TMI Blog2006 (11) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... I, J. 1. It was in an age of struggle that India's struggle for independence achieved success, for, with the end of the Second World War, countries were struggling to overcome the disastrous consequences, which the war had brought. It was an age, when the people, all over the world, were struggling for space and everyone wanted to have greater say in the governance of their respective countries. British empire had fragmented and struggle to occupy he void created by the fall of the British empire had had fragmented and struggle to occupy the void created by the fall of the British empire intestified. It was in such a period of transition from colonial rule to a rule of self-governance that the constitution of India was in prepared. What our constitution-makers witnessed and experienced had its reflection in our Constitution. The concept of entry tax is a concept routed in history. Before the industrial revolution, the society, world over was mainly agriculture based, there were small principalities and very little quantity of goods moved from one area to another, because gods were, ordinarily, produced for consumption by the producers themselves, such as, land-owners and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , particularly, Article 301 read with Article 304 contained therein? Does an enactment imposing entry tax, legislated under Entry 52, necessarily have a direct and immediate impact on the movement of goods and, if so, how to decide whether such an enactment falls within the ambit of the freedom of trade, commerce and intercourse guaranteed under Article 301 or not? Can an entry tax be sustained if the same is not compensatory in nature or are there any exceptions thereto? When does such legislation require President's sanction in terms of the proviso to Article 304(b)? Whether the Assam Entry Tax Act, 2001 (hereinafter referred to as the AET Act, 2001 ), notifications, issued under Section 3(4) thereof, imposing entry tax on goods, such as, biscuits, textiles and fabrics, crude oil, tobacco including cigarette, cheroots, cigar, biri, zarda khaini, sada and smoking mixture, the Assam Entry Tax (Amendment) Ordinance, 2005 (hereinafter referred to as the AET (Amendment) Ordinance, 2005 ) or the Assam Entry Tax (Amendment) Act 2005 (hereinafter referred to as the AET (Amendment) Act, 2005 ) are compensatory in nature? What is the difference between tax simpliciter, on the one ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, those, who pay sales tax to the State, are exempted from payment of the entry tax. The entry tax, thus, falls only on those persons, who, such as the present writ petitioners, pay sales tax on the purchase of raw materials and sale of finished goods to States other than the State of Assam. Entry tax, under the AET Act, 2001, is a single point tax as the entry tax can be levied only at one stage. Once entry tax has been paid, or liability has been incurred, on the entry of any of the scheduled goods into any local area, the entry tax cannot be levied thereafter, though the goods, which have been so taxed, may be moved from one local area to another local area and so on irrespective of the fact whether the movement of the scheduled goods, out of a local area, is by way of stock transfer, inter-State sale or sale in the course of export or import. By impugned notifications, issued under Sub-section (4) of Section 3 of the AET Act, 2001, when the goods, namely, biscuits, textiles and fabrics, crude oil, tobacco including cigarette, charoots, cigar, biri, zarda, khaini, sada and smoking mixture, were added to the schedule of the goods under the AET Act, 2001, and were, thus, brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dl., dated 30th August, 2000. The State Government is requested to make necessary provisions in the Bill to exempt goods relating to Prasar Bharti and all kind of textiles and fabrics, as agreed to by them vide their letters No. (i) FTX. 31/89/Pt/93 dated 8th November, 1999 and (ii) FTX. 31/89/Pt/104 dated 30th March, 2000 before introduction of the Bill in the State Legislature. (emphasis supplied) 7. Section 3 of the AET Act, 2001, is the charging Section and it provides that entry tax can be levied and collected on the entry of goods specified in the Schedule appended to the AET Act, 2001, into any local area for consumption, use or sale therein at the rate shown against each item in the Schedule and such tax shall be paid by every importer of such goods. Before Section 3 under went amendment and Sub-section (4) thereof was deleted, Sub-section (4) of Section 3 empowered the State Government, by publication of notification in the Official Gazette, to add to, delete, amend or otherwise modify the said Schedule and also to vary the rates of tax of the goods specified in the Schedule. 8. However, the amended Section 3, now, reads' as follows: 3. Levy of tax. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oom or otherwise, crude oil and tobacco including cigarette, cheroots, cigar, biri, zarda khaini, sada and smoking mixture, as specified goods to the Schedule of the said Act. By various other notifications, the Government, from time to time, included some other articles to the Schedule of the said Act. 10. The relevant dates of the notifications along with the numbers and dates thereof are, for the sake of convenience, quoted hereinbelow: Biscuits No. FTX.90/2003/5 dated 21-8-2003 All varieties of textiles, viz., cotton, woollen or silken, including rayon, art silk and nylon textiles, whether manufactured by handloom, power loom or otherwise. FTX.90/2003/5 dated 26-8-2003 Crude oil No. FTX.2694/2 dated 29-9-2004 Tobacco including cigarette, cheroots, cigar, biri, zarda, khoini, sada and smoking mixture No. FTX.89/2004/Pt/15 dated Bitumen FTX 146/2001/5 dated 8-1-2002 Marble tiles FTX. 146/2001/5 dated 8-1-2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication, fix in this behalf and different rates may be fixed for different class or classes of specified goods and such tax shall be paid by every importer of such goods. 12. As the promulgation of the AET (Amended) Ordinance, 2005, was a development subsequent to the institution of the writ petitions, the writ petitions were amended by the petitioners incorporating challenge to the validity of the Ordinance too. It is necessary to point out that pursuant to the AET (Amendment) Ordinance, 2005, a notification was also issued bearing No. FTX. 90/2003/19, dated 12.5.2005, whereby the Governor of Assam, in exercise of powers conferred under Section 3(1) of the AET Act, 2001, fixed the rate of tax payable against each of the entries specified in the Schedule to the Act save and except entries made in Serial Nos. 54 and 55. As per the notification, dated 12.5.2005, aforesaid, the specified goods to which the present writ petitions relate are biscuits, all varieties of textiles, namely, cotton, woollen or silken including rayon, art silk and nylon textile, whether manufactured by handloom, power-loom or otherwise, crude oil and tobacco including cigarette, cheroots, cigar, biri, zarda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther manufactured by handloom, power-loom or otherwise, biscuits, crude oil, tobacco including cigarette, cheroots, cigar, biri, zarda, khaini, sada and smoking mixture to the Schedule of the AET Act, 2001, with rates of tax specified in these notifications and after these notifications already stood challenged in the present set of writ petitions, the AET (Amendment) Ordinance, 2005, was brought into force on 12.5.2005. 17. Contending that prior to 12.5.2005, when the AET (Amendment) Ordinance, 2005, was promulgated, imposition of entry tax, by way of notifications, issued under Section 3(4) of the AET Act, 2001, suffered from the vice of excessive delegation, Mr. Shanti Bhusan, learned senior Counsel, points out that prior to its amendment by the AET (Amendment) Ordinance, 2005, Sub-section (4) of Section 3 empowered the State Government to add any new item to the Schedule of the said Act without providing any guidelines therefore and also to vary the rates of tax without providing upper ceiling limits in this regard. Such delegation of primary power of taxation by the State Legislature to the State Government is, according to Mr. Shanti Bhusan, nothing, but abdication of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. Union of India and Ors. and State of Kerala v. K.M. Charia and Abdulla and Co. [1965] 1 SCR 601 to explain the concept of subordinate legislation and the role and powers of a delegated authority. 21. It is contended by Mr. Shanti Bhushan that imposition of entry tax by way of mere notification by the State Government is impermissible in law inasmuch as entry tax restricts the freedom of trade and commerce guaranteed under Article 301 and such restrictions cannot be imposed except by appropriate legislation. In support of his contention that when any restriction is sought to be placed on the freedom of trade and commerce guaranteed by Article 301, the restriction can be imposed only by Legislature and it cannot, as is the case at hand, be imposed by any executive action, Mr. Shanti Bhushan has relied on the decisions in District Collector of Hyderabad v. Ibrahim and Co. reported in [1970] 3 SCR 498 and Kalyani Stores v. State of Orissa [1966] 1 SCR 865 , Mr. Shanti Bhushan also relies on State of Mysore v. H. Sanjeeuiah [1967] 2 SCR 673 to demonstrate that no restrictions, on the freedom of trade and commerce, can be imposed by the executive under Article 304(b) in exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Section 3(4) of the said Act, to the executive to decide. A legislation, such as the present one, is, contends Mr. Choudhury, a valid piece of legislation. 25. Mr. Choudhury has contended that the validity of the guidelines given by the Legislature to a delegated authority cannot be tested by any uniform rule and the same must depend on the object of the enactment giving the delegated authority the power to fix the rate of tax. In support of this contention, Mr. Choudhury seeks to derive strength from the decision in Corporation of Calcutta v. Liberty Cinema [1965] 2 SCR 477 . 26. Reacting to the submissions made on behalf of the respondents, Mr. Shanti Bhushan has pointed out that there is no dispute that if the Legislature lays down the legislative policy and provides necessary guidelines, it can delegate to the executive the functions, such as, selection of persons on whom the tax shall be levied and the rates at which the tax shall be charged. The decision, in Pandit Banarasi Das Bhanwahlol v. State of M.P. (1958) 9 STC 258, has not, contends Mr. Shanti Bhushan, laid down the proposition that the Legislature, without providing guidelines, can delegate absolute power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter alia, add any new item to the Schedule of the said Act and bring thereby such an item within the purview of the entry tax and also to choose or vary the rates of tax. For choosing any item for being added to the said Schedule or for selecting the rate of tax in respect of such an item or to vary the rates of tax already fixed in the Schedule to the AET Act, 2001, neither Sub-section (4) of Section 3 nor any other provisions of the said Act laid down any guidelines or any policy nor did the Act fix the upper ceiling limits for choosing the rate of tax. Can such a piece of legislation and the action taken pursuant thereto by the State Government be allowed to survive? 30. While considering the question posed above, it needs to be borne in mind that, as held by the Supreme Court, in Pandit Banarasi Das Bhanwahlol (supra), it is not unconstitutional for the Legislature to leave it to the executive to determine the details relating to the working of a taxing statute, such as, selection of persons on whom to impose tax, rates at which it is to be charged, etc. Such a liberty is given to the Legislature, because, the Legislature often finds it convenient and necessary to delegat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guidelines and the policy, which the Legislature may have enunciated in the legislation concerned. Concluded, therefore, the Supreme Court, in Agricultural Market Committee v. Shalimar Chemical Works Ltd. (supra), as under: The principle, which therefore, emerges out, is that the essential legislative function consists of the determination of the legislative policy and legislature cannot abdicate essential legislative function in favour of another. Power to make subsidiary legislation may be entrusted by the Legislature to another body of its choice, but the Legislature should before delegating enunciate either expressly or by implication, the policy and the principles for guidance of the delegates. These principles also apply to taxing statutes. The effect of these principles is that the delegatee which has been authorized to make subsidiary rules and regulations has to work within the scope of the Act or the policy laid down there under. It cannot in the grab of making rules, legislate on the field covered by the Act and has to restrict itself to the mode of implementation of the policy and purpose of the Act. 33. In the case at hand, while Sub-section (4) of Section 3, pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffaced itself in the matter of fixing of ceiling inasmuch as it did not give any guidelines either under Section 5 or any other provisions of the Act. 35. In fact, as correctly contended by Mr. Shanti Bhusan, the decision in Sitaram Bishambher Dayal (supra) supports the case of the petitioners inasmuch as the Supreme Court, in Sitaram Bishambher Dayal (supra), has held as follows: It is true that the power to fix a rate of tax is a legislative power, but if a Legislature lays down the legislative policy and provides the necessary guidelines, this power can be delegated to the Executive. Though a tax is levied primarily for the purpose of gathering revenue, in selecting the objects to be taxed and in determining the rate of tax, various economic and social aspects, such as the availability of goods, administrative convenience, the extent of evasion, the impact of tax levied on the various section of the society etc., have to be considered. It can be used to achieve the economic and social goods of the State. For that reason, the power to tax must be flexible power. It must be capable of being modulated to meet the exigencies of the situation. In a Cabinet form of Government, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a delegated authority, this aspect of the matter needs no examination, when clear findings of this Court are that the impugned notifications suffer from the vice of excessive delegation and cannot, therefore, be sustained. 39. To sum up, Sub-section (4) of Section 3 of the AET Act, 2001, is, to the extent that the same empowers the State Government to add, by way of mere notification, new items in the Schedule for the purpose of levying entry tax on such items, is wholly impermissible in law and cannot be allowed to survive. In consequence thereof, the impugned notifications, dated 21.8.2003, 26.8.2003, 29.9.2004 and 28.2.2005, aforementioned cannot be sustained. Whether the imposition of Entry Tax on the specified goods, namely, tobacco including cigarette, cheroots, cigar, biri, zarda khaini, sada and smoking mixture and crude oil is in violation of Sections 14 and 15 of the Central Sales Tax Act, 1956, and/or of the provisions of Additional Duty of Excise (Goods of Special Importance) Act, 1957? 40. Referring to Article 286 of the Constitution of India, Dr. Saraf submits that same as Article 301, Article 286 also aims at preserving the economic unity of India and, hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional excise duty under the ADE Act, Dr. Saraf submits that the State of Assam cannot impose any tax including entry tax, when it is collecting its share from the revenue collected by way of imposition of additional excise duty on tobacco, crude oil, etc. The impugned entry tax is, thus, according to Dr. Saraf, violative of the provisions of the ADE Act. 42. With regard to the above submissions made on behalf of the petitioners, Mr. K.N. Choudhury, learned Additional Advocate General, has submitted that after deletion of Article 272, the 11th Finance Commission has diluted the special significance of the additional duty of excise by making the additional duty of excise a part of the general revenue of the Central Government and, as a result thereof, the States have been deprived of the proceeds of the additional excise duty to a large extent. It is contended by Mr. Choudhury that after the 80th Amendment of the Constitution, the additional duty of excise is no longer a levy in lieu of sales tax. Upon deletion of Article 272 and because of the nature of the recommendations of the 11th Finance Commission, the States are, now, according to Mr. Choudhury, not only empowered to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Legislature should keep within the domain assigned to it and should not trespass into the domain reserved for the other, and a law made by one - be it Union or State - trespasses into, or encroaches upon, the field of legislation assigned to the other is invalid. But before the legislation, with respect to a subject in one List and touching also a subject in another List, is declared to be void, the courts apply the rule of pith and substance. In determining whether an enactment is legislation with respect to a given power, what is relevant is not the consequence of the enactment on the subject-matter, but whether, in its pith and substance, it is a law upon the subject-matter in question. This was emphasized very clearly in Gallagher v. Lynn 1937 AC 863 , in these words, It is well established that you are to look at the 'true nature and character of legislation'; the 'pith and substance of the legislation'. If, on the view of the statute, as a whole, you find that the substance of the legislation is within the express powers, then, it is not invalidated if incidentally it affects matters, which are outside the authorized field. 46. The doctrine of 'p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49. The rule of pith and substance envisages that the legislation, as a whole, be examined to ascertain its true nature and character in order to determine in what List it falls. If according to its true nature and character , the legislation substantially falls within the powers conferred on the Legislature, which has enacted it, then, it is not invalid merely because it incidentally trenches or encroaches on matters assigned to another Legislature. To ascertain the true character of a law, it must be looked into as an organic whole. It would be a wrong approach to view the statute as a mere collection of sections, to disintegrate it into parts, to examine under which entry each part would fall and, then, to determine which part of it is valid and which invalid. Instead, the enactment should be taken in one piece and, then, its true character determined. The doctrine of pith and substance saves the incidental encroachment if the law, in pith and substance, falls within an entry or within the legislative field of the particular Legislature, which has made it. Once it is found that in pith and substance, a law falls within the permitted field, any incidental encroachment by it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 443 . 52. Laying down the principles of interpretation, when the validity of the legislations made under various entries are challenged, the Apex Court (per Y.K. Subbarwal, J, as his lordship then was) observed, in ITC v. Agricultural Produce Market Committee [2002] 1 SCR 441 , as follows: 97. The principles of interpretation are well settled. There is no doubt that the entries in the lists in the Seventh Schedule do not provide competence or power to legislate on the Legislature for which the source of power is contained in Article 246 of the Constitution. In deciding question of legislative competence, it has to be kept in view that the Constitution is not required to be considered with a narrow or pedantic approach. It is not to be construed as a mere law but as a machinery by which laws are made. The interpretation should be broad and liberal. The entries only demarcate the legislative field of respective Legislature and do not confer legislative power as such and if it is found that some of the entries overlap or is conflict with the other, an attempt to reconcile such entries and bring about a harmonious construction is the duty of the court. When, however, reconciliat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll prevail. Additionally some of the entries in the State List have been made expressly subject to the power of Parliament to legislate either under List I of under List III. Entries in the List of the Seventh Schedule have been liberally interpreted; nevertheless Courts have been wary of upsetting this balance by a process of interpretation so as to deprive any entry of its content and reduce it to useless 'lumber'. The use of word 'exclusive' in Clause (3) denotes that within the legislative fields contained in List II, the State Legislatures exercise authority as plenary and ample as Parliament. The fact that under the scheme of our Constitution, greater power is conferred upon the Centre vis-a-vis the States does not mean that States are mere appendages of the Center. Within the sphere allotted to them, States are Supreme. The Centre cannot tamper with their powers. More particularly, the courts should not adopt an approach, an interpretation, which has the effect of or tends to have the effect of whittling down the powers reserved to the States. 130. Although Parliament cannot legislate on any of the entries in the State List, it may do so incidentally while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CST 'Act and the entry tax are entirely different. Unless, therefore, it can be shown that the legislation made under Entry 52 encroaches upon the field of legislation reserved for Parliament under any of the entries in the Union List or that the legislation made under Entry 52 entrenches upon a legislation made by Parliament under any of the entries in the Concurrent List, the court cannot interfere with the legislation made under Entry 52 of the State List if such legislation is, otherwise, in conformity with the provisions of the Constitution and the law in force. Merely because of the fact that in respect of some of the goods, such as, cigarettes, cheroots, cigars, biri, zarda, khaini, sada and smoking mixtures and crude oil, parliamentary legislations, such as, the CST Act and/or the ADE Act exists, such parliamentary legislations cannot be taken to have denuded the State of its legislative power under Entry 52 of the State list. 57. Bearing the above aspect of the matter in mind, it may be further pointed out that Article 286, as correctly contended by Dr. Saraf, seeks to preserve the economic unity of India. There can also be no doubt that the CST Act, enacted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had an inter-State content. Amendment of Article 286, and the Central Sales Tax Act, 1956, were all intended to serve a dual purpose to maintain the source of revenue from sales-tax to the States and at the same time to prevent the States from subjecting transactions in the course of inter-State trade so as to obstruct the free flow of trade by making commodities unduly expensive. 59. In Telengana Steel Industries (supra), the relevant observations are as under: At this stage, we may note the object behind interdicting multiple-point tax on declared goods which follows from the mandate contained in Clause (a) of Section 15 of the Act. According to us, the purpose behind this provision is to minimize the tax burden on declared goods because of the special importance of these goods in inter-State trade and commerce. 60. What is, however, of immense importance to note, now, is that while Section 14 declares certain goods as goods of special importance in inter State trade and commerce and Section 15 put a cap on the legislative powers of the State to impose local sales tax on goods of special importance at a rate higher than 4 per cent of the sale or purchase price and at not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E Act was really meant as a substitute for tax on sale or purchase of scheduled commodities or whether the ADE Act was meant to be a substitute for all kinds of taxes, cess and fees, which the States are, otherwise, entitled to impose by virtue of various entries in the State List or by virtue of the Concurrent List, it is important to note that in exercise of its powers conferred by Section 6 of the ADE Act, the Central Government has framed rules under the ADE Act. Rule 2 reads as follows:- During each of the financial years commencing on and after the 1st day of April, 1974, there shall be paid to each of the States specified in column 1 of the Table below such percentage of the net proceeds after deducting therefrom a sum equal to 1.41 per cent of the said proceeds as being attributable to Union Territories, as is set out against it in column 2: Provided but if during the financial year there is levied and collected in any State a tax on the sale or purchase of sugar, tobacco, cotton fabrics, woollen fabrics, rayon or artificial silk fabrics or one or more of them by or under any law of that State, no sums shall be payable to that State under this paragraph in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment made by it, tax on the sale or purchase of the goods within the State. Neither the Parliament could have, nor has it, prohibited any State from making any law or levying any tax, which a State is, otherwise, entitled to levy by virtue of the Entries in the State List. 65. A question similar to the one, which Dr. Saraf has raised, in the present case, with regard to the ADE Act, was raised in Bihar Chamber of Commerce (supra) and has been answered in the negative. This part of the decision of the Bihar Chamber of Commerce (supra) has not been overruled by the Constitution Bench in Jindal Stainless Steel Ltd. (supra). In Bihar Chamber of Commerce (supra), the Apex Court, having discussed the effect of the ADE Act on the State's power to impose levy under Entry 52 of the State List, has concluded, thus: We are also of the opinion that the scope of the ADE Act cannot be extended by reference to anterior reports or correspondence between the Centre and the States, as the case may be, apart from the fact that the material referred to is not unambiguous. Para 32 at p. 126 of the Taxation Enquiry Commission (1953-54), the relevant portion whereof we have extracted hereinbef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ADE Act will follow and nothing more. The ADE Act does not affect the legislative competence of the State Legislature to make a law with reference to any of the entries in List II. The contention of Shri Ganesh on this score is accordingly rejected. 66. What emerges from the above discussion is that the impugned levy cannot be interfered on the ground that the same is violative of Sections 14 and 15 of the CST Act, 1956, and/or the ADE Act, 1957. Whether the entry tax imposed on the goods, which form subject-matter of the present set of writ petitions, is violative of Article 301 read with Article 304(b)? 67. Contending that the AET Act, 2001, is in violation of Article 301 of the Constitution of India, Mr. Shanti Bhusan, learned senior Counsel, has pointed out that Article 301 guarantees freedom of trade, commerce and intercourse throughout the territory of India. Referring to Atiabari Tea Co. Ltd v. State of Assam [1961] 1 SCR 809 , Mr. Shanti Bhusan has also pointed out that the law of taxation is not immune from guarantee of freedom of trade, commerce and intercourse, which Article 301 provides. At the same time, submits Mr. Shanti Bhusan, it is not every restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding facilities to the trading class, particularly, manufacturers of tobacco and its products. Hence, it is apparent, contends Mr. Shanti Bhusan, that the entry tax, imposed under the impugned Act, is not compensatory in nature. Reiterating his contention that the entry tax, in the present case, is not compensatory in nature, Mr. Shanti Bhusan, learned Senior Counsel, has submitted that the scheme of the impugned Act and subsequent amendments made thereto clearly reveals that the revenue, realized from entry tax, is, in fact, meant for augmenting general revenue of the State and not for providing any specific or particular facility to the traders of tobacco and its products, who are importing goods from the outside the State. The entry tax, in the present case, cannot, therefore, be regarded, according to Mr. Shanti Bhusan, as compensatory. 69. To support his contention that the entry tax, under the impugned Act, is not compensatory tax within the meaning of what a compensatory tax, in the light of the decision in Automobile Transport (Rajasthan) Ltd. (supra) means, Mr. Shanti Bhusan has referred to and relied upon, Sharma Transport v. Govt. of Andhra Pradesh reported in AIR 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for the purpose of Clause (b) shall be introduced or moved in the Legislature of the States without previous sanction of the President. Pointing out to the fact that the original Bill, in the present case, had proposed textile in its schedule as an item for imposition of entry tax and the President granted his assent to the Bill on condition that textile would be removed from the purview of the entry tax, logical it is to infer that in respect of tobacco and tobacco products too, no sanction of the President exists, for, tobacco and its products, which are treated to be goods of special importance in the course of inter-State trade and commerce under the Central Sales Tax Act, 1956, had not been included in the Schedule to the original Bill nor did it appear in the AET Act, 2001, when the Act, initially, came into force. After the impugned Act had come into force, the Legislature of the State, in Assam, according to Mr. Shanti Bhusan, could not have added goods, such as, textile or even tobacco and its products, into the Schedule of the impugned Act without having obtained prior sanction from the President in terms of Article 304(b) of the Constitution. Contending that the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Rajeeb Kumar v. Commissioner of Sales Tax, Madhya Pradesh and Ors. reported in [1995] 96 STC 654 (SC); [1995] Suppl 1 SCC 673, and State of Bihar v. Bihar Chamber of Commerce reported in [1996] 103 STC 1 (SC); [1996] 9 SCC 136, wherein, deviating from the decision of the seven Judges Bench of the Supreme Court, in Automobile Transport (supra), that a tax, to be compensatory in nature must be such, which provides certain facilities for better conduct of business to the traders as a class and, at the same time, does not require the traders not to pay patently much more than what is required for providing such facilities to them, the court held that the concept of compensatory nature of tax has been widened and if there is some substantial link between the tax and the facilities extended to the dealers, levy cannot be regarded as invalid. Referring, particularly, to the views expressed, in Bihar Chamber of Commerce (supra), to the effect that so long as there is some connection between the tax imposed and facilities provided, levy is valid, Dr. Saraf has submitted that the respondents relied on the concept of some connection, as propounded in Bihar Chamber of Commerce (supra) and ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aked in by way of amendments of the provisions of the AET Act, 2001, as has been done in the present case and such a levy, contends Dr. Todi, is not sustainable in law. 75. Resisting the submissions made on behalf of the petitioners, Mr. K.N. Choudhury, learned Additional Advocate General, has advanced two alternative pleas. His first plea is that the impugned enactment is a legislation under Entry 52 of State List of the Seventh Schedule and since a State Legislature is competent to impose entry tax under Article 246(3) read with Entry 52 of the State List, such a tax cannot be said to be violative of Article 301 inasmuch as a tax, merely because it is an entry tax, does not cause any hindrance in the freedom of trade and commerce. Such legislation, therefore, does not require, according to the learned Additional Advocate General, previous sanction of the President. In the present case too, the imposition of entry tax, according to Mr. Choudhury, did not strictly speaking, require the President's sanction. 76. In the case at hand, contends the learned Additional Advocate General, the petitioners have miserably failed to specifically and pointedly show before this Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, require President's prior sanction to the Bill or assent thereto. 78. Referring to Kaiser-i-Hind Pvt. Ltd. (supra), Mr. Choudhury submits that this decision is of no avail for adjudication of the issues involved in the present case inasmuch as Kaiser-i-Hind (P.) Ltd. (supra) is a decision arising out of a case in which inconsistency between the law made by the Parliament and the State Legislature was an issue. Since, according to Mr. Choudhury, no such issue has arisen in the present case and the settled position of law is that every decision is an authority for what it actually decides, it is clear, contends Mr. K.N. Choudhury, that since the principal Act, which introduced the impugned levy, had received President's sanction under Article 304(b), no fresh sanction is required when the amendments are made in the Schedule to the Act. The impugned notification, impugned Ordinance and/or the AET (Second Amendment) Act, 2005, have not created, according to Mr. K.N. Choudhury, any additional restriction as one can construe in the context of Article 301 of the Constitution and, hence, previous sanction of the President was not a necessity for the amendments, which have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny facility has not been furnished. In support of this contention, reliance is placed by Mr. Choudhury on Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan and Ors. [1963] 1 SCR 491, Atiabari Tea Co. v. State of Assam [1961] 1 SCR 809 , G.K. Krishnan v. State of Tamilnadu [1975] 2 SCR 715 and International Tourist Corporation v. State of Haryana [1981] 2 SCR 364 . Mr. Choudhury submits that the revenue, raised through the implementation of the impugned Act and other taxation laws, is utilized by the State in laying and maintaining roads, waterways, establishment and maintenance of market, etc. It is further submitted by Mr. Choudhury that after the decision of the Apex Court, in Godfrey Philips India Ltd. v. State of U.P. reported in (2005) 194 CTR (SC) 257, declaring the levy of luxury tax as ultra vires, the State faced a sudden loss of large scale revenue hitherto collected from imposition of luxury tax on tobacco and tobacco products. Public interest, therefore, contends Mr. Choudhury, demanded immediate action on the part of the Government to find alternative source of revenue to keep its various welfare programmes and other Governmental function going. Merely becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the learned Additional Advocate General and drawing attention of this Court extensively to the observations made in Hansa Corporation (supra), Jindal Stripes Ltd. (supra) and Jindal Stainless Ltd. (supra), Mr. Shanti Bhusan has submitted that these decisions make it abundantly clear that because of the very nature of the restriction, winch an entry tax impose on entry of goods into a local area for the purpose of use, consumption or sale therein, such a levy has a direct and immediate impact on the movement of goods and can be saved only when the levy falls within the protective umbrella of Article 304(b). In the case in hand, submits Mr. Shanti Bhusan, since the tax sought to be levied under the AET Act, 2001, is on the entry of goods into a local area, it directly operates as a restriction on the freedom of trade and commerce and such restrictions, being violative of Article 301, can stand only if the levy, in question, is proved to be either compensatory or is a levy imposed in conformity with the requirements of Article 304(b). In the present case, neither the levy, according to Mr. Shanti Bhusan, is compensatory in nature nor is the same in conformity with the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, it needs to be noted that the proviso to Article 304(b) speaks not only of the Bill, but also of amendment thereto. In the present case, points out Mr. Shanti Bhusan, tobacco and tobacco products, which have been declared to be goods of special importance in inter-state trade and commerce, were not included in the Schedule to the original enactment, namely, the AET Act, 2001. Hence, no Presidential sanction existed for imposing the entry tax under the said Act on tobacco or tobacco products, which are goods of special importance. Thus, imposition of entry tax on tobacco and tobacco products being, according to Mr. Shanti Bhusan, a new restriction, or at any rate, an additional restriction, which was not contained in the original enactment, must satisfy the provisions of Article 304(b) and sanction of the President earlier obtained in respect of the original enactment is, insists Mr. Shanti Bhusan, of no relevance. 87. It is further submitted by Mr. Shanti Bhusan that since the present amendments made to the Act bringing in tobacco and tobacco products within the ambit of the Act are contrary to, and in clear violation of, the agreement, which had been reached by the State wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is contended by Mr. Shanti Bhusan that as the entry tax, in the present case, is not compensatory in nature and the levy of the entry tax, because of its very nature, causes a direct impediment to the freedom of movement of goods guaranteed under Part XIII of the Constitution, no amendment to the AET Act, 2001, could have been validly made without obtaining President's prior sanction as mandated by Article 304(b). Pointing out to the fact that respondents rely on the fact that the luxury tax earlier imposed by the State Government had been struck down as ultra vires, the Legislature has, in replacement of the said luxury tax, introduced the levy of entry tax on tobacco and tobacco products, Mr. Shanti Bhusan submits that in Hansa Corporation (supra), State of Karnataka had been validly levying octroi in proper exercise of its legislative powers and it was replaced by entry tax under the same constitutional entry in order to relax the rigour of octroi, which was known to be obnoxious. In the case at hand, submits Mr. Shanti Bhusan, the State of Assam had levied the luxury tax, which was not within its legislative competence as has been held by the Supreme Court, and when suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04, some reference to Articles 302 and 304 is unavoidable. Let me, therefore, quote, hereinbelow, Articles 301 to Article 304. 301. Freedom of trade, commerce and intercourse. - Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free. 302. Power of Parliament to impose restrictions on trade, commerce and intercourse. - 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. 303. Restrictions on the legislative powers of the Union and of the States with regard to trade and commerce. - (1) Notwithstanding anything in Article 302, neither Parliament nor the Legislature of a State shall have power to make any law giving, or authorizing the giving of any preference to one State over another, or making, or authorizing the making of any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. (2) Nothing in Clause (1) shall prevent Parliament from making any law giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced very little commodities for sale. With the industrial revolution, expansion of industries took place, which gave rise to larger production of goods and this resulted into faster movement of goods to distant places. The trade-barriers were, therefore, required to be minimized in order to avoid obstructions to the free movement of goods. Because of the fact that the makers of our Constitution conceived India as a strong economic unit, it was but natural for them to introduce into our Constitution a meaningful scheme for growth of industries so as to strengthen economic base of India. The makers of our Constitution knew that no meaningful growth of industries is achievable unless obstructions in the movement of the goods were, if not completely removed, be, at least, reduced as much as possible. 98. Before India achieved her independence, the western world, particularly, Europe was, as already indicated above, fragmented into small principalities having toll-barriers imposing toll taxes and these toll-barriers caused hindrance to the movement of goods resulting into obstructions to the growth of industries and commerce in those countries. Having realised that unless these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... territory of India is essential for the economy of the nation and for sustaining and improving licensing standards of the country. The provision contained in Article 301 guaranteeing the freedom of trade, commerce and intercourse is not a declaration of mere platitude, or the expression of a pious hope of a declaratory character; it is not also a mere statement of direction principle of State policy; it embodies and enshrines a principle of paramount importance that the economic unity of the country will provide the main sustaining force for the stability and progress of the political and cultural unity of the country. In appreciating the significance of these general considerations were may profitably refer to the observations made by Cardozo, J., in C.A.F Seelig Inc. v. Charles H. Baldwin 294 U.S. 511, 79 L. Ed. 1033, while he was dealing with the commerce clause contained in Article 1, Section 8, Clause 3 of the American Constitution. This part of the Constitution , observed Cardozo J., was framed under the dominion of a political philosophy less parochial in range. It was framed upon the theory that the peoples of the several states must sink or swim together and that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the reason that the goods are carried to or transported through a given State, for, if such restrictions are not avoided, the freedom of trade cannot be achieved. Addressing, therefore, the question as to whether tax laws are excluded from the provisions of Part XIII and whether tax laws were immune from the freedom guaranteed under Article 301, the Supreme Court, in Atiabari Tea Company Limited (supra), observed: 50. Thus the intrinsic evidence furnished by some of the Articles of Part XIII shows that taxing laws are not excluded from the operation of Article 301; which means that tax laws can and do amount to restrictions freedom from which is guaranteed to trade under the said Part. Does that mean that all tax laws attract the provisions of Part XIII whether their impact on trade or its movement is direct and immediate or indirect and remote? It is precisely because the words used in Article 301 are very wide, and in a sense vague and indefinite that the problem of construing them and determining their exact width and scope becomes complex and difficult. However; in interpreting the provisions of the Constitution we must always bear in mind that the relevant provision has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions made in Atiabari Tea Co. Limited (supra), it is clear that the Apex court answered, in the negative, the question as to whether the tax laws are immune from the operation of Article 301. Having held that tax laws were not immune from the operation of the Article 301 or, for that matter, the constitutional scheme, embodied in Part XIII, the Constitution Bench, in Atiabari Tea Company Limited (supra), clarified that it is not all taxes, which will hit Article 301, but only such taxes, which, directly and immediately, restrict trade, for, it is only direct restrictions causing impediments to the movement of goods that Article 301 seeks to avoid and nullify. It is in this light that the following further observations, made in Atiabari Tea Company Limited (supra), need to be read. 51. We do not think it necessary or expedient to consider what other laws would be affected by the interpretation we are placing on Article 301 and what other legislative entries would fall under Part XIII. We propose to confine our decision to the Act with which we are concerned. If any other laws are similarly challenged the validity of the challenge will have to be examined in the light of the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freedoms as may be required in public interest. Article 303, however, clarifies that neither Parliament nor the Legislature of States shall have the power to make any law giving or authorizing the making of any discrimination between one State and another by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. In other words, Article 303 clarifies that even in public interest, Parliament is not authorized to make laws giving preference to one State over the other. This restriction is, however, subject to one exception, the exception being that the Parliament is left with the discretion to make laws giving preferential treatment or making discriminatory provisions if such laws become necessary for the purpose of dealing with the situation arising from scarcity of goods in any part of the territory of India. 105. Thus, a State Legislature, apart from the limitation imposed by Article 301, has the limitation of not making laws to give preference or make discrimination between one State and another, while making laws, in exercise of its powers, relating to trade, commerce and intercourse. However, this limitation on the State Legislature, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate impact on the movement of goods, can be saved only if it falls in any of the permissible restrictions, which Articles 302, 303 and 304 perceive. 107. It may also be noted that in Atiabari Tea Company Ltd. (supra), the three appellants before the Supreme Court were tea companies, two of whom carried on the trade of growing tea in Assam and the third one carried on its trade at Jalpaiguri. They carried their tea to Calcutta in order that it might be sold, in Calcutta, for consumption and sale outside India. Tea, produced in Jalpaiguri, had to move through a few miles of the territory of the State of Assam. Besides the tea, which was carried by railways, a substantial quantity of tea was also carried by road or by inland waterways and, as such, became liable to pay tax leviable under the Assam Taxation (on goods carried by roads or inland waterways) Act, 1954, for, this Act levied tax on certain goods, such as, tea, which was carried by road and inland waterways. The principal ground of attack on the legislation was that it violated the provisions of Article 301 and was not saved by Article 304(b). It is of immense importance to note that in Atiabari T a Company Ltd. (supra), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew as expressed by Shah, J, and described, in Automobile Transport (Rajasthan) Ltd. (supra), as the widest view was that the freedom, contemplated under Article 301, was freedom of trade, commerce and intercourse in every aspect of all such activities, which constitute commerce and intercourse and not merely restrictions on the movement or transportation part of goods. Shah J (as his Lordship then was) expressed his view thus, The guarantee of freedom of trade and commerce is not addressed merely against prohibitions, complete or partial; it is addressed to tariffs, licensing, marketing regulations, price-control, nationalization, economic or social planning, discriminatory tariffs, compulsory appropriation of goods, freezing or stand-still orders and similar other impediments operating directly and immediately on the freedom of commercial intercourse as well. Every sequence in the series of operations which constitutes trade or commerce is an act of trade or commerce and burdens or impediments imposed on any such step are restrictions on the freedom of trade or commerce and intercourse. What is guaranteed is freedom in its widest amplitude - freedom from prohibition, control, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 111. In Automobile Transport (Rajasthan) Ltd. (supra), which is a decision of 7 Judges Bench, the correctness of the majority view, expressed in Atiabari Tea Company Ltd. (supra), came to be questioned. Having examined all the three views, as indicated hereinabove, the majority, in Automobile Transport (Rajasthan) Ltd. (supra), held that the widest view, expressed by Shah, J, being based on purely taxtual interpretation of Part XIII of the Constitution of India, was not the correct view, for, this view ignores altogether, amongst others, the reality that the freedom of trade, commerce and intercourse in a society, regulated by law, must be understood in the context of working of an orderly society and the effect of such a view, if conceded to, would be that even when a. State Legislature wishes to control or regulate trade, commerce and intercourse in such a way as to facilitate its free movement, it must, nevertheless, proceed to make a law under Article 304(b) and that no such Bill can be introduced or moved in the Legislature of the States without the previous sanction of the President. In other words, the views of Shah, J, if acceded to, would mean that even when a Bill seeks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral items relating to the imposition of taxes in List II. The Constitution-makers must have intended that under those items the States will be entitled to raise revenue for their own purposes. If the widest view is accepted, then there would be for all practical purposes, an end of State autonomy even within the fields allotted to them under the distribution of powers envisaged by our Constitution. An examination of the entries in the lists of the Seventh Schedule to the Constitution would show that there are a large number of entries in the State list (List II) and the Concurrent list (List III) under which a State Legislature has power to make laws. Under some of these entries the State Legislature may impose different kinds of taxes and duties, such as property tax, sales tax, excise duty, etc., and legislation in respect of anyone of these items may have an indirect effect on trade and commerce. Even laws other than taxation laws, made under different entries in the lists referred to above, may indirectly or remotely affect trade and commerce. If it be held that every law made by the Legislature of a State which has repercussion on tariffs, licensing, marketing regulations, pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se would be served by repeating them. It is enough to point out that though the power of levying tax is essentially for the very existence of government, its exercise may be controlled by constitutional provisions made in that behalf. It cannot be laid down as a general proposition that the power to tax is outside the purview of any constitutional limitations. We have carefully examined the provisions in Part XII of the Constitution and are unable to agree that those provisions exhaust all the limitations on the power to impose a tax. The effect of Article 265 was considered in the majority decision and it was pointed out that the power of taxation under our Constitution was subject to the condition that no tax shall be levied or collected except by authority of law. Article 245 which deals with the extent of laws made by Parliament and by the Legislatures of States expressly states that the power of Parliament and of the State Legislatures to make laws is, 'subject to the provisions of this Constitution'. The expression subject to the provisions of this Constitution is surely wide enough to take in the provisions of both Part XII and Part XIII. In view of the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satory taxes for the use of trading facilities are not hit by the freedom declared by Article 301. They are excluded from the purview of the provision of Part XIII of the Constitution for the simple reason that they do not hamper trade, commerce and intercourse but rather facilitate them. We have, therefore, come to the conclusion that neither the widest interpretation nor the narrow interpretation canvassed before us are acceptable. The interpretation which was accepted by the majority in the Atiabari Tea Co. case (1961) 1. S.C.R. 809, is correct, but subject to this clarification. Regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by Article 301 and such measures need not comply with the requirements of the proviso to Article 304(b) of the Constitution. 114. Having laid down the parameters of the freedom guaranteed under Article 301, the majority examined the scheme of the Act, which was under challenge in Automobile Transport (Rajasthan) Ltd. (supra) and having found that the tax imposed by the enactment, questioned therein, was compensatory in nature, it upheld the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpensatory in nature. This decision also lays down a working test for answering the question as to whether a tax is compensatory or not, the working test being whether the people are having the use of certain facilities for better conduct of their business and paying patently not much more than what is required for providing the facilities . In Atiabari Tea Co. Ltd. (supra), as the tax was found to have imposed restrictions on the freedom of trade, the enactment, in question, was declared void, for, the State Legislature had not complied with the mandatory provisions of Article 304(b). In Automobiles Transport (Rajasthan) Ltd. (supra), however, the court, as reflected from para 19 of the decision, on noticing that the taxes imposed was really compensatory in nature, upheld the levy. The Court further clarified, in Automobiles Transport (Rajasthan) Ltd. (supra), at para 21 of the decision ...If statute fixes a charge for a conveyance for service provided by the State or an agency of the State, and imposes it upon those, who choose to avail those services or conveniences, the freedom of trade and commerce may well be considered unimpaired. Thus, the concept of compensatory tax, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Hansa Corporation (supra), which Bhagatram Rajeeb Kumar (supra) relies upon, though a challenge to the levy of entry tax was posed, the issue as to whether the tax, in question, was compensatory in nature or not had been decided, because Article 304(b) was found to have been complied with. 118. Be that as it may, a two Judges Bench of the Supreme Court, in Bihar Chamber of Commerce (supra), extended the concept of some 'link' between the tax imposed and the facilities provided, as propounded in Bhagatram Rajeeb Kumar (supra), by holding, thus: 12. It is not possible to deny the force of this submission. Where the local areas contemplated by the Act cover the entire State, the distinction between the State and the local areas practically disappears. (The situation would, no doubt, be different if the local areas are confined to a few cities or towns in the State and the levy is upon the entry of goods into those local areas alone. This is an important distinction which should be kept in mind while appreciating this aspect and also while examining the decisions of this Court rendered in fifties and sixties .) The facilities provided in the State are the facilities p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be, more or less, commensurate with the definite purpose of meeting the expenses on account of providing trading facilities or for making improvement in trading facilities and that there must be a reasonable relation between the actual and projected expenditure, on the one hand, and the services offered or facilities provided, on the other, so that the traders, as users of such facilities, shall not be required to pay patently much more than what is required to provide such facilities. However, in Bhagatram Rajeeb Kumar (supra) and Bihar Chamber of Commerce (supra), the court took the view that it is not-necessary for a levy, to be compensatory, that the purpose of the levy shall be to provide any specific service or facility to the traders and that for a levy to be compensatory, it is enough if the facilities are provided to the public, in general, and traders are incidentally beneficiaries of such facilities. 121. Confronted with the fact that the constitutionally held view as regards the compensatory tax has been departed from in Bhagatram Rajeeb Kumar (supra) and Bihar Chamber of Commerce (supra), a two Judges Bench, in Jindal Stripes Ltd. (supra), pointed out, at para 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of this judicially evolved concept are blurred, particularly, by reason of the decisions in Bhagatram's case and Bihar Chamber of Commerce, the court felt that the interpretation of Article 301 vis-a-vis compensatory tax should be authoritatively laid down with certitude by the Constitution Bench under Article 145(3). 123. In Jindal Stainless Ltd. (supra), the Constitution Bench has, in fact, pointed out that Part XIII of our Constitution amalgamates two distinctly different concepts of freedom of trade as prevails, on the one hand, in the Constitution of the United States and, on the other, in the Constitution of Australia. The decision, in Jindal Stainless Ltd. (supra), points out that Section 8 of Article 1 of the U.S. Constitution, contains what is called Commerce Clause , which regulates trade and commerce and in view of the dual form of government in the United States, the U.S. Supreme Court has held that the commercial power, embodied in the Commerce Clause, implies the power to regulate, that is, power to prescribe the rules by which the commerce has to be governed, but this commercial power prohibits, at the same time, the States from enacting any law, which im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncouragement of commerce among the States. By its own force, it creates an area of trade free from interference by the States. Therefore, the commerce clause is per se a limitation upon the power of the States and is not dependent upon the law being enacted. It prohibits the States from enacting a law which impedes free flow of trade between the States. On the other hand, Section 92 of the Australian Constitution provides for freedom of trade and commerce. It does not seek to regulate as in case of commerce clause. However, it has been held in numerous decisions of the Privy Council and the Australian High Courts that Section 92 leaves open the regulation of trade and commerce at all events until the regulation is enacted provided it does not impede the true freedom of inter-State commerce. This reasoning is based on the principle that all trade and commerce must be conducted subject to law. Thus, we have the difference between taxing and regulatory laws. This is how the concept of regulatory charges came about. Article 301 is inspired by Section 92 of the Australian Constitution when it refers to freedom of trade and commerce, however, Article 301 is subject to limitations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of exercise of regulatory power or whether it is the product of exercise of taxing power, the working test being that if the impugned levy seeks to control the conditions under which an activity like trade has to take place, then, such a levy is regulatory; but if the impugned tax chooses an activity, such as, movement or transportation of goods, as the criterion for its imposition and if the effect of such imposition of tax is to impede trading activities, then, the levy would be restrictive as conceived under Article 301. In short, if the law enacted is meant to enforce discipline or regulate conduct of the trade or commerce or if the payment is for regulation of conditions or incidence of trade or manufacture, then, the levy is regulatory. One may, in this regard, refer to the observations made, in Jindal Stainless Ltd. (supra), which proceed, at para 35, as under: In the generic sense, tax, toll, subsidies etc. are manifestations of the exercise of the taxing power. The primary purpose of a taxing statute is the collection of revenue. On the other hand, regulation extends to administrative acts which produces regulative effects on trade and commerce. The difficulty arises be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther hand, a fee is based on the principle of equivalence . This principle is the converse of the principle of ability to pay. In the case of a fee or compensatory tax, the principle of equivalence applies. The basis of a fee or a compensatory tax is the same. The main basis of a fee or a compensatory tax is the quantifiable and measurable benefit. In the case of a tax, even if there is any benefit, the same is incidental to the government action and even if such benefit results from the government action, the same is not measurable. Under the principle of equivalence, as applicable to a fee Or a compensatory tax, there is an indication of a quantifiable data, namely, a benefit which is measurable. 39. A tax can be progressive. However, a fee or a compensatory tax has to be broadly proportional and not progressive. In the principle of equivalence, which is the foundation of a compensatory tax as well as a fee, the value of the quantifiable benefit is represented by the costs incurred in procuring the facility/services which costs in turn become the basis of imbursement/recompense for the provider of the services/facilities, compensatory tax is based on the principle of pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uivalence being the converse of the principle of ability and in the case of a compensatory tax, it is the principle of equivalence, which is applicable. Hence, the basis of a compensatory tax is quantifiable and measurable benefit.; whereas in the case of tax, benefit, if any, is incidental, indirect and immeasurable. A tax can be progressive; whereas a compensatory tax has to broadly proportional and not progressive. The concept of compensatory tax is based on the principle of pay for the value and from the point of view of the Government, a compensatory tax is a charge for offering trading facilities. It adds to the value of the trade and commerce, which does not happen in the case of tax. A compensatory tax is levied on an individual as a member of a class; whereas a fee is levied on an individual as such. Reimbursement or recompense are the closest equivalence to the cost incurred by the provider of the services/facilities. The principle of compensatory tax is that if the Government, by some positive action, confers upon individuals, as a class, a particular measurable advantage, it is only fair that those, who receive such benefit, pay for the same. 128. Firmly laying dow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State has proved that the restrictions imposed by it by way of taxation are reasonable and in public interest within the meaning of Article 304(b) See: para 35 of the decision in the case of Khyerbari Tea Co. Ltd. and Anr. v. State of Assam and Ors. [1964]5SCR975 . 130. Having analyzed the concept of compensatory tax, which was judicially propounded in Automobile Transport (Rajasthan) Ltd. (supra), the Constitution Bench, in Jindal Stainless Ltd. (supra), has pointed out, 46. The concept of compensatory taxes was propounded in the case of Automobile Transport in which compensatory taxes were equated with regulatory taxes. In that case, a working test for deciding whether a tax is compensatory or not was laid down. In that judgment, it was observed that one has to enquire whether the trade as a class is having the use of certain facilities for the better conduct of the trade/business. This working test remains unaltered even today. Having, thus, adhered to the working test of compensatory tax, which was laid down in. Automobiles Transport (Rajasthan) Ltd. (supra), the Constitution Bench, in Jindal Stainless Ltd. (supra), commented on the decisions, rendered in Bhagatram Raje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t establish that the tax imposed is not for general revenue, but as a measure of reimbursement or to re-compensate the services offered or facilities provided, for, the compensatory tax is founded on the principle of equivalence and is based on the concept of re-imbursement. The parameters of compensatory tax, as laid down in Jindal Stainless Ltd. (supra), are summarized hereinbelow: (a) The, 'principle of equivalence', which is converse of the 'principle of ability to pay, applies to a case of compensatory tax; (b) The benefits, under a compensatory tax, are quantifiable and measurable; (c) A compensatory tax has to be broadly proportional and not progressive; (d) A compensatory tax is based on the principle of pay for the value'; (e) Reimbursement or recompense are the closest equivalence to the cost incurred by the provider of the services/facilities; (f) Compensatory tax is based on the concept of recompense/reimbursement; (g) Compensatory tax is a compulsory contribution levied broadly in proportion to the special benefits derived to defray the cost of regulation or facilities or special advantages provided to trade, commerce and intercours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the entry of goods into a local area, its immediate impact would be on the movement of goods affecting the trade. Such a measure of taxation, commonly called entry tax, can be saved only if it is shown that either the tax imposed is compensatory in nature or is protected under Article 304(b). 136. Bearing in mind the ambit of Article 301 vis-a-vis the law of taxation, when one reverts to the impugned Act, it clearly transpires that the impugned Act seeks to impose tax on the very entry of goods into a local area. Irrespective of the fact as to whether the tax, so imposed, is discriminatory or not, the fact remains that the immediate impact of such a tax is on the movement or transportation of goods. Thus, an enactment, such as, the one, impugned in the present set of writ petitions, which seeks to levy tax upon entry of goods into a local area for the purpose of use, consumption or sale therein and has a direct and immediate effect on the movement of goods can be saved only if the levy is found to be in the nature of compensatory tax for the use of trading facilities or if the levy comes under the protective umbrella of Article 304(b); otherwise, such a tax cannot be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t set of writ petitions, the Legislature introduced, under the Assam Entry Tax (Second Amendment) Act, 2005, Section 8A by means of the impugned Notification, dated 9.9.2005. Section 8A, is, however, retrospective, for, it comes into force with effect from 12.5.2005. Section 8A reads as follows: 8A. Subject to such condition as may be prescribed such sum of the proceeds of the tax as may be determined by the State Government shall be spent by the State Government for the purpose of development of trading facilities, maintenance of roads and other infra-structures in the local area. 140. As would shortly transpire, the insertion of Section 8A appears to be a result of the legislative anxiety to prove or show that the Assam Entry Tax Act, 2001, is compensatory in nature and would, therefore, fall outside the purview of Article 301. 141. What is, now, of paramount importance to note is that a microscopic reading of Section 8A reveals that the impugned Act, including subsequent amendments made thereto, do not specify how much of the revenue realized, by way of entry tax, will be utilized for facilitating trade and commerce. Section 8A, which relates to utilization of the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities. Over and above this, the State Government is also spending substantial amount of fund for maintenance of roads within the territories of various local bodies. For example, Rs. 80 crore has been earmarked for this purpose during the current year 2005-06. Similarly, substantial amount of funds are also being transferred by the State Government to the A.S.E.B. for development of electricity network in both urban and rural areas of the State. The quantum of such support has been at an average of around Rs. 100 crore per year. Year Amount of entry tax collected Amount released to local bodies (Rs. in crores) 2001-02 7.84 67.48 2002-03 28.34 90.29 2003-04 28.81 97.48 2004-05 106.50 176.56 From the above, it is clear that the amount being spent by the State Government on development of infrastructure facilities to facilitate trade and commerce within the territories of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the special benefits, which the traders are claimed to have been provided with, the traders are not paying patently much more than what is required for providing facilities . This test has been adhered even in Jindal Stainless Ltd. (supra). In a case of present nature, the State Government ought to have, therefore, shown as to what trading facilities it has really provided to the traders, what expenses are incurred for providing such facilities and how much amount, realized from the imposition of the entry tax, is being utilized for providing the trading facilities so that this Court could feel satisfied that the traders are paying, for the facilities, if any, provided to them, patently not much more than what is required for providing the facilities. No such thing has been done. Situated thus, it is clear that the State Government has not discharged its burden of showing that the entry tax, in the present case, is compensatory in nature. 143. I may, at this stage, pause here to point out that Dr. Saraf has made pointed submissions to show that so far as movement of crude oil is concerned, no facility of any kind is provided to the petitioners, who are involved in the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the losses in the form of Excise Duty, Sales Tax, Cess, etc., on this additional costs. On a rough estimate, if this was to be passed on to the ultimate consumer it would entail an additional cost of at least between Rs. 3 to Rs. 4 a litre of diesel and Rs. 5 to Rs. 6 per litre of petrol. If this additional cost is borne by the company (as it presently is) it would entail an equivalent loss to the company. In either event, it imposes an additional cost on the petroleum products of the refineries in Assam which makes them much more expensive in comparison to similar products produced in refineries in other states where there is no entry tax (e.g., West Bengal) and, therefore, far less competitive. 144. From the above averments made in WP(C) No. 4775/2005, it clearly transpires that according to the petitioners, the movement or transportation of crude oil, through pipelines, is entirely at the expenses of the petitioners. Even pipelines are laid on the land, which the petitioners have acquired at their own expenses, and that the same are maintained by the oil companies themselves. In short, according to 3the petitioners, the State provides no facility and incurs no expenses in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Assam Act XII of 1993). 148. When the provisions of Section 5 is carefully read, in the light of the object and reasons behind the enactment of the impugned Act, it becomes clear that the legislative intent behind imposition of the impugned levy is to arrest evasion of sales tax, which has, now, been replaced by the Assam Value Added Tax Act, 2003. Though Assam Entry Tax Act, 2001, and the Assam Value Added Tax Act, 2003, have been enacted on two distinctly separate footings, the former having been enacted for the purpose of levy of tax on entry of goods into any local area, in Assam, for consumption, use or sale therein, this power being traceable to Entry 52 of the State List, the latter is enacted for the purpose of levy of tax on sale or purchase of goods in Assam, the subsequent legislation being traceable to Entry 54 of the State List, yet the common and broad objective, in both the enactments, are to earn revenue for the State. One can also not ignore the grievances expressed, on behalf of the petitioners, that the respondents have, time and again, placed before this Court not only varied, but self-conflicting and contradictory reasons for enactment of the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eful reading of Section 5 also indicates that the imposition of entry tax is aimed at realizing State sales tax, which the State is unable to impose in the form of Assam Value Added Tax Act, 2003. Coupled with this, it is also of immense importance to note that one, who pays sales tax or Assam Value Added Tax, is exempted from payment of entry tax. Viewed from this angle, I find considerable force in the submissions, made on behalf of the petitioners, by Dr. A. Saraf that the impugned levy is a colourable exercise of power and that though the entry tax is, now, being claimed to be compensatory in nature, the legislative object and the scheme of the impugned enactment are to really realize payment of sales tax in advance inasmuch as those, who pay entry tax, would be exempted from payment of State sales tax or Value Added Tax. Reliance placed, on behalf of the petitioners, on the decision in Sri Krishna Marbles and Granites v. State of Kerala and Ors. reported in 137 STC 481 (Ker.), to show that the impugned levy is nothing, but an advance payment of sales tax cannot be said to wholly unjustified. The relevant observations, made in Sri Krishna Marbles and Granites (supra), read as f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The State of Assam, like some other States, had imposed luxury tax on tobacco and tobacco products, in the State of Assam, with the help of the Assam Taxation (Luxury) Act, 1997. Following a challenge to the imposition of luxury tax, the Apex Court, in Godfrey Philips India Ltd. v. State of UP reported in (2005) 194 CTR (SC) 257 , declared the levy of luxury tax-to be beyond the legislative competence and ultra vires. Having, thus, failed to sustain the luxury tax on tobacco and its products, which had been imposed @ 10 paisa at a rupee under the Assam Taxation (Luxury) Act, 1997, the State Government, as delegated authority, under the AET Act, 2001, issued notification, dated 28.2.2005, inserting tobacco and tobacco products, in the Schedule to the Act, making tobacco and its products taxable at the same rate at which the luxury tax had been imposed on these items under the Assam Taxation (Luxury) Act, 1997. From these glaringly noticeable facts, there can be no escape from the conclusion that the impugned notification, dated 28.2.2005, aforementioned is in colourable exercise of power to levy and collect tax, under the AET Act, 2001, on items on which the State could not have, ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; rather, Article 246 is subject to Article 301. Hence, the power to legislate, under Article 246, has to be read subject to the provisions of Article 301. 157. It clearly follows, therefore, that while exercising the powers under Article 246, Legislature cannot enact a law, which impinges or violates Article 301. To put it differently, entry tax cannot be imposed in violation of the freedom of trade and commerce guaranteed under Article 301. It is, therefore, no answer to the question that an entry tax, being a legislation under Entry 52 of the State List, is a valid piece of legislation even if the imposition of entry tax is found to be violative of Article 301. 158. What crystallizes from the above discussion is that the impugned levy could not be proved to be compensatory in nature. One of the possible ways, therefore, of sustaining the impugned levy would be to ascertain if the levy, as contemplated under the impugned notifications, AET (Amendment) Ordinance, 2005, and the AET (Second) Amendment Act, 2005, fall under the protective umbrella of Article 304(b). 159. While considering the question as to whether the impugned levy falls within the protective umbrella of Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t's assent, even before the Bill, proposing such an enactment is introduced in the Legislature of any State, must be obtained. The anxiety of the Constitution-makers was obviously to ensure that the freedom of trade, commerce and intercourse, which Article 301 seeks to guarantee, is not diluted or set at naught unless, for compelling reasons, a State has to make an enactment levying a tax, which though restrictive of Article 301, is, nevertheless, indispensable in the interest of the State concerned. Since the Parliament, in exercise of its various legislative powers, such as, Article 286, has made various legislations in order to generate revenue and, at the same time, ensure growth of trade and commerce throughout India, President is required to apply his mind to ascertain if a tax, which is restrictive in nature and is sought to be imposed by a State, can be permitted in the national interest and in the interest of the State concerned. The power given to the President under Article 304(b) is, therefore, a special constituent power as protector and defender of the Constitution and as a person, who has the responsibility to safeguard fundamental rights of the citizens and fede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conflict between two enactments, Central and State, and it is in the context of such a conflict between the two that the decision, in Kaiser-i-Hind (P.) Ltd. (supra) was rendered. What is, however, imperative to note is that Article 254(2) requires that law made by the State Legislature, which is repugnant to any of the provisions of any law made by the Parliament, must be reserved for consideration of the President and must have received his assent. If it has not been considered by the President and has not received his assent, the law will not be valid. Though in Kaiser-i-Hind (P.) Ltd. (supra), it was conflict between two enactments, which was an issue, the fact remains that the object and parameters of the powers, vested in the President under the proviso to Article 304(b), has been held to be same as the power under Article 254(2). The reference made by Mr. Shanti Bhusan to Kaiser-i-Hind (Put.) Ltd. (supra) cannot, therefore, be said to be misplaced. 164. Under the proviso to Clause (b) of Article 304, not only a Bill containing restrictive provisions, but even the amendments sought to be made thereto cannot be introduced in the Legislature of a State without the previous s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which had not been, originally, included in the Bill, when it had received the sanction of the President, is sought to be subsequently included. The President's sanction, under Article 304(b), is sine qua non for the validity of a legislative enactment. As has been pointed out, in Kaiser-i-Hind (P.) Ltd. (supra), a genuine, real and effective consideration would depend upon specific information having been provided to the President inviting his attention to every item, which is sought to be taxed. 167. In the present case, the original Bill, as already discussed above, had proposed textile, in its schedule, as an item for imposition of entry tax, but the President granted his assent to the Bill on condition that textile would be removed from the purview of the entry tax. Same as tobacco and tobacco products, textiles are goods of special importance under the Central Sales Tax Act, 1956. Hence, the goods, such as, tobacco and tobacco products, could not have been introduced into the Schedule of the impugned Act without the President's prior sanction having been obtained thereto in terms of Article 304(b). If the submissions, made on behalf of the State respondents, are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra), Subodyya Chit Fund (supra) and Widia (India) Ltd. (supra), which Mr. K.N. Cliuudhury has relied upon to contend that every amendment of an enactment does not require President's prior sanction or assent, it may be noted that in Syed Ahmed Aga (supra), the Apex Court has pointed out that it is only an additional restriction from the special point of view of Article 304(b), which requires President's sanction. In other words, when an amendment does not bring any additional restriction, President's sanction, under the proviso to Article 304(b), is not necessary. Naturally, therefore, when an amendment imposes an additional restriction, the obtaining of the President's sanction would become indispensable. In the present case, there was no entry tax on any item except on those seven items in respect whereof, the President had granted sanction. Inclusion of any additional item within such a tax net would be nothing, but an additional restriction from the special point of Article 304(b) and any such inclusion without President's sanction would be impermissible. In Subodyya Chit Fund (supra), it was merely the form of security, which was sought to be amended, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tured within the State of Assam, even if such goods enter from one local area of the State into another local area for the purpose of consumption, use or sale therein, the ground of such exemption being that sale of these goods are taxable under the Assam Value Added Tax, 2003, whereas those goods, which are produced or manufactured outside the State of Assam and, then, imported into the State of Assam, are liable to payment of entry tax, when these goods enter into any local area of Assam for use, consumption and sale therein. Section 5 is, thus, according to Mr. Shanti Bhushan, in clear violation of Article 304(a) of the Constitution, for, points out Mr. Shanti Bhusan, Article 304(a) prohibits the States from making, while imposing a tax, any discrimination between the goods, which are manufactured or produced within the State, and the goods, which are manufactured or produced outside the State. Such a discrimination is also, contends Mr. Shanti Bhusan, a violation of the guarantee of equality, which Article 14 of the Constitution provides. Mr. Shanti Bhusan further submits that even prior to the amendment of Section 5, this section granted exemption from payment of entry tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Majid and Co. v. State of Madras AIR 1963 SC 928 (paragraph Nos. 11 and 19). 176. The above submissions of Mr. Shanti Bhusan have been substantially adopted by other learned Counsel appearing for the parties. 177. Controverting the submissions made on behalf of the petitioners, Mr. K.N. Choudhury, learned Advocate General, has submitted that the challenge to the entry tax by the manufacturer of tobacco and tobacco products is not tenable, for, these items are not subject to sales tax or Value Added Tax in Assam. The tobacco products, points out Mr. K.N. Choudhury, suffer from no discrimination inasmuch as tobacco and tobacco products are not subject to local sales tax or Value Added Tax in Assam. 178. The impugned Act, according to Mr. Choudhury, makes no discrimination between imported goods and the locally manufactured goods. The exemption under Section 5 has been granted, contends Mr. K.N. Choudhury, solely with a view to avoiding double taxation. The levy of entry tax, on the specified goods, into a local area of the State and the sales tax levied, on the subsequent sale or purchase thereof inside the State, are, according to Mr. Choudhury, two distinct levies and inde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other local area of the State is concerned. 180. Mr. K.N. Choudhury has also contended that under the impugned Act, the importers of goods as well as manufacturers or producers of similar goods, within the State, are liable to pay equal rate of entry tax. In such a situation, the question of the impugned levy being violative of Article 301 does not arise at all. To buttress his argument, Mr. Choudhury relies on Andhra Sugar Mills v. State of Andhra Pradesh [1968] 1 SCR 705 . 181. Referring to Anand Commercial Agencies (supra), which Mr. Shanti Bhushan has relied upon, Mr. Choudhury submits that in Ananth Commercial Agencies (supra), the manufacturer of groundnut oil, within the State of Andhra Pradesh, were given the benefit of lower rate of tax than the importers of groundnut oil. Such levy being clearly discriminatory was, submits Mr. K.N. Choudhury, interfered with by the court as discriminatory. Similarly, contends Mr. Choudhury, in Shree Mahabir Oil Mills (supra), edible oil manufacturers of other States were required to pay tax, whereas local manufacturers were exempted from tax and it was for this reason that the levy was held to be discriminatory. The remaining author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h may give preference to one State over another, if such discriminatory law is aimed at meeting the scarcity of the goods, in question, in any part of the territory of India. As far as the State Legislatures are concerned, Clause (1) of Article 303 imposes one additional limitation, the limitation being that a State Legislature cannot make law giving preference or making discrimination between one State and another. What is, now, extremely important to note is that the limitation, on the part of the State Legislatures, to impose tax, which interferes with the freedom of the trade, commerce and intercourse, is lifted by Article 304(a) by allowing the Legislature of a State to impose, on goods, imported from sister States or Union territories 'any tax' to which similar goods manufactured, in its own State, are subjected, but not so as to discriminate between the imported goods and the goods manufactured in the State. 184. Thus, Clause (a) of Article 304 authorizes a State Legislature to impose non-discriminatory tax on goods imported from sister States even if imposition of such tax interferes with the freedom of trade and commerce guaranteed by Article 301. The principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t observed at para 7, in Kalyani Stores (supra), thus, 7. Article 301 has declared freedom of trade, commerce and intercourse throughout the territory of India, and restriction on that freedom may only be justified if it falls within Article 304. Reasonableness of the restriction would have to be adjudged in the light of the purpose for which the restriction is imposed, that is as may be required in the public interest . Without entering upon an exhaustive categorization of what may be deemed required in the public interest , it may be said that restrictions which may validly be imposed under Article 304(b) are those which seek to protect public health, safety, morals and property within the territory. Exercise of the power under Article 304(a) can only be effective if he tax or duty imposed on goods imported from other States and the tax or duty imposed on similar goods manufactured or produced in that State are such that there is no discrimination against imported goods. As no foreign liquor is produced or manufactured in the State of Orissa the power to legislate given by Article 304 is not available and the restriction which is declared on the freedom of trade, commerce or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced within the State. It is in this backdrop that the scheme of the AET Act, 2001, and, particularly, Section 5 thereof need to be examined. 189. Section 5 of the AET Act, 2001, reads as follows : Section 5. Notwithstanding anything contained in Section 3 and Section 4 and subject to production of documentary proof, no tax under this Act shall be levied in respect of the specified goods which are also subject to levy of taxes under the provisions of the Assam Value Added Tax Act, 2003 Assam Act VIII of 2005. (iii) If the sale of such specified goods inside the State, made by an importer are sales within the meaning of Clauses (43) of Section 2 of the said Act, excepting sales falling under Sub-clauses (ii), (iii) and (iv) of the said clause and if he is liable to pay tax on such sales as a registered dealer under the Assam Value Added Tax Act, 2003 Assam Act No. VIII of 2005 (iv) If the sale of such specified goods are made by the importer in the course of inter-state trade or commerce or in the course of export out of the territory of India or such goods are otherwise dispatched outside the State by way of stock transfer and if he is registered dealer under the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable. Similarly, such goods, which are taxable under local sales tax enactment, enter into a local area, on being imported into the State, the same becomes liable to payment of entry tax; but when, after entering into a local area, such goods are sold within that local area and since such sale is subject to local sales tax, no entry tax is, eventually, payable. It is, thus, clear that in respect of goods, which are exempted from payment of sales tax, the levy of entry tax is on the entry of goods into a local area irrespective of the fact whether such entry is from outside the State into a local area or from one local area of the State to another local area of the State. Similar is the position of the goods, which are subject to local sales tax, for, the goods, which are produced outside the State but taxable under the local sales tax, suffer from no payment of entry tax, when such goods enter into a local area from outside the State. It is also not the pleaded case of the petitioners that goods, similar to the ones, the goods, which form the subject matter of the present set of writ petitions, are not produced or manufactured within the State of Assam. 193. From the discussion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this Court, in WA No. 412/05, on 22.6.2005, read, thus: Mr. K.N. Choudhury, learned Addl. Advocate General, Assam, undertakes that in case the respondent succeeds before this Court then the payment of Entry tax shall be refunded by the appellant. In view of the undertaking recorded as above, we stay the operation of the order under appeal. 198. On 5.1.2006, W.A. No. 412/05 aforementioned was disposed of along with W.A. No. 306/05 and W.A. No. 479/05. This order reads as follows: It is brought to our notice that the main writ petition itself is being heard and in fact learned Additional Advocate General has already completed his submission and what remains is the reply to be given by the learned senior counsel appearing on behalf of the writ petitioner. It is also brought to our notice that the matter is in the list for hearing before the learned Single Judge today. In such view of the matter no further order as such is required to be passed in this writ appeal. It is needless to reiterate that in case the writ petition is allowed all consequences in accordance with law including refund of the Entry tax stated to have been collected by the State from the writ petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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