DIGVIJAY CEMENT COMPANY LIMITED Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) The challenge in this writ petition is to the notification dated 12th March, 1997 issued by the State of Rajasthan under Section 8(5) of the Central Sales Tax Act (for short "the Act") whereby it reduced the rate of sales tax on inter-State sale of cement by any dealer from that State to 4% and did away with the requirement of furnishing of declaration in Form-C or certificate in Form-D contemplated by Section 8(4) of the Act.

(2.) Shri Digvijay Cement Co. Ltd. and M/s. Gujarat Ambuja Cements Ltd., petitioners Nos. 1 and 3 herein, manufacture cement and have their manufacturing units in the State of Gujarat. The cement manufactured by them is sold in Gujarat and elsewhere. The State of Rajasthan had issued under Section 8(5) notifications dated 8th January, 1990 and 27th June, 1990, which had the effect of reducing tax on inter-State sale effected by dealers from Rajasthan to 7% even though in respect of local sales the tax was 16%. These notifications were challenged by the petitioners by their filing a writ petition in the Rajasthan High Court in February, 1994. During the pendency of this petition the State of Rajasthan issued under Section 8(5) of the Act another notification dated 7th March, 1994 reducing the rate of tax on inter-State sale of cement to 4% and without the requirement of furnishing of declaration in Form-C or certificate in Form-D by dealers in Rajasthan who may have effected the inter-State sale. By amending the aforesaid writ petition this notification of 7th March, 1994 was also challenged.

(3.) The grievance of the petitioners in the aforesaid petition was that as a consequence of such reduction of sales tax, cement from Rajasthan became much cheaper in the neighbouring States like Gujarat and that adversely affected the local sale of cement manufactured by the petitioners in Gujarat by reason of higher rate of sales tax on the local sales within that State. Such reduction of the rate of tax, it was contended, was contrary to the scheme contained in Part XIII of the Constitution and was liable to be struck down.