Local area under Entry 52 means a local authority area, not factory premises, making the cess provision ultra vires.

Entry 52 of List II permits a tax on entry of goods into a local area for consumption, use or sale, and "local area" was construed as an area administered by a local authority such as a municipality, district board, local board, union board or panchayat. On that interpretation, a levy on sugarcane entering factory premises under section 3 of the Uttar Pradesh Sugarcane Cess Act, 1956 treated the factory premises as the taxable unit and therefore departed from the constitutional requirement of entry into a local area. The majority declined to read down or sever the provision to preserve it, while the separate opinion would have confined the levy to entries from outside the relevant local area and remanded the matter for factual inquiry.

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Issues: Whether the levy of cess on the entry of sugarcane into the premises of a factory under section 3 of the Uttar Pradesh Sugarcane Cess Act, 1956, was within the legislative competence of the State Legislature under Entry 52 of List II of the Seventh Schedule to the Constitution, and whether the provision could be saved by construing it down.

Analysis: Entry 52 authorises a tax on the entry of goods into a local area for consumption, use or sale therein. The phrase "local area" was construed in light of constitutional history, including the earlier octroi-based provisions and the meaning of the expression in the scheme of local self-government. On that basis, a local area was held to mean an area administered by a local body such as a municipality, district board, local board, union board or panchayat, and not the premises of a factory. Section 3 treated the factory premises as the taxable unit, thereby departing from the constitutional concept of entry into a local area. The majority declined to sever or rewrite the provision to make it conform to the entry, and therefore did not accept the argument that the law could be preserved by reading it down. The separate opinion agreed that "local area" denoted an administrative unit under local self-government, but held that the section could be read down to confine the levy to entries from outside the relevant local area and that the matter should have been remanded for factual inquiry.

Conclusion: The majority held that section 3 of the Uttar Pradesh Sugarcane Cess Act, 1956 was beyond the legislative competence of the State Legislature and invalid, so the appeal succeeded.

Concurring / Dissenting Opinion: Ayyangar, J. agreed on the meaning of "local area" but dissented on the consequence. He would have read down the charging provision to confine it to lawful entries from outside the local area and remanded the case for investigation of the factual extent of the levy.

Ratio Decidendi: For Entry 52 of List II, "local area" means an area administered by a local authority, and a levy that treats factory premises as the taxable unit instead of entry into such a local area is outside the State Legislature's competence.

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