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TMI Blog2017 (3) TMI 1956X X X X Extracts X X X X X X X X Extracts X X X X ..... brought into a local area . The entire State is divided into local areas. The Act covers not only vehicles bringing goods into the State but also vehicles carrying goods from one local area to another. However, those who pay sales tax to the State are exempt from payment of entry tax. Ultimately, the entry tax only falls on concerns, like Jindal Strips, which, by virtue of the provisions of the Central Sales Tax Act, 1956, pay sales tax on purchase of raw-material and sale of finished goods to other States and do not pay sales tax to the State of Haryana. This is the context in which the challenge to the Act Under Article 301 has been made. Reasons for referral order - HELD THAT:- In Atiabari Tea Co. Ltd. etc. v. State of Assam and Ors. [ 1960 (9) TMI 94 - SUPREME COURT ], it was held that taxing laws are not excluded from the operation of Article 301, which means that tax laws can and do amount to restrictions on the freedoms guaranteed to trade under Part-XIII of the Constitution. However, the prohibition of restrictions on free trade is not an absolute one. Statutes restrictive of trade can avoid invalidation if they comply with Article 304(a) or (b) - Reference was made to Nine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7179/2017 (Arising out of SLP (C) No. 9911/2004), Civil Appeal No. 7180/2017 (Arising out of SLP (C) No. 9912/2004), Civil Appeal No. 7181/2017 (Arising out of SLP (C) No. 9950/2004), Civil Appeal No. 7182/2017 (Arising out of SLP (C) No. 9964/2004), Civil Appeal No. 7183/2017 (Arising out of SLP (C) No. 9976/2004), Civil Appeal No. 7184/2017 (Arising out of SLP (C) No. 9989/2004), Civil Appeal No. 7185/2017 (Arising out of SLP (C) No. 9991/2004), Civil Appeal No. 7186/2017 (Arising out of SLP (C) No. 9993/2004), Civil Appeal No. 7187/2017 (Arising out of SLP (C) No. 9998/2004), Civil Appeal No. 7188/2017 (Arising out of SLP (C) No. 9999/2004), Civil Appeal No. 7189/2017 (Arising out of SLP (C) No. 10003/2004), Civil Appeal No. 7190/2017 (Arising out of SLP (C) No. 10007/2004), Civil Appeal No. 7191/2017 (Arising out of SLP (C) No. 10129/2004), Civil Appeal No. 7192/2017 (Arising out of SLP (C) No. 10133/2004), Civil Appeal No. 7193/2017 (Arising out of SLP (C) No. 10134/2004), Civil Appeal No. 7194/2017 (Arising out of SLP (C) No. 10153/2004), Civil Appeal No. 7195/2017 (Arising out of SLP (C) No. 10154/2004), Civil Appeal No. 7196/2017 (Arising out of SLP (C) No. 10156/2004), Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 (Arising out of SLP (C) No. 10906/2004), Civil Appeal No. 7233/2017 (Arising out of SLP (C) No. 10907/2004), Civil Appeal No. 7235/2017 (Arising out of SLP (C) No. 10908/2004), Civil Appeal No. 7236/2017 (Arising out of SLP (C) No. 10909/2004), Civil Appeal No. 7237/2017 (Arising out of SLP (C) No. 10910/2004), Civil Appeal No. 7238/2017 (Arising out of SLP (C) No. 10923/2004), Civil Appeal No. 7239/2017 (Arising out of SLP (C) No. 10929/2004), Civil Appeal No. 7240/2017 (Arising out of SLP (C) No. 10977/2004), Civil Appeal No. 7241/2017 (Arising out of SLP (C) No. 11012/2004), Civil Appeal No. 7242/2017 (Arising out of SLP (C) No. 11266/2004), Civil Appeal No. 7243/2017 (Arising out of SLP (C) No. 11271/2004), Civil Appeal No. 7245/2017 (Arising out of SLP (C) No. 11274/2004), Civil Appeal No. 7246/2017 (Arising out of SLP (C) No. 11281/2004), Civil Appeal No. 7248/2017 (Arising out of SLP (C) No. 11320/2004), Civil Appeal No. 7250/2017 (Arising out of SLP (C) No. 11326/2004), Civil Appeal No. 7252/2017 (Arising out of SLP (C) No. 11328/2004), Civil Appeal No. 7254/2017 (Arising out of SLP (C) No. 11329/2004), Civil Appeal No. 7256/2017 (Arising out of SLP (C) No. 11370/2004) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91/2017 (Arising out of SLP (C) No. 6723/2010), Civil Appeal No. 626/2012, Civil Appeal No. 629/2012, Civil Appeal No. 630/2012, Civil Appeal No. 637/2012, Civil Appeal No. 749/2012, Civil Appeal No. 753/2012, Civil Appeal No. 3413/2012, Civil Appeal No. 4956/2012, Civil Appeal No. 6031/2012, Civil Appeal No. 3453/2002, Civil Appeal No. 3454/2002, Civil Appeal No. 3455/2002, Civil Appeal Nos. 3456-3459/2002, Civil Appeal No. 3460/2002, Civil Appeal No. 3461/2002, Civil Appeal Nos. 3462-3463/2002, Civil Appeal No. 3464/2002, Civil Appeal No. 3465/2002, Civil Appeal No. 3466/2002, Civil Appeal No. 3467/2002, Civil Appeal No. 3468/2002, Civil Appeal No. 3469/2002, Civil Appeal No. 3470/2002, Civil Appeal No. 3471/2002, Civil Appeal No. 4008/2002, Civil Appeal No. 5858/2002, Civil Appeal No. 2608/2003, Civil Appeal No. 8241/2003, Civil Appeal No. 8242/2003, Civil Appeal No. 8243/2003, Civil Appeal No. 8244/2003, Civil Appeal No. 8245/2003, Civil Appeal No. 8246/2003, Civil Appeal No. 8247/2003, Civil Appeal No. 8248/2003, Civil Appeal No. 8249/2003, Civil Appeal No. 8250/2003, Civil Appeal No. 8251/2003, Civil Appeal No. 8252/2003, Writ Petition (Civil) No. 221/2004, Civil Appeal No. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal No. 324/2012, Civil Appeal No. 3328/2012, Civil Appeal No. 322/2012, Civil Appeal No. 628/2012. Civil Appeal No. 627/2012, Civil Appeal No. 636/2012, Civil Appeal Nos. 632-635/2012, Civil Appeal No. 631/2012, Civil Appeal Nos. 638-639/2012 and Civil Appeal No. 640/2012 Hon'ble Judges A.K. Sikri and Ashok Bhushan, JJ. JUDGMENT 1. With the consent of counsel for the parties, all the matters of the State of Uttar Pradesh and Haryana on the issue arising in the instant matters are taken on record and shall be governed by this order. Leave granted in the special leave petitions. 2. Having regard to the fact that the correctness of the ratio of the judgment of the Seven Judges' Bench of this Court in 'Automobile Transport (Rajasthan) Ltd. Etc. v. State of Rajasthan and Ors.' [1963 (1) SCR 491] and the theory of compensatory tax was questioned, the matter was referred to Nine Judges' Bench. The Nine Judges' Bench of this Court heard the matters and answered the reference in those cases, leading case being 'Jindal Stainless Ltd. and Anr. v. State of Haryana and Ors.' [2016 (11) SCALE 1]. The Court, by majority, answered the reference in the following te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessees by filing writ petitions in the High Courts primarily on the ground that the levy was not in the nature of compensatory tax. The aforesaid challenge was because of the law laid down in Automobile Transport case (supra) which held the field at that time. 4. Similar challenges were made by the Assessees in other States challenging various provisions of the similar enactments made by the said States. Some of the High Courts upheld the legislation holding the tax, to be compensatory tax whereas some other High Courts found the legislation not to be compensatory in nature and, thus, struck down the provisions thereof. Some High Courts had taken support of certain other reasons also in striking down these legislations. The Assessees as well as the States had filed special leave petitions against those judgments. Those cases were heard and decided by the Constitution Bench of this Court in Jindal Stainless Ltd. (2) and Anr. v. State of Haryana and Ors. [2006 (7) SCC 241]. 5. Jindal Strips Ltd. is an industry manufacturing products within the State of Haryana. The raw-material is purchased from outside the State. The finished products are sent to other States on consignment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the State Legislature can only be done after satisfying the requirements of Article 304(b). The statute which was challenged in Atiabari Tea Co. (supra) was the Assam Taxation (On Goods Carried By Roads And Inland Waterways) Act, 1954. It was held that the Act had put a direct restriction on the freedom of trade and since the State Legislature had not complied with the provisions of Article 304(b), the Act was declared void. 9. It is in the aforesaid background, reference was made to Nine Judges' Bench, as indicated at the outset of this order. 10. We may also mention at this stage that when the matters were argued before the Nine Judges' Bench, certain other aspects were also argued. Primarily, three kinds of issues were taken by the Assessees which are to the following effect: (1) Whether the entire State can be treated as 'local area' for the purposes of entry tax? (2) Whether entry tax can be levied on the goods which are directly imported from other countries and brought in a particular State?. (3) In some statutes enacted by certain States, there was a provision for giving adjustment of other taxes like VAT, incentives etc. paid by the indigenous manufacture ..... 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