1997 (2) TMI 447

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ate of Uttar Pradesh has invited the wrath of article 301 read with article 304(a) of the Constitution of India. Two notifications were issued by the Government of Uttar Pradesh on December 1, 1973. The effect of these two notifications was that exercise books made from paper purchased within Uttar Pradesh were exempt from sales tax whereas all other kinds of exercise books were liable to sales tax at 5 per cent. The High Court dealt with three categories of cases, (1) exercise books made from paper purchased within Uttar Pradesh (sale of paper within Uttar Pradesh attracted sales tax at 5 per cent), (2) exercise books made outside the State of Uttar Pradesh and brought into and sold in Uttar Pradesh and (3) exercise books made in Uttar Pra....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e State. (It had also subjected the hides or skins imported from outside the State after purchase in their raw condition and then tanned inside the State to a higher rate of tax than the hides or skins purchased in raw condition in the State and tanned in the State). The following holding in the said decision is relevant: "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 effec....