WIDIA INDIA LIMITED Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) The levy of entry tax on goods by the State of Karnataka has chequered history and the State had to face various litigations on this score. The constitutional validity of Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979 (hereinafter referred to as 'the Act') and the Notifications issued by the State Government in exercise of its powers conferred by S. 3 of the said Act were challenged before the High Court by filing writ petitions under Art. 226 of the Constitution. The Act and the Notifications issued thereunder were declared unconstitutional and mandamus was issued directing the State Government and its officers to forebear from enforcing the provisions of the Act. Against that judgment and order, the State Government preferred appeal before this Court. This Court in State of Karnataka and another v. M/s. Hansa Corporation ((1980) 4 SCC 697) set aside the order passed by the High Court striking down the Act.

(2.) The Court negatived the contention that S. 3 of the Act was vague. The Court also held that it was settled law that if the tax is compensatory in character, it would be immune from challenge under Art. 301 of Constitution of India; if on the other hand, the tax is not shown to be compensatory in character, it would be necessary for the party seeking to sustain the validity of the tax law to show that the requirements of Art. 304 have been satisfied. The Court also held that the levy of tax by the Notification at the relevant time was not discriminatory in character as envisaged by Art. 304(a) and it does not impose restrictions. The Court further held that the restrictions imposed are reasonable and in public interest and the Act subsequently having received the assent of the President, proviso to Art. 304(b) is complied with and, therefore, the Act was saved by Art. 304 and could not be struck down on the ground of its being violative of Art. 301.

(3.) The title of the aforesaid Act was amended in 1992 and it was named as 'The Karnataka Tax on Entry of Goods Act, 1979.' Section 3 of the Act empowers the State Government to levy tax by issuing Notification on the entry of any goods specified in the schedule into a local area for consumption, use or sale therein. At present, sub-section (1) of S. 3 reads as under :-