TMI Blog2004 (4) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... g hunter shoe, P.T. shoe and gum boot being item Nos. 1, 2 and 3, respectively of the said advertisement. A copy of the advertisement has been appended as annexure 1 to the writ application. 4.. In pursuance of the said tender, the petitioners submitted their tender papers on August 22, 2003. They have appointed one agent M/s. Amit Traders, A/32, Ganga Apartment, Mainpura, Patna, having its business in the State of Bihar for effectuating supplies in terms of the tender notice. Said M/s. Amit Traders is registered under the provisions of the Bihar Finance Act, 1981, bearing registration No. PTW-4387(R). A copy of the registration certificate of M/ s. Amit Traders has been appended as annexure 2 to the writ application. 5.. On January 10, 2004, the Deputy Inspector General of Police (Provision), Bihar (respondent No. 3) informed petitioner No. 1 and other tenderers to be present on January 16, 2004 before the Central Purchase Committee. However, on that day the meeting of the said committee could not be held and the tenderers were asked to come on January 17, 2004. On January 17, 2004 price bids of other tenderers whose technical bids were approved by the Central Purchase Committ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "A" to the counter-affidavit filed by respondent No. 3. In terms of the aforesaid policy an amendment was made in the Bihar Finance Rules by the Bihar Finance (Amendment) Rules, 2002. Rule 2 of appendix 8 of the Bihar Finance Rules was amended and the aforesaid Policy has been incorporated. The aforesaid provision does not restrict or put prohibition on the manufacturers located outside the State of Bihar from participating in the tender. On the other hand, the units located outside the State of Bihar can also participate in the tender through the corporate office, local agent and authorised dealer provided it is registered with the Commercial Taxes Department. The aforesaid purchase policy extends preferential policy to large and medium scale industries situated in the State of Bihar and also to ensure uniform tax compliance by the suppliers. Petitioner No. 1's unit is located outside the State. No doubt, it has appointed one M/s. Amit Traders, Patna as its agent which is a registered dealer under the Bihar Finance Act, but the petitioners have not submitted their tender through the aforesaid authorised agent. They have directly submitted their tender and have thus, violated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .W.J.C. No. 1800 of 2001) and the other of a single Bench in the case of Shakti Steel Pipes, a Unit of Shakti Tubes Limited v. State of Jharkhand [W.P. (C) No. 696 of 2002]. 10. Learned counsel appearing for the State combated both the submissions and submitted that the said condition is not violative of any of the articles of the Constitution. Tax on sale of goods is not an impediment in the free-flow of trade and business and is not violative of article 301 of the Constitution. On the other hand, the said policy decision clearly shows that with a view to have a uniform tax structure with regard to the goods imported from outside the State as well as the goods manufactured or produced inside the State and with a view to protecting industries in the backward State the said terms and conditions have been incorporated. There is no question of discrimination with regard to rate of tax between the goods manufactured and brought from outside the State and the goods manufactured or produced inside the State. If the manufacturing unit is located outside the State and is registered or if not registered but its corporate offices' local agent/authorised dealer is registered under the Bih ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the court has to strike a balance between the individual freedom and social control. Article 301 of the Constitution of India provides that subject to other provisions of this Part (Part XIII) under which Part this article falls trade, commerce and intercourse throughout the territory of India shall be free. Article 303 of the Constitution contains a provision with regard to restrictions on the legislative powers of the Union and of the States with regard to trade and commerce. The said article provides that if the tax imposed by the State is discriminatory, it will be hit by article 303(1). Article 304 is an exemption to the aforesaid article 301 and it provides, inter alia, that notwithstanding anything contained in article 303, the Legislature of a State may impose a non-discriminatory tax on goods so imported from outside the State as provided under article 304(a) or impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within the State as may be required in the public interest provided that a legislation for the said purposes shall not be introduced or moved in the Legislature of a State without the previous sanction of the President. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l other States and thereby develop the economic unity of India is one of the major commitments or goals of the constitutional aspirations of this land. For the working of an orderly society economic equality of all the States is as much vital as economic unity." 15.. The tax on sale of goods would not normally offend article 301 of the Constitution. However, if it impedes directly or immediately the free-flow of trade and commerce and intercourse within the Union of India then it will be violative of article 301 of the Constitution of India and the apex Court in the aforesaid case in paragraph 21 (at page 99 of 77 STC) held that the tax, which does not directly or immediately restrict or interfere with the trade, commerce and intercourse throughout the territory of India would, therefore, be excluded from the ambit of article 301 of the Constitution. The sales tax has only an indirect effect on trade and commerce. Normally a tax on sale of goods does not directly impede the movement of goods. The tax is on sale and movement is occasioned by sale. In this connection, it is relevant to quote paragraph 21 of the said judgment (page 99 of 77 STC), which runs as follows: "The taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nteed under Part XIII and also under articles 14 and 19(1)(g) of the Constitution. The apex Court negatived the aforesaid challenge. It was held that such exemption is permissible and it does not violate the aforesaid articles. In this connection it is relevant to quote paragraph 28 (page 104 of 77 STC) as follows: "Concept of economic barrier must be adopted in a dynamic sense with changing conditions. What constitutes an economic barrier at one point of time often ceases to be so at another point of time. It will be wrong to denude the people of the State of the right to grant exemptions which flow from the plenary powers of legislative heads in List II of the Seventh Schedule to the Constitution. In a federal polity, all the States having powers to grant exemption to specified class for a limited period, such granting of exemption cannot be held to be contrary to the concept of economic unity. The contents of economic unity by the people of India would necessarily include the power to grant exemption or to reduce the rate of tax in special cases for achieving the industrial development or to provide tax incentives to attain economic equality in growth and development. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery Association [1988] 71 STC 298 (SC); AIR 1988 SC 1814, there was a levy of tax on the hosiery goods manufactured outside the State of Bihar and sold in the State of Bihar, whereas the sales of similar hosiery goods manufactured in the State of Bihar were exempted from sales tax. The State of Bihar did not file any counter-affidavit in that case to justify the aforesaid levy as regulatory measure or a compensatory tax and in that context, it was held that the said action of the State is violative of provision of article 301, read with article 304(b) of the Constitution. Similarly, in the case of Weston Electroniks [1988] 70 STC 52 (SC); AIR 1988 SC 2038, the levy of sales tax at different rates on the goods imported into the State and the goods manufactured within the State was held to be illegal as that was discriminatory. The laws were struck down as they were discriminatory and violative of article 304(a) of the Constitution. 20.. Thus, the cases relied upon on behalf of the petitioner are not applicable in this case as in this case there is no question of providing two different rates of tax with regard to the goods manufactured or brought here from outside the State and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t will be provided in every tender that only the industrial units of Bihar and such corporate offices/local offices, agents, authorised dealers of producing units of outside State, which are registered under Commercial Taxes Department of the Bihar State may participate in the tender.' " 24.. Thus, the very object of condition No. 1 in the tender notice has been made in public interest for the aforesaid purchases. There is no total prohibition so far as the manufacturers from outside the State are concerned in submitting tenders. If they are already having registration in the State of Bihar, then they are eligible to participate in the tenders and in case of having no registration, they can apply through authorised agents or dealers, who are registered under the provisions of the Bihar Finance Act with the Commercial Taxes Department, Bihar. Thus, the restriction on the manufacturing units located outside the State is not putting a total prohibition to carry trade, business and commerce. On the other hand, the same is reasonable one for public interest to serve the object as indicated above. 25.. The case of Rama Expoinvest Pvt. Ltd. (C.W.J. No. 1800 of 2001 Jharkhand High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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