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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 ..... 14 of the Constitution of India - whether the impugned legislation is violative of Article 304 (a) of the Constitution of India? - whether entire State can be declared as local area in light of Judgment of the Hon ble Supreme Court in Jindal s case? - HELD THAT:- 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 (9) TMI 911 - CHHATTISGARH HIGH COURT] 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 [ 2016 (11) TMI 545 - SUPREME COURT (LB)] . The argument of higher tax being imposed on goods imported from other state is violative of article 14 of Constitution of India cannot hold water in view Malwa Bus Service (Private) Ltd. v. State of Punjab and others [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 - it is also admitted that entire State is not local area and it is defined in section 2 (d) of definition clause of the Act of 1976. It is to be seen that there is no ambiguity in the definition clause. As to whether the petitioners suffered entry tax at multiple levels has not been substantially demonstrated. Hence, appropriate writ as claimed in this regard cannot be issued. Placing reliance on the judgments of the Hon ble Supreme Court and the discussion made herein, the petition is dismissed. - HON'BLE MR. RAMESH SINHA, CHIEF JUSTICE AND HON BLE MR. SACHIN SINGH RAJPUT, JUDGE For the Petitioners : Mr. Ashish Shrivastava, Senior Advocate assisted by Mr. Soumya Rai, Mr. Aman Pandey, Mr. Rohishek Verma, Mr. Rahul Ambast and Mr. Udit Khatri, Mr. Anand 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted in the interest of justice. 10.7 That the Hon'ble High Court may be pleased to issue an appropriate writ/writ and/or, order/orders declaring Section 4A of the Entry Tax Act as ultra-vires being violative of Article 14 of the Constitution of India 10.8-. That the Hon'ble High Court may be pleased to issue an appropriate writ/writs and/or, order/orders quashing all the relevant notifications issued in exercise of powers under Section 4A of the Act being violative of Article 14 and Article 304 of the Constitution of India; 10.9-. That the Hon'ble High Court may be pleased to issue an appropriate writ/writ and/or, order/orders declaring that imposition of entry tax on the goods which are coming from outside the State, if the same has been procured otherwise than by way of purchase, is ultra vires the Constitution being violative of Article 245 read with Article 246 of the Constitution 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 moveme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution? If the answer is in the affirmative whether such levy can be protected if entry tax is compensatory in character and if the answer to the aforesaid question is in the affirmative what are the yardsticks to be applied to determine the compensatory character of the entry tax? (3) Whether Entry 52 List II, Schedule VII of the Constitution like other taxing entries in the Schedule, merely provides a taxing field for exercising the power to levy and whether collection of entry tax which ordinarily would be credited to the Consolidated Fund of the State being a revenue received by the Government of the State and would have to be appropriated in accordance with law and for the purposes and in the manner provided in the Constitution as per Article 266 and there is nothing express or explicit in Entry 52 List II, Schedule VII which would compel the State to spend the tax collected within 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 movem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd free used in Article 301 does not mean free from taxation . 1159.2. Only such taxes as are discriminatory in nature are prohibited Article 304 (a). It follows that levy of a non-discriminatory tax would not constitute an infraction of Article 301. 1159.3. Clauses (a) and (b) of Article 304 have to be read disjunctively. 1159.4. A levy that violates Article 304 (a) cannot be saved even if the procedure under Article 304(b) or the proviso thereunder is satisfied. 1159.5. The Compensatory Tax Theory evolved in Automobile Transport case and subsequently modified in Jindal cases has no juristic basis and is therefore rejected. 1159.6. The decisions of this Court in Atiabari, Automobile Transport and Jindals cases and all other judgments that follow these pronouncements are to the extent of such reliance overruled. 1159.7. A tax on entry of goods into a 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 dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt laying down law with regard to challenge the constitutional validity of any legislation. It is a settled principle of law that the Statute enacted by the Parliament or State Legislature cannot be declared unconstitutional lightly. The Court must be able to hold beyond any iota of doubt that the violation of the constitutional provisions was so glaring that the legislative provisions under challenge cannot stand. The Constitution Bench of the Supreme Court in the matter of Shayara Bano v. Union of India and others (Ministry of Women and Child Development Secretary and others) (2017) 9 SCC 1 held that legislation can be struck down if it is manifestly arbitrary and manifest arbitrariness is the ground to negate legislation as well under Article 14 of the Constitution of India. It has been observed by their Lordships as under: - 101. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court cannot sit in judgment over their wisdom. 72. It has been held by this Court that there is one and only one ground for declaring an Act of the legislature or a provision in the Act to be invalid, and that is if it clearly violates some provision of the Constitution in so evident a manner as to leave no manner of doubt. It has further been held that if two views are possible, one making the statute constitutional and the other making it unconstitutional, the former view must always be preferred. It has been held that the Court must make every effort to uphold the constitutional validity of a statute, even if that requires giving a strained construction or narrowing down its scope. 73. It has consistently been held that there is always a presumption in favour of constitutionality, and a law will not be declared unconstitutional 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 onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed before the Court and cautioned the Courts in paragraph 37 as under: - 37. The Court can, in the first instance, examine whether there is a prima facie strong ground made out in order to examine the vires of the provisions raised in the writ petition. The Court can also note whether such challenge is made at the earliest point of time when the statute came to be introduced or any provision was brought into the statute book or any long time-gap exists as between the date of the enactment and the date when the challenge is made. It should also be noted as to whether the grounds of challenge based on the facts pleaded and the implication of the provision really has any nexus apart from the grounds of challenge made. With reference to those relevant provisions, the Court should be conscious of the position as 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II of 7th schedule of the Constitution of India. He submitted that the petitioners are subject to entry tax at multiple places. Reliance has been placed on Ishar Ahmed Khan v. Union of India, AIR 1962 SC 1052, State of Bombay v. Narottam Das Jethhabhai, AIR 1951 SC 69, D.K.Trivedi and sons v. State of Gujarat, AIR 1986 SC 1323, State of Bombay v. F.M.Balsara, 1951 SCR 682. Reliance was further placed on judgment of the Supreme Court in the case of Shakti Kumar N. Sancheti v. State of Maharashtra, (1995) 1 SCC 351. 13. Shri Dadariya adopted the arguments advanced by Shri Ashish Shrivastava, Senior Advocate and supplemented by submitting that levy of entry tax under the impugned Act is clearly discriminatory as the cumulative burden of taxes on goods that are imported into the State is higher than the cumulative 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raphs of 9 judges bench judgment in case of Jindal Stainless Ltd. and anr. (Supra) have been quoted in the return. It has been submitted in the return, in view of the above discussion with respect to the judgment of 9 judges there can be no doubt that Bhagatram Rajeevkumar (supra) and Geo Millers (supra) as also the judgment of this Court in Steel Authority of India Ltd. (supra) are not impliedly overruled in view of the fact that, the judgment of Jindal Stainless (2) (supra) overruling Bhagatram Rajeevkumar now stands overruled by the Bench of 9 judges and the same Bench of 9 judges while overruling Jindal Stainless (2) revived Bhagatram Rajeevkumar and therefore, Bhagatram Rajeevkumar is still a good law and Geo Miller and Steel Authority of India following Bhagatram Rajeevkumar are also valid judgments. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Act [and includes composition money payable under Section 7-A); II) Section 3 deals with the incidence of taxation. Subsection (1) reads as under: 3. Incidence of taxation. ( 1) There shall be levied an entry tax- (a) on the entry in the course of business of a dealer of goods specified in Schedule II, Into each local area for consumption, use or sale therein; and (b) on the entry in the course of business of a dealer of goods specified in Schedule III, 'into each local area for consumption or use of such goods as raw material or incidental goods or as packing material or in the execution of works contracts but not for sale therein; and such tax shall be paid by every dealer liable to tax under the Sales Tax Act who has effected entry of such goods: Provided. III) First proviso 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the State Government may, by notification, amend Schedule II and Schedule III. However, it has been further provided that the rate of tax shall not exceed twice the rate of tax specified in the Schedules. IX) Sub-section (3) further provides that notification issued under sub-section (1) shall be laid on the table of the Legislative Assembly after it is issued. X) Section 10 empowers the State Govt. that it may, by notification, exempt prospectively or retrospectively, in whole or in part, any class of dealers or persons or any goods from payment of entry tax in respect of all or any of the local areas, for a specified period by issuance of notification. XI) Section 12 provides for rate at which entry tax to be charged on goods under Section 3(2). 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs on the ground that the levy was compensatory in character hence outside the purview of Article 301. 4. The correctness of the said order was assailed before this Court in Jindal Stripe Ltd. v. State of Haryana (2003) 8 SCC 60 . A two-Judge Bench of this Court, however, referred the matter to a larger Bench as it noticed an apparent conflict between the pronouncements of this Court in Atiabari (supra) and Automobile Transport (supra) cases on the one hand and Bhagatram (supra) and Bihar Chamber of Commerce (supra) on the other. The Court after noticing the development of law on the subject observed: 25. To sum up: the pre-1995 decisions held that an exaction to reimburse/recompense the State the cost of an existing facility made available 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 q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continue to apply. The Court observed: 53. We reiterate that the doctrine of direct and immediate effect of the impugned law on trade and commerce under Article 301 as propounded in Atiabari Tea Co. Ltd. v. State of Assam and the working test enunciated in Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan for deciding whether a tax is compensatory or not vide para 19 of the Report (AIR), will continue to apply and the test of some connection indicated in para 8 (of SCC) of the judgment in Bhagatram Rajeevkumar v. CST and followed in State of Bihar v. Bihar Chamber of Commerce is, in our opinion, not good law. Accordingly, the constitutional validity of various local enactments which are the subject-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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed within the local area in which it Page 30 30 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with regulatory taxes. In that case, a working test for deciding whether a tax is compensatory or not was laid down. In that judgment, it was observed that one has to enquire whether the trade as a class is having the use of certain facilities for the better conduct of the trade/business. This working test remains unaltered even today. 50. As stated above, in the post 1995 era, the said working test propounded in Automobile Transport stood disrupted when in Bhagatram case, a Bench of three Judges enunciated the test of some connection saying that even if there is some link between the tax and the facilities extended to the trade directly or indirectly, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on with reason . The whole doctrine of classification is based on this distinction and on the well-known fact that the circumstances which govern one set of persons or objects may not necessarily be the same as those governing another set of persons or objects, so that the question of unequal treatment does not really arise as between persons governed by different conditions and different sets of circumstances. The main objection to the West Bengal Act was that it permitted discrimination without reason or without any rational basis. 136. Any challenge to a fiscal enactment on the touchstone of Article 304 (a) must 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 aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be held to flow from a legitimate desire to promote industries within its territory. Grant of exemptions and incentives in such cases must be deemed to have been inspired by considerations Page 167 167 which in the larger context help achieve the Constitutional goal of economic unity. 143. In Malwa Bus Service (Private) Ltd. v. State of Punjab and others (1983) 3 SCC 237: (AIR 1983 SC 634) this Court held that a difference in the rate of tax by itself cannot be considered to be discriminatory and offensive to the equality clause: 21. The next submission urged on behalf of the petitioners is based on Article 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 liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not relevant to the case of a classification made between stage carriages which carry passengers and public carriers which transport goods. The petitioners have not placed before the court sufficient material to hold that the impugned levy suffers from the vice of discrimination on the above ground. 144. Seen in the context of the above, we are inclined to accept the submission made on behalf of the State that so long as the intention behind the grant of exemption/adjustment/credit is to equalize the fall of the fiscal burden on the goods from within the State and those from outside the State such exemption 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government under Entry 52, List II pursuant to Automobile is unwarranted. The concept of compensatory tax was evolved fifty years back through judicial pronouncements. It has withstood the test of time and thus, any subsequent judicial pronouncement like the present one should not prejudice the interest of the parties involved. The State Governments should not suffer any loss of revenue solely because of judicial interpretations and innovations in Automobile and the case subsequent to it. Subject to passing the muster of Art. 304 (a), entry tax levied by the States under entry 52, List 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC 2344) overruled. 465. In Bhagatram Rajeevkumar v. Commissioner of Sales Tax, M.P. 1995 Supp (1) SCC 673 , it was held that even if there is some link or some connection between the tax and the facilities extended to the trade directly or indirectly the levy cannot be challenged as invalid. 466. The same dictum was followed in State of Bihar v. Bihar Chamber of Commerce (1996) 9 SCC 136, wherein this Court considered the challenge to a legislation in which the State of Bihar levied entry tax on the goods entering into a local area for consumption, use or 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 compens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory tax with the scheme of Articles 301, 302 and 304 . (emphasis supplied) The Bench further held: 45. To sum up, the basis of every levy is the controlling factor. In the case of a tax , the levy is a part of common burden based on the principle of ability or capacity to pay. In the case of a fee , the basis is the special benefit to the payer (individual as such) based on the principle of equivalence. When the tax is imposed as a part of regulation or as a part of regulatory measure, its basis shifts from the concept of burden 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the States under entry 52, List II even though termed as compensatory tax does not fall foul of Art. 301. It is not necessary that the money realized by the levy should be put into a separate Fund or that the levy should be proportionate to the expenditure. There is no bar to subsumption of the revenue realized from regulatory/compensatory taxes into the Consolidated Fund of the State as they are no different from other taxes of a general nature. Moreover, the quantum of expenditure incurred in achieving 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. 485. Articles 304 (a) and 304(b) are to be read disjunctively; both apply to different subject matters; while Art. 304 (a) deals with tax, Art. 304(b) deals only with non-fiscal matters. 486. Where there is equivalence in terms of tax treatment between the locally produced goods and the 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 entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r refund and unjustly enrich themselves. 19. Argument has been advanced by learned counsel for the petitioners that the levying entry tax on various inputs and other goods imported from other States as a rate much higher than that at which entry tax leviable on identical goods moving inside the State, the State has subjected the petitioner to hostile and arbitrary discrimination of violation of Article 14 and 304-A of the Constitution. Similar arguments was advanced 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 answere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed for different categories of persons, transactions, occupations or objects. 106: Challenges to the constitutional validity of Section 4A on the ground that the same suffers from vice of excessive delegation as it confers unguided and channelized power to the State in imposing entry tax up to an exorbitant rate of 507o of the value of the goods, is to be tested in the light of above principles of law laid down by the Apex Court. The entry Tax has been imposed 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that the discriminatory levy of entry tax has adversely affected their trade and the same constitutes a direct and immediate impediment for their business. Relying upon the judgment in the matter of V. Venugopala Ravi Verma Rajah AIR 1969 SC 1094, we hold that imposition of different rates of entry tax by the notifications issued by the State, on the goods imported from outside the State and brought into the local areas and the goods brought from 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be judged by o stereo-typed rule. The guidance furnished must be held to be good if it leads to the achievement of the object of the statute which delegated the power. The validity of the power to fix rates of taxes delegated to the Corporation by S. 548 of the Act must be judged by the same standard. All taxes including the one under section 548 can be collected and used by the Corporation only for discharging its functions under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y contravene Article 14 of the Constitution if it seeks to impose on the same class of property, persons, transactions or occupations similarly situate, incidence of taxation, which leads to obvious inequality. A taxing statute is not, therefore. exposed to attack on the ground of discrimination merely because different rates of taxation are prescribed for different categories of persons, transactions. occupations or objects. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of taxation in all proper and reasonable ways. The courts lean more readily in favour of upholding the constitutionality of a taxing law in view of the complexities involved in the social and economic life of the community. It is one of the duties of a modem legislature to utilise the measures of taxation introduced by it for the purpose of achieving maximum social good and one has to trust the wisdom of the legislature 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification does not debar the petitioner to trade and commerce inside the State of Chhattisgarh. A submission was made that charging the goods imported from outside the State at higher tax rates than the goods inside the State amounts to positive discrimination. Except a comparative chart with regard to difference of amount of tax paid in lieu of higher tax rate, no substantive documents are on record to make analysis 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 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately entitled to ensure that the tax burden should not discriminate between locally produced or manufactured goods of that state and goods originating in other states. The substance must prevail over form. Once there is no constitutional necessity that the form in which legislation is enacted in India must cover only one legislative entry, the legislature is entitled to devise a law in a suitable manner which 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 colourabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that appropriate writ be issued declaring that entire State cannot be a local area for the purposes of Entry 52 of List II of the Constitution of India, and that the local area can only be declared, as defined in the 'definition' of the Act. In this context observation of Hon ble R. Bhanumati J in concurring judgment is necessary to be quoted When the entry tax is levied by the Entry Tax Act enacted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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