TMI Blog1989 (2) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... G. Ramaswamy, Additional Solicitor-General (Ranjit Kumar, Advocate, with him), for the appellants. None appeared for the respondent. -------------------------------------------------- The judgment of the Court was delivered by K.N. SAIKIA, J.- These appeals by special leave are from a Full Bench judgment of the Patna High Court in two writ petitions under articles 226 and 227 of the Constitution of India allowing the petitions and quashing the Bihar Government's Notification No. S.O. 1432 dated 28th December, 1985, as violative of articles 301 and 304 of the Constitution of India. Sub-section (2a) of section 31 of the Bihar Finance Act, 1981, was substituted by Bihar Finance Act, 1984 as follows: "(2a) A person transporting goods shall carry a declaration in such form as may be prescribed by the Commissioner supported by either a cash memo, bill or a challan, in case the movement is otherwise than as a result of sale, in respect of goods which is being transported on a goods carrier, or a vessel and shall produce such challan, cash memo or bill along with the aforesaid form of declaration on demand before the prescribed authority: Provided that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or after the assessment. 2.. This notification shall come into force with effect from the 1st January, 1986. /Bikrikar/Vividh/121-308/85 By order of the Governor of Bihar MUKUND PRASAD Commissioner of Commercial Taxes and Special Secretary to Government." The respondent as proprietor of M/s. Jai Durga Industries of Jamshedpur town, which was registered under the Bihar Sales Tax Act and the Central Sales Tax Act, purchased 165 bags of mustard (sarso) from M/s. Kapur Chand Girish Chand Jain at Dhaulpur, in the State of Rajasthan, and was transporting the same therefrom to Jamshedpur in the State of Bihar in Truck No. RSG 533. On the 13th of February, 1986, the officers of the Investigation Bureau, Jamshedpur Division, inspected the said truck and all necessary papers including a road permit in form XXVIII-B for the 165 bags of mustard (sarso) were produced at the time of inspection. In the road permit the bill number had not been mentioned in column No. 9 in form XXVIII-B. On that ground the Inspecting Officers seized the goods loaded in the aforesaid truck and detained it at Mango Mofussil Police Station at Jamshedpur. A notice was issued to the petitioner to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submits that the particulars to be disclosed in the prescribed forms XXVIII-A and XXVIII-B and the carrying of the forms by the carriers would promote rather than hinder freedom of inter- State trade. It may be noted that the vires of sub-section (2a) of section 31 of the Bihar Finance Act, hereinafter referred to as "the Act", whereunder the notification was issued and the forms were adopted by the Commissioner and of the relevant Rules referred to in the forms, namely, rules 41 and 42(2), were not challenged before the High Court or before this Court. To decide the question whether the notification and adoption of the two aforesaid forms would be ultra vires articles 301 and 304 of the Constitution of India, it would be relevant to refer to the forms and the articles. The following are the forms: FORM XXVIII-A Permit (See rule 41) No. I hereby permit the transport of the consignment detailed overleaf. This permit will be valid for one month from the date of issue. Place..................... Signature Date...................... Designation (Seal) DETAILS OF CONSIGNMENT PERMITTED TO BE TRANSPORTED ----------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------- ------------------------------------------------------------------------------- NOTE.-(1) Separate form should be used for each consignment. (2)(a) In case of transport across or beyond check-post, a copy of the form should accompany the consignment. (b) In case of delivery of consignment from any notified railway station/other such place, the original copy of the form shall accompany the consignment in transit and thereafter shall be sent to the appropriate authority of the commercial taxes. Article 301 which deals with freedom of trade, commerce and inter- course provides: "Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free." Article 304 which deals with restrictions on trade, commerce and inter- course among States provides: "Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law- (a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been held that the freedom of trade, commerce and intercourse guaranteed by article 301 was wider than that contained in section 297 of the Government of India Act, 1935, and it included freedom from tax laws also. Article 301 provides that the flow of trade shall run smooth and unhampered by any restriction either at the boundaries of the State or at any other points inside the States themselves; and if any Act imposes any direct restrictions on the movement of the goods it attracts the provisions of article 301 and its validity can be sustained only if it satisfies the requirements of article 302 or article 304. Further the operation of article 301 cannot be restricted to legislation under entries dealing with the trade and commerce. Gajendragadkar, J., as he then was, in the majority judgment, observed that free movement and exchange of goods throughout the territory of India was essential for sustaining the economy and improving living standards of the country and that article 301 guaranteeing freedom of trade and commerce and intercourse embodied and enshrined a principle of paramount importance that the economic unity of the country would provide the main sustaining for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course directly and immediately, as distinct from creating some indirect or inconsequential impediment which may be regarded as remote. In other words, regulatory or compensatory measure cannot be regarded as violative of the freedom. Such measures may be of diverse nature or various kinds such as traffic regulation, making of declarations and filing of returns within reasonable limits. Such measures cannot be challenged as interfering with the freedom guaranteed by article 301 unless they are shown to be colourable measures to restrict the free flow of trade, commerce and intercourse. Measures impeding the freedom of trade, commerce and intercourse may be legislative or executive and may be fiscal or non-fiscal. He who assails such a measure has to show that it is not regulatory but it directly and immediately interferes with the free flow of inter-State trade or business. Freedom may be impeded by impediments on the individuals carrying on trade or business, on the business itself or on the vehicles, carriers, instruments and labour used in the trade or business. In Atiabari [1961] 1 SCR 809 tax on goods carried by roads outside State was struck down. In Automobile Transport (R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the conditions laid down in the said rule 31B. Under Schedule I jute exceeding 800 kg. could not be tendered for transport without a despatch permit and Kishanganj was one of the railway stations mentioned in Schedule II. In July, 1967, the Superintendent of Commercial Taxes prohibited the railway authorities from loading and despatching jute goods from any station in Purnea District without the production of a registration certificate. For non-production of such certificate the railway authorities refused to despatch from Kishanganj the jute goods booked by the appellant. The appellant moved a writ petition in the High Court of Patna challenging, inter alia, the validity of sections 3A and 5A of the Bihar Sales Tax Act and of rule 31B. The High Court dismissed the petition. With certificate the appeal was filed. In support of the petition it was urged (i) that sections 3A and 5A infringed the guarantee of freedom of trade under article 301 of the Constitution and since the amendment by the Finance Act, 1966, introducing the sections did not receive the assent of the President under article 304(b) the amendment was not saved; (ii) that sections 3A and 5A were contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on December 26, 1967 was also declared ultra vires. It would thus be seen that rule 31B and the notification issued thereunder were struck down on the ground that they impeded inter-State trade, commerce and intercourse. It would also be clear that the notification issued was shown to be a measure for preventing evasion of sales tax. In the instant case the notification dated 28th December, 1985, clearly states that the declaration in the permit is indeed for the purpose of verification and assessment of tax payable. In Indian Cement Ltd. v. State of A.P. [1988] 69 STC 305 (SC) it was held that the restriction provided for in article 301 can within the ambit be limited by law made by the Parliament and the State Legislature and that no power is vested in the executive authority to act in any manner which affects or hinders the essence and thesis contained in the scheme of Part XIII of the Constitution which is against creation of economic barriers and/or pockets which would stand against the free flow of trade, commerce and intercourse. There could be no dispute that taxation was a deterrent against free flow. The reasonable restrictions contemplated in Part XIII have to be back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not disputed that the notification and the forms were applicable in respect of goods being brought into the State and being sent out of the State in excess of the quantity notified under section 35 of the Act on every goods carrier or vessel. Thus, it would be applicable to the transport of all goods carried intra-State in Bihar, and inter-State to and through the State of Bihar. Further, clause (ii) of the notification states that if the prescribed form is found blank or does not contain all the required particulars it would be deemed to be a violation of the provisions of sub-section (2a) of section 31 of the Act entailing penalties for the infraction thereof. Counsel for the State submits that form XXVIII-A (Permit) is meant for those who are not registered as dealers and it has to be obtained from office, while form XXVIII-B (Permit) can be filled up by the registered dealer himself. It is further submitted that the particulars are to be furnished by the persons and this would not affect the freedom of movement of the goods carried, and that it would facilitate transportation across and throughout the State of Bihar by showing the permit wherever required and thus, instead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to transport goods from outside the State by road through the State to destinations outside the State. It provides that when a vehicle coming from any place outside the State and bound for any other place outside the State passes through the State, the driver or the other person-in-charge of such vehicle shall obtain in the prescribed manner a transit pass from the officer-in-charge of the first check post or barrier after his entry into the State and deliver it to the officer-in-charge of the check post or barrier before exit from the State. If he fails to do so it shall be presumed that the goods carried thereby have been sold within the State by the owner or person-in-charge of the vehicle. Rule 87 of the Uttar Pradesh Sales Tax Rules, 1948, inserted by the U.P. Sales Tax (First Amendment) Rules, 1977 provides that a person who wishes to obtain a transit pass shall make an application in the prescribed form to the officer-in-charge of the check post concerned. It also provides for the issue of private pass in triplicate and for inspection of the documents, consignments and goods to ensure that the statements are true. The appellants who claimed to be engaged in the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Article 304(b) clearly permits the State Legislature to impose such a reasonable restriction on the freedom of trade, commerce and intercourse with or within that State as may be required in the public interest. The word "with" involves an element having its situs in another State. It cannot be therefore said that the insistence on the disclosure in respect of goods entering Bihar from another State if otherwise legitimate would not be protected by article 304(b). The question, therefore, arises whether the insistence on the permit in form XXVIII-A or XXVIII-B, as the case may be, pursuant to the impugned notification can be said to be a reasonable measure adopted by the State Legislature for the express purpose of preventing evasion and facilitating assessment of tax. The reasonability has to be considered in the context of the effectiveness of the State's powers and the erosion, if any, of the powers of the Parliament in respect of inter-State trade, commerce and intercourse. In so far as carriage of goods vis-a-vis sales tax, it has also to be considered keeping in mind the fact that at some point goods imported from outside shall become assimilated with the general mass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply the maxim "de minimis non curat lex". A stoppage of the vehicle for roadside repair, for taking petrol, for allowing the driver to take rest or his meals would not naturally amount to interruptions of trade, commerce and intercourse. Public interest also will not allow transit regulations and allied measures to be violated, thwarted or evaded through the channel of inter-State trade, commerce and intercourse, unless of course the measures are shown to be unreasonable. In this view of the matter this case would squarely be covered by the decision in Sodhi Transport Co. [1986] 62 STC 381 (SC). We accordingly hold the notification and adoption of the forms to have been validly made in exercise of powers incidental to the power of levying sales tax, and that they are reasonable and in public interest, and not ultra vires the articles 301 and 304 of the Constitution of India. In the result, the impugned judgment of the High Court is set aside, and the appeals are allowed, but without any orders as to costs. Learned counsel for the appellant states that the State in these appeals was interested in the law being laid down, and that even if the validity of the notification is uphe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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