Part XIII trade freedom protects against local tax preference; concessional cement notifications were unconstitutional.

Notifications granting concessional sales tax rates to local cement manufacturers and inter-State cement sales were unconstitutional because they created local preference and altered tax incidence in a way that impeded the free flow of trade and commerce under Part XIII of the Constitution. The Court held that taxation measures remain subject to constitutional scrutiny when they directly burden trade or discriminate between similarly placed traders or goods, and preferential treatment outside the permitted restrictions is invalid. The challenge to the vires of section 8(5) of the Central Sales Tax Act was not decided because it was abandoned.

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Issues: Whether the impugned notifications granting concessional sales tax rates to local cement manufacturers and inter-State sales of cement were invalid as offending the freedom of trade, commerce and intercourse guaranteed by Part XIII of the Constitution.

Analysis: Part XIII protects the free flow of trade throughout India and prohibits executive action that creates economic barriers or local preferences inconsistent with that freedom. Taxation is not beyond constitutional scrutiny where it directly impedes trade or discriminates between similar goods or traders. The notifications conferred a substantial tax advantage on local manufacturers and altered the incidence of tax on inter-State sales in a manner that favoured one class of traders over another. Such preferential treatment could not be justified as a valid restriction within the constitutional scheme governing trade and commerce. The challenge to the vires of section 8(5) of the Central Sales Tax Act was abandoned and was not decided.

Conclusion: The impugned notifications were held to be unconstitutional and unenforceable as they violated Part XIII of the Constitution, and the writ petition succeeded.

Ratio Decidendi: State taxation or exemption measures that create local preference or directly hinder the free flow of trade and commerce are invalid unless they fall within the constitutionally permitted restrictions under Part XIII.

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