Local tax registration condition in public procurement upheld as a reasonable restriction, without violating trade freedoms.

A State tender condition requiring registration with the Commercial Taxes Department in Bihar, or participation through a registered local agent or authorised dealer, was upheld as a reasonable restriction in public interest. It did not amount to a total prohibition on outside manufacturers, because they could still participate through the prescribed routes. The condition was also treated as not directly or immediately impeding free trade, and no discriminatory taxation between local and out-of-State goods was shown. The writ petition was rejected, and the tender condition was held not unconstitutional under Article 19(1)(g) or Articles 301 and 304(a).

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Issues: Whether the tender condition requiring registration with the Commercial Taxes Department in Bihar, or participation through a registered local agent or authorised dealer, was violative of the right to carry on trade under Article 19(1)(g) of the Constitution of India and of the freedom of trade under Articles 301 and 304(a) of the Constitution of India.

Analysis: The condition was examined in the context of the State's purchase preference policy and the amended Bihar Finance Rules, which aimed at uniform tax compliance and protection of local industries. The restriction did not bar outside manufacturers from participating altogether, because they could participate either if registered in Bihar or through a registered local agent or authorised dealer. The measure was treated as a reasonable restriction in public interest rather than a total prohibition. It was also held that a sales-tax related condition of this kind did not directly or immediately impede the free flow of trade and commerce, and there was no discriminatory taxation between locally manufactured goods and goods brought from outside the State. The cases relied on by the petitioners were distinguished because they involved different factual and legal settings, including discriminatory rates of tax or absence of a comparable regulatory framework.

Conclusion: The tender condition was not unconstitutional under Article 19(1)(g) or Articles 301 and 304(a) of the Constitution of India, and the writ petition was rejected.

Ratio Decidendi: A State tender condition requiring local tax registration or participation through a registered local agent is valid where it does not impose a total prohibition, is framed in public interest, and does not create discriminatory treatment between local and out-of-State suppliers.

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