TaxTMI 
TaxTMI 
1970 (9) TMI 89
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....ar Sales Tax Act, 1959, as originally enacted did not provide for levy of purchase tax. By the Bihar Finance Act, 1966, with effect from April 1, 1967, among others the following sections were incorporated in the Bihar Sales Tax Act, 1959: Section 3A. "The State Government may from time to time, by notification, declare any goods or class of goods to be liable to purchase tax on turnover of purchases: Provided that general sales tax and special sales tax shall not be payable on the sale of goods or class of goods declared under this section." Section 5A. "The purchase tax on goods declared under section 3A shall be levied at the point of purchase made from a person other than a registered dealer." By a notification dated September 14, 1966, the Governor of Bihar declared "jute" as a commodity liable to purchase tax at the rate specified in the notification. Section 42 of the Bihar Sales Tax Act by the first sub-section provided: "No person shall transport from any railway station, steamer station, airport, post-office or any other place, whether of similar nature or otherwise, notified in this behalf by the State Government, any consignment of such goods, exceeding such quant....
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...., 1967, the Superintendent of Commercial Taxes addressed a letter prohibiting the railway authorities from loading jute goods and despatching them from any railway station within the Purnea District of Bihar, except on production of a "registration certificate". By his letter dated July 10, 1967, the Station Master, Kishanganj, called upon the Secretary, jute Merchants Association, Kishanganj, to produce a certificate as required in the letter of the Superintendent of Commercial Taxes, before "loading jute goods for despatch was commenced" and informed them that in default wagons allotted to the jute merchants shall be cancelled and registration fees forfeited and that "demurrage" will be charged. The appellant's request that jute booked by him be despatched from Kishanganj was turned down by the railway authorities, because the registration certificate issued by the Superintendent of Commercial Taxes, Purnea, for the movement of jute from the place was not produced. The appellant then moved a petition before the High Court of Patna on August 29, 1967, challenging the validity of sections 3A, 5A, 42 and 46 and rule 31B of the Bihar Sales Tax Rules, 1959. The High Court of Patna di....
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....without the previous sanction of the President." Article 304 is in terms a restriction on the freedom guaranteed by article 301. Notwithstanding the amplitude of the freedom of trade, commerce and intercourse throughout the territory of India, the Legislature of a State may by law impose among others such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest. But the authority to impose reasonable restrictions on the freedom of trade, may only be exercised by the Legislature of a State if the Bill or amendment for the purpose of clause (b) is introduced or moved in the Legislature of a State with the previous sanction of the President. It was contended that since section 3A providing for the levy of purchase tax imposes a restriction on the freedom of trade, commerce and intercourse and on that account violates the freedom of trade guaranteed by article 301, it may be saved only if it, is legislation of the nature contemplated by article 304(b) and the Bill which was enacted into the Act received the previous assent of the President. The assumption that the levy of purchase tax must be deemed i....
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....egarded as void. But it is said that by imposing tax on sales, no restriction hampering trade is imposed. In the Atiabari Tea Company's case, [1961] 1 S.C.R. 809., Gajendragadkar, J., observed: 'Taxes may and do amount to restrictions; but it is only such taxes as directly and immediately restrict trade that would fall within the purview of article 301. The argument that all taxes should be governed by article 301 whether or not their impact on trade is immediate or mediate, direct or remote, adopts, in our opinion, an extreme approach which cannot be upheld.' In a recent judgment of this court in The Andhra Sugars Ltd. and Another v. The State of Andhra Pradesh and Others [1968] 21 S.T.C. 212 (S.C.)., Bachawat, J., speaking for the court, after referring to the observations made by Gajendragadkar, J., in Atiabari Tea Company's case[1961] 1 S.C.R. 809., observed: 'This interpretation of article 301 was not dissented from in Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan [1963] 1 S.C.R. 491. Normally, a tax on sale of goods does not directly impede the free movement or transport of goods. Section 21 is no exception. It does not impede the free movement or transport ....
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....s inside the State shall not exceed three per cent. of the sale or purchase price thereof, and such tax shall not be levied at more than one stage; (b) where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State." By section 15 of the Central Sales Tax Act in respect of the declared goods on transactions of sale or purchase the tax leviable is restricted to 3 per cent. and is not leviable at more than one stage. There is no dispute that the purchase tax on jute is leviable at the first point of purchase under section 3A of the Bihar Sales Tax Act, and the rate of tax also is not shown to exceed the maximum prescribed by section 15 of the Central Sales Tax Act. The provisions of sections 3A and 5A of the Bihar Sales Tax Act are not therefore inconsistent with the provisions of section 15 of the Central Sales Tax Act. But, in our judgment, rule 31B of the Bihar Sales Tax Rules, 1959, and the notification is....