TaxTMI 
TaxTMI 
1989 (2) TMI 367
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....eclaration in such form as may be prescribed by the Commissioner supported by either a cash memo, bill or a challan, in case the movement is otherwise than as a result of sale, in respect of goods which is being transported on a goods carrier, or a vessel and shall produce such challan, cash memo or bill along with the aforesaid form of declaration on demand before the prescribed authority: Provided that the Commissioner, by notification in this respect, may prescribe a form of declaration or adopt a form of declaration or permit prescribed for the purpose of sections 34 and 35 of this part, and he may also prescribe in the said notification, the manner in which such declaration or permit shall be utilised for verification and assessment of tax payable under this part: Provided further that the Commissioner may exempt any person or dealer or class of registered dealers from the requirement of this sub- section." Under the aforesaid amended provision the following notification was issued: "The 28th December, 1985. S.O. 1432.-In exercise of the powers conferred by sub-section (2a) of section 31 of the Bihar Finance Act, 1981 (Bihar Act 5 of 1981), Part I, the Commissio....
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.... necessary papers including a road permit in form XXVIII-B for the 165 bags of mustard (sarso) were produced at the time of inspection. In the road permit the bill number had not been mentioned in column No. 9 in form XXVIII-B. On that ground the Inspecting Officers seized the goods loaded in the aforesaid truck and detained it at Mango Mofussil Police Station at Jamshedpur. A notice was issued to the petitioner to show cause as to why penalty should not be imposed under section 31(3) of the Act. He was directed to appear before the Inspecting Officer on the 14th February, 1986. The petitioner being a member of the Singhbhum Chamber of Commerce and Industry, moved the said organisation to agitate the matter before the authority and on a representation by the said Chamber the truck with the goods therein were released on the 15th February, 1986. In reply to the show cause notice the appellant took the stand that no permit in the required form was necessary and in any case it was violative of the petitioner's constitutional right of freedom of inter-State trade and commerce. The contention was rejected and a penalty of Rs. 8,330 was imposed by order dated 29th May, 1986; and thereaft....
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....d the articles. The following are the forms: FORM XXVIII-A Permit (See rule 41) No. I hereby permit the transport of the consignment detailed overleaf. This permit will be valid for one month from the date of issue. Place..................... Signature Date...................... Designation (Seal) DETAILS OF CONSIGNMENT PERMITTED TO BE TRANSPORTED ------------------------------------------------------------------------- Description Quantity. Dated signature of the authority issuing of goods. the permit. ------------------------------------------------------------------------- 1 2 3 -------------------------------------------------------------------------------------------------------------------------------------------------- RESULTS OF CHECKING ON THE ROUTE ------------------------------------------------------------------------- Designation and head- Description Quantity of Dated signature quarters of the authority of goods. the goods of the authority by whom transport actually mentioned in of consignment transported. column 1. was checked. ------------------------------------------------------------------------- ....
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....provides: "Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free." Article 304 which deals with restrictions on trade, commerce and inter- course among States provides: "Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law- (a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President." The right to carry on any occupation, trade or business conferred by article 19(1)(g) on citizens is subject to reasonable restrictions, and in so far as trade or commerce involves the buying and selling of goods, restrictions on....
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....irements of article 302 or article 304. Further the operation of article 301 cannot be restricted to legislation under entries dealing with the trade and commerce. Gajendragadkar, J., as he then was, in the majority judgment, observed that free movement and exchange of goods throughout the territory of India was essential for sustaining the economy and improving living standards of the country and that article 301 guaranteeing freedom of trade and commerce and intercourse embodied and enshrined a principle of paramount importance that the economic unity of the country would provide the main sustaining force for the stability and progress of the political and cultural unity of the country and it was based on the theory that the peoples of the several States may sink or swim together. It was also held that though the power of levying tax was essentially for existence of the Government, its exercise must inevitably be controlled by the constitutional provisions and the power was not outside the purview of any constitutional limitations. Article 301 mandates free trade, commerce and intercourse throughout the territory of India. Inter-State trade has, therefore, to be free from trad....
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....ercourse. Measures impeding the freedom of trade, commerce and intercourse may be legislative or executive and may be fiscal or non-fiscal. He who assails such a measure has to show that it is not regulatory but it directly and immediately interferes with the free flow of inter-State trade or business. Freedom may be impeded by impediments on the individuals carrying on trade or business, on the business itself or on the vehicles, carriers, instruments and labour used in the trade or business. In Atiabari [1961] 1 SCR 809 tax on goods carried by roads outside State was struck down. In Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan [1963] 1 SCR 491 sub-section (1) of section 4 of the Rajasthan Motor Vehicles Taxation Act which provided that no motor vehicle should be used in any public place or kept for use in Rajasthan unless the owner thereof had paid in respect of it, a tax at the appropriate rate specified in the Schedule to the Act within the time allowed was challenged on the ground that it constituted a direct and immediate restriction on the movement of trade and commerce with and within Rajasthan inasmuch as motor vehicles which carried passengers and goods wit....
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....ppellant. The appellant moved a writ petition in the High Court of Patna challenging, inter alia, the validity of sections 3A and 5A of the Bihar Sales Tax Act and of rule 31B. The High Court dismissed the petition. With certificate the appeal was filed. In support of the petition it was urged (i) that sections 3A and 5A infringed the guarantee of freedom of trade under article 301 of the Constitution and since the amendment by the Finance Act, 1966, introducing the sections did not receive the assent of the President under article 304(b) the amendment was not saved; (ii) that sections 3A and 5A were contrary to section 15 of the Central Sales Tax Act, 1956 and accordingly void; (iii) that rule 31B framed by the State Government and the notification issued on December 26, 1967 was unauthorised and liable to be struck down. While striking down rule 31B of the Bihar Sales Tax Rules, 1959, and the notification issued on December 26, 1967, as ultra vires, their Lordships observed that the Bihar Sales Tax Act was enacted by the legislature to consolidate and amend the law relating to the levy of tax on the sale and purchase of goods in Bihar. The State Legislature was compet....
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.... 305 (SC) it was held that the restriction provided for in article 301 can within the ambit be limited by law made by the Parliament and the State Legislature and that no power is vested in the executive authority to act in any manner which affects or hinders the essence and thesis contained in the scheme of Part XIII of the Constitution which is against creation of economic barriers and/or pockets which would stand against the free flow of trade, commerce and intercourse. There could be no dispute that taxation was a deterrent against free flow. The reasonable restrictions contemplated in Part XIII have to be backed by law and not by executive action provided the same are within the limitations prescribed under the scheme of Part XIII. In Weston Electroniks v. State of Gujarat [1988] 70 STC 52 (SC) it was reiterated that while a State Legislature may enact a law imposing a tax on goods imported from other States as is levied on similar goods manufactured in that State, the imposition must not be such as to discriminate between goods so imported and goods so manufactured and that taxing laws could be restrictions on trade, commerce and intercourse, if they hamper the flow of trade ....
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....visions of sub-section (2a) of section 31 of the Act entailing penalties for the infraction thereof. Counsel for the State submits that form XXVIII-A (Permit) is meant for those who are not registered as dealers and it has to be obtained from office, while form XXVIII-B (Permit) can be filled up by the registered dealer himself. It is further submitted that the particulars are to be furnished by the persons and this would not affect the freedom of movement of the goods carried, and that it would facilitate transportation across and throughout the State of Bihar by showing the permit wherever required and thus, instead of hindering, it will promote free movement of the goods. We find no reason to disbelieve these statements. We are of the view that the permits will indirectly help assessment by ascertaining whether tax would be payable or not. The permit would enable the carrier to cross the State territory by producing it if and when needed and thus would promote rather than impede inter-State trade. A declaration may also serve the public purpose by finding out unauthorised trade or business to which freedom of trade, commerce and intercourse would not apply. Thus, the impugned no....
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....it shall be presumed that the goods carried thereby have been sold within the State by the owner or person-in-charge of the vehicle. Rule 87 of the Uttar Pradesh Sales Tax Rules, 1948, inserted by the U.P. Sales Tax (First Amendment) Rules, 1977 provides that a person who wishes to obtain a transit pass shall make an application in the prescribed form to the officer-in-charge of the check post concerned. It also provides for the issue of private pass in triplicate and for inspection of the documents, consignments and goods to ensure that the statements are true. The appellants who claimed to be engaged in the business of transport of goods belonging to others for hire and who in the course of their business had to carry goods from one State to another State along roads lying in the State of Uttar Pradesh, questioned the validity of section 28-B of the Act and rule 87 of the Rules by filing writ petitions before the High Court. Their contentions were (i) that section 28-B and rule 87 were outside the scope of entry 54 of the Seventh Schedule of the Constitution; (ii) that they infringed freedom of trade, commerce and intercourse guaranteed under article 301 of the Co....
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....II-A or XXVIII-B, as the case may be, pursuant to the impugned notification can be said to be a reasonable measure adopted by the State Legislature for the express purpose of preventing evasion and facilitating assessment of tax. The reasonability has to be considered in the context of the effectiveness of the State's powers and the erosion, if any, of the powers of the Parliament in respect of inter-State trade, commerce and intercourse. In so far as carriage of goods vis-a-vis sales tax, it has also to be considered keeping in mind the fact that at some point goods imported from outside shall become assimilated with the general mass of property in a State and be subject to State taxation and the problem of determination as to when and where that point is reached. The motive of State regulation in exercise of incidental power to tax has to be scrutinised and laissez-faire hostility towards trade regulations or taxation has to be kept within limits. The peculiarity of the local situation of a State may not also be entirely ignored. To decide whether the notification impeded inter-State trade we have also to take into consideration the concept of inter-State trade and its continu....