JINDAL STAINLESS LTD V. STATE OF HARYANA (2017) 12 SCC 1
FACTS
The debate over tax collection in states has persisted, particularly in Haryana, where Jindal Steel manufactures. To maintain the industrial sector and control other taxes, the Haryana Local Development Act was passed in 2000. The act aims to collect taxes from other states' entries and control other taxes on goods being imported and exported, focusing on the state's internal development and maintaining growth in the industrial sector.
The petitioner has argued that the Haryana Local Development Act, 2000 is unconstitutional. However, based on the cases Automobile Transport (Rajasthan) Ltd. Etc. V. State of Rajasthan and Ors. and Atibari Tea Co. v. State of Assam, the Division Bench of the High Court of Punjab and Haryana determined that the taxes levied under the Act are compensatory and do not violate Article 301 of the Constitution.
Taxing the entry of goods has been criticized as being against the Constitution’s guarantee of freedom of trade and commerce, and the government’s actions are seen as being capricious instances. However, they have been mentioned in the parties’ contentions.
ISSUES:
- Whether the tax levied by the state on the entry of goods is violative of Article 301 of the Indian Constitution?
- Whether the enactment of the Haryana Local Development Act,2000 violative and unconstitutional?
- Whether the levy of taxes on entry of goods is important to be considered and tested about articles 304(a) and (b) of the constitution?
- Whether the levying of taxes on the goods being stored to be treated the same as the goods being imported for sale?
- Whether the principle laid down in the case of Atibari and Automobile in the present scenario?
- Whether the taxes that are stated as non-discriminatory infringe the right mentioned in Article 301 of the Constitution?
- Whether levying taxes as per Entry 52 List of Schedule VII is in contradiction with Article 301 of the Constitution?
- Whether the internal and external goods be differentiated by Article 304(b) of the Constitution?
JUDGEMENT:
- The Supreme Court underlined that it is a state's sovereign power and responded in the positive. Before discussing the idea and conducting analysis, the cases of S.R. Bommai v. Union of India and Keshavananda Bharti v. State of Kerela established the idea that the Indian Constitution has a quasi-federal character. This idea even falls under the basic structure doctrine. The court used the historical context to examine the justifications and perspectives of the constitutional writers who created the aforementioned clauses.
- The court also emphasised that if it is a sovereign power, it must be used within the constraints outlined by the constitution in Dena Bank v. Bhikhabhai Prabhudas Parekh & Co. No matter how high or low the tax is, according to the Supreme Court, it is not a limitation as defined by Article 301 of the Constitution. The Court stated that taxation is both a characteristic of sovereignty and an unavoidable need. The court determined that it is not sufficient to impose taxes just by possessing entries pertaining to trade and commerce.
- The Indian Constitution’s Article 301 is not restricted by something like that, the court ruled. Furthermore, it is evident from the text of the Article that states with import taxes should have a separate statute authorizing the legislature to enact such taxes. The Indian Constitution’s Article 301 is not restricted by something like that, the court ruled.
- Furthermore, it is obvious from the text of the Article that if a tax on imported goods is in place, it should not be applied differently from a tax on domestically produced or manufactured goods of a similar nature.