Article 304(b) and entry tax restrictions: amended Schedule needed fresh Presidential sanction and could not be enforced.

A State entry tax regime affecting movement of trade was examined under Article 301 and the Article 304(b) exception, applying the direct and immediate effect test and rejecting a broader "some connection" approach. The Jharkhand amendment was found to impose additional restrictions through an expanded Schedule, including coal, beyond the original scheme. Because the enlarged restrictions required fresh Presidential sanction under the proviso to Article 304(b) and no such sanction was shown, the amended levy was treated as unenforceable as a valid restriction on trade.

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Issues: (i) Whether the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 as adopted by the State of Jharkhand and amended by the Jharkhand Tax on Entry of Goods into Local Areas for Consumption, Use or Sale thereof (Amendment) Ordinance, 2001 is saved by Article 304(b) of the Constitution of India. (ii) Whether the amendment to the Schedule introduced by the Jharkhand Tax on Entry of Goods into Local Areas for Consumption, Use or Sale thereof (Amendment) Ordinance, 2001, including entry tax on coal, was valid without fresh Presidential sanction.

Issue (i): Whether the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 as adopted by the State of Jharkhand and amended by the Jharkhand Tax on Entry of Goods into Local Areas for Consumption, Use or Sale thereof (Amendment) Ordinance, 2001 is saved by Article 304(b) of the Constitution of India.

Analysis: The levy was examined in the light of Article 301 and the settled doctrine that a State tax affecting the movement of trade must satisfy the requirements of Article 304(b) if it is to be justified as a reasonable restriction. The compensatory tax theory was tested against the later Constitution Bench ruling which rejected the broader "some connection" standard and reaffirmed the "direct and immediate effect" and working test. On the record, no material was shown to establish that the Jharkhand amendment, with its enlarged restrictions and changed schedule, had the requisite Presidential sanction or satisfied Article 304(b) as a reasonable restriction.

Conclusion: The levy, as adopted and amended, was not saved by Article 304(b) and was held ultra vires.

Issue (ii): Whether the amendment to the Schedule introduced by the Jharkhand Tax on Entry of Goods into Local Areas for Consumption, Use or Sale thereof (Amendment) Ordinance, 2001, including entry tax on coal, was valid without fresh Presidential sanction.

Analysis: The amended Schedule added several new goods and imposed further restrictions beyond the original scheme approved in the principal enactment. This was treated as a substantive enlargement of the restrictive field, not a mere formal change. Since the amendment introduced additional restrictions on goods not previously included, Presidential sanction was required under the proviso to Article 304(b), and the absence of such sanction was fatal to the amendment.

Conclusion: The amendment to the Schedule, including the inclusion of coal, was invalid for want of fresh Presidential sanction.

Final Conclusion: The impugned entry tax regime, as adopted by Jharkhand and amended by the 2001 Ordinance, could not be enforced against the petitioners and the writ petitions succeeded. The question relating to motor vehicles was not decided and was left open.

Ratio Decidendi: Where a State entry tax measure, as amended, imposes additional restrictions beyond the principal enactment, it must independently satisfy Article 304(b) and obtain the required Presidential sanction; absent that, the levy cannot be enforced as a valid restriction on trade.

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