TaxTMI 
TaxTMI 
1988 (4) TMI 380
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....monitors. The factories are located at Delhi, and the goods are sold through sales organisations spread all over India, including the State of Gujarat. 2. Section 7 of the Gujarat Sales Tax Act, 1969, provides for the levy of sales tax on the turnover of sales of goods specified in Part A of Schedule II appended to the Act. Entry 80A(1) of Part A of Schedule II specifies the rate of tax applicable to the turnover of television sets. The rate was 15 per cent originally up to 1981, the entry applied to all television sets, whether manufactured and sold within the State of Gujarat or imported from outside the State. No distinction was made between the goods on the basis of the place of manufacture. 3. Sub-section (2) of section 49 of the....
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....red by the petitioner have been prejudically affected within the State of Gujarat. 5. Article 301 of the Constitution declares that subject to the provisions of Part XIII "trade, commerce and intercourse throughout the territory of India shall be free". Clause (1) of article 303 prohibits "the Legislature of a State from making any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule". The terms of the prohibition are subject to article 304, which provides: "Notwithstanding anything in article 301 or article 303, the Legi....
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....the scope and significance of article 301 were explained, it proceeded to observe: "It is therefore now well-settled that taxing laws can be restrictions on trade, commerce and intercourse, if they hamper the flow of trade and if they are not what can be termed to be compensatory taxes or regulatory measures. Sales tax, of the kind under consideration here, cannot be said to be a measure regulating any trade or a compensatory tax levied for the use of trading facilities. Sales tax, which has the effect of discriminating between goods of one State and goods of another, may affect the free flow of trade and it will then offend against article 301 and will be valid only if it comes within the terms of article 304(a). 7. Article 304....
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....ed in clause (1) of article 303 can be sustained on the basis of clause (a) of article 304 only if the conditions contained in the latter provision are satisfied. 12. In the result, the discrimination effected by applying different rates of tax between goods imported into the State of Gujarat and goods manufactured within that State must be struck down. 13. The next question is whether, for the purpose of ensuring the same rate of tax between the petitioners and the local manufacturers, the levy of the higher rate of tax suffered by the petitioners should be quashed and they be held entitled to the levy of the lower rate applied to the local manufacturers or should the higher rate imposed on the petitioners be maintained and the notif....