THRESSIAMMA L CHIRAYIL Vs. STATE OF KERALA

JUDGEMENT

(1.) Constitutional validity of certain provisions of the Kerala Tax on Entry of Goods into Local Areas Act, 1994 (Act 15 of 1974) is under challenge in all these Original Petitions. A few of the writ petitioners have sought for a declaration that Section 2(1)(d), 2(1)(g), 2(1)(i) and Section 3 of the Kerala Tax on Entry of Goods into Local Areas Act, 1994 (in short "Entry Tax Act") are discriminatory and ultra vires of Articles 14, 19(1)(a), 19(1)(g), 246, 265, 286, 301, 304(a), 304(b) and other consequential reliefs. State maintained the stand that the Act is within the legislative competence of the State since it was promulgated in exercise of its powers under Articles 245 and 246 read with Entry 52 List II of the VII Schedule to the Constitution of India. Two batches of cases have also come up for our consideration; some pertaining to the levy of entry tax with regard to the goods brought from outside the State to the State of Kerala and some others with regard to the goods brought from outside the country to the State of Kerala. Counsel appearing for the petitioners submitted that the right of the State to impose entry tax under the Entry Tax Act has to be tested in the light of the decision of the Constitution Bench of the apex court in Jindal Stainless Ltd. v. State of Haryana and Ors. . Counsel submitted, in the light of the above decision of the apex court the decision rendered by a Division Bench of this Court in Rajan v. State of Kerala 1995 (2) KLT 369 is no longer good law and that the decision in Fr. William Fernandez v. State of Kerala and Ors. 115 STC 591 has to be affirmed,

(2.) The Division Bench in Rajan's case, supra considered the question as to whether Section 3 of the Entry Tax Act and Rule 4 framed therein are ultra vires and violative of the Constitution of India. Though the Bench made reference to the decisions of the Apex Court in Atiabari Tea Co. Ltd. v. State of Assam and Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan , It upheld the validity of Section 3 of the Entry Tax Act holding that if the tax imposed is compensatory or regulatory in nature it cannot be contended that it is violative of Article 301 of the Constitution of India. The court noticed that the contention of the State that there was evasion of sale tax in motor vehicles purchased from outside the State and brought into the State and it was as a compensatory measure the Entry Tax Act was enacted. The court also took the view that the State Legislature is competent to enact such a legislation under Entry 52 of List II of the VII Schedule of the Constitution.

(3.) The Kerala Finance Act, 1996 (Act 23 of 1996) had introduced substantial amendments to Act 15 of 1994 with effect from 19.7.1996. Preamble to that Act was substituted as follows: