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TMI Blog1974 (8) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. 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. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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..........." 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 AssamA.I.R. 1961 S.C. 232. and in Automobile Transport (Rajasthan) Ltd. v. State of RajasthanA.I.R. 1962 S.C. 1406., the Supreme Court in Firm A.T.B. Mehtab Majid Co. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." These principles were reiterated in the State of Madras v. N.K. Nataraja Mudaliar[1968] 22 S.T.C. 376 (S.C.); A.I.R. 1969 S.C. 147. 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks 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. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no tax on local article. The observation has no application. The learned standing counsel relied upon Rattan Lal Co. v. Assessing Authority[1970] 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 off end against the equality clause of article 304 of the Constitution. These observations are also not applicable to the present case. In the result the petition succeeds and is allowed. The te ..... X X X X Extracts X X X X X X X X Extracts X X X X
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