TMI Blog1999 (7) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... outside the charging provision. The discrimination between the two types of the motor vehicle is hit by the provisions of article 304(a) of the Constitution of India. 3.. Definition of "importer" under section 4-A(1)(c) provides importer means a person who brings a motor vehicle into a local area from any place outside the State for use or sale therein and who owns the vehicle at the time of entry into the local area. The words "outside the State", since have created a charge only on the imported vehicles, the levy is contrary to the decision given by the apex Court as well as the division Bench of this Court in the case of State of Karnataka v. Hansa Corporation AIR 1981 SC 463 while upholding the validity of the Act it was observed: "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 into a local area. Thus, this tax is non-discriminatory. In view of the declaration of law as above, the impugned notification is violative of Constitution of India." Reliance is placed on the decision given in the case of Shree Mahavir Oil Mills v. State of Jammu and Kashmir [1997] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein. Article 304 has permitted the State Legislature to levy tax to which similar goods manufactured or produced in the State are subjected to. There cannot be any discrimination between the goods imported and goods so manufactured. The levy under the Karnataka Tax on Entry of Goods Act by section 4-B is of tax and therefore the restrictions imposed by article 304(a) have to be complied with. If the motor vehicles are manufactured in the State of Karnataka and are moved from the municipal limits of one town to another then the charging provision of section 4-B does not come into operation. If the motor vehicles are imported from other States, liability of tax is created on such imported motor vehicles. The entry tax has been considered to be compensatory in nature. In Atiabari Tea Co. Ltd. v. State of Assam AIR 1961 SC 232, wherein it was held as under: "..... that restrictions freedom from which is guaranteed by article 301, would be such restrictions as directly and immediately restrict or impede the free-flow or movement of trade. Taxes may and do amount to restrictions; but it is only such taxes as directly and immediately restrict trade that would fall within the purvie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... barriers or obstructions within the State as well as inter-State: all restrictions which directly and immediately affect the movement of trade are declared by article 301 to be ineffective. The extent to which article 301 operates to make trade and commerce free has been considered by this Court in several cases. In Atiabari Tea Co. Ltd. v. State of Assam [1961] 1 SCR 809; AIR 1961 SC 232, Gajendragadkar, J., speaking for himself and Wanchoo and Das Gupta, JJ., observed at page 860 of SCR (at page 254 of AIR): '........we think it would be reasonable and proper to hold that restrictions, freedom from which is guaranteed by article 301, would be such restrictions as directly and immediately restrict or impede the free-flow or movement of trade'. In Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan [1963] 1 SCR 491; AIR 1962 SC 1406, the view expressed by Gajendragadkar, J., in Atiabari Tea Co.'s case [1963] 1 SCR 809; AIR 1961 SC 232, was accepted by the majority. Subba Rao, J., who agreed with the majority observed that the freedom declared under article 301 of the Constitution of India referred to the right of free movement of trade without any obstructions by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der article 301 of the Constitution. 6.. From the various decisions of the apex Court as referred above, it is now settled that the provisions of Part XIII of the Constitution particularly articles 301 to 304 of the Constitution take into their ambit the provisions of taxation laws in respect of such taxes which restrict the movement of the goods more particularly when a discriminatory treatment is given to the imported goods in comparison to the goods manufactured or could be manufactured in the State. Article 301 provides that trade, commerce and intercourse throughout the territory of India shall be free. Any impediment in the movement of goods from one State to another has to pass the test of the constitutional prohibitions. Article 302 provides that Parliament may by law impose such restrictions on the 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. It is the competence of the Parliament by which restrictions in public interest could be imposed in respect of movement of goods including freedom of trade, commerce and intercourse between one State and the other. Und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This decision therefore cannot assist the respondent. There could be a provision by which no discrimination between imported goods and locally manufactured goods is given and the amount of entry tax is given adjustment in the total liability of sales tax or the amount of sales tax already paid could be given adjustment under the provisions of the Entry Tax Act. 7.. Provisions of section 4-B has made liable only the importer of motor vehicles for registration and tax. Importer has been defined under section 4-A(1)(c) as the person who brings a motor vehicle into a local area from any place outside the State for use, or sale therein and who owns the vehicle at the time of entry into the local area. 8.. It cannot be denied nor can be presumed that the motor vehicles are not produced in the State of Karnataka. If such locally manufactured motor vehicles are moved from one local area to another they are not liable to entry tax and it is only the importer who has been subjected to tax. The provisions of section 4-B of the Karnataka Tax on Entry of Goods Act, 1979 are directly hit by articles 301 and 304(a) of the Constitution of India and are declared ultra vires the Constitution ..... X X X X Extracts X X X X X X X X Extracts X X X X
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