Inter-State goods movement rules struck down as beyond State power and ultra vires for regulating outside-State transfers.

Rules 43(3), 43(6)(c) and 43(7)(j)(iii) of the Assam General Sales Tax Rules, 1993, requiring a despatch note in Form 35 and its production at check-posts for goods moving outside Assam, were found to regulate inter-State movement rather than intra-State levy, collection, or anti-evasion measures. Because the State's rule-making power under the Act extended only to intra-State transactions, the provisions were treated as encroaching on a field reserved to Parliament under entry 92A of List I. Applying the principle that ancillary machinery provisions cannot ol inter-State trade, the Court declared the impugned rules ultra vires.

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Issues: Whether rules 43(3), 43(6)(c) and 43(7)(j)(iii) of the Assam General Sales Tax Rules, 1993, insofar as they required a despatch note in form 35 for movement of goods outside Assam and production of that form at check-posts, were beyond the rule-making power of the State and ultra vires.

Analysis: The impugned rules operated in the field of inter-State movement of goods, whereas the State's power under section 46 of the Assam General Sales Tax Act, 1993 and the rule-making power under section 72(2)(iii) of that Act were confined to levy, collection and prevention of evasion in relation to intra-State transactions. The requirement of form 35 applied even where the goods were moving outside the State in the course of inter-State sales, stock transfers, or export, thereby regulating a field reserved to Parliament under entry 92A of List I. The Court relied on the principle that machinery or ancillary provisions cannot be used by the State to control inter-State transactions, and treated the earlier decision on a pari materia Bihar provision as governing the present challenge.

Conclusion: The impugned rules were held to be beyond the powers of the State authority and were declared ultra vires.

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