TATA STEEL LTD Vs. STATE OF JHARKHAND

JUDGEMENT

(1.) This bunch of writ petitions have been preferred to challenge the validity of section 3 of the Jharkhand Entry Tax Act on Consumption or Use of Goods Act, 2011 being ultra vires to Article 301 read with Article304(a) of the Constitution of India and is not saved by Article 304(b) of the Constitution of India with consequential relief of order of restraint against the respondent State of Jharkhand from enforcing the provisions of the Jharkhand Entry Tax Act, 2011, whereby and whereunder entry tax has been sought to be levied and collected on scheduled goods, making entry exceeding Rs. 10,000/- into local area from any place outside the State for consumption or use therein.

(2.) All the petitioners are engaged in trade or manufacture and registered under the Jharkhand Value Added Tax Act, 2005 and Central Sales Tax Act, 1956 as dealer. The petitioners, during the course of their business, import scheduled goods as specified under the Jharkhand Entry Tax Act of 2011 on Consumption or Use of Goods Act, 2011 (hereinafter referred to as the Act of 2011) from outside the State of Jharkhand for their works at various places in the State of Jharkhand. By section 3 of the Act of 2011, liability has been imposed upon the petitioners to pay entry tax on the value of those scheduled goods which they are importing in the State of Jharkhand and which are used in their works. The objection of the petitioners is that levy of such entry tax directly interferes the free movement of goods and imposes unreasonable restrictions upon free trade and therefore, it has violated Article 301 which provides that trade, commerce and intercourse throughout the territory of India shall be free and power to impose restriction has been given to Parliament in Article 302. The Parliament may impose restriction on freedom of trade, commerce and intercourse between one State and another or within any part of the territory of India as may be required in the public interest and that power is not vested in the State. It is true that under Article 304, notwithstanding, anything contained in Article 301 or 303, the Legislature of a State may frame the law to impose tax on goods imported from other State or Union Territories to which similar goods manufactured or produced in the State are subject to some tax. However, the tax should not to discriminate between the goods so imported and goods so manufactured or produced. The State may impose such reasonable restrictions on the freedom of trade, commerce and intercourse with or within the State as may be required in public interest.

(3.) As per proviso to Article 304, no Bill or amendment for the purposes of clause (b) of the Article 304 can be introduced or moved in the Legislature of the State without sanction of the President. Therefore, according to the petitioners, Article 301 imposes a general limitation on all legislative power in order to ensure that trade, commerce and intercourse throughout India is free. However, this limitation on power has been relaxed under Article 302 of the Constitution of India but only in favour of the Union Legislation and that too, on satisfaction of public interest. Article 303(2) of the Constitution of India is an exception to the restrictions imposed under Article 303(1) on the Parliament and that exception applies only to Parliament and to be resorted only in a specified situation indicated in Article 303(2) of the Constitution. Article 304(a) of the Constitution authorizes imposition of tax on the goods imported from the neighbouring State at par in such a manner as not to create any discrimination between similar goods manufactured and produced inside the State with regard to State taxation within the allocated field. Similarly Article 304(b) of the Constitution is analogous to Article 302 for it makes the State power contained in Article 304(b) of the Constitution free from the prohibition contained under Article 301 in view of the opening words of Article 304 of the Constitution. However, there is also difference between the power under Article 302 and those of Article 304 and the difference is that under Article 302 of the Constitution restrictions are not subject to the test of reasonableness or it is coupled with the requirement of a previous sanction from the President as introduced in the proviso to Article 304(b) of the Constitution. The legislation mentioned in Article 304(b) of the Constitution is, thus, made subject to the requirements (i) test of reasonable restriction and (ii) prior sanction of the President.