LexHANSRAJ BAGRECHA versus STATE OF BIHAR & ORS.
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412 HANSRAJ BAGRECHA v. STATE 01<' BIHAR & ORS. September 18, J 970 [J. C. SHAH, K. S. HEGDE AND A, N. GROVER, JJ.J Constitmion of India, A.·rts. 301 & 304-The Bihm· St1les Tax A.ct, l9S9.as amended by BiharFinance A.ct, 1966, ss. 3A, SA., & 42-The Bihar Sales Tax Rules, 1959, R.31B-Levy of purchase tax on goods whether pe1· se restrlct/\•e of freedom of tarade-Pres/demial msent whether rt· q1rlr~d for levy o~ tax-Stctlons 3A. d SA. of Bll1ar A ct whether lnva,Jld 011 gro11nd of contra~·entlon of .s. 15 of Ctnlral S<ole.1· T11x Act, 1956- Rules 3 IB restricts tran.1port of goods p11rs11an1 to tr1111.1·1wtlon.1 In course .uf inter-State trade-Hence Invalid. Under s. SA of the Bibar Sales Tax Act J 959 a< umende.d by the Bihar Finance Act, 1966 the purchase tax on goods declared under s. 3A was to be levied at the point of purchase made from a person .other than a registered dealer. By a notification dated September 14, i966 the Governor of Bihar declared jute as a commodity liable to purchase tax at the rate specified in the notification. The .ippellant carried on business in jute. In the course of his business he purchased raw jute from producers in West Bengal, transported it to Kishenganj Railway Station in Bihar and then re-exported it to purchasers in West Bangal. He also bought raw jute in Bihar and exported it to merchants. and mill-owners in West Bengal by rail from Kishenganj Railway Station. After the enactment of ss. 3A and 5A the State Government issued a notification dated December 26, 1961 purporting io exercise power under s. 42 of the Bihar Sales Tax Act, 19591 read with r. 31B of the Bihar Sales Tax Rules, 1959 notifying that no person shall tender nt any railway station mentioned in Sch. ll any consignment of goods mentioned in Sch. I exceeding the quantity specified for transport to any place inside the State of Bihar and no person shall accept such tender in accordance with the conditions laid dow:i in the said R; 3 IB. Under Sch. I jute exceeding 800 kg. could nor be tendered for transport without a despatch permit and Kishenganj was one of the railway stations mentioned in Sch. II. In July 1967 the Superintendent of Co.n· mercial Taxes prohibited the railway authorities from loading and despatching jute goods from any railway station in Purnea district without the production of a registration certificate. For non-production of such certificate the railway authorities refused to despatch from Kishenganj the jute goods booked by the appellant. The appellant moved :i writ petition iri the High Court of Patna challengir.g inter alla the validity of ss. 3A and SA of the Bihar Sales Tax Act and of R.3 !B. The High Court dismissed the petition. With certificate t,he present appeal was filed. In support of the petition it was urged (i) that ss. 3A and SA infringed the guarantee of freedom of trade under Art. 301 of the Constitution and since the amendment by the Finance Act, 1966 intro· ducing these sections did not receive the assent of the President under A'rt. 304(bl the amendment was not saved; (ii) that ss. 3A and SA were contrarv to s. 15 of the Central Sales Tax Act, 19S6 and accordingly void; (iii) that R. 318 framed hv the State Govcr~ment and. the notifi- cation issued on December 26. 1967 were unauthomcd and hable to be struck down. HELD : (i) The aS>umption that the levy of purchase tax must be deemed in all circun1stancc.s to violate the guarantee unJi:r Art. 301 and A H c D E F G ff A B c D E F G H HANSRAJ v. B!HAR (Shah, .J.) 413 the levy will be valid oolY. if the Act is enacted by the State U$islature with Ille previous sanction of the President cannot be accepted a8 correct. Imposition of tax may in certain circumstances impede free fiow of trade, commerce and intercourse. But every tax does not have that effect. [417 G; 419 EJ State of Madras v. N. K. Nataraja Mudaliar [1968] 3 S.C.R. 829. Atiabari Tea Co. Ltd. v. State of Assam, (1967] l S.C.R. 809 alld The Andhra Sugars Ltd. v. State of Andhra Pradesh, 21 S.T.C. 212, applied. In the present case the petitioner has made no averments in his peti- tion which supported tho plea that imposition of purchase-tax directly and lmmcdlatefy mtricta or impedes · the free 11ow of trado. Since power to Impose purchase tax under 1. 3A wa1 not shuwn to l'i"Strict or Impede the free 11ow of trade directly ano immediately, it neod not seok to derive for
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