Purchase tax and constitutional trade freedom: levy upheld as an ordinary revenue measure, with export and declared-goods objections rejected.

Purchase tax under section 5-A of the Rajasthan Sales Tax Act, 1954 is analysed as an ordinary revenue levy that does not directly and immediately restrict trade, so Articles 301 and 304(b) are not attracted and prior presidential sanction is unnecessary. The note further states that Article 286 immunity depends on the legal character of the transaction itself, and purchases made earlier for export are not automatically purchases in the course of export. It also explains that declared goods are not hit by section 15(a) of the Central Sales Tax Act, 1956 where the levy remains at the prescribed single stage and within the Central rate ceiling. The commentary concludes that the levy was treated as valid.

---

---

Issues: (i) Whether purchase tax under section 5-A of the Rajasthan Sales Tax Act, 1954, offended Articles 301 and 304(b) of the Constitution for want of previous presidential sanction; (ii) whether the levy was hit by Article 286 as a tax on purchases made in the course of export out of India; (iii) whether the levy in respect of declared goods contravened section 15(a) of the Central Sales Tax Act, 1956.

Issue (i): Whether purchase tax under section 5-A of the Rajasthan Sales Tax Act, 1954, offended Articles 301 and 304(b) of the Constitution for want of previous presidential sanction.

Analysis: A tax on sale or purchase of goods does not, by its own direct operation, restrain the freedom of trade, commerce and intercourse. The prohibition in Article 301 is attracted only where a law directly and immediately hampers the flow of trade. Sales tax or purchase tax is ordinarily a revenue measure and any effect on movement of goods is only incidental or remote. Such a levy is therefore not a restriction requiring compliance with the proviso to Article 304(b).

Conclusion: The levy did not violate Articles 301 or 304(b), and absence of presidential sanction did not invalidate section 5-A.

Issue (ii): Whether the levy was hit by Article 286 as a tax on purchases made in the course of export out of India.

Analysis: Article 286 protects sales or purchases that themselves take place in the course of export. Purchases made earlier for the purpose of export, or to implement contracts with foreign buyers, are not automatically purchases in the course of export. Whether a particular transaction falls within the export immunity depends on its facts and legal character. On the material before it, the Court treated this question as one requiring factual determination by the assessing or appellate authority and not one to be finally decided in writ jurisdiction for each petitioner.

Conclusion: The challenge under Article 286 failed at the writ stage and did not invalidate the impugned levy.

Issue (iii): Whether the levy in respect of declared goods contravened section 15(a) of the Central Sales Tax Act, 1956.

Analysis: Section 15(a) limits tax on declared goods to the prescribed rate and to a single stage. The State's rules and notification fixed the incidence at the last point in the series of sales, and the rate did not exceed the Central limit of 2 per cent. No material was shown to establish that the same declared goods were being taxed at more than one stage or subjected to double taxation.

Conclusion: The levy on declared goods was not shown to be contrary to section 15(a) of the Central Sales Tax Act, 1956.

Final Conclusion: The purchase tax under section 5-A was upheld as constitutionally and statutorily valid, and the writ applications were rejected.

Ratio Decidendi: A purchase tax that operates as an ordinary revenue levy, without directly and immediately restricting trade, is not hit by Article 301 or the proviso to Article 304(b); purchases made for export are not, merely for that reason, purchases in the course of export; and a levy on declared goods is valid if it remains within the Central rate ceiling and is confined to a single prescribed stage.

---