Supreme Court - Daily Orders
M/S Eastern Spinning And Textiles Mills ... vs The State Of Uttar Pradesh And Anr. on 10 February, 2020
Bench: D.Y. Chandrachud, Indu Malhotra
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IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No 2801 of 2012
M/s Eastern Spinning and Textiles Mills Pvt Ltd .... Appellant(s)
Versus
State of Uttar Pradesh and Anr ....Respondent(s)
ORDER
This appeal has arisen from a judgment and order of a Division Bench of the High Court of Judicature at Allahabad dated 23 December 2011. The High Court dismissed a batch of petitions, including Writ Tax No 1261 of 2008 instituted by the appellant, challenging the constitutional validity of the Uttar Pradesh Tax on Entry of Goods into Local Areas Act 2007.
The issue which has been raised in the appeal stands covered by a decision of a nine-Judge Bench of this Court in Jindal Stainless Limited v State of Haryana1. By the judgment of the majority, the reference before the nine-Judges has been answered in the following terms:
Signature Not Verified“1159. By majority the Court answers the reference in the Digitally signed by SANJAY KUMAR Date: 2020.02.12 17:37:10 IST Reason: following terms:
1 (2017) 12 SCC 1 2 1159.1 Taxes simpliciter are not within the contemplation of Part XIII of the Constitution of India. The word ‘Free’ used in Article 301 does not mean “free from taxation”. 159.2. Only such taxes as are discriminatory in nature are prohibited by Article 304(a). It follows that levy of a non- discriminatory tax would not constitute an infraction of Article
301.
1159.3. Clauses (a) and (b) of Article 304 have to be read disjunctively.
1159.4. A levy that violates 304(a) cannot be saved even if the procedure under Article 304(b) or the proviso there under is satisfied.
1159.5. The compensatory tax theory evolved in Automobile Transport case and subsequently modified in Jindal’s case has no juristic basis and is therefore rejected. 1159.6. Decisions of this Court in Atiabari, Automobile Transport and Jindal cases (supra) and all other judgments that follow these pronouncements are to the extent of such reliance over ruled.
1159.7. A tax on entry of goods into a local area for use, sale or consumption therein is permissible although similar goods are not produced within the taxing state.
1159.8. Article 304 (a) frowns upon discrimination (of a hostile nature in the protectionist sense) and not on mere differentiation. Therefore, incentives, set-offs etc. granted to a specified class of dealers for a limited period of time in a non- hostile fashion with a view to developing economically backward areas would not violate Article 304(a). The question whether the levies in the present case indeed satisfy this test is left to be determined by the regular benches hearing the matters.
1160. States are well within their right to design their fiscal legislations to ensure that the tax burden on goods imported from other States and goods produced within the State fall equally. Such measures if taken would not contravene Article 304(a) of the Constitution. The question whether the levies in the present case indeed satisfy this test is left to be determined by the regular benches hearing the matters. 1161. The questions whether the entire State can be notified as a local area and whether entry tax can be levied on goods entering the landmass of India from another country are left open to be determined in appropriate proceedings.” In view of the decision in Jindal Stainless Limited (supra), we find no merit in the appeal. The appeal is accordingly dismissed. The State of Uttar Pradesh may invoke the bank guarantee(s) that were furnished in 3 terms of the interim order passed by this Court on 12 March 2012. There shall be no order as to costs.
…………...…...….......………………........J. [Dr Dhananjaya Y Chandrachud] …..…..…....…........……………….…........J. [Indu Malhotra] New Delhi;
February 10, 2020
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ITEM NO.56 COURT NO.8 SECTION III-A
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s).2801/2012
M/S EASTERN SPINNING AND TEXTILES MILLS PVT LTD. Appellant(s)
VERSUS
STATE OF UTTAR PRADESH AND ANR. Respondent(s)
Date : 10-02-2020 This appeal was called on for hearing today.
CORAM :
HON'BLE DR. JUSTICE D.Y. CHANDRACHUD HON'BLE MS. JUSTICE INDU MALHOTRA For Appellant(s) For Respondent(s) Mr. Bhakti Vardhan Singh, AOR Mr. Rajesh Kumar, Adv.
Mr. Soumyaranjan, Adv.
UPON hearing the counsel the Court made the following O R D E R The appeal is dismissed in terms of the signed order.
Pending application, if any, stands disposed of.
(SANJAY KUMAR-I) (SAROJ KUMARI GAUR)
AR-CUM-PS COURT MASTER
(Signed order is placed on the file)