Jindal Stainless Ltd. V State of Haryana

Jindal Stainless Ltd. V State of Haryana

The issue before the Supreme Court was whether the State enactments relating to levy of entry tax had to be tested with reference to both Article 304(a) and Article 304(b) of the Constitution and whether Article 304(a) is conjunctive with or separate from Article 304(b)?

The question,  in the first instance, before going into the validity of the State Laws impugned – Whether after 49 years, the Supreme Court should revisit the tests propounded in the earlier decisions in the case of Atiabari Tea Co. Ltd. and Automobile Transport (Rajasthan) Ltd. ? The  States whose  Entry Tax Laws have been challenged contended that the tests propounded in Atiabari Tea Co. Ltd. and Automobile Transport (Rajasthan) Ltd. (supra) have failed to strike a balance between the “freedom of trade and commerce” under Article 301 of the Constitution and the States’ authority to levy taxes under Articles 245 and 246 of the Constitution read with the appropriate Legislative Entries in the Seventh Schedule to the Constitution of India. The states, therefore, sought revisiting of the aforestated two decisions in Atiabari Tea Co. Ltd. and Automobile Transport (Rajasthan) Ltd. by a larger Bench.

Applying the tests laid down in Keshav Mills Co. Ltd. and Central Board of Dawoodi Bohra Community, it held that on number of aspects a larger Bench of Supreme Court need to revisit the interpretation of Part XIII of the Constitution including the various tests propounded in the judgments of the Constitution Bench of the Court in the aforestated two cases, namely, Atiabari Tea Co. and Automobile Transport (Rajasthan) Ltd.

The issues were: Interplay/interrelationship between Article 304(a) and Article 304(b). The significance of the word “and” between Article 304(a) and 304(b). The significance of the non obstante clause in Article 304. The balancing of freedom of trade and commerce in Article 301 vis-à-vis the States’ authority to levy taxes under Article 245 and Article 246 of the Constitution read with the appropriate legislative Entries in the Seventh Schedule, particularly in the context of movement of trade and commerce. Whether Article 304(a) and Article 304(b) deal with different subjects? Whether the impugned taxation law to be valid under Article 304(a) must also fulfil the conditions mentioned in Article 304(b), including Presidential assent? Whether the word “restrictions” in Article 302 and in Article 304(b) includes tax laws? Whether validity of a law impugned as violative of Article 301 should be judged only in the light of the test of non-discrimination? Does Article 303 circumscribe Article 301? Whether “internal goods” would come under Article 304(b) and “external goods” under Article 304(a)? Whether “per se test” propounded in Atiabari’s case should or should not be rejected? Whether tax simpliciter constitutes a restriction under Part XIII of the Constitution? Whether the word “restriction” in Article 304(b) includes tax laws? Is taxation justiciable? Whether the “working test” laid down in Atiabari makes a tax law per se violative of Article 301? Inter-relationship between Article 19(1)(g) and Article 301 of the Constitution? These are some of the questions which warrant reconsideration of the judgments in Atiabari Tea Co. Ltd and Automobile Transport (Rajasthan) Ltd.  by a larger Bench of the Supreme Court.