Constitutional validity of inter-State sales tax amendments upheld, including retrospective levy and exemption scheme under Article 14.

Parliamentary levy on inter-State sales was treated as a uniform fiscal measure protected by Article 302, and the Court held that mere differences in tax incidence between intra-State and inter-State sales did not amount to unconstitutional discrimination under Articles 301, 303(1) or an unreasonable restriction under Article 19(1)(g). Retrospective operation of section 6(1-A) was upheld because retrospective taxation is not invalid by itself and the assessment machinery remained adequate. Section 10's exemption for dealers who had not collected tax during the relevant period was also sustained as a reasonable classification linked to the legislative object, though one judge dissented on that point.

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Issues: (i) Whether the amended Central Sales Tax law offended the freedom of trade and commerce under Articles 301, 302 and 303(1) of the Constitution; (ii) whether the levy under section 6(1-A) and section 9 infringed Article 19(1)(g); (iii) whether the retrospective operation of section 6(1-A) violated Article 19(1)(f) or Article 14; and (iv) whether section 10 of the Amendment Act offended Article 14.

Issue (i): Whether the amended Central Sales Tax law offended the freedom of trade and commerce under Articles 301, 302 and 303(1) of the Constitution.

Analysis: The levy of tax on inter-State sales was held to be a Parliamentary fiscal measure operating uniformly throughout the country. A tax law is ordinarily presumed to be in the public interest and is protected by Article 302 unless it directly and immediately impedes trade in a constitutionally impermissible manner. Mere variation in tax incidence between intra-State and inter-State sales did not amount to a preference for one State over another or discrimination between States within the meaning of Article 303(1).

Conclusion: The challenge under Articles 301, 302 and 303(1) failed and was rejected against the petitioner.

Issue (ii): Whether the levy under section 6(1-A) and section 9 infringed Article 19(1)(g).

Analysis: The impugned levy was not confiscatory or extortionate. A taxing statute serves a public purpose and a mere burden on trade does not by itself make the restriction unreasonable. The Court held that the fact that the State taxed intra-State sales at a single point did not show absence of public need for further revenue, and the levy remained a reasonable restriction in the interest of the general public.

Conclusion: The challenge under Article 19(1)(g) failed and was rejected against the petitioner.

Issue (iii): Whether the retrospective operation of section 6(1-A) violated Article 19(1)(f) or Article 14.

Analysis: Retrospective taxation is not invalid merely because it operates backwards in time. Once section 6(1-A) and the related machinery provisions were given retrospective effect, adequate machinery existed for assessment and collection under the State sales tax framework. The retrospective levy did not create an arbitrary classification, because the section applied equally and any difference arose from limitation, not from the statutory provision itself.

Conclusion: The retrospective operation of section 6(1-A) did not infringe Articles 19(1)(f) or 14 and was upheld against the petitioner.

Issue (iv): Whether section 10 of the Amendment Act offended Article 14.

Analysis: The majority held that the exemption for dealers who had not collected tax during the specified period was founded on a reasonable classification. The date chosen marked the point at which the law became certain after the Supreme Court ruling, and the exemption was linked to the legislative object of relieving dealers who had acted on that legal position. The burden of proving entitlement to exemption was placed on the dealer and the classification was treated as part of the statutory scheme.

Conclusion: Section 10 was held not to violate Article 14 and was upheld against the petitioner.

Final Conclusion: The majority upheld the constitutional validity of the impugned amendments and sustained the tax liability, resulting in dismissal of the writ petition with costs.

Concurring/Dissenting Opinion: Trivedi, J. dissented on section 10, holding that the exemption created an unreasonable classification because the cut-off date had no rational nexus with the statutory object. On that view, the petition would have been allowed in part and the exemption would have been available to all dealers who had not collected tax for the relevant period.

Ratio Decidendi: A parliamentary tax on inter-State sales, operating uniformly throughout India and supported by adequate machinery and a rational exemption scheme, is not invalid merely because it is retrospective or because it creates a limited class of exempted dealers, so long as the classification has a reasonable nexus with the legislative object and the levy is not confiscatory or directly destructive of trade freedom.

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