Sales tax on country spirit was a valid sale levy in law, but unconstitutional for directly restricting trade without Article 304(b) sanction.

Country spirit sold by licensed retail vendors constituted a sale in the legal sense, because the transactions still involved assent, transfer of property and price despite heavy excise regulation; the sales were therefore capable of being subjected to sales tax. However, the levy directly and immediately restricted trade and commerce because the trade was tightly controlled, the sale price was fixed, the profit margin was narrow, and the tax could not be passed on to consumers. In the absence of presidential sanction under Article 304(b), the impugned sales tax provision was unconstitutional and unenforceable to the extent it applied to country spirit sales.

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Issues: (i) Whether the sale of country spirit by licensed retail vendors constituted a sale in the legal sense so as to attract sales tax under the State law. (ii) Whether the levy of sales tax on such sales directly and immediately restricted trade and commerce so as to attract Article 304(b) of the Constitution of India.

Issue (i): Whether the sale of country spirit by licensed retail vendors constituted a sale in the legal sense so as to attract sales tax under the State law.

Analysis: A sale liable to taxation under the State entry must be a sale in the legal sense and not merely in the popular sense. The essential elements of a legal sale include competent parties, mutual assent, transfer of property, and price. Although the trade in country spirit was highly controlled by the Bengal Excise Act, 1909 and the rules and licence conditions, the licensee still opened the shop, offered goods for sale, and accepted the customer's offer to purchase. The transaction therefore retained contractual character and was not a transfer wholly outside consent.

Conclusion: The sale of country spirit by the licensed vendors was a sale in the legal sense and was capable of being subjected to sales tax.

Issue (ii): Whether the levy of sales tax on such sales directly and immediately restricted trade and commerce so as to attract Article 304(b) of the Constitution of India.

Analysis: Taxation laws may fall within Part XIII when they directly and immediately impede the free flow of trade. Here the sale price was rigidly fixed, the profit margin was already narrow, and the tax burden could not be passed on to consumers because the licence and excise rules prohibited such alteration. On those facts, the impost operated not as a mere ordinary levy but as a direct impediment to the carrying on of the regulated business.

Conclusion: The levy directly and immediately restricted trade and commerce and, as presidential sanction under Article 304(b) was absent, the impugned provision was unconstitutional.

Final Conclusion: The writ petition succeeded, the impugned sales tax amendment, to the extent it imposed tax on country spirit sales, was struck down, and relief was granted against enforcement of that provision.

Ratio Decidendi: A sale subject to sales tax must still be a contract of sale in the legal sense, but even a valid tax provision is unconstitutional if, in the context of a tightly regulated and price-fixed trade, it directly and immediately impedes the free flow of trade without compliance with Article 304(b).

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