Compensatory entry tax levy upheld as fresh constitutional challenge, delegation objections and discriminatory notification claims all failed.

A compensatory entry tax levy, previously upheld on binding authority, could not be reopened through a fresh constitutional challenge merely because part of the earlier doctrinal formulation had later been overruled. The amendment raising the ceiling under section 4A to 50 per cent was upheld because the legislative policy, statutory limits and laying requirement provided sufficient guidance and control over delegated power, and the differential taxation had a rational fiscal basis. The notifications issued under sections 3(2), 4A and 10 were also sustained as falling within the statutory scheme and not violating equality or free trade principles.

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Issues: (i) whether a fresh challenge to the constitutional validity of the entry tax enactment was maintainable after earlier decisions upholding the levy; (ii) whether the amendment enhancing the ceiling of tax under section 4A to 50 per cent suffered from excessive delegation or unconstitutional discrimination; and (iii) whether the notifications issued under sections 3(2), 4A and 10 were invalid as discriminatory or contrary to the Act and the Constitution.

Issue (i): whether a fresh challenge to the constitutional validity of the entry tax enactment was maintainable after earlier decisions upholding the levy.

Analysis: The earlier judicial decisions upholding the entry tax enactment were treated as binding on the question whether the levy, imposed to compensate local bodies after abolition of octroi, was compensatory in character. The later Constitution Bench decision had only overruled the broader "some connection" formulation and did not unsettle the operative holding sustaining the levy. The Court further held that the changed legal position did not reopen the validity of the statute so as to permit a fresh constitutional attack on the same enactment.

Conclusion: Fresh challenge to the constitutional validity of the enactment was held not maintainable, and the objection of the State was accepted.

Issue (ii): whether the amendment enhancing the ceiling of tax under section 4A to 50 per cent suffered from excessive delegation or unconstitutional discrimination.

Analysis: The legislative scheme, the statement of objects and reasons, the ceiling fixed by the Legislature, and the requirement that notifications be laid before the Legislative Assembly were treated as adequate guidance and control over delegated power. The Court held that the power to select goods, areas and differential rates in a fiscal measure is a permissible area of delegation. It also held that differential treatment in taxation does not by itself establish hostile discrimination where the classification has a rational basis and is designed to compensate local bodies and maintain parity in fiscal incidence.

Conclusion: The amendment to section 4A was upheld as valid and the challenge based on excessive delegation and discrimination was rejected.

Issue (iii): whether the notifications issued under sections 3(2), 4A and 10 were invalid as discriminatory or contrary to the Act and the Constitution.

Analysis: The Court found that the State had offered a rational fiscal justification for different rates, including compensation for local bodies, parity among traders, and adjustment of fiscal burden where goods were brought from outside the State. The Court also accepted that the Act itself contemplated differential rates for different local areas and classes of goods, and that the petitioners had not established a direct and immediate impediment to trade or arbitrariness sufficient to invalidate the notifications. The notifications were held to fall within the statutory scheme and not to offend the equality clause or the freedom of trade.

Conclusion: The notifications were held valid and intra vires.

Final Conclusion: The constitutional challenge to the entry tax enactment, its amendment, and the impugned notifications failed in entirety, leaving the statutory levy operative and the petitions liable to dismissal.

Ratio Decidendi: A compensatory entry tax scheme, once upheld on binding authority, cannot be reopened by a fresh constitutional challenge merely because the broader doctrinal formulation on which it was earlier discussed has been overruled in part; within a fiscal regime, differentiated rates and delegated rate-setting are valid if supported by legislative policy, statutory control, and rational classification.

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