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TMI Blog2024 (9) TMI 1489X X X X Extracts X X X X X X X X Extracts X X X X ..... Dadariya, Advocate, Mr. Rahul Pandey through VC, Mr. Ashish Surana, Mr. Raja Sharma, Advocate, Mr. Krishna Sharma, Ms. Gitanjali N. Sharma, Mr. Ghanshyam Patel, Advocate and Mr. Neelabh Dubey, Advocates. For the Respondent/State : Mr. R. S. Marhas, Additional Advocate General CAV ORDER PER SACHIN SINGH RAJPUT, J. 1. Common question of law involved in these batch of cases is to declare the Chhattisgarh Sthaniya Kshetra me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (for short Act of 1976) as illegal, ultra vires to the Constitution of India. Challenge in this petition is also to the notification dated 04/03/2014 issued by the respondent / State in purported exercise of the powers conferred by Sub-Section (1) of Section 4-A of the Act of 1976. The relief claimed in WPT No.75 of 2017 is quoted herein below:- "10.1 That this Hon'ble High Court may be pleased to call for the entire records from the Respondents No. 1 & 2 relating to the case of the petitioner, for its kind perusal. 10.2 That the Hon'ble High Court may be pleased to issue an appropriate writ/writs and/or, order/orders declaring that the Chhattisgarh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam,1976 to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India. The said imposition of tax I outside the legislative competence of the State as the aid transactions would be covered within the Entry 92B of list I of the 7th Schedule of the Constitution of India for which the Union Government alone has the power to impose taxes on such movements which are in the nature of consignment in the course of inter-State trade or commerce". 2. Constitutional validity of Act of 1976 came for consideration before the Hon'ble High Court of Madhya Pradesh in case of Sanjay Trading Co. Vs. Commissioner of Sales Tax and others reported in 1994 SCC OnLine MP 315 = (1994) 93 STC 589. The Hon'ble High Court of Madhya Pradesh upheld the validity of Act of 1976. The same was unsuccessfully challenged in case of Bhagatram Rajeevkumar Vs. CST reported in 1995 (1) Supp 637. The challenge to the Act of 1976 was again made in the case of M/s Geo Millers Co. Pvt. Ltd. Vs. State of MP reported in (2004) 5 SCC 209. In case of Jindal Stripes Ltd. and others Vs. State of Haryana and others reported in (2003) 8 SCC 60 in which it has been observed by the Hon'ble Supreme Court that since concept of compensatory tax has been judicially evolved as and exception of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the local area in which it was collected? (4) Will the principles of quid pro quo relevant to a fee apply in the matter of taxes imposed under Part XIII? (5) Whether the entry tax may be levied at all where the goods meant for being sold, used or consumed come to rest (standstill) after the movement of the goods ceases in the "local area"? (6) Whether the entry tax can be termed a tax on the movement of goods when there is no bar to the entry of goods at the State border or when it passes through a local area within which they are not sold, used or consumed? (7) Whether interpretation of Articles 301 to 304 in the context of tax on vehicles (commonly known as "transport") cases in Atiabari case and Automobile Transport case apply to entry tax cases and if so, to what extent? (8) Whether the non-discriminatory indirect State tax which is capable of being passed on and has been passed on by traders to the consumers infringes Article 301 of the Constitution? (9) Whether a tax on goods within the State which directly impedes the trade and thus violates Article 301 of the Constitution can be saved by reference to Article 304 of the Constitution alone or can be saved by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... local area for use, sale or consumption therein is permissible although similar goods are not produced within the taxing State. 1159.8. Article 304 (a) frowns upon discrimination (of a hostile nature in the protectionist sense) and not on mere differentiation. Therefore, incentives, set-offs, etc. granted to a specified class of dealers for a limited period of time in a non-hostile fashion with a view to developing economically backward areas would not violate Article 304 (a). The question whether the levies in the present case indeed satisfy this test is left to be determined by the regular Benches hearing the matters." 5. Further observations were made in paragraphs 1160 and 1161 which are quoted as under: "1160. States are well within their right to design their fiscal legislations to ensure that the tax burden on goods imported from other States and goods produced within the State fall equally. Such measures if taken would not contravene Article 304 (a) of the Constitution. The question whether the levies in the present case indeed satisfy this test is left to be determined by the regular Benches hearing the matters. 1161. The questions whether the entire State can be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. It will be noticed that a Constitution Bench of this Court in Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India stated that it was settled law that subordinate legislation can be challenged on any of the grounds available for challenge against plenary legislation. This being the case, there is no rational distinction between the two types of legislation when it comes to this ground of challenge under Article 14. The test of manifest arbitrariness, therefore, as laid down in the aforesaid judgments would apply to invalidate legislation as well as subordinate legislation under Article 14. Manifest arbitrariness, therefore, must be something done by the legislature capriciously, irrationally and/or without adequate determining principle. Also, when something is done which is excessive and disproportionate, such legislation would be manifestly arbitrary. We are, therefore, of the view that arbitrariness in the sense of manifest arbitrariness as pointed out by us above would apply to negate legislation as well under Article 14." 9. In the matter of Dr. Jaya Thakur v. Union of India and others (2023) 10 SCC 276, their Lordships of the Supreme Court relying upon their earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itutional unless the case is so clear as to be free from doubt. It has been held that if the law which is passed is within the scope of the power conferred on a legislature and violates no restrictions on that power, the law must be upheld whatever a court may think of it. 74. It could thus be seen that the challenge to the legislative Act would be sustainable only if it is established that the legislature concerned had no legislative competence to enact on the subject it has enacted. The other ground on which the validity can be challenged is that such an enactment is in contravention of any of the fundamental rights stipulated in Part III of the Constitution or any other provision of the Constitution. Another ground as could be culled out from the recent judgments of this Court is that the validity of the legislative act can be challenged on the ground of manifest arbitrariness. However, while doing so, it will have to be remembered that the presumption is in favour of the constitutionality of a legislative enactment." 10. Furthermore, in the matter of Dental Council of India v. Biyani Shikshan Samiti and Another (2022) 6 SCC 65, their Lordships of the Supreme Court have held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent of public interest involved when the provision operates the field as against the prevention of such operation. The Court should also examine the extent of financial implications by virtue of the operation of the provision vis-a-vis the State and alleged extent of sufferance by the person who seeks to challenge based on the alleged invalidity of the provision with particular reference to the vires made. Even if the writ court is of the view that the challenge raised requires to be considered, then again it will have to be examined, while entertaining the challenge raised for consideration, whether it calls for prevention of the operation of the provision in the larger interest of the public. We have only attempted to set out some of the basic considerations to be borne in mind by the writ court and the same is not exhaustive. In other words, the writ court should examine such other grounds on the above lines for consideration while considering a challenge on the ground of vires to a statute or the provision of law made before it for the purpose of entertaining the same as well as for granting any interim relief during the pendency of such writ petitions. For the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive burden of taxes on goods that are locally produced or manufactured. Therefore, the same amounts to discrimination which is contrary to Article 304 (a). He invited the attention of this Court to the chart prepared in the writ petition indicating therein that in taxation the levy with the legislation is massive and they can classify to a great extent of tax on goods purchased locally and imported from outside. Shri Dadariya, quoting the paragraphs from Jindal's case (9 judges) tried to persuade this Court that the impugned notification is manifestly discriminatory therefore, he submits that impugned act is liable to be struck down. 14. Mr. Neelabh Dubey also made submission in the same line. He submitted that in taxation leeway with legislation is massive and they can classify to a great extent. But they cannot do away with discrimination. There can be a differentiation but not the discrimination. There cannot be any discrimination between the goods out side state or inside state. The difference between the differentiation and discrimination is rational. He submitted that the petitioner cannot compete in the state because of higher tax rate. Reading from a comparative chart he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is submitted in the return that, in view of the fact that, Bhagatram Rajeevkumar is still a good law the erroneous pleadings and interpretation of the judgment of Supreme Court of 9 judges made by the petitioner is wiped away. It is also submitted in the return that by application of Article 141 of the Constitution of India, Bhagatram Rajeevkumar is still a binding precedent and applies with full force presently over all Courts including this High Court also. It is submitted in the return that, in view of the fact that the constitutional validity of the Madhya Pradesh Sthaniya Kshetra Mein Mal Ke Pravesh Par Kar Adhiniyam, 1976 has already been affirmed twice in the Supreme Court in the judgments of Bhagatram Rajeevkumar and Geo Millers (supra), this present attempt to challenge the constitutional validity of the Adhiniyam, 1976 is not maintainable in the first place. The petitioners have and cannot take a plea that Bhagatram Rajeevkumar stands overruled by the judgment of 9 judges. Shri Ranbir Singh Marhas learned Additional Advocate made the submission in line of the return filed by the State. He submitted that the presumption is always in favour of constitutionality of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to sub-section (1) of Section 3 further provides for contingency, in which no tax under subsection (1) of Section 3 is to be levied. Sub-section (2) of Section 3 reads as under: "(2) (a) There shall be levied an entry tax on the entry into any local area for consumption. Use or sale therein.- (i) of such goods specified in Schedule II or Schedule III, other than motor vehicles, on which entry tax is not leviable under the provisions of sub-section (1); and (ii) by such persons or class of persons, [..............] as may be either case, be notified by the State Government and thereupon such tax shall be paid by such person or class of persons: Provided that entry tax under this subsection shall not be levied on the entry of such goods. if it is proved to the satisfaction of the assessing authority that such goods have already been subjected to entry tax or that the entry tax is liable to be paid by any other person or dealer under this Act. IV) Sub-section (5) of Section 3 empowers the State Government to amend Schedule I, Schedule II or Schedule III to include therein any goods or to exclude therefrom the goods so included from either of the Schedules. V) Sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-section (1) further provides that entry tax payable under Section 3 (2) shall not exceed 20 per cent of the value of the goods. 17. Hon'ble Supreme Court while deciding the reference placed before it in Jindal's case (9 Judges) formulated the questions which fell for determination as under:- 11.1. (i) Can the levy of a non-discriminatory tax per se constitute infraction of Article 301 of the Constitution of India? 11.2. (ii) If answer to Question (i) is in the affirmative, can a tax which is compensatory in nature also fall foul of Article 301 of the Constitution of India? 11.3. (iii) What are the tests for determining whether the tax or levy is compensatory in nature? 11.4. (iv) Is the entry tax levied by the States in the present batch of cases a Violative of Article 301 of the Constitution and in particular have the impugned State enactments relating to entry tax to be tested with reference to both Articles 304 (a) and 304(b) of the Constitution for determining their validity? 18. Some of the paragraphs of Jindal's case (9 Judges) (2017) 12 SCC 1 are essential to refer here. Per the Hon'ble T.S. Thakur, Chief Justice of India (For himself and A.K. Sikri and A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable to the traders or the cost of a specific facility planned to be provided to the traders is compensatory tax and that it is implicit in such a levy that it must, more or less, be commensurate with the cost of the service or facility. The decisions emphasized that the imposition of tax must be with the definite purpose of meeting the expenses on account of providing or adding to the trading facilities either immediately or in future provided the quantum of tax sought to be generated is based on a reasonable relation to the actual or projected expenditure on the cost of the service or facility. "26. The decisions in Bhagatram 1995 Supp (1) SCC 673 and Bihar Çhamber of Commerce (1996) 9 SCC 136 now say that even if the purpose of imposition of the tax is not merely to confer a special advantage on the traders but to benefit the public in general including the traders, that levy can still be considered to be compensatory. According to this view, an indirect or incidental benefit to traders by reason of stepping up the developmental activities in various local areas of the State can be legitimately brought within the concept of compensatory tax, the nexus between the tax k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect-matters of pending appeals, special leave petitions and writ petitions will now be listed for being disposed of in the light of this judgment." 8. All these judgments and orders of the High Courts, passed after the remand, then, came to be challenged by the States. concerned in the appeals filed against the same. These appeals initially came-up before a two-Judge Bench of this Court comprising Justice Arijit Pasayat and Justice S.H. Kapadia. Their Lordships referred the same to a Constitution Bench for an authoritative pronouncement on as many as ten questions formulated in the reference order (Jaiprakash Associates Limited v. State of Madhya Pradesh and Ors. (2009) 7 SCC 339). The Court noticed the arguments advanced on behalf of the assessees that entry taxes were, in essence and in the classical sense, in the nature of 'a fee' and not 'a tax'. It also noted the contention that all the cases on which the parties had placed reliance related to entry tax in the context of tax on vehicles in contradiction to taxes on entry of goods, The Court was of the view that while the Constitution Bench in Jindal Stainless Ltd. (2) (supra) had dealt with some aspects of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "transport") cases in Atiabari case and Automobile Transport case apply to entry tax cases and if so, to what extent? (8) Whether the non-discriminatory indirect State tax which is capable of being passed on and has been passed on by traders to the consumers infringes Article 301 of the Constitution? (9) Whether a tax on goods within the State which directly impedes the trade and thus violates Article 301 of the Constitution can be saved by reference to Article 304 of the Constitution alone or can be saved by any other article? (10) Whether a levy under Entry 52 List II, even if held to be in nature of a compensatory levy, must, on the principle of equivalence demonstrate that the value of the quantifiable benefit is represented by the costs incurred in procuring the facility/services (which costs in turn become the basis of reimbursement/recompense for the provider of the services/facilities) to be provided in the "local area" concerned and whether the entire State or a part thereof can be comprehended as local area for the purpose of entry tax?" 11. At the hearing before us learned counsel for the parties agreed after a day long exploratory exercise that the questions th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly, the levy cannot be impugned as invalid. In our view, this test of "some connection" enunciated in Bhagatram case is not only contrary to the working test propounded in Automobile Transport case but it obliterates the very basis of compensatory tax. We may reiterate that when a tax is imposed in the regulation or as a part of regulatory measure the controlling factor of the levy shifts from burden to reimbursement/recompense. The working test propounded by a Bench of seven Judges in Automobile Transport and the test of "some connection" enunciated by a Bench of three Judges in Bhagatram case cannot stand together. Therefore, in our view, the test of "some connection" as propounded in Bhagatram case is not applicable to the concept of compensatory tax and accordingly to that extent, the judgments of this Court in Bhagatram Rajeevkumar v. CST and State of Bihar v. Bihar Chamber of Commerce stand overruled. XXX XXX XXX XXX 52. In our opinion, the doubt expressed by the referring Bench about the correctness of the decision in Bhagatram case followed by the judgment in Bihar Chamber of Commerce was well founded. 53. We reiterate that the doctrine of "direct and immediate effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in our opinion be tested by the same standard as in Kathi's case (AIR 1952 SC 123) (supra). The Court ought to examine whether the differentiation made is intended or inspired by an element of unfavourable bias in favour of the goods produced or manufactured in the State as against those imported from outside. If the answer be in the affirmative, the differentiation would fall foul of Article 304 (a) and may tantamount to discrimination. Conversely, if the Court were to find that there is no such element of intentional bias favouring the locally produced goods as against those from outside, it may have to go further and see whether the differentiation would be supported by valid reasons. In the words of Fazl Ali, J. discrimination without reason would be unconstitutional whereas discrimination with reason may be legally acceptable. In Video Electronic's case (AIR 1990 SC 820), this Court noted that the differentiation made was supported by reasons. This Court held that if economic unity of India is one of the Constitutional aspirations and if attaining and maintaining such unity is a Constitutional goal, such unity and objectives can be achieved only if all parts of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle 14 of the Constitution. It is contended by the petitioners that the Act by levying Rs 35,000 as the annual tax on a motor vehicle used as a stage carriage but only Rs 1500 per year on a motor vehicle used as a goods carrier suffers from the vice of hostile discrimination and is, therefore, liable to be struck down. There is no dispute that even a fiscal legislation is subject to Article 14 of the Constitution. But it is well settled that a legislature in order to tax some need not tax all. It can adopt a reasonable classification of persons and things in imposing tax liabilities. A law of taxation cannot be termed as being discriminatory because different rates of taxation are prescribed in respect of different items, provided it is possible to hold that the said items belong to distinct and separate groups and that there is a reasonable nexus between the classification and the object to be achieved by the imposition of different rates of taxation. The mere fact that a tax falls more heavily on certain goods or persons may not result in its invalidity. As observed by this Court in Khandige Sham Bhat v. Agricultural Income Tax Officer (AIR 1963 SC 591) in respect of taxation l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or set off will not amount to hostile discrimination offensive to Article 304 (a). Having said that, we leave open for examination by the regular benches hearing the matters whether the impugned enactment achieve the object of such equalization or lead to a situation that exposes goods from outside the state to suffer any disadvantage vis-a-vis those manufactured in the taxing State. produced or manufactured in the taxing State. 145. We must, while parting, mention that learned counsel for the parties had attempted to raise certain other issues like whether the entire State can be treated as a local area and whether entry tax can be levied on goods imported from outside the country. We do not, however, consider it necessary in the present reference to address all those issues which are hereby left open. to be decided by the regular bench hearing the matter." Per R. Banumathi, J.:- (concurring) "269. Question No. 1: I agree with the conclusion of the Chief Justice holding that a non-discriminatory tax does not per se constitute a restriction on the right to free trade, commerce and intercourse guaranteed under Article 301 of the Constitution. I also agree with the view ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II even though termed as compensatory tax does not fall foul of. Art. 301. In my view, Jindal Stainless Ltd. (2) v. State of Haryana (2006) 7 SCC 241 is not a correct view in adopting quantifiable data approach; for a tax, there is no requirement of proximate quid pro quo and Jindal Stainless Ltd. (2) is overruled. I agree with the view taken in Bhagatram and Bihar Chamber of Commerce as the same is in harmony with the original design of compensatory tax laid down in Automobile. (emphasis supplied) 272. For the above conclusions, I have put forth my views and reasonings under the following heads of discussions. "273. In Automobile the concept of compensatory tax has been judicially evolved as an exception to the provisions of Art. 301. Pre-1995 decisions have held that the entry tax imposed on the entry of goods into a local area for consumption, use or sale therein is in the nature of a compensation, to which, the cost of an existing facility made available to the traders, or the cost of the specific facility planned to be provided to the traders, more or less, is to be commensurate with. Pre-1995 decisions further emphasized that the imposition of tax is must for the definite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale therein. The Act was challenged as violative of Art.301 of the Constitution. After referring to Bhagatram, it was held as under:- "18. In this connection, it is necessary to notice a few decisions brought to our notice. In Bhagatram Rajeev kumar 1995 Supp (1) SCC 673, a three-judge Bench of this Court has rejected the argument that to be compensatory, the tax must facilitate the trade. The reason is obvious: if a measure facilitates the trade, it would not be a restriction on trade but an encouragement to it. It was observed: [SCC Page 678, Para 8] "...The submission of Shri Ashok 'Sen, learned Senior Counsel that compensation is that which facilitates the trade only does not appear to be sound. The concept of compensatory nature of tax has been widened and if there is substantial or even some link between the tax and the facilities extended to such dealers directly or indirectly the levy cannot be impugned as invalid. The stand of the State that the revenue earned is being made over to the local bodies to compensate them for the loss caused, makes the impost compensatory in nature, as augmentation of their finance would enable them to provide municipal services more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rden" to the concept of measurable/quantifiable benefit and then it becomes "a compensatory tax" and its payment is then not for revenue but as reimbursement/recompense to the service/facility provider. It is then a tax on recompense. Compensatory tax is by nature hybrid but it is more closer to fees than to tax as both fees and compensatory taxes are based on the principle of equivalence and on the basis of reimbursement/recompense. If the impugned law chooses an activity like trade and commerce as the criterion of its operation and if the effect of the operation of the enactment is to impede trade and commerce then Article 301 is violated. 46. Burden on the State: Applying the above tests/parameters, whenever a law is impugned as violative of Article 301 of the Constitution, the Court has to see whether the impugned enactment facially or patently indicates quantifiable data on the basis of which the compensatory tax is sought to be levied. The Act must facially indicate the benefit which is quantifiable or measurable. It must broadly indicate proportionality to the quantifiable benefit. If the provisions are ambiguous or even if the Act does not indicate facially the quantifiab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the object behind a compensatory levy cannot be inquired into. 474.3 Jindal Stainless Ltd. (2) v. State of Haryana (2006) 7 SCC 241 is not a correct view in adopting quantifiable data approach; for a tax, there is no requirement of proximate quid pro quo and Jindal Stainless Ltd. (2) is overruled. The view taken in Bhagatram and Bihar Chamber of Commerce is correct as the same is in harmony with the original design of compensatory tax laid down in Automobile. "475. Lastly, it is necessary to consider an important issue raised by the assessees on the payment of tax/refund of tax in case the validity of the legislations is upheld or otherwise as the case may be. It has come on record that many Entry Tax legislations of the State are enacted pursuant to Bhagatram and Bihar Chamber of Commerce. But Jindal Stainless Ltd. (2) which we have now over-ruled, has led to a scenario of discordant judicial pronouncements, whereby some High Courts have struck down the impugned legislation as being non-compensatory, while the others have upheld the laws declaring them compensatory. In some States, the High Courts have passed interim orders directing petitioners to pay 33% of the demand and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ones imported from other States, levy of entry tax on the goods imported from other States when there is no such levy on the locally produced goods is not discriminatory. 487. Every differentiation is not discrimination. Any difference in the rate of tax on goods locally manufactured and those imported, such difference not being discriminatory does not fall foul under Art.304 (a). Any incentive/benefits of concession in the rate of tax given to the local manufacturers/producers in order to encourage the local manufacturers/production in the State cannot be said to be discriminatory. Digvijay and Video Electronics have laid down the correct law. Mahavir Oil Mills is not a correct view. 488. Levy of entry tax on the goods imported from the other States is not discriminatory merely on the ground that there are no similar goods manufactured or produced within the taxing State. The law laid down in Kalyani Stores is not a good law. 489. Levy of entry tax on the goods imported from outside India which enter into local area for consumption, use or sale therein is within the legislative competence of the State. Question Nos. (ii) and (iii) 490 In so far as compensatory taxes are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before this court in case of Steel Authority of India (Citation) challenging the validity of Act of 1976. This court the arguments advanced in the said case. Constitutional Validity of Act of 1976 has been upheld by the Hon'ble Supreme Court in Jindal Stainless Ltd. (9 judges) leaving open the questions as stated above to be decided in appropriate proceedings. 20. The validity of Act of 1976 came up for consideration before this Court in Steel Authority of India Vs. State of Chhattisgarh and others (and other cases), 2009 SCC OnLine Chh 476 in which this Court upheld the validity of the Act of 1976. The same was subject to challenge by petitioners therein before the Hon'ble Supreme Court. After the reference was answered by the Hon'ble Supreme Court in Jindal's case (9 Judges). The matter were placed before the regular bench of the Hon'ble Supreme Court and liberty was reserved in favour of the petitioners to file a fresh writ petitions in light of Judgment of the Hon'ble Supreme Court in Jindal's Case (9 Judges). Therefore the judgment of this Court was not set aside hence reference can be made on the judgment of Steel Authority of India (Supra). This court held in following wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed for the purposes of compensating the local bodies for the losses suffered by them due to abolition of octroi. Statement of Objects and Reasons of the Statute provides sufficient guidance to the State for imposing entry tax. The legislature has already fixed maximum permissible limit for imposition of entry tax. From perusal of the notifications under challenge, we also observe that except for petroleum products and Bauxite, entry tax is being levied (c)107o or less for other goods. We also take note of the fact that notification issued under The Act of 1976 is to be laid on the table of the Legislative Assembly soon after issuance of the notification. Thus, the aforesaid provision also demonstrates that the notification issued under Section 4A has to face scrutiny of the legislature. 111. It is settled law that though taxing laws are not outside article 14, however, having regard to the wide variety of diverse economic criteria that go into the formulation of a fiscal policy, Legislature enjoys a wide latitude in the matter of selection of persons, subject-matter, events, etc., for taxation. The tests of the vice of discrimination in a taxing law are, accordingly, less rigo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the State, would not render the notifications ultra vires article 14 of the Constitution and unconstitutional. Protection of the equality clause does not predicate a mathematically precise or logically complete or symmetrical classification. After considering the reasons assigned by the respondents for imposing higher rates of entry tax on the goods brought from outside the State, we hold that the classification is rational as the same has been done to provide level playing field to all the taxpayers and the dealers, who purchase the goods from other registered dealers of the State. Accordingly, we hold that the impugned notifications do not offend article 14 of the Constitution and they are valid in law. 21. While coming to the above conclusion, this Court in case of Steel Authority of India (Supra) relied upon the following judgments which are quoted below:- 22. In the case Vasantlal Magan Bhai Sanjanwala v. State of Bombay reported in AIR 1961 SC 4, the Constitution Bench of the Hon'ble Supreme Court while dealing with the nature and permissible extent of delegative powers under Article 245 of the Constitution observed thus - "4. It is now well-established by the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act The Corporation. subject to certain controls is an autonomous body. It is often given power to decide when and in what manner the functions are to be performed. For all this it needs money and it needs will vary from time to time with the prevailing exigencies. Its power to collect tax, however, is necessarily limited by the expenses required to discharge those functions. It has, therefore, where rates have not been specified m the statute, to fix such rates as may be necessary to meet its needs. That would be sufficient guidance to make the exercise of its power to fix the rates valid. The Act in the present case impliedly provides the same guidance: see Section 127 (3) & (4). It would be impracticable to insist on a more rigid guidance. In the case of a self-governing body with taxing powers, a large amount of flexibility in the guidance to be provided for the exercise of that power must exist. In the case of a big municipality like that of Calcutta, its needs would depend on various and changing circumstances. There are epidemics, influx of refugees, labour strikes, new amenities to be provided for, such as hospitals, schools-and various other such things may be mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25. In Hiralal Rattanlal vs. STO, AIR 1973 SC 1034, while considering the challenge to the constitutional validity of the statute on the ground of excessive delegation, it was observed thus- "30. It is true that the Legislature cannot delegate its legislative functions to any other body. But subject to that qualification, it is permissible for the legislature to delegate the power to select the persons on whom the tax is to be levied or the goods or the transactions on which the tax is to be levied. In the Act, under Section 3 the Legislature has sought to impose multi-point tax on all sales and purchases. After having done that it has given power to the executive to select for special treatment dealings in certain class of goods. In the very nature of things, it is impossible for the Legislature to enumerate goods, dealings in which sales tax or purchase tax should be imposed. It is also impossible/e for the Legislature to select the goods which should be subjected to a single-point sales or purchase. Before making such selections several aspects such as the impact of the levy on the society, economic consequences and the administrative convenience will have to be considered. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in this regard. Unless the fiscal law in question is manifestly discriminatory the court should refrain from striking it down on the ground of discrimination. These are some of the broad principles laid down by this Court in several of its decisions and it is unnecessary to burden this judgment with citations. Applying these principles it is seen that stage carriages which travel on an average about 260 kilometres every day on a specified route or routes with an almost assured quantum of traffic which invariably is overcrowded belong to a class distinct and separate from public carriers which carry goods on undefined routes. Moreover the public carriers may not be operating every day in the State. There are also other economic considerations which distinguish stage carriages and public carriers from each other. The amount of wear and tear caused to the roads by any class of motor vehicles may not always be a determining factor in classifying motor vehicles for purposes of taxation. The reasons given by this Court in G.K. Krishnan case for upholding the classification made between stage carriages and contract carriages both of which are engaged in carrying passengers are not relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is with regard to discrimination. The power to impose tax is a plenary power with the State subject to the fact that while imposing higher tax rate on the goods imported from outside is not discriminatory. The fact remains as stated above that the notification does not debar the petitioners for trade and commerce in the State of Chhattisgarh. 29. Shri Dubey tried to persuade this Court that as a result of higher tax, it has become unviable for the petitioner to compete in the trade and business in the State. Hardship has been shown to suggest that the impugned notification is discriminatory. Any legislation cannot be struck down on the ground of hardship as held by the Hon'ble Supreme Court in the case of Prafulla Kumar Das Vs. State of Orissa reported in (2003) 11 SCC 614 that a mere hardship cannot be a ground for striking down a valid legislation unless it is held to be suffering from vice of discrimination or unreasonableness. 30. Argument was advanced that the State has not justified rationale behind imposing higher tax rates on the goods imported outside the State. These petitions have been filed by the petitioners on a liberty being reserved in their favour by the Regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while being consistent with the norm of non-discrimination also preserves a parity of tax burden between goods imported and domestic goods. This is the foundation of the theory of equivalence". It has been further observed that the burden of establishing that there is a discrimination against goods which are imported from other States lies on the person who sets up such a plea. In the present cases the petitioners failed to establish such plea. 31. As stated above the legislation cannot be declared ultra vires lightly. The taxing statute cannot be challenged only on the ground that the rate of taxation is higher. Until and unless it is said be colourable piece of legislation. It has not been established by the petitioner that the impugned legislation is enacted with colourable exercise of power or it is fraud on the legislative power. The argument was advanced that since there is a higher tax imposed on the goods imported from outside of the state hence it is discriminatory and cannot pass the test of Article 304 (a) of Constitution of India. This argument was considered by this Court in Steel Authority of India (Supra) and has been repelled. As stated above different tax rate on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nacted by the State Legislature, the term 'a local area' contemplated by Entry 52 may cover the 'Whole State' or 'a local area' as notified in the legislation. I agree with the view taken in Bihar Chamber of Commerce that from the point of view of entry tax that the State is a compendium of local areas and where the local areas contemplated by the Act cover the entire State, the difference between the State and 'a local area' practically disappears." 34. The definition of local area in section 2(d) is precisely given as "Local area means the area comprised within the limits of a local authority". Hon'ble Supreme Court in case of B. Premanand and others Vs. Mohan Koikal and others; (2011) SCC 226 observed as "It may be mentioned in this connection that the first and foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g. the mischief rule, purposive interpretation etc. can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible results or if read literally would nullify the very object of the statute. Where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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