JINDAL STAINLESS AND ANR V. STATE OF HARYANA AND ORS.

FACT OF THE CASE

The collection of taxes by various states has been contested in a number of occasions. The debate over tax collection has persisted for a while. In the state of Haryana, there is a manufacturing facility for Jindal Stainless Steel products. It becomes crucial to export and import commodities in accordance with requirements for an industry to function. For profit and sales to other states, Jindal Steel imported raw materials and exported goods.

In order to collect taxes from other states’ entries and to control other taxes on goods being imported and exported, the Haryana Local Development Act was passed in 2000. The state’s internal development was the main emphasis of the act. It was necessary to levy taxes in order to maintain the industrial sector so that growth might occur in addition to work.

The Haryana Local Development Act, 2000 has been contested as being unconstitutional by the petitioner in this case. But several of the nation’s states have passed legislation imposing fees on the entry of products into the local districts. The article guarantees the freedom of trade, business and intercourse. The act of 2000 has previously faced several challenges.

However, the emphasis was placed on the cases Automobile Transport (Rajasthan) Ltd. Etc. V. State of Rajasthan and Ors. (AIR 1962 SC 1406) Atibari Tea Co. v. State of Assam (AIR 1961 SC232), and it was determined by the Division Bench of High Court of Punjab and Haryana that the taxes levied under the Act are compensatory and thus do not violate Article301 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

1. Whether the tax levied by the state on the entry of goods is violative of Article 301 of the Indian Constitution?
2. Whether the enactment of the Haryana Local development Act,2000 violative and unconstitutional?
3. Whether the levy of taxes on entry of goods are important to be consider and tested about articles 304(a) and (b) of the constitution?
4. Whether the levying of taxes on the goods being stored are to be treated the same as the goods being imported for sale?
5. Whether the principle laid down in the case of Atibari and Automobile in the present scenario?
6. Whether the taxes which are stated as non-discriminatory infringe the right mentioned in Article301 of the Constitution?
7. Whether levying taxes as per Entry 52 List of Schedule VII is in contradiction with Article 301 of the Constitution?
8. Whether the internal and external goods be differentiated about Article 304(b) of the Constitution?   

ARGUMENT

In the connection, reliance was placed on the judgment of this court in the case of Hansa Corporations, the issue whether the tax was compensatory in nature was expressly left open, the impugned act was saved because Article 304 was compiled with. It was for that reason alone that the Act could not be struck down in Hansa Corporation’s case.

In the case of Synthetics and Chemical Ltd. v. the state of U.P, (1990) it was recognized that in India, the Centre and the States both enjoy exercising the sovereign power within the constitutional limits conferred upon them. While interpreting the provision of Part XIII, the court referred to the case of ITC Ltd. V. Agriculture Produce Market Committee and Ors,(2000), where it was held that the constitution of India must be interpreted in such a way as it does not temper the power of the State Legislature. An interpretation should  be made to ensure the promotion of federalism while upholding central supremacy fiscal measures, hurdles to free trade, commerce and intercourse under Article 301 should be answered in the view of the Constitutional Scheme stating the separation of power in a federal system of governance.     

JUDGMENT

Yes, it is a state’s sovereign authority, the the supreme court reiterated the well supreme court said in an affirmative response. S.R.Bommai V. Union Of India And Keshavananda Bharti V. State Of Kerela established notion that the Indian Constitution is quasi-federal in character, which concept even constitutes to be a part of basic structure doctrine and reliance on the w doctrine before discussing the said concept and before making analysis. The  court went to the historical backdrop to analysis the reasoning and mindset of the constitutional makers behind the said provisions. 

In Dena Bank v. Bhikhabhai Prabhudas Parekh & Co., in addition, the court emphasized that if it is a sovereign right, it must be exercised within the parameters set forth by the constitution. The Supreme Court ruled that regardless of how high  or low the tax is, it does not qualify as a restriction under Article 301 of the Constitution. The Court noted that the imposition of taxes is both a feature of sovereignty and an inescapable requirement. The court ruled that simply having entries relating to trade and commerce is insufficient in character to levy taxes.

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.

REFERENCE

http://blog.ipleaders.in

http://indiankanoon.org

http://lawtimesjournal.in

http://www.advocatekhoj.com

Written by Simran Shaw an intern under legal vidhiya.

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