Unconstitutional Clause 5 Words Quashed, Notification Invalid

The court declared the words "in the State" in clause 5 of notification exhibit 3 unconstitutional, finding them discriminatory and violative of Article 301 of the Constitution. Consequently, the assessment orders and demand notices based on this notification were quashed, and the matter was remanded for reconsideration by the assessing authority. The writ petition was allowed without costs.

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Issues Involved:

1. Constitutionality of the words "in the State" in clause 5 of notification exhibit 3 dated August 16, 1983.
2. Validity of the respective assessment orders (exhibits 13 to 15) and demand notices (exhibits 16 to 18) dated March 7, 1988.

Issue-wise Detailed Analysis:

1. Constitutionality of the words "in the State" in clause 5 of notification exhibit 3 dated August 16, 1983:

The petitioner, Paras Mal, Principal Secretary of M/s. Barmer Marudhar Vikas Samiti, challenged the constitutionality of the words "in the State" in clause 5 of the notification exhibit 3 dated August 16, 1983, under Article 226 of the Constitution of India. The petitioner argued that the impugned notification was unconstitutional as it levied sales tax on products of village industries situated outside Rajasthan and imported into Rajasthan, which would only be valid if a similar tax was imposed on products of similar industries within Rajasthan. This, according to the petitioner, violated Article 304(a) and Article 14 of the Constitution of India due to its discriminatory nature.

The court examined Articles 301 and 304 of the Constitution, noting that Article 301 ensures free trade, commerce, and intercourse throughout India, while Article 304(a) permits states to impose taxes on goods imported from other states provided similar goods within the state are also taxed, thus preventing discrimination. The court concluded that the notification exhibit 3, by exempting products manufactured within Rajasthan from sales tax while taxing similar products imported from other states, was discriminatory and hampered the free flow of trade, violating Article 301.

The court referred to several precedents, including State of Madhya Pradesh v. Bhailal Bhai, West Bengal Hosiery Association v. State of Bihar, Weston Electroniks v. State of Gujarat, and Indian Cement Ltd. v. State of Andhra Pradesh, which supported the principle that sales tax discriminating between goods of different states affects the free flow of trade and is valid only if it complies with Article 304(a).

The court rejected the non-petitioner's reliance on State of Madhya Pradesh v. Abdeali, distinguishing it on the grounds that there was no discrimination in that case between goods manufactured within and outside the state. The court found that the words "in the State" in clause 5 of the notification exhibit 3 were unconstitutional as they violated Article 301.

2. Validity of the respective assessment orders (exhibits 13 to 15) and demand notices (exhibits 16 to 18) dated March 7, 1988:

Given the court's finding that the words "in the State" in clause 5 of the notification exhibit 3 were unconstitutional, it followed that the respective assessment orders (exhibits 13 to 15) and demand notices (exhibits 16 to 18) issued based on this notification were also invalid. The court quashed these assessment orders and demand notices and remanded the matter back to the assessing authority for reconsideration in light of the court's judgment. The assessing authority was directed to grant exemption if the petitioner fulfilled the other conditions specified in exhibit 3.

Conclusion:

The writ petition was allowed, and the court declared the words "in the State" in clause 5 of notification exhibit 3 unconstitutional. Consequently, the respective assessment orders and demand notices were quashed, and the matter was remanded back to the assessing authority for fresh consideration. No costs were awarded.

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