obstante provision to Article 301, It is also important to note that Article 304 is not a restriction upon the legislative competence of the Legislature strictly understood. The language of Article 304, which empowers the Legislature of a State to make laws falling under Clause (a) or (b), clearly shows that power having been taken away by Article 301 a limited power is then conferred under Article 304.

Therefore, we must really construe Article 304 in order to decide whether the present legislation comes within the provisions of Article 304, because in our opinion unless the legislature falls under Article 304, it would be prohibited under Article 301.

Para (30) of the report reads as tinder:

Now, it is said that gambling is a very evil thing, that the petitioners induce poor people to-part with their hard earned money and to run after the will-of-the-wisp of a highly doubtful prize which they may get, and the larger the amount of the prize advertised the greater the temptation and the more waste of bard earned money on the part of the poor people.

These are all very proper submissions and we are entirely with Mr. Seervai in taking the view that the State would be perfectly justified in saving the poor people from themselves, safeguarding their hard earned money, and preventing temptation being effected to them to make easy money without any work.

If the legislature had prohibited this particular business of lotteries or made it illegal, then we could have understood the righteous indignation of Mr. Seervai. But it hardly lies in his mouth to take his moral attitude, when the Legislature by this Act not only legalises the business, not only permits the business to be run, but actually wishes to make money out of that business. It is true that Section 3- of the Acts says:

'Subject to the provisions of this Act, all lotteries and all prize competitions are unlawful.' But if the prize competitions comply with the provisions of the Act, if they carry out the conditions of the licence, and they pay the tax imposed by the provisions of the Act, then the State, far from looking with disfavour upon this type of activity, permits it and, as we said before, makes money out of it, How it could possibly be alleged that an activity is against public policy which the Legislature not only tolerates but expressly permits, it is difficult to understand.

He has further contended that tax is a 'restriction' on free trade and there is no reason why a different meaning should be given to the expression 'restriction' under Article 304. He submits that whereas Article 304(b) is limited to one subject matter only, viz., tax on imported goods under the conditions laid down therein. Their Lordships, while considering the case in hand, have also held that in case before us, the State Legislature has both imposed tax which is a tax which does not fall under Article 304(b) and it has also imposed restrictions attempting to control the business of the petitioner. These restrictions would only be justified under Article 304(b) with regard to taxes if it falls within its purview. The imposition of the tax is by the Act itself and the Amending Act although it did not receive the previous sanction of the President, but received the subsequent assent after it was passed on November 11,1952.

6. Learned Counsel for the petitioner has invited my attention to the judgment of the Supreme Court in State of Bombay v. R.M.D. Chemarbaugwala : [1957]1SCR874 and has pointed out that the judgment of the Bombay High Court (supra) has not been overruled so far as the point of the interpretation of Articles 301 and 304 of the Constitution of India is involved. He submits that the judgment has been overruled on the ground that the purpose of the Act is not to restrict anything which brings the transaction under the description of trade, commerce or intercourse. In other words, the Act is in substance, an Act with respect to betting and gambling and to control and restrict betting and gambling, is not to interfere with trade or commerce or intercourse as such but to keep all trade and commerce free and to save it from anti-social activities. Their Lordships, while considering the provisions of Act. 304, in para 5, have held.-

Assuming that imposition of tax is well within the legislative competence of the Bombay legislature and fiat it is not valid on the ground of extra-territorial operation, we have to examine if there is anything also in the Constitution which renders it invalid.

Articles 19(1)(g) and 301 of the Constitution are two facets of the same thing the freedom of trade. Article 19(1)(g) looks at the matter from the point of view of individual citizen and protects the individual rights to carry on trade or business. Article 301 of the Constitution looks on the matter from the point of view of the country as a whole. Learned Counsel for the petitioner submits that Article 301 has been inserted in the Constitution to put checks on the national disintegration and to achieve the object of the national homogeneity. He submits that Article 301 looks at the matter from the point of view of country's trace and commerce as a whole as distinguished from in individual interest of the citizen and it relates to trade or commerce or intercourse both intra-State and inter-State. He further submits that if the free trade and commerce arid intercourse is not allowed, it will lead to disintegration of the country and to maintain the national unity and oneness it is necessary that there should be free trade, commerce and intercourse throughout the country.

7. In considering the provisions of our Constitution the decision of American Supreme Court on the commerce clause and the decisions of Australian High Court and the Privy Council on Section 92 of the Australian Constitution should, for one reason, be used with caution and circumspection. Out Constitution differ from both American and Australian Constitutions. There is nothing in the American Constitutions corresponding to Article 19(1)(g) or Article 301. He further submit's that the scheme of our Constitution is to prefect the freedom of each individual citizen to on his trade or business. This is done by Article 19(1)(g). The underlying idea in making trade and commerce and intercourse intra-State as well as inter-State undoubtedly is to emphasise the unity of India and to ensure that no barriers might be set up to break the national unity. Their Lordships while dealing with the case of Bombay (supra), in para 45, have held as under:

In the view we have taken, it is not necessary for us to consider IT express any opinion on this occasion as to the vexed question whether restriction, as contemplated in Articles 19(6) and 304(b), may extend to total prohibition and this is so because we cannot persuade ourselves to hold that Article 19(1)(g) or Article 301 comprises all activities undertaken with a view to profit as 'trade' within the meaning of those Articles. Nor it is necessary for us on this occasion to consider whether a company is a citizen within the meaning of Article 19 and indeed the point has not been argued before us.

Learned Counsel for the petitioner submits that their Lordships have kept the matter open so far as the provisions of Article 304 are concerned and on this ground, he submits that the case cited by him (supra) is not overruled case on this point.

8. In Atiabari Tea Co. v. State of Assam and Ors. : [1961]1SCR809 their Lordships of the Supreme Court have considered the provisions of Articles 301 and 304(b). Their Lordships were considering the matter relating to the provision of Asssm Taxation on wood carriage by road or inland water Act (No. 13 of 1954) and the Act No. 24 of Assam. The purpose of the Act was to levy tax on certain woods carried by road or inland waterways in the State of Assam. It was the general Act and it had no relevancy whatsoever with use, sale or consumption of tea It was contended before their Lordships that the traders of tea of West Bengal and Assam carry their tea to market in Calcutta from where the tea is sold for consumption in the country or is exported for sale out of the country It was also contender before their Lordships that the sale of the inside Assam bears a very small proportion to the tea produced and manufactured by the growers block and the tea produced and manufactured is carried out of Assam either for internal consumption in India or for export abroad. It is in this background of the facts and circumstances of that Act that their Lordships have considered the ambit of freedom contemplated by Art.301 of the Constitution. The power to tax is inherent in some cases with the Union of India and in other cases with the State. Article 301 contains the special words. - 'shall be free' and provides the way to the solution of the problems posed by the while part The freedom declared by this Article is not an absolute freedom from a legislation. The freedom declared by this Article is governed by severa entries in the three lists suggest that both Parliament and the State legislator have been given the power to legislate in respect of trade, commerce an intercourse but it is amply clear that legislation should not hive the effect putting impediments in the way of free flow of trade and commerce. Incidents of taxation in respect of trade and commerce and intercourse as show in Entry 8-9 in List 1 and Entries 52, 54, 56 to 60 in List I and Entry 36 List III also governs the imposition of the tax and restricts the operation to reasonable extent. The freedom of free trade, commerce and in excurse a provided under Article 301 of the Constitution of India. The freedom ha further been described by the power vested in Parliament or in the Legislature of a State to impose restriction in public interest. Parliament ha further been authorised to legislate in the way of giving preference or maker discrimination in certain strictly limited circumstances indicated in Clause (2) Article 303 of the Constitution Reasonable restrictions may be imposed by to Legislature of the State in public interest under Article 304 Clause 8 with the assent President of India. Sinha, J. (as he then was) after considering the various provisions, held:.It will be seen from the bare summary of the relevation provisions of the statute that it is a taxing statute without the last suggestion even of any attempt at discrimination again dealers and producers outside the State of Assam or of preference favour of those inside the State. On the face of it, therefore, the Act does not suffer from any of the vices against which Part XIII the Constitution was intended. It has not been suggested that the Act imposes a heavy burden on the dealer or the producer as the can maybe. On the terms of the Statute, it cannot be said that it is intended to put obstacles or impediments in the way of free flow traffic in respect of jute and tea. On the face of it, it would not be the interests of the State of Assam to put any such impedime because Assam is a large producer of those commodities and market for those commodities is mainly in Calcutta. In those, circumstanced it is difficult, if not impossible, to come to the conclusion that the Act comes within the purview of Article 301 of the Constitution. If that is so, no further consideration arising out of the other provisions of Part XIII of the Constitution calls for any decision.

The then Hon'ble Gajendragadkar, J., delivering the judgment on behalf of himself, Wanchoo and Dasgupta, JJ., considered the provisions of the the following observations contained in Paras 43, 50, 52 and 53 are very important for the purpose of considering the case in hand which read under:. Article 301 applies not only to inter-State trade, commerce and intercourse but also to inter-State trade, commerce and in course.

The freedom of trade guaranteed by Article 301 is freedom from I restrictions except those which are provided by the other Article (sic) Part XIII.

On a careful examination of the relevant provisions of Part (sic) as a whole as well as the principle of economic unity which it is intended to safeguard by making the said provisions, the conclusion is inevitable that the content of freedom provided for by Article 301 was larger than the freedom contemplated by Section 297 of the Government of India Act of 1935, and, whatever as it may or may not include, it includes movement of trade which is of the very essence of all trade and is its integral part. If the transport or the movement of goods is taxed solely on the basis that the goods are thus carried or transposed that directly affects the freedom of trade as contemplated by Article 301

When it is said that the freedom of the movement of trade cannot be subject to any restrictions in the form of taxes imposed on the carriage of goods or their movement, all that is meant is that the said restrictions can be imposed by the state Legislatures only after satisfying the requirements of Article 304(b). It is not as if no restrictions at all can be imposed on the free movement of trade

The difference in the provisions contained in Article 302 and Article 304(b) would prima facie suggest that where Parliament exercises its power under Article 302 and passes a law imposing restriction on the freedom of trade in the public interest, whether or not the given law is in the public interest may not be justiciable, & in that sense Parliament is given the sole power to decide what restrictions can be imposed in public interest as authorised by Article 302. On the other hand, Article 304(b) requires not only that he law should be in the public interest and should have received the previous sanction of the President but that the restriction imposed by it should also be reasonable. Prima facie, the requirement of public interest can be said to be not justiciable and may be deemed to be satisfied by the sanction of the President; but whether or not the restrictions imposed are reasonable would be justiciable and in that sense law passed by the State Legislature may, on occasions, have to face judicial scrutiny.

Their Lordships held that when it is said that the freedom and movement of trade cannot be subject to any restrictions in the form of tax imposed on carriage of tax or movement, all that is made is that the said restriction can be imposed by the Legislature only after satisfying the requirements of Article 304(b). It is not as if no restrictions at all can be imposed on the free movement of trade.

9. Article 304(b) requires, not only that the law should be in the public interest and should have received the previous assent of the President but that the restrictions imposed by it should be reasonable. Prmia facie, the requirement of public interest can be said to be not justiciable and can be deemed to be justified by the sanction of the President but whether or not restrictions imposed are reasonable would be justiciable and in that sense the law passed by the Legislature may have to face judicial scrutiny, However, their Lordships further held that this point does not fall to be considered may the present proceedings and we wish to express no definite opinion on it.

10. In State of M.P. and Ors. v. Abdeali A.I.R. 1963 S.C. 127, their Lordships were considering the provisions of the M.P. Sales Tax Act. Their Lordships in para 5 held:.The notification clearly lays down three conditions for the grant of exemption: one of the conditions is that she sale must be of such shoes, chappals, country shoes and footwear as are hand made and not manufactured on power machine....

Their Lordships further held that such a classification in the interest of small manufactures has often been made and upheld by this Court.

11. Learned Counsel for the petitioner has invited my attention to the decision of the Supreme Court in Kalyani Stores v. State of Orissa : [1966]1SCR865 . He submitted that their Lordships held that only such instructions or impediments which directly and immediately impede the free flow of trade, commerce and intercourse, fall Within the prohibition imposed by Article 30. The Supreme Court has also observed that unless High Court first came to the finding whether or not there was any infringement of the guarantee under Article 301 of the Constitution, the further question as to whether the Statute was saved under Article 304(b) did not arise. He has invited my attention to paras 7 and 23 of the said judgment which read as under:.Article 301 has declared freedom of trade, commerce and intercourse throughout the territory of India and restriction on that freedom may only be justified if it falls within Article 304. Reasonableness of the restriction would have to be adjudged in the light of the purpose for which the restriction is imposed, that is, 'as may be required in the public interest'. Without entering upon an exhaustive categorization of what may be deemed 'required in the public interest', it may be said that restrictions which may validly be imposed under Article 304(b) are those which seek to protect public health, safety, morals and property within the territory. Exercise of the power under Article 304(b) can only be effective if the tax or duty imposed on goods imported from other States and the Tax or duty imposed on similar goods manufactured or produced in that State are such that there is no discrimination against imported goods. As no foreign liquor is produced or manufactured in the State of Orissa the power to legislate given by Article 304 is not available and the restriction which is declared on the freedom of trade, commerce of intercourse by Article 304 of the Constitution remains unfettered.

So long as the Act is valid, and that is beyond doubt, the notification can be changed. The duty could always be made less and there is no reason why it could not be made more provided the imposition of duty on locally produced goods was not made lower. If production of foreign liquor is not a condition precedent to the validity of the Act because of historical reasons there is no bar to the validity of the notification which takes its force from the valid Act. The Constitution preserved certain taxes by Article 276. There the rate or incidence of the tax could not be changed for every change made the tax a new tax. This is not the case under Article 372 which upholds the Act. The notification takes its validity from the Act.

In Kalyani Store's case (supra), the question as to whether the statute was saved under Article 304(b) did not arise at all. The case was sent back to the High Court with the direction to take further affidavits in the matter. The Court feft it open to the parties to argue as to whether the levy in question was in substance a duty of excise and as such it was not competent for the State Legislature to enact the provisions in question. Learned counselor the petitioner ha further cited the case of State of Karnataka and Ors. v. Hansa Corporation : [1981]1SCR823 and has invited my attention to para 27 of the judgment which reads as under:

On a conspectus of these decisions, it appears well settled that if a tax is compensatory in character it would be immune from the challenge under Article 301. If on the other hand, the is now shown to be compensatory in character it would be necessary for the party seeking to sustain the validity of the tax law to show that the requirements of Article 304 have been satisfied.

He submits that it is necessary for the respondents to show that the tax is compensatory in character to sustain the validity of the tax imposed to fulfil the requirement of Article 304. He has also invited my attention to para 29 and para 34 of the judgment arid submitted that the restrictions or impediments which directly or immediately impede the free Low of trade, commerce and intercourse, would fall within the mischief of Article 301. He submits that even from this, a levy which appears to be quite reasonable in its impact on the movements of goods is imposed for the purpose of augmenting municipal finances which suffered a dent on account of abolition of octroi, cannot make the invalid provisions of law valid. He further submits that there is a specific unreasonable restriction on the free movement of trade, commerce and intercourse.

12. Learned Counsel for the respondent has submitted before me that the imposition of the octroi squarely fall within entry 52 of VII Schedule of List II. He submits that there is no restriction as suggested by the counsel for the petitioner in entry 52. He submits that taxes on entry of goods into Municipal area for consumption, sale or use therein are wide enough and it takes into its sweep not only the goods which are produced in the State of Rajasthan but also the goods which are not produced at all in the State of Rajasthan or any part thereof and are exclusively imported either from any part of the country or from any foreign country. He submits that Constitution of India should be read as a whole. He submits that under Article 302 of the Constitution, the Parliament may, by law, impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India, as may be required for the public interest. He submits that under Article 303 Clause (1), restrictions on the legislative powers of the Union and State with regard to trade and commerce have been imposed. He submits that under Article 303, there is a provision that notwithstanding anything in Article 302, neither Parliament, nor the Legislature of a State shall have the power to make any law giving or authorising the giving of any preference to one State or other for making or authorising for making of any discrimination between one State and another by virtue of any entry relating to trade and commerce in any of the lists in VII Schedule. He further submits that notwithstanding anything contained in Articles 301 and 303, the legislature has been empowered under Article 304(b) to enact a law which imposes on goods imported from any other State or Union Territory, any tax to which similar goods manufactured or produced in the State are subjected so, however, as not to discriminate between goods so imported and goods so manufactured or produced. He submits that Article 304 is of a sweeping nature and sweeps away the restrictions imposed under Article 303. Only the requirement is that the conditions laid down in Article 304 should be satisfied. He further submits that Clause (a) does not apply in the instant case at all.

13. He submits that here the goods are neither produced nor manufactured and are imported either from any other State or from a foreign country, then only Article 304(b) applies. He has pointed out that the words 'any tax to which similar goods manufactured or produced in the State, so however as no to discriminate between the goods so imported and goods so manufactured and produced has not been used in Article 304(b). As far as the question of import is concerned, Article 304(b) is wide enough and includes the goods which are not manufactured or produced in the State at all. He submits that there cannot be question of discrimination between the goods manufactured or produced within the State and those which are imported from the other parts of the State. Only for the simple reason that the goods are not produced within the State and are either imported from a foreign country or from other State. He further submits that the restrictions imposed under Article 304(b) are different than the restrictions imposed in Clause (a) of Article 304. He has invited my attention to the words 'reasonable restriction' and ''public interest' used in Clause (b). Clause (a) and Clause (b) of Article 394 are independent of each other and if the requirements of any of the clauses is satisfied, then any law which may be hit on account of the provisions of Article 301 of the Constitution of India can be served with the aid of Article 304 Clause (a) or Clause (b). He further submits that by the imposition of octroi referred to by the petitioner in his petition, it cannot be said that there is any restriction on trade, commerce or intercourse which could be within the mischief of Article 301 of the Constitution of India. Learned Counsel for the petitioner submits that the Division Bench of this Court in Arjun Singh v. Teck Chand and Ors. has considered the matter in detail.

14. In Rajasthan Town Municipalities Act of 1951, there were similar provisions of the imposition of the octroi like the present one as provided under Section 104 of the Act. The validity of the notification was challenged on number of grounds including the ground that they fall within the mischief of Article 301 and cannot be said to have been saved by Article 304. The Lordships have discussed the matter and on behalf of the Court, Wanchoo, C.J., as he then was, delivered the judgment and it was held in para 12 of the said judgment as under:

The sixth point is that the taxes imposed were heavy and unreasonable, and were an undue restraint oh trade and commerce and were thus opposed to Article 301 of the Constitution. Article 301 merely lays down that the trade, commerce and intercourse throughout the territory of India shall be free subject to the other provisions of Part XIII. The authority to impose octroi is given to the State Legislature under Article 304(b), and the Rajasthan Town Municipalities Act has been passed with the assent of the President of India. There is no provision in Part XIII of the Constitution enabling the Courts to adjudicate on whether the taxes imposed are heavy and, therefore, unreasonable Under these circumstances, it is not open to the Courts to sit in judgment over of the Taxing Authorities and consider whether particular taxes imposed under a law passed under Article 304 are heavy, and, therefore, unreasonable and therefore, undue restraint on trade and commerce. There is no force in this contention either.

Their Lordships have considered that the provisions of Article 304(b) of the Constitution are applicable.

15. Learned Counsel for the respondent has also invited by attention to the case O.C Industries v. Jharsuguda Municipality : AIR1963Ori171 . After considering the judgments given by the Supreme Court in Western India Theaters v. Municipal Corporation of the City of Poona : AIR1959SC586 and Automobile Transport v. State of Rajasthan 0065/1962 : [1963]1SCR491 , their Lordships have considered the provisions of octroi and held that the law relating to the imposition of the octroi is not ultra vires and is not hit by the provisions of Article 301 of the Constitution of India. The relevant paragraph 7 reads as under:.The Municipality is required to provide certain amenities not only for the permanent residents within the Municipality but also even for casual visitors who may on occasions enter the limits of the Municipality. The entry of large quantities of goods within the Municipality almost daily from outside necessarily creates innumerable problems such as provision of water, supply of lighting facilities for conservancy sanitation etc., maintenance of goods and markets etc....

Hence, if, with a view to meet the extra expenditure involved in solving the problems created by the daily influx of people carrying goods within Municipal limits the Municipality imposes an octroi duty with a view to increase its income, it must be held that such an octroi duty is essentially a compensatory tax. As their Lordships pointed out in the aforesaid paragraph of their judgment it is necessary, for a tax to be compensatory, to show that the amount collected is actually used in providing facilities. But bearing in mind the fundamental limitation on the power of a Municipality to expend its income for purposes other than making provisions for the convenience of the people residing either temporarily or permanently within Municipal limits such octroi duty must be held to be essentially compensatory in nature. Hence Article 304 does not apply and the impugned provision does not require either the previous sanction or the subsequent assent of the President.

It the cage of City Municipality represented by the Executive Officer v. Mahadeo : AIR1967AP363 , their Lordships have considered the provisions imposing of octroi tax under Section 96 of the Hyderabad District Municipalities Act. Their Lordships held in paras 8 & 9 of the judgment as under:

Where taxation is resorted to for the purpose of restricting the free-flow of trade and commerce, it would contravene Article 301 and in order to justify such taxation, the requirements of Article 304(b) will have to be satisfied. On the other hand, taxation per se under authorised heads of the State List would not amount to violation of Article 301, if it does not directly affect free flow or movement of goods, but is meant for the bonafide purpose of collecting revenue although such taxation may indirectly or incidentally place burden on trade, commerce or intercourse. It is true that taxation in some cases even when made for the purpose of collection of revenue and not with a view to affect the free-flow of goods in view of its heavy impact, may result in abridging the freedom of trade, commerce and intercourse appreciably, and in such a case, the legislation being a colourably exercise of the powers, the taxation would offend Article 301.

The provisions relating to octroi clearly indicate that they do not profess to regulate or control 'trade or commerce'. The said provisions and the transaction on which they operate are not actually commercial dealings or the trade dealings because they do not prevent or restrict the free-flow of goods for commercial or trade purposes. No one is prevented from carrying on trade or commerce in the commodities taxed. The provisions have corns into force for the purpose of levying a tax on goods, which are brought in local area for use. consumption or sale therein. Instances are not wanting where persons bringing commodities for their own consumption or use are also taxed without involving any trade or commerce in such cases. The said provisions, therefore, provide a machinery for the realisation of some revenue by way of this tax to the local bodies The rates vary, but are not so heavy as to curtail the freedom of trade in those commodities. The rates at which different, commodities are taxed and the scheme of refund make the octroi a tax to cable for the trade and in no Way it can be argued that it puts heavy burden on the freedom of trade. I am, therefore, satisfied that tax is meant for the bonafide purpose of collecting revenue and that it does not put heavy burden on the trade so as to call it an infringement of the freedom of trade and that it does not offend Article 301.

Learned Counsel for the respondent has also referred before me the case of G.K. Krishnan v. State of Tamil Nadu : [1975]2SCR715 . Their Lordships were considering the provisions of Madras Motor Vehicles Taxation Act, and held in para 14 as under:

Article 301 imposes a general limitation on all legislative power in order to secure that trade, commerce and intercourse throughout the territory of India shall be free. Article 302 gave power to Parliament to impose general restrictions upon that freedom, But a restriction is put on this relation by Article 303(1) which prohibits Parliament from giving preference to one State over another or discrimination between one State and another by virtue of the entries relating to trade and commerce in Lists I and III of Seventh Schedule and a similar restriction is placed on the States, though the reference to the States is inappropriate. Each of the clauses of Article 304 operates as a proviso to Articles 301 and 303. Article 304(a) places goods imported from sister-states on a part with similar goods manufactured or produced inside the State in regard to State taxation within the allocated field. Article 304(b) is the State analogue to Article 302, for it makes the State's power contained in Article 304(b) expressly free from the prohibition contained in Article 303(1) by reason of the opening words of Article 304. Whereas in Article 302 the restrictions are not subject to the requirement of reasonableness, the restrictions under Article 104(b) are so subject. The word 'free' in Article 301 does not mean freedom from regulation. There is a clear distinction between laws interfering with freedom to carry out the activities constituting trade and laws imposing on those engaged therein rules of proper conduct or other restraints directed to the due and orderly manner of carrying out the activities. This distinction is described as regulation. The word 'regulation' has no fixed connotation. Its meaning differs according to the nature of the thing to which it is applied. The true solution perhaps, in any given case, could be found by distinguishing between factures of the transaction or activity in virtue of which it fell within the category of trade, commerce and intercourse and those features which, though invariably found occur in some form or another in the transaction or action are not essential to the conception. What is relevant is the contrast between the essential attribute of trade and commerce and the incidents of the transaction which do not give it necessarily the character of trade and commerce. Such matters relating to hours, equipment, weight/size of load, lights, which form the incidents of transportation, even if inseparable, do not give the transaction its essential character of trade or commerce. Laws for Government of such incidents 'regulate'.

In the case of State of Kerala v. A.S. Abdul Kodir : [1970]1SCR700 , their Lordships were considering whether the provisions of Kerala Luxury Tax on Tobacco Validation Act of 1964 is slaved by Article 304 of the Constitution of India or not and held that the Act is valid and does not fall within the mischief of Article 301 of the Constitution of India. Their Lordships have further kept open the question of the applicability of Article 304(b). The provisions of Kerala Luxury Tax on Tobacco Validation Act No. 9 of 1964 were considered by their Lordships in a case of A.B. Abdul Kadir v. State of Kerala : [1976]2SCR690 . The relevant observations in paras 11, 15, 23 and 24 read as under:. We may now turn to the provisions of the impugned Act 9 of 1964. The charging Section 3 of this Act creates a liability for payment of luxury tax on the stocking and vending to tobacco. There is no provision of this Act which concerned with production or manufacture of tobacco or which links the tax under its provisions with the manufacture or production of tobacco. The same is the position of the rules issued on August 3, 1950 and January 25, 1951 and Mr. Krishnamurthy Iyer on behalf of the appellants has frankly conceded that those rules are in no way concerned with the production or manufacture of tobacco. It would, therefore, follow that the levy of tax contemplated on the provisions of Section 3 of the Act has nothing to do with the manufacture or production of tobacco and, as such cannot be deemed to be in the nature of excise duty. Argument that the provisions of the Act fall under Entry 84 of List I of the Seventh Schedule to the Constitution must, therefore, be held to be bereft of force.

The harped Judges of the High Court were of the opinion that the levy of tax in question was violative of Article 301 of the Constitution, according to which subject to the provisions of Part XIII, trade, commerce and intercourse throughout the territory of India shall be free. The learned Judges in this connection took the view that the levy of tax as a condition preceding to the entry of goods into a place directly impeded the flow of trade to that place. The conclusion arrived at by the High Court in this respect, in our opinion, was correct and sound The appellants were A class licensees. According to Rule 16 of the rules issued on January 25, 1951. A class licensees shall be entitled to purchase tobacco from any dealer within or without the State any quantitative restriction. This class of licensees could sell only to other A class licensees or 5 class licensees. It was also mentioned in that rule that the licence fee would be realised only for the quantities brought in from cut side. Perusal of the rules shows that it was imperative for the A class licensees to pay the licence fee in advance before they could bring tobacco within the taxable territory We agree with the learned Judges of the High Court that such levy directly impedes that free flow of trade and as such is violative of Article 301 of the Constitution..Where a topic is not included within the relevant List dealing with the legislative competence of the State Legislature, Parliament, by making a law cannot attempt to confer such legislative competence on the State Legislatures. The above principle would, however, have no application where, as in the present case, what is sought to be done is to validate the recovery of licence fee for stocking and vending of tobacco. The impugned provisions under which that levy is sought to be made with a retrospective effect have nothing to do as already pointed out above, with production and manufacture of tobacco. The levy is sought to be made as luxury tax which is within the competence of the State Legislature and not as excise duty which is beyond the legislative competence of the State Legislature. If the levy in question can be justified under a provision which is within the Legislative competence of the State Legislature, the levy shall be held to be validly imposed and cannot be considered to be impermissible.

Where a challenge to the validity of a legal enactment is made on the ground that it is a colourable piece of legislation, what has to be proved to the satisfaction of the court is that though the Act ostensibly is within the legislative competence rf the legislature in question, in substance and reality it covers field which is outside its legislative competence. In the present case we find that in enacting the impugned provisions, the State Legislature as already pointed out above, has exercised a power of levying luxury tax in the shape of licence fee on the vend and stocking of tobacco. The enactment of a law for levying luxury tax is unquestionably within the legislative competence of the State Legislature in view of Entry 62 in List II of the Seventh Schedule to the Constitution. As such, it cannot to be said that the impugned Act is a colourable piece of legislation....

16. I Lave considered the rival contentions raised by the learned Counsel for the parties. I am of the view that the provisions Article 301 of the Constitution, of India are wide enough and direct that trade commerce and intercourse throughout the territory of India shall be free. Thereby, it means that not only the trade, commerce and intercourse between one State and other State shall be free but also it shall be inter-State free. Article 304 is just like a proviso to Article 301 and it empowers the Parliament to impose such restrictions on freedom of trade, commerce or intercourse between one State and another as may be required in the public interest. Article 304(b) is not wide enough like Article 302 of the Constitution Under Article 302, the only requirement is the public interest, whereas under Article 304 Clause (a) enables the State to impose any tax on goods imported from other States to which similar goods manufactured and produced in that State are subject, so however, as not to discriminate between the goods so imported and the goods so manufactured or produced. Article 304(a) is an enabling article with a qualifying restriction of discrimination between goods so imported and goods so manufactured or produced in the State. This article applies when the goods of the similar nature are produced in the State. If the goods of the similar nature are produced in the State, the enabling Article 304(a) does apply. For illustration, the State legislature imposes the Sales Tax @ 12% on the goods imported from other State or the Union territory and @ 6% on the goods which are manufactured or produced in the State, then there will be a discrimination between the goods so imported and the goods so manufactured or produced. In such cases, if any legislation is enacted, it cannot, be saved by the provisions of Article 304(a). The only restriction in Article 304(a) is that it should not discriminate between goods so imported arid goods so manufactured or produced. Nowhere in Article 304(a) it has been provided that the legislature is not competent to impose any tax where similar goods are not manufactured or produced in the State. The question of discrimination between the goods so imported and the goods so manufactured or produced in the State will not arise at all.

17. Article 304(b) is similar in some respect to Article 302 of the Constitution of India. Under Article 302, the only requirement is that the Parliament may by law impose such restrictions on freedom of trade, commerce or intercourse between one State and another as may be required in the public interest. Thus, the requirement of public interest is only to be considered while interpreting the law imposing the tax which has to be saved from the mischief of Article 301 of the Constitution whereas Article 304(b) is not so wide as Article 302 of the Constitution. Before imposing any tax, it is necessary that such imposition puts reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest. Thus, there are two qualifying restrictions, namely. The restrictions must be reasonable restrictions audit must be in the public interest. In my opinion only Article 304(b) applies when the goods, in which the tax is imposed are not produced or manufactured in that State. The question of giving a protection or putting discrimination to that goods to imported does not arise at all, as the similar nature of goods are neither produced nor manufactured in the State which is imposing the tax. requirement of Clause (a) of Article 304 is not to be imported for finding out the justification or otherwise of the tax imposed under Clause (b). The two as noted above, ate different in as much as Clause (a) provides for imposition of tax on goods falling within the mischief of discrimination while Clause (b) provides for imposition of reasonable restrictions on trade, commerce and intercourse within the State for public purpose. So far as Kalyani Stores's case (supra) is concerned, in that case, the imposition of duty on excise on liquor imported into the State under the Bihar and Orissa Excise Act, 1951, was under challenge. The majority view was taken in the case that the expression 'countervailing duties in List II of Seventh Schedule of the Constitution meant a duty levied with a view to equalize the burden on alcoholic liquors imported from outside the State and the burden laid down by the State on manufacture or production in that State.' It means that countervailing duties should be levied if similar goods are not actually produced or manufactured in that State on which excise duties are being levied. In my opinion, this decision is distinguishable. The State Government has been empowered to impose duties as excise on the goods manufactured or produced in that State and countervailing duties at the same or lower rate on similar goods manufactured or produced else where in India. Entry No. 52 of Seventh Schedule List II empowers the State Government to impose taxes on entry of goods into any local area for consumption, use or sale therein. Thus, from the persual of this entry, it is clear that the State Govt. has been empowered to impose the tax only if the goods are imported for the purpose consumption, use or sale therein. In this entry it has not been mentioned any where that the tax on the entry of the goods into the local area meant for of consumption, use or sale there I can only be levied if similar goods and manufactured or produced in the State. The case of State of Kerala's (supra) is also not of much help to the petitioner. State of Karnataka in exercise of its powers conferred in Section 36 imposed tax on entry of goods into the local crease for consumption, use or sale therein. It was held that that levy was in public interest and was meant to compensate the loss suffered by abolition of octroi and the requirements of the proviso also proved satisfied. The impugned Act was even saved by Article 304 and was not struck down on the ground that it was violative of Article 301. Before applying the above principles in the instant case. I would like to reproduce the relevant part of the notification imposing the tax on the disputed items:

36&ydM;+h dk dks;yk] dks;yk dh jk[k] tyk gqvk dks;yk] iRFkj dk dks;yk LkskV] gkMZ ,oa LVhe dks budk pwjk vkSj ydM+h dk cqjknk 0-50 fDaoVy51& xkSn lHkh izdkj ds yk[k ,oa mudh cuh gqbZ oLrq,s] jky vkSj cSjtk] ,ye;k ,yqfefu;e gkbMkslkbM] lYQj dksjskysisVe] iSVksfy;e dkse] dSyf'k;e dks,jMkftd] dkcksZusV] esEuh'kh;k] dkcZu MkbZ lYQsM lksfM;e gkbMksDyksjkbM bR;kfn 1-00 lSdM+k52& lHkh fdLe dk jax o jax dk leku rS;kj isaV~l] ofuZ'k ,usfeYl]dSfedYl ,oa vU; lEcfU/kr leku fLizV 2-00 lSdM+k101& dPpk leku tks QSfDV;ks es dke vkos ftldk bl 'kgj ukek es mYys[kugh gSA 1-00 lSdM+k

The tax imposed is so negligible that it cannot be said that it puts restriction on trade commerce as provided under Article 301. A tax can he imposed by the State under the legislative power in the ordinary process of law. Tax should not discriminate against the goods as imported so as to give protection to the local manufacturers or producers. A tax on imported goods at the same rate or lower rate than those imposed oh domestic goods will not be violative of freedom of trade at all. What constitutes, a barrier to trade and commerce is not an equal tax or lower tax imposed on imported goods but higher tax imposed on imported goods. In the instant case, the goods of the similar nature are neither manufactured nor produced in the State of Rajasthan and within the Municipal limits of Municipality Kota. Thus, it is a tax simpliciter and it cannot be said to be a restriction on the freedom or trade. Even assuming for the time being that it puts restriction on trade, commerce and intercourse as provided under Article 301 even then it is saved by the provisions of Article 304(b) read with entry 52 of the List II Seventh Schedule. It cannot be said that such a negligible tax which has been imposed is not a reasonable restriction, Even the petitioner has only stated in para 15 of the writ petition that the Act and the notification in question being purely of fiscal in nature, cannot be said, to constitute a reasonable restriction of freedom of trade concerned and intercourse within the territory of India. In Ground C of the writ petition, the petitioner has repeated the factual position which he has stated in para 16 by saying that it cannot be said to constitute a reasonable restriction on freedom of trade guaranteed under Article 301 of the Constitution of India. No details have been given in the writ petition as to how and to what extent it is not a reasonable restriction on trade, or intercourse. The legislature has a power to impose reasonable restrictions on trade or intercourse if they are indeed in the public interest and are in conformity with entry 52 of List II of VII Schedule.

18. For the reasons mentioned above, the writ petition has no force and it is, accordingly, dismissed without any order as to costs.


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