THE PRINCIPAL COMMISSIONER OF INCOME TAX-II, VISAKHAPATNAM vs. L. SURYAKANTHAM, VISAKHAPATNAM

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Reserved on :15.06.2024 Pronounced on: 23.09.2024

NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPT No. 76 of 2012 1 - M/s Vodafone Spacetel Limited 2a, Fortune Towers, 2nd Flr., Chandrashekharpur, Bhubaneswar, Orissa, Branch Off. Ashoka Millenium, Devpuri, Raipur C.G. Thru Dy. Gm Legal Rabindra, Chhattisgarh

---- Petitioner versus 1 - The Assistant Commercial Tax Officer And Ors. S/o Circle-3, Raipur C.G., Chhattisgarh 2 - The Commissioner Of Commercial Tax Raipur C.G. 3 - State Of C.G. Thru Its Principal Secretary, Commercial Tax Deptt. Govt. Of C.G. Raipur C.G.

---- Respondents WPT No. 91 of 2017 1 - Nokia India Pvt. Ltd Incorporated Under Companies Act, 1956, Having Its Registered Office At Flat N. 1213, 12th Floor, Kailash Building, 26, Kasturba Gandhi Marg, Central Delhi 110001, Through Sr. Manager Accounts And Taxation Pardeep Kumar Dhaka, Aged 38 Years S/o Sh. Raj Singh, R/o 132, Sector 9 A, Gurgaon 122011, Haryana ., Delhi

----Petitioner Versus

2 / 54 1 - State Of Chhattisgarh S/o Through Secretary, Commercial Tax Department, Mantralaya, Naya Raipur, Chhattisgarh., Chhattisgarh 2 - Commissioner, Commercial Tax, Chhattisgarh, Raipur, Chhattisgarh.

---- Respondents WPT No. 101 of 2015 1 - Ambuja Cements Limited A Company Incorporated Under The Companies Act Having Its Registered Office At P.O. Ambuja Nagar, Taluk, Kodinar, District Junagarh Gujarat And Unit At Village And P.O. Rawan, Teh. Baloda Bazar, Distt Baloda Bazar- Bhatapara, Chhattisgarh, Through Its Manager Legal Anup Jaiswal, 54 Yrs. S/o Late Loknath Jaiswal, Po Rawan, Teh. Baloda Bazar, Distt. Baloda Bazar- Bhatapara, Chhattisgarh, Chhattisgarh

----Petitioner Versus 1 - State Of Chhattisgarh S/o Through Its Secretary, Finance And Commercial Tax, Mantralaya, Naya Raipur, Chhattisgarh, Chhattisgarh 2 - Commissioner, Commercial Tax, Vanijya Kar Bhavan, Civil Lines, Raipur, Chhattisgarh

---- Respondents WPT No. 137 of 2015 1 - Micromax Informatics Ltd. A Company Incorporated Within The Meaning Of The Companies Act, 1956, Having Its Registered Office At Plot No. 21/14, Block A, Naraina Industrial Area, New Delhi. And Having Its Local Office At- Micromax Informatics Limited C/o Neeta Enterprises, Opposite Jeet Cold Storage, Ring Road No.2, Gondpara, Raipur, Chhattisgarh 492099, Chhattisgarh

----Petitioner Versus 1 - State Of Chhattisgarh S/o Through Secretary Department Of Commercial Taxes, Mahanadi Bhawan, Naya Raipur, Chhattisgarh, Chhattisgarh

3 / 54 2 - Commissioner Of Commercial Tax, Vajinjyik Kar Bhawan, Civil Lines, Raipur, Chhattisgarh

---- Respondents WPT No. 280 of 2017 1 - M/s Jayaswal Neco Industries Ltd. A Company Incoporated Under The Compnies Act, 1956 Having Its Registered Office At F-8, M I D C, Industrial Area, Hingna Road, Nagpur Maharashtra State And One Of Its Plant At Siltara Industial Area, Raipur, Chhattisgarh Through Its Authorized Representative Shri Vivek Tiwari R/o A-21, Cross Street - 6, Smritinagar, Durg Chhattisgarh 490020., Chhattisgarh

----Petitioner Versus 1 - State Of Chhattisgarh S/o Through Secretary, Department Of Commercial Taxes, Mahanadi Bhawan, Naya Raipur, Mantralaya, Raipur, Chhattisgarh., Chhattisgarh 2 - Commissioner Of Commercial Tax, Vanijyik Kar Bhawan, Civil Lines, Raipur, Chhattisgarh.

---- Respondents WPT No. 75 of 2017 1 - Ultratech Cements Limited Formerly Grasim Industries Ltd. White Cement Division A Company Incorporated Under Companies Act, 1956, Having Its Registered Office At B- Wing Ahura Center, Il Floor, Mahakali Caves Road, Andheri E, White Cement Unit And Factory At Rajashree Nagar, Vill. Kharia Khangar, District Jodhpur Rajasthan And Branch Office At Crystal Tower, Ground Floor, Telibandha, Raipur Chhattisgarh Through Its Authorized Signatory91 Jyoti Prakash., Maharashtra

----Petitioner Versus 1 - State Of Chhattisgarh S/o Through The Secretary, Department Of Finance, Mantralaya, Mahanadi Bhawan, Naya Raipur Chhattisgarh, Chhattisgarh

4 / 54 2 - The Commissioner, Commercial Tax, Chhattisgarh, Mantralaya, Mahanadi Bhawan, Naya Raipur Chhattisgarh 3 - Commercial Tax Officer, Commercial Tax, Raipur Circle I V, Raipur Chhattisgarh

---- Respondents WPT No. 76 of 2017 1 - Acc Ltd. A Company Incorporated Under The Provisions Of The Companies Act 1956 Having Its Registered Office At Cement House 121, Maharshi Karve Road, Mumbai- 400 020 And Having Its Plant At Jamul Cement Works, Dist. Durg 490024 Chhattisgarh Through Jagjahir Lal Tiwari, S/o. Raj Bhan Tiwari, Aged About 54 Years, Plant Head, Jamul Cement Works Dist. Durg 490024 Chhattisgarh, Chhattisgarh 2 - Shri Sumit Banerjee, S/o. Mohit Kumar Banerjee, Aged About 51 Years Managing Director, A C C Limited, Cement House, 121, Maharshi Karve Road, Mumbai 400 020 Chhattisgarh, District : Mumbai, Maharashtra

----Petitioner Versus 1 - State Of Chhattisgarh S/o Through Secretary, Department Of Commercial Taxes, Mantralaya, Mahanadi Bhawan, Naya Raipur Chhattisgarh, Chhattisgarh 2 - Commissioner Of Commercial Tax, Vanijyik Kar Bhawan Civil Lines, Raipur Chhattisgarh

---- Respondents WPT No. 80 of 2017 1 - Ultratech Cement Limited A Company Registered Under The Provisions Of The Companies Act, 1956 And Having Its Registered Office At B Wing, Ahura Centre, 2nd Floor, Mahakali Caves Road, Andheri East Mumbai 400093 Maharashtra And A Cement Plant/ Unit At Hirmi Cement Works Hirmi, P I N 493195 District Baloda Bazar, Chhattisgarh, Through Its Authorized Signatory Shri S S K V D Prasada Rao, Vice President Finance And Commercial ., Maharashtra

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----Petitioner Versus 1 - State Of Chhattisgarh S/o Through The Secretary, Department Of Finance, Mantralaya, Mahanadi Bhawan, Naya Raipur Chhattisgarh., Chhattisgarh 2 - The Commissioner, Commercial Tax, Chhattisgarh, Mantralaya, Mahanadi Bhawan, Naya Raipur Chhattisgarh. 3 - Commercial Tax Officer, Commercial Tax, Raipur Circle I V, Raipur Chhattisgarh.

---- Respondents WPT No. 88 of 2017 1 - Century Textiles And Industries Limited A Company Having Registered Under Companys Act, 1956 Having Its Registered Office At Century Bhawan, Dr. Annie Basant Road, Worli, Mumbai Maharastra And Local Office At P. O. Baikunth 498116, District Raipur Chhattisgarh Through Authorized Signatory Shri Arun Kumar Gour, Executive President Finance Century Cement, Baikunth, District Raipur Chhattisgarh., Chhattisgarh

----Petitioner Versus 1 - State Of Chhattisgarh S/o Through The Secretary, Department Of Finance, Mantralaya, Mahanadi Bhawan, Naya Raipur Chhattisgarh, Chhattisgarh 2 - The Commissioner, Commercial Tax, Chhattisgarh, Mantralaya, Mahanadi Bhawan, Naya Raipur Chhattisgarh 3 - Commercial Tax Officer, Commercial Tax Officer I V, Raipur Chhattisgarh.

---- Respondents WPT No. 344 of 2017 1 - M/s Bharti Airtel Ltd. Registered Address 3-4th Floor Metro Tower, A. B. Road, Indore 452001 Through Its Authorized Signatory / Manager Legal And Regularity Mr. Sanjeev Jain

6 / 54 S/o Shri M. K. Jain Aged 39 Years., Madhya Pradesh

----Petitioner Versus 1 - State Of Chhattisgarh S/o Through The Principal Secretary, Commercial Tax Department, Mantralaya, Raipur Chhattisgarh., Chhattisgarh 2 - The Commissioner Of Commercial Tax, Raipur Chhattisgarh. 3 - The Deputy Commissioner Of Commercial Tax, Raipur Chhattisgarh.

---- Respondents with WPT No. 117 of 2016 1 - M/s Maithan Alloys Ltd. A Company Duly Registered Under The Companies Act 1956, Having Its Office At 9 A.J.C. Bose Road, 4th Floor, Ideal Centre, Kolkata 700017, Manufacturing Unit At P.O. Kalyaneshwari, Villae Debipur, District Burdwan, West Bengal 713369 Through Its Authorised Signatory Mr. Rakesh Singh, S/o Mr. Kapil Dev Singh, Aged About 49 Years, R/o Of Flat No 504, Madhuarisha Heights Phase I, Risali, Sector Bhilai Chhattisgarh, Chhattisgarh

... Petitioner versus 1 - State Of Chhattisgarh Through The Secretary, Department Of Finance Mahandi Bhawan, Mantralaya,

New

Raipur,

District

Raipur

Chhattisgarh,

Chhattisgarh 2 - State Of Chhattisgarh Thorugh The Secretary, Department Of Commercial Tax, Mahanadi Bhawan, Mantralaya, New Raipur District Raipur Chhattisgarh ... Respondents For 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

7 / 54 and Mr. Neelabh Dubey, Advocates. For Respondent/State : Mr. R. S. Marhas, Additional Advocate General Division Bench Hon'ble Mr. Ramesh Sinha, Chief Justice Hon’ble Mr. Sachin Singh Rajput, Judge 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 be ultra vires the Constitution of India, being discriminatory. 10.3 That the Hon'ble High Court may be pleased to issue an appropriate writ/writs and/or, order/orders 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.

8 / 54 10.4 That the Hon'ble High Court may be pleased to issue an appropriate writ/writs and/or, order/orders, direction/directions restraining the Respondents from proceeding from taking any proceedings under the Act seeking to levy and or collect and or recover any amount from the Petitioner or making any demand or adopt any process; coercive or otherwise, against the Petitioner. 10.5 That the Hon'ble High Court may be pleased to direct the respondents to refund to the Petitioner the amount of Entry Tax deposited by it (Petitioner) from time to time and or recovered from the Petitioner by enforcement of any Bank Guarantee, alongwith interest @18% p.a. by issuing a writ of Mandamus or any other writ, order or direction. Or In the alternative, the Entry Tax as levied and collected so far, be allowed to be set off / adjusted against with the payment of taxes under other taxes as levied on goods by the Government of the State of Chhattisgarh. 10.6 Any other relief which this Hon'ble Court may deem fit and proper in the circumstances of the case may kindly be granted 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

9 / 54 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 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 provision of Article 301 of Constitution of India and parameters of this judicial concept are blurred, particularly by the decisions of Bhagatram (Supra) and Bihar Chambers of Commerce, we are of the view that the interpretation of Article 301 vis-a-vis compensatory tax should be authoritatively laid down with certitude of Constitution Bench under Article 145 (3). This is how the issue was placed before the Constitution Bench of the Hon’ble Supreme Court. 3. Later on in the case of Jaiprakash Associates Ltd. Vs. State of Madhya Pradesh and Ors, (2009) 7 SCC 339. “The Hon’ble Supreme Court observed that though some of the important factors have been addressed to by the Constitution Bench in Jindal case, certain other important constitutional issues are involved

10 / 54 because of the approach so far as the levy on transport cases indicated above are concerned is conceptually and contextually different from entry tax cases and framing ten questions referred the matter to Larger Bench in terms of Article 145 (3) of Constitution which are reproduced herein below:- “(1) Whether the State enactments relating to levy of entry tax have to be tested with reference to both clauses (a) and (b) of Article 304 of the Constitution for determining their validity and whether clause (a) of Article 304 is conjunctive with or separate from clause (b) of Article 304? (2) Whether imposition of entry tax levied in terms of Entry 52 List II of the Schedule VII is violative of Article 301 of the Constitution? 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 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?

11 / 54 (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 the 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?” 4. Thereafter, the Constitution Bench of the Hon’ble Supreme Court in the case of Jindal Stainless and Anr. Vs. State of Haryana and Ors. (2010) 4 SCC 595 considered the ten questions referred in the case of Jaiprakash and Associates Ltd. (supra) placed the matter before Hon’ble the Chief Justice of India for constituting a suitable larger Bench for re-consideration of the judgment of the Supreme Court in Atiabari Tea Co. Ltd. v. State of Assam (AIR 1961 SC 232); Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan (AIR 1962 SC 1406). Ultimately, the issue was placed before the Larger Bench of Hon’ble Supreme Court in the case of Jindal Stainless Ltd. and anr. Vs. State of Haryana and ors., (2017) 12 SCC 1. The larger Bench of Hon’ble Supreme Court by majority answered the reference in para 1159.1 to 1159.8, which is quoted herein below - “1159.1. Taxes simpliciter are not within the contemplation of Part XIII of the Constitution of India. The word "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.

12 / 54 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 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 notified as a local area and whether entry tax can be levied on goods entering the landmass of India from another country are left open to be determined in appropriate proceedings.” 6. The petitioners in these cases have challenged the constitutional validity of the Act of 1976 particularly Section 3 and Section 4-A of the Act of 1976 and also prayed for quashing 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-

13 / 54 A of the Act of 1976. The petitioners have also prayed that a declaration that the entire State cannot be a local area for the purposes of Entry 52 of List II of the Constitution of India and that “local area” can only be declared as defined in the definition of the Act of 1976. It has further been prayed that the respondent / State be restrained from seeking levy and / or collect and / or recover any amount from the petitioner or making any demand under the Act of 1976. It has been further prayed that the State / respondent may be directed to refund the entry tax deposited with interest or may be adjusted / set off against the payment of taxes as levied on goods by the Government. 7. Predominantly challenge to the constitutional validity of the Act of 1976 is on the ground that it is violative of Article 301 and 304 of Constitution of India and also violative of Article 14 of the Constitution of India. 8. Before delving into the merits of the case it would be appropriate to rely upon some judgments of the Hon’ble Supreme Court 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 India8 stated that it was settled law that subordinate legislation can be challenged on any of the grounds available for challenge

14 / 54 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 earlier judgment in the matter of Binoy Viswam v. Union of India and others (2017) 7 SCC 59 and reviewing their earlier decisions, have held that the statute enacted by Parliament or a State Legislature cannot be declared unconstitutional lightly, and observed as under: - “70. It could thus be seen that this Court has held that the statute enacted by Parliament or a State Legislature cannot be declared unconstitutional lightly. To do so, 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 provision under challenge cannot stand. It has been held that unless there is flagrant violation of the constitutional provisions, the law made by Parliament or a State Legislature cannot be declared bad. 71. It has been the consistent view of this Court that legislative enactment can be struck down only on two grounds. Firstly, that the appropriate legislature does not have the competence to make the law; and secondly, that it takes away or abridges any of the fundamental rights enumerated in Part III of the Constitution or any other constitutional provisions. It has been held that no enactment can be struck down by just saying that it is arbitrary or unreasonable. Some or the other constitutional infirmity has to be found before invalidating an Act. It has been held that Parliament and the legislatures, composed as they are of the representatives of the people, are supposed to know and be aware of the needs of the people and what is good and bad for them. The court cannot sit in judgment over their wisdom.

15 / 54 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 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 that there is always a presumption in favour of constitutionality or validity of a subordinate legislation and the burden is upon him who attacks it to show that it is invalid. It has been held in paragraphs 27 & 28 of the report the same is as under: - “27. It could thus be seen that this Court has held that the subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition, it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. Though it may also be questioned on the ground of unreasonableness, such

16 / 54 unreasonableness should not be in the sense of not being reasonable, but should be in the sense that it is manifestly arbitrary. 28. It has further been held by this Court in the said case that for challenging the subordinate legislation on the ground of arbitrariness, it can only be done when it is found that it is not in conformity with the statute or that it offends Article 14 of the Constitution. It has further been held that it cannot be done merely on the ground that it is not reasonable or that it has not taken into account relevant circumstances which the Court considers relevant.” 11. Similarly, in the matter of PGF Limited and others v. Union of India and another (2015) 13 SCC 50, their Lordships of the Supreme Court have laid down certain guidelines by taking note of certain precautions to be observed whenever the vires of any provision of law is raised 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 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

17 / 54 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 stated reasons it is also imperative that when such writ petitions are entertained, the same should be disposed of as expeditiously as possible and on a time-bound basis, so that the legal position is settled one way or the other.” 12. It has been argued by Shri Ashish Shrivastava, learned Senior Advocate assisted by Shri Soumya Rai that 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. He further argued that the State Government has levied discriminatory rate of tax based on the use to which the goods have been put after their entry into the local area. He further submitted that the goods manufactured in the State do not carry the burden of entry tax while such burden is fastened upon similar goods brought into local area from outside the State. The impugned provisions suffers from the vice of excessive delegation in as much as the legislature has completely abdicated its essential legislative function to levy tax without any guidelines. He further submits that Section 4-A of the Act of 1976 confers arbitrary, uncontrolled and unguided powers on the executive to enhance the rate of entry tax upto 50% and suffers from the vice of excessive delegation. He submits that State cannot be deemed to be a single local area and the definition of the local area is ultra vires of the entry 52 of List 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.

18 / 54 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 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 submitted because of discriminatory tax, the petitioner has to be pay excessive tax. Inviting attention to the notification dated 04.03.2014 issued under the VAT Act, submitted that the VAT tax has been reduced to 2% for ferro alloyes. On the same day in a notification under VAT Act is reduced to 2% whereas vide notification under the Entry Tax Act the tax is increased to 5 %. He submitted that because of the difference of rate in

19 / 54 Chhattisgarh renders the petitioner’s product unviable for trade and commerce in state. He further submitted that the state has not filed any counter affidavit stating reasons for it. He submitted that the state can defend the notification only if they have shown the rational behind it. He placed reliance on the case Pasa Associates Pvt. Ltd v. Sate of C.G and Anr. 2015 (85) VSP 439 (Chhattisgarh) and Weston Electronics v. State of Gujarat, 1988 (2) SCC 568. 15. Return has been filed by the State. It has been stated in the return that the Constitutional validity of section 3 of the Act of 1976 was upheld by the Hon’ble Supreme Court in case of Bhagatram (Supra). Subsequently, in case of M/s Geo Millers Co. Pvt. Ltd (Supra) the validity of entire Act of 1976 was challenged, repelling the contention and upholding the validity of the Act of 1976, the Supreme Court observed that the revenue realized by applying the Act of 1976 is compensatory. In para 10 the Court observed that revenue realized that from the tax was made over to the local bodies, which had to be compensated for loss of revenue due to abolition of octroi. Various paragraphs 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

20 / 54 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 statute. He submitted that no supporting documents filed to say that the petitioner are discriminated. The petitioners have not filed any document to show discrimination. Replying to the arguments advanced with regard to levy of entry tax at multiple local area, submission was made that the same has not pleaded. He submitted that the challenge to vires of statute cannot be on hypothesis. Replying to the argument that Shri Neelabh Dubey that the product of the petitioner is unviable for trade and commerce in state, Shri Marhas submitted that there is documents material to substantiate this. He submitted that the local are as mentioned in the impugned notification is local area as defined in the Act of 1976. He submitted that entire state has not been declared as local area. Relying upon Jindal’s case (9) judges he submitted that presidential sanction is not required for import of goods from other state. Power of taxation is plenary. Power of grant of exemption to local goods is not discriminatory.

21 / 54 He submitted that just because tax is heavy is not contrary to part III of Constitution of India. He submitted that there is no discrimination in the impugned notification. 16. In order to appreciate the rival submissions made by learned counsel for the parties, it would be appropriate to refer to certain provisions of the Act of 1976. I) Section 2(b) of the Act of 1976 defines entry tax, which reads as under: "2(b). entry tax means a tax on entry of goods into a local area for consumption, use or sale therein levied and payable in accordance with the provisions of this 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 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:

22 / 54 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 (1) of Section 4 prescribes that entry tax shall be charged on the goods specified in Schedule II and Schedule III at the rates mentioned in the said Schedules. Section 4(l)(i) stipulates that entry tax payable in respect of goods specified in Schedule II other than iron and steel, which are consumed or used as raw material for the manufacture of other goods shall be one per cent, if the rate of tax prescribed exceeds one per cent. VI) Section 4 A was inserted vide Amendment Act of 1976 and it read as under before Amendment Act of 2001: “4.A. Provision for entry tax at enhanced rate on certain goods consumed or used in manufacture of other goods. - (1) The State Government may. by notification, specify the local area or areas and the goods which are used or consumed in such local area or areas mainly for the manufacture of other goods and may direct that, as from the date specified in the notification and in such manner as may be prescribed, the entry tax payable by a dealer under this Act shall be charged on his taxable quantum relating to such goods at a rate not exceeding ten per centum as may be specified in such notification notwithstanding anything to the contrary contained in Section 4. (2) On the issue of notification under sub-section (1), entry tax shall not be chargeable and payable on such goods at any other rate mentioned in any other provisions of this Act." VII) The word 'ten' occurring after "rate not exceeding" in sub- section (1) of Section 4A was substituted by word 'fifty' vide Amendment Act of 2001 w.e.f. 4.9.2001. VIII) Sub-section (1) of Section 9 stipulates 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.

23 / 54 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 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.M. Khanwilkar, JJ.) (majority view) 2. In exercise of their legislative powers under Entry 52 of List II of the Seventh Schedule to the Constitution several States in the country, at least 14 of whom are parties to these proceedings, have enacted laws that provide for levy of a tax on the "entry of goods into local areas comprising the States". The constitutional

24 / 54 validity of these levies was questioned in different High Courts by assesses/dealers aggrieved of the same, inter alia, on the ground that the same were violative of the constitutionally recognised right to free trade commerce and intercourse guaranteed under Article 301 of the Constitution of India. The levies were also assailed on the ground that the same were discriminatory and, therefore, violative of Article 304(a) of the Constitution of India. Absence of Presidential sanction in terms of Article 304(b) of the Constitution of India was also set-up as a ground of challenge to the levies imposed by the respective State legislatures. 3. Writ Petition (Civil) No.8700 of 2000 filed before the High Court of Punjab and Haryana was one such petition that assailed the constitutional validity of the Haryana Local Development Act, 2000. Relying upon the decisions of this Court in Atiabari Tea Co. Ltd. v. State of Assam (AIR 1961 SC 232); Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan (AIR 1962 SC 1406); Bhagatram Rajeev Kumar v. Commissioner of Sales Tax, M.P. (1995 Supp (1) SCC 673); and State of Bihar v. Bihar Chamber of Commerce (1996) 9 SCC 136, a Division Bench of the High Court of Punjab and Haryana dismissed the said petition and connected matters 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 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.

25 / 54 "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 known as compensatory tax and the trading facilities not being necessarily either direct or specific. 27. Since the concept of compensatory tax has been judicially evolved as an exception to the provisions of Article 301 and as the parameters of this judicial concept are blurred, particularly by reason of the decisions in Bhagatram and Bihar Chamber of Commerce we are of the view that the interpretation of Article 301 vis-à-vis compensatory tax should be authoritatively laid down with certitude by the Constitution Bench under Article 145(3). 28. In the circumstances let all these matters be placed before the Hon'ble the Chief Justice for appropriate directions." 5. The matters were, pursuant to the above, placed before a Constitution Bench of this Court in Jindal Stainless Ltd. (2) v. State of Haryana, (2006) 7 SCC 241 which resolved the conflict noticed in the reference order by holding that the working test propounded by seven Judges in Automobile Transport case (supra) was incompatible with the test of 'some connection' enunciated by the three Judge Bench in Bhagatram's case (supra). The Court held that the test of 'some connection' as propounded in Bhagatram's case (supra) had no application to the concept of compensatory tax. The Court, accordingly, overruled the decisions rendered in Bhagatram and Bihar Chamber of Commerce cases and held that the doctrine of 'direct and immediate effect of the impugned law on trade and commerce under Article 301 as propounded in Atiabari (supra) and the working test enunciated in Automobile Transport (supra) cases for deciding whether a tax is compensatory or not will continue to apply. The Court observed: "53. We reiterate that the doctrine of "direct and immediate effect of the impugned law on trade and

26 / 54 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 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 the matter, certain other important constitutional issues remained to be examined especially because a conceptually and contextually different approach may be required vis-à-vis "transport cases on the one hand and cases of "entry tax on goods on the other. 9. The questions formulated by the Court for determination by the Constitution Bench were in the following words: "(1) Whether the State enactments relating to levy of entry tax have to be tested with reference to both clauses (a) and (b) of Article 304 of the Constitution for determining their validity and whether clause (a) of Article 304 is conjunctive with or separate from clause (b) of Article 3047(2)

27 / 54 (2) Whether imposition of entry tax levied in terms of Entry 52 List II of the Schedule VII is violative of Article 301 of the Constitution? 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 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?

28 / 54 (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 that fall for determination by this Court could be re-framed as under: 11.1. Can the levy of a non-discriminatory tax per se constitute infraction of Article 301 of the Constitution of India? 11.2. If answer to question No. 1 is in the affirmative, can a which is compensatory in nature also fall foul of Article 301 of the Constitution of India? 111.3. What are the tests for determining whether the tax or levy is compensatory in nature? 11.4. Is the Entry Tax levied by the States in the present batch of cases 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? "65. The net effect of the decision in Automobile case(supra) is that taxes, if the same are compensatory in character, do not offend the guarantee of free trade, commerce and intercourse under Article 301 of the Constitution. The further question whether the compensatory character of a tax has to be determined by reference to the direct and substantial benefits/facilities provided by the State to the tax payer was examined and answered in the affirmative in Jindal Stainless Steel case (supra), where this Court while overruling the decisions in Bhagatram and Bihar Chamber of Commerce cases (supra) declared that it is not just a remote benefit to the tax payer but only a direct and substantial benefit that would justify levy of compensatory taxes

29 / 54 without offending Article 301 of the Constitution of India. Speaking for the Court, Kapadia, J. observed: "49. The concept of compensatory taxes was propounded in Automobile Transport in which compensatory taxes were equated 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" 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 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),

30 / 54 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." "122. In the light of what we have said above, we answer Question No.1 in the negative and declare 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. Decisions taking a contrary view in Atiabari's case (AIR 1961 SC 232) followed by a series of later decisions shall, therefore, stand overruled including the decision in Automobile Transport (AIR 1962 SC 1406) declaring that taxes generally are restrictions on the freedom of trade, commerce and intercourse but such of them as are compensatory in nature do not offend Article 301. Resultantly decisions of his Court in Jindal Stainless Limited(2) and anr. v. State of Haryana and ors (2006) 7 SCC 241 (AIR 2006 SC 2550) shall also stand overruled." "135. Fazl Ali J. in his concurring judgment explained the concept in the following words: "19. I think that a distinction should be drawn between "discrimination without reason" and "discrimination 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

31 / 54 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 Country develop equally. There is, if we may say so, with respect considerable merit in that line of reasoning. A State which is economically and industrially backward on account of several factors must have the opportunity and the freedom to pursue and achieve development in a measure equal to other and more fortunate regions of the country which have for historical reasons, developed faster and thereby acquired an edge over its less fortunate country cousins. Economic unity from the point of view of such underdeveloped or developing states will be an illusion if they do not have the opportunity or the legal entitlement to promote industries within their respective territories by granting incentives and exemptions necessary for such growth and development. The argument that power to grant exemption cannot be used by the State even in case where such exemptions are manifestly intended to promote industrial growth or promoting industrial activity has not appealed to us. The power to grant exemption is a part of the sovereign power to levy taxes which cannot be taken away from the States that are otherwise competent to impose taxes and duties. The conceptual foundation on which such exemptions and incentives have been held permissible and upheld by this Court in Video's case is, in our opinion, juristically sound and legally unexceptionable. Video Electronics, therefore, correctly states the legal position as regards the approach to be adopted by the Courts while examining the validity of levies. So long as the differentiation made by the States is not intended to create an unfavourable bias and so long as the differentiation is intended to benefit a distinct class of industries and the life of the benefit is limited in terms of period, the benefit 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

32 / 54 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 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 laws, the power of legislature to classify goods, things or persons are necessarily wide and flexible so as to enable it to adjust its system of Page 173 173 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 modern 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 kilometers 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

33 / 54 (AIR 1975 SC 583) for upholding the classification made between stage carriages and contract carriages both of which are engaged in carrying passengers are 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 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 over-ruling the decisions in Atiabari and Automobile Transport to the extent they declare that taxes generally are restrictions on the freedom of trade, commerce and intercourse. I also agree with the view taken by the Chief Justice ruling Jindal over- Stainless Ltd. (2) v. State of Haryana (2006) 7 SCC 241. Insofar as the concept of compensatory taxes evolved in Automobile Transport. I am of the view, abandoning compensatory tax in the subsequent judicial pronouncement like the present one, might prejudice the interest of the States concerned.

34 / 54 270. Question No. 4: I agree with the view taken by the Chief Justice on question No. 4 however, with the following additions:- 270.1When 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. 270.2 States have legislative competence to levy entry tax on the goods imported from other countries when those goods imported from other countries enter a local area for use, consumption or sale therein. 270.3.Tax concessions/benefits/subsidies granted by the State for locally manufactured goods need not necessarily be limited for a specific period of time. 271. Questions Nos. 2 and 3: Insofar as compensatory taxes are concerned in the light of the conclusions on question No. 1, I hold that the nomenclature of 'compensatory' ascribed to the taxes levied by the State 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 discussions. "273. In Automobile the concept of compensatory tax has been judicially evolved as an exception to the provisions of Art. 301.

35 / 54 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 purpose of meeting the expenses on account of providing or adding to the trading facilities, either immediately or in future, provided the tax sought to be generated is based on a reasonable relation to the actual or the projected expenditure on the cost of the service or facility. But the decisions in Bhagatram Rajeevkumar v. Commissioner of Sales Tax, M.P. 1995 Supp (1) SCC 673 and State of Bihar v. Bihar Chamber of Commerce (1996) 9 SCC 136held that even if the purpose of imposition of the tax is not to confer a special advantage on the traders, but to benefit the public in general including the traders, the levy can still be considered compensatory. In Bihar Chamber of Commerce, this Court reiterated the position that "some connection" between the tax and the trading facilities is sufficient to characterize it as compensatory tax. The Court went on further to hold that 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 and the nexus between the compensatory tax and the trading facility need not necessarily be either direct or specific. In Jindal Stripe Ltd. v. State of Haryana (2003) 8 SCC 60, this Court referred the matter to the Constitution Bench to authoritatively lay down the principles vis-à-vis compensatory tax." "274…….... The Constitution Bench further held that the test of "some connection" enunciated in Bhagatram was not only contrary to the working test propounded in Automobile (AIR 1962 Sc 1406) but obliterated the very basis of compensatory tax. It was, therefore, held that the test of "some connection" as propounded in Bhagatram was not a correct view and the judgments in Bhagatram and Bihar Chamber of Commerce were (AIR 1996 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

36 / 54 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 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 efficiently, which would help or ease free flow of trade and commerce, because of which the impost has to be regarded as compensatory in nature, in view of what has been stated in the aforesaid decisions, more particularly in Hansa Corpn. Case (1980) 4 SCC 697: (AIR 1981 SC 463)". [emphasis in original)" "467. The Constitution Bench in Jindal Stainless Ltd. (2) (AIR 2006 SC 2550, Paras 36, 43 7 44) after placing reliance on Automobile concluded that there is difference between a taxing Statute whose purpose is collection of revenue, and a taxing Statute whose purpose is regulation. The Court formulated a working test to determine whether the impugned law is a product of the exercise of regulatory power or taxing power: "If the impugned law seeks to control the conditions under which an activity like trade is to take place then such law is regulatory". The Bench concluded that the only way to reconcile a compensatory tax Statute that chooses movement of trade and commerce as a criterion and in effect impedes it, is by holding it as regulatory and, therefore, outside the scope of Articles 301, 302 & 304. "38.... If the impugned law seeks to control the conditions under which an activity like trade is to take place then

37 / 54 such law is regulatory, Payment for regulation is different from payment for revenue. If the impugned taxing or non- taxing law chooses an activity, say, movement of trade and commerce as the criterion of its operation and if the effect of the operation of such a law is to impede the activity, then the law is a restriction under Article 301. However, if the law enacted is to enforce discipline or conduct under which the trade has to perform or if the payment is for regulation of conditions or incidents of trade or manufacture then the levy is regulatory. This is the way of reconciling the concept of compensatory 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: 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 quantifiable benefit, the burden will be on the State as a service/facility provider to show by placing the material before the Court,

38 / 54 that the payment of compensatory tax is a reimbursement/recompense

for

the quantifiable/measurable benefit provided or to be provided to its paver(s). As soon as it is shown that the Act invades freedom of trade it is necessary to enquire whether the State has proved that the restrictions imposed by it by way of taxation are reasonable and in public interest within the meaning of Article 304(b) (see para 35 of AIR) of the decision in Khyerbari Tea Co. Ltd. v. State of Assam). (AIR 1964 SC 925)" (emphasis supplied) 468. For compensatory tax, Jindal Stainless Ltd. (2) thus ingrained the tests of (i) facial declaration; and (ii) proportionality to the quantifiable benefits provided to its payers, as an essential element. It was held that compensatory taxes like fees always have to be proportionate to the benefits and the decisions rendered in Bhagatram and Bihar Chamber of Commerce were declared bad in law." "474. To summarise the conclusions on question Nos. (ii) and (iii);- 474.1 In so far as compensatory taxes are concerned in the light of the conclusion on question (i), I hold that the nomenclature of 'compensatory' ascribed to the taxes levied by the State Government under Entry 52, List II pursuant to Automobile is unwarranted. The concept of compensatory tax was evolved fifty vears 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 cases subsequent to it. 474.2 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. 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

39 / 54 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 some cases 50% of the demand. When the matters were admitted by the Court, interim orders were passed directing the assessees to pay 50% of the demand. But, this Court cannot lose sight of the fact that assessees have not pleaded and produced evidence to establish that they have not passed on the tax burdens to the consumers. In absence of such a submission, the normal presumption is that they have passed on the tax burden. Had they contended otherwise, burden would have been on them to allege and establish the same. In the absence of any such allegation and proof, the claim of refund is not called for." Summary of the conclusions on Question Nos. (i) to (iv) are as under:-- Question No. (I) 482. Non-discriminatory taxes do not constitute infraction of Art. 301 of the Constitution. With due respect, the view taken in Atiabari and approved in Automobile Transport that taxes do amount to restriction and that freedom of trade, commerce and intercourse cannot be subject to restriction in the form of taxes is not a correct view and are to be over ruled. However, I am agreeing with the theory of compensatory tax evolved in the Automobile case for the reasons indicated hereunder while answering Questions (ii) and (iii). Question No. (iv) 483. Entry tax with reference to entry 52, List II of Seventh Schedule is not violative of Art. 301 subject to the levy being non- discriminatory i.e. passing the muster of Art. 304(a). A levy

40 / 54 sustainable under Art. 304(a), being non-discriminatory would ipso facto be out of the purview of Art. 301. 484. 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. 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 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 concerned in the light of the conclusion on question No. 1, I hold that the nomenclature of 'compensatory' ascribed to the taxes levied by the State 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

41 / 54 test of time and thus, any subsequent judicial pronouncement like the present one should not prejudice the interest of the parties involved. The States should not suffer any loss of revenue solely because of judicial interpretations and innovations in Automobile and the decisions subsequent to it. 491. 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. 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. 492. 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. Unjust Enrichment: 493. The concept of unjust enrichment is applicable for considering the question of refund. Unless the assessees establish that they have not passed on the tax burden to the consumers, they cannot make a claim for 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

42 / 54 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 way: “104 : The principles of law that may be deduced from various judgments of the Hon'ble Supreme Court referred to above, are that "the legislature cannot delegate its essential legislative function in any case. It must lay down legislative policy and principle, and must afford guidance for carrying out the said policy before it delegates its subsidiary powers in that behalf. If the Statement of Objects and Reasons offers satisfactory basis for holding that the legislative policy and principle have been enunciated with sufficient accuracy and clarity/, it may consider that it satisfies the requirements of necessary guidance to the delegatee. Guidance furnished must be held to be good if it leads to the achievement of the object of the statute which delegated the power. It is permissible for the legislature to delegate the power to select persons on whom the tax is to be levied or the goods or the transactions on which tax is to be levied. It is not possible for the legislature to enumerate goods on which the tax is to be imposed, the manner of taxation, the different rates at which tax is to be imposed on different categories of goods/persons/areas as various aspects such as impact of levy on the society, economic consequences and the administrative convenience etc. are required to be considered and these factors may change from time to time.

43 / 54 105: Equal protection clause of the Constitution does not enjoin equal protection of the laws as abstract propositions. Laws are enacted-to solve specific problem or to achieve definite objectives by specific remedies; absolute equality or uniformity of treatment is impossible of achievement. Taxes laws are aimed at dealing with complex problems of infinite variety necessitating adjustment of several disparate elements. 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. 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 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 rigorous. In examining the allegations of a hostile, discriminatory treatment what is looked into is not its phraseology, but the real effect of its provisions. A Legislature does not, as an old saying goes, have to tax everything in order to be able to tax something. If there is equality and uniformity within each group, the law would not be discriminatory. (Federation of Hotel & Restaurant Association of India v. Union of India [1989] 74 STC 102 (SC); AIR 1990 SC 1637). 112. It is also settled law that there is always a presumption in favour of the constitutionality of statutory provisions and the

44 / 54 burden is upon the petitioner to show that there has been a clear transgression of the constitutional principles. In order to sustain the presumption of constitutionality, the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and while good faith and knowledge of the existing conditions on the part of a Legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and un- known reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. (Ram Krishna Dalmia v. Justice S. R. Tendolkar AIR 1958 SC 538). 113. The petitioners have also challenged the notifications on the ground that it violates article 301 as well as articles 14 and 19 of the Constitution. However, in the entire petitions, the petitioners have neither alleged nor given any figures to demonstrate and establish that they suffered loss in the business as a result of increase in the rate of entry tax or 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 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

45 / 54 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 decisions of this court that the power of delegation is a constituent element of the legislative power as a whole, and that in modern times when the legislatures enact laws to meet the challenge of the complex socio-economic problems, they often find it convenient and necessary to delegate subsidiary or ancillary powers to delegates of their choice for carrying out the policy laid down by their Acts. The extent to which such delegation is permissible is also now well-settled. The legislature cannot delegate its essential legislative function in any case. It must lay down the legislative policy and principle, and must afford guidance for carrying out the said policy before it delegates its subsidiary powers in that behalf. It has been further observed thus: In dealing with the challenge to the vires of any statute on the ground of excessive delegation it is, therefore, necessary to enquire whether the impugned delegation involves the delegation of an essential legislative function or power and whether the legislature has enunciated its policy and principle and given guidance to the delegate or not. As the decision in Bagla's case. 1955-1 SCR 380: (AIR 1954 SC 465), shows, in applying this test this court has taken into account the statements in the preamble to the Act, and if the said statements afford a satisfactory basis for holding that the legislative policy and principle has been enunciated with sufficient accuracy and clarity the preamble itself has been held to satisfy the requirements of the relevant tests. In every case it would be necessary to consider the relevant provisions of the Act in relation to the delegation made and the question as to whether the delegation is intra vires or not will have to be decided by the application of the relevant tests." 23. In Corporation of Calcutta AIR 1965 SC 1107 the Constitution Bench held as thus – "The validity of the guidance required to make delegation of power good cannot 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

46 / 54 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 mentioned,— which make it necessary for a colossal municipal Corporation like that of Calcutta to have a large amount of flexibility in its taxing powers. These considerations lead to the view that Section 548 is valid legislation. There is sufficient guidance in the Act as to how the rate of the levy is to be fixed.” 24. In V. Venugopala Ravi Verma Rajah Vs. Union of India and Another reported in AIR 1969 SC 1094, in paragraph 14 it has been observed as under - "14. Equal protection clause of the Constitution does not enjoin equal protection of the laws as abstract propositions. Laws being the expression of legislative will intended to solve specific problems or to achieve definite objectives by specific remedies, absolute equality or uniformity of treatment is impossible of achievement. Again tax laws are aimed at dealing with complex problems of infinite variety necessitating adjustment of several disparate elements. The Courts accordingly admit. subject to adherence to the fundamental principles of the doctrine of equality, a larger play to legislative discretion in the matter of classification. The power to classify may be exercised so as to adjust the system of taxation in all proper and reasonable ways the legislature may select persons, properties, transactions and objects; and apply different methods and even rates for tax. if the legislature does so reasonably. Protection of the equality clause does not predicate a mathematically precise or logically complete or symmetrical classification: it is not a condition of the guarantee of equal protection that all transactions, properties, objects or persons of the same genus must be affected by it or none at all. If the classification is rational, the legislature is free to choose objects of taxation, impose different rates, exempt classes of property from taxation. subject different classes of

47 / 54 property to tax in different ways and adopt different modes of assessment. A taxing statute may 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, 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. These factors may change from time to time. Hence in the very nature of things, these details have got to be left to the executive. AIR 1958 SC 909. Referred to." 26. 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 (1983) 3 SCC 237: (AIR 1983 SC 634) wherein Hon’ble Supreme Court held that a difference in the rate of tax by itself cannot be considered to be discriminatory and offensive to the equality clause: “The next submission urged on behalf of the petitioners is based on Article 14 of the Constitution. It is contended by the

48 / 54 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 hostiles 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 in respect of taxation laws, the power of legislature to classily goods, things or persons are necessarily wide and flexible so as to enable it to adjust Its system 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 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 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

49 / 54 hold that the Impugned levy suffers from the vice of discrimination on the above ground.” 27. Two issues are before this Court is (i) as to whether the impugned legislation is violative of Article 304 (a) of the Constitution of India (ii) as to whether entire State can be declared as local area in light of Judgment of the Hon’ble Supreme Court in Jindal’s case (9 Judges). The Power to State to grant tax reduction to local goods non discriminating as observed by the Hon’ble Supreme Court in Jindal’s Case (9 Judges). It has been further observed that constitutional validity of any taxing statute has, therefore, to be tested only on the anvil of Article 304(a) and if the law is found to be non discriminatory, it can be declared to be Constitutionally valid without legislation having to go through the test or process envisaged by Article 304(b). It has been further observed that suffice to say that a fiscal statute shall be opened to challenge only under Article 304(a) of the Constitution without being subjected to test of Article 304(b) either in terms of existence of public interest or reasonableness of the levy. Therefore, the validity of the impugned legislation and the notification to be tested on the anvil of Article 304(a). The Court has to see as to whether the impugned legislation and notification are the tested of Article 304(a) of Constitution of India. 28. The discrimination is required to be proved by positive action. It has to be brought on record that by virtue of any legislation, the party has suffered loss or it is restricted to perform trade and commerce in the given State in which the legislation is enacted. The impugned notification only prescribes the rates on the goods imported from outside and goods inside the State. The notification 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

50 / 54 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 Bench of the Hon’ble Supreme Court after the decision of Jindal’s case (9 Judges) upholding the validity of entry tax. The Hon’ble Supreme Court by granting the liberty in favour of the petitioners observed that in many cases when there is no adequate factual foundation and there is no discussion in the impugned judgment therefore, liberty was reserved to file a fresh petition raising the aforesaid issues to factual background or any other constitutional statutory issues which arises for consideration. Therefore, the petitioners were required to place on record substantial material to demonstrate as to whether by imposing higher tax paid with that they are being discriminated in positive manner. Only by placing reliance on different tax on the goods imported from outside the State and inside the State to the accessed tax is being paid by the petitioners and as such no sufficient factual foundation is laid by the petitioners to substantiate the arguments advanced by them on discrimination. Different rates of taxes per se cannot be said to be discriminatory in nature. The Hon’ble Supreme court in Jindal’s case (9 Judges) observed that “as a matter of constitutional doctrine, there is no restraint on the plenary powers of Parliament as well as the state legislatures which requires the legislative body enacting a statute to legislate only upon one head of legislation falling within its competence. The legislature can distribute or allocate its regulatory or law

51 / 54 making requirements (both fiscal and non-fiscal) in a manner which best sub-serves its needs and concerns. Once this be the position, its impact upon the interpretation of Article 304(a) is that it is open to the state legislature to have due regard to the equality of tax burdens, when it legislates to impose “any tax” so long as it does not breach the notion of non-discrimination as between goods that are imported from other states and goods which are produced or manufactured within. It is legitimately 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 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 the goods imported from outside of state and within state per se cannot be said to be discriminatory. The state can look after the growth of the industry in the geographical boundary. In its wisdom it can provide incentive for better growth of the industry. In this context if higher tax rate is charged for the product imported from out of

52 / 54 state would not ipso facto mean to be discriminatory and colourable exercise of legislative power. The competency of the state to enact the Act of 1976 is not under challenge. The Act of 1976 survived for many years. It is a settled position of law that every discrimination involves a differentiation but every differentiation does not implicate discrimination. (Please see Shree Digvijay Cement Co. Ltd.Vs. State of Rajasthan (2000) 1 SCC 688). This proposition has also been laid down by Hon’ble R. Bhanumati J, in paragraph 459.2 of concurring judgment of Jindal’s case (9 Judges). 32. With due respect the judgment of this court in case of Pasa Associates Pvt. Ltd v. Sate of C.G and Anr. 2015 (85) VSP 439 (Chhattisgarh) is not helpful to the petitioner. As it was delivered in the context of the Value Added Tax Act, 2005 and here in this case the validity of the Act of 1976 has been upheld by this Court in Steel Authority of India (Supra) considering the same argument with regard to violation of Article 304 (a) and 14 of the Constitution of India. With due respect case law of Western Electronic (Supra) was also placed before this Court in Steel Authority of India (Supra) and thereafter considering the ground of challenge did not apply in the facts of the case. Therefore, this Court is unable to accede to arguments advanced by learned counsel for the petitioners that Act of 1976 is violative of Article 304 (a), 14 of Constitution of India. With due respect the case laws as cited by Shri Shrivastava would not come to rescue in the given fact of this cases, looking to the issue involved in this petition. 33. It has been argued 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

53 / 54 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 the words of a statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule, vide Swedish Match AB vs. Securities and Exchange Board, India, AIR 2004 SC 4219. As held in Prakash Nath Khanna vs. C.I.T. 2004 (9) SCC 686, the language employed in a statute is the determinative factor of the legislative intent. The legislature is presumed to have made no mistake. The presumption is that it intended to say what it has said. Assuming there is a defect or an omission in the words used by the legislature, the Court cannot correct or make up the deficiency, vide Delhi Financial Corporation vs. Rajiv Anand 2004 (11) SCC 625. Where the legislative intent is clear from the language, the Court should give effect to it, vide Government of Andhra Pradesh vs. Road Rollers Owners Welfare Association 2004(6) SCC 210, and the Court should not seek to amend the law in the garb of interpretation. In Shiv Shakti Co-operative Housing Society vs. Swaraj Developers AIR 2003 SC 2434, Supreme Court observed as under: “"It is a well settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent."

54 / 54 35. Mr. Marhas 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. 36. Placing reliance on the judgments of the Hon’ble Supreme Court and the discussion made herein above we dismiss the writ petitions. 37. No cost.

Sd/- Sd/- (Sachin Singh Rajput) (Ramesh Sinha) Judge Chief Justice Deepti/Abhigya S.

DEEPTI HARIKUMAR Digitally signed by DEEPTI HARIKUMAR Date: 2024.09.23 19:37:22 +0530