Entry-stage tax on foreign-import goods upheld; Articles 286 and 304 did not bar the State levy.

A State levy imposed at the entry stage on yarn brought from outside India was upheld because it was not a tax on a sale or purchase in the course of import or export. Article 286(1)(b) was held inapplicable as the charge attached to entry into the State, not to the import transaction itself, and Article 304 was held to concern discrimination affecting goods imported from other States, not foreign-import goods. The constitutional challenge therefore failed, and the notification was valid.

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Issues: Whether the notification imposing a higher rate of tax on yarn imported from outside India was beyond the State's competence and violated Articles 286 and 304 of the Constitution of India.

Analysis: The levy was examined as an entry-level tax on goods brought into the State and not as a tax on a sale or purchase in the course of import or export. Article 304 was held inapplicable because it deals with goods imported from other States and prevents discrimination between imported and locally manufactured goods within the State, not goods imported from outside India. Article 286(1)(b) was read in its proper context and held to restrain State taxation only where the sale or purchase takes place in the course of import or export. Since the impugned levy operated on the entry of foreign goods into the State and not on the import transaction itself, the constitutional challenge failed. The cited authorities on inter-State discrimination and import-linked sales were distinguished on facts.

Conclusion: The notification was valid, the State had competence to impose the levy, and the challenge was rejected.

Ratio Decidendi: A State levy imposed at the entry stage on goods brought from outside India is not hit by Article 286(1)(b) unless it is a tax on the sale or purchase taking place in the course of import or export; Article 304 does not govern such foreign-import goods.

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