1980 (9) TMI 273 - SUPREME COURT

Whether a tax of a certain kind can be levied on entry of goods in certain local areas, the classification of local areas, if found to be reasonable, the levy of tax would not be invalid on the ground that choosing certain areas only excluding some others would violate Article 14?

Held that:- Tax under the impugned legislation would be levied on scheduled goods either manufactured or produced within Karnataka State or imported from outside on their entry in a local area. Thus, this tax is non-discriminatory in that it does not discriminate between scheduled goods manufactured or produced within Karnataka State or those imported from outside. And the microscopic discrimination relied upon by the respondents that there is differential treatment accorded to goods produced within a local area and those imported from outside the local area is hardly relevant for the purpose of Art. 304(a). The High Court was accordingly right in concluding that the impugned tax satisfies the requirements of Art. 304(a).

It would be useful to recall the observations of this Court in Khyerbari Tea Co. Ltd. case [1963 (12) TMI 24 - SUPREME COURT OF INDIA] that the power conferred on this Court to strike down a taxing statute if it contravenes the provisions of Arts. 14, 19 or 301 has to be exercised with circumspection, bearing in mind that the power of the State to levy taxes for the purpose of governance and for carrying out its welfare activities is a necessary attribute of sovereignty and in that sense it is a power of paramount character. It is, therefore, idle to contend that the levy imposed an unreasonable restriction on the freedom of trade and commerce.

As has been repeatedly observed by this Court, the taxes generally are imposed for raising public revenue for better governance of the country and for carrying out welfare activities of our welfare State envisaged in the constitution and, therefore, even if a tax to some extent imposes an economic impediment to the activity taxed, that by itself is not sufficient either to stigmatise the levy as unreasonable or not in public interest.

Thus the impugned tax is not discriminatory in character as envisaged by Art. 304(a) and it does impose restrictions but the restrictions imposed are reasonable and in public interest and the Act subsequently having received the assent of the President, the proviso to Art. 304(b) is complied with and, therefore, the impugned Act is saved by Art. 304 and could not be struck down on the ground that it was violative of Art. 301. The contention must accordingly be negatived.