TMI Blog1993 (7) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... hit by article 19(1)(g) of the Constitution as it amounts to a restraint on freedom of trade. 3.. The stand of the Revenue, on the other hand, is that the legislative power to make law for imposition of tax on sale of goods within the ambit of entry 54 of List II of the Seventh Schedule brings within its sweep the ancillary power of making a law to see any evasion of tax on that score and since the statute has provided for a check-gate with that object, the said provision is within the legislative competence and cannot be held to be a colourable exercise of power. It is further contended that the concept of freedom of trade postulated by article 301 also recognises the need and the legitimacy of some degree of regulatory control and, therefore, the provision to have a check-gate to find out whether there is any evasion of tax is a regulatory measure and does not hamper or impede trade, commerce and intercourse in any manner and, therefore, article 301 has no application. Lastly, it is contended that the restrictions or impediments which directly and immediately impede or hamper the free-flow of trade will only fall within the prohibition of article 301 and not those which have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax payable in respect of such goods to be assessed in the prescribed manner, the goods seized as aforesaid shall be released: Provided also that no order of confiscation shall be made in respect of goods which are not liable to payment of tax. (4) If the goods which are seized or confiscated under sub-section (3) are of a perishable nature, they shall be sold in the prescribed manner." The aforesaid provision has remained in the statute book for the last 32 years and it is conceded at the Bar that pari materia provisions are there in almost all the States in the country. Section 16A(1) categorically and unhesitatingly indicates that when the State Government consider it necessary to set up checkpost with a view to prevent or check evasion of tax then they can do so by issuing a notification. Thus the object of providing for a check-post is to prevent or check the evasion of tax under the Orissa Sales Tax Act. 5.. The first question which arises for our consideration is whether the State Legislature has the legislative competence to make the law in question or it is a colourable exercise of power. The true meaning of "colourable legislation" has been conveyed by Mukherjea, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said provision is merely to have a check on evasion of sales tax and the said legislation cannot be held to be a colourable piece of legislation. We, therefore, do not find any substance in the argument of Mr. Mohanti for the petitioners that the legislation is invalid on the ground that it is a colourable legislation. 6.. The next question that arises for consideration is whether having a checkgate at places to be notified by the State Government amounts to any restriction or impediment on the free-flow of trade, within the ambit of article 301 of the Constitution. According to Mr. Mohanti, the learned counsel for the petitioners, the moment a contrivance is put obstructing the normal flow, it amounts to a restriction of free-flow of trade under article 301 and, therefore, the very fact of having a check-gate and thereby obstructing the path of free-flow would attract the provision contained in article 301 of the Constitution and unless saved under article 304, the provision must be held to be ultra vires. In support of this contention reliance has been placed on two decisions of the Supreme Court in Atiabari Tea Co. Ltd. v. State of Assam AIR 1961 SC 232 and Khyerbari Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of "Tree-flow of trade" under article 301 of the Constitution, the learned Judges in paragraph 45 of the judgment held: "It is, of course, true that the validity of tax laws can be questioned in the light of the provisions of articles 14, 19 and article 301 if the said tax directly and immediately imposes a restriction of the freedom of trade; but the power conferred on this Court to strike down a taxing statute if it contravenes the provisions of article 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..........." In further elaboration, the learned Judges observed that on examining the impugned provision if the court is satisfied that the said provision imposed unreasonable restriction on the fundamental rights of the citizen or conferred unbridled power on the appropriate authorities or introduced unconstitutional discrimination and in consequence, amounted to a colourable exercise of legislative power, then certainly the provision should be str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitutions, the provisions of our Constitution must be interpreted against the historical background in which our Constitution was made; the background of problems which the Constitutionmakers tried to solve according to the genius of the Indian people whom the Constitution-makers represented in the Constituent Assembly......" In Automobile Transport case AIR 1962 SC 1406, the apex Court held that on the basis of the textual construction, the view expressed is that the freedom guaranteed by article 301 is of the widest amplitude and is subject only to such restrictions as are contained in the succeeding articles in Part XIII. After noticing articles 302, 303 and exceptions in Part XIII, the learned Judges also observed that a purely textual interpretation may not disclose the true intendment of the articles and, then, the court held: "....... but we must at the same time remember that we are dealing with the Constitution of a country and the inter-connection of the different parts of the Constitution forming part of an integrated whole must not be lost sight of. Even textually, we must ascertain the true meaning of the word 'free' occurring in article 301. From what burdens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act is merely a regulatory measure provided for checking evasion of tax and does not reach the stage of affecting or impairing the freedom of trade or commerce in any manner and, therefore, is outside the scope of article 301 of the Constitution. We agree with this submission of the learned Standing Counsel for the Revenue, as, in our view, the law in relation to providing for a check-gate is essentially meant to check evasion of payment of sales tax and the so-called obstacle or barrier cannot be held to be a restriction on the free-flow of trade and commerce so as to attract the provision of article 301 of the Constitution. 7.. It is in this context we think it appropriate to notice some other decisions of different High Courts where such physical barrier vis-a-vis applicability of article 301 of the Constitution has been considered. So far as this Court is concerned, the validity of section 16A as well as rule 94 was considered in the case of Kamal Kumar Goyal v. State of Orissa [1975] 35 STC 343 (Orissa) and the challenge in that case was in relation to the legislative competence of the State Legislature to make the law in question under entry 54 of List II of the Seventh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the problem before the Legislature and the object which is sought to be achieved by the statute........" It may be stated that section 29A of the Kerala Act also authorised the State Government to establish check-posts if the Government considers it necessary with a view to prevent or check evasion of tax. In other words, it is in pari materia with section 16A of the Orissa Sales Tax Act. It may be noticed that so far as section 29A of the Kerala Act is concerned, it had obtained the previous sanction of the President satisfying article 304(b) of the Constitution though so far as section 16A of the Orissa Act is concerned, no such sanction has been obtained since the stand of the Revenue is that it does not attract article 301 of the Constitution. In the case of Sodhi Transport Company v. State of U.P. [1983] 52 STC 440 (All.), section 28B of the U.P. Sales Tax Act requiring vehicles carrying goods from outside the State to other States passing through the State of U.P. to obtain a transit pass was challenged to be violative of articles 301 and 19(1)(g) of the Constitution on the ground that it impedes free-flow of trade. Rejecting the said contention, the learned Judges o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olative of articles 14, 19 and 301 of the Constitution and the Supreme Court in the case of Sodhi Transport Co. v. State of U.P. [1986] 62 STC 381; AIR 1986 SC 1099 considering the said provisions held the provisions to be intra vires. In paragraph 18, the learned Judges observed: "The levy of sales tax on goods which are held to have been sold inside the State cannot be considered as contravening article 301 of the Constitution. The restrictions imposed are not also shown to be unreasonable. They do not unduly hamper trade. On the other hand they are imposed in the public interest. The contentions based on article 301 and article 19(1)(g) of the Constitution are, therefore, without substance." What has been stated in the aforesaid case in relation to section 29B of the U.P. Sales Tax Act, in our considered opinion, equally applies to the contentions raised in relation to section 16A of the Orissa Sales Tax Act. In the case of State of Bihar v. Harihar Prasad Debuka [1989] 73 STC 353 (SC); AIR 1989 SC 1119, the notification issued by the State Government under the Bihar Finance Act requiring some prescribed forms to be carried by goods carrier or vessel for transporting of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e effect on the trade. The checking of documents or the filling in and submission of forms and returns, detour to a public weigh-bridge and the like may be an inconvenience, and unless they are shown to be unreasonable and not in public interest, the court may apply the maxim 'de minimis non curat lex'......" Ultimately, it was held that the notification and adoption of the forms had been validly made in exercise of powers incidental to the power of levying sales tax and they are reasonable and in public interest and not ultra vires the articles 301 and 304 of the Constitution. This being the position of law, we entirely agree with the submission of the learned Standing Counsel appearing for the Revenue and hold that the impugned provisions contained in section 16A of the Orissa Sales Tax Act and rules 94 and 94A of the Orissa Sales Tax Rules are regulatory measures merely to check evasion of tax and the interruption caused to the moving vehicles for the purpose of checking whether tax is being evaded or not, does not amount to impeding the free-flow of trade attracting article 301 of the Constitution and, therefore, the submission of Mr. Mohanti, the learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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