JINDAL STRIPE LTD. AND ORS. versus STATE OF HARYANA AND ORS.

Citation: [2003] SUPP. 4 S.C.R. 154 · Decided: 26-09-2003 · Supreme Court of India · Bench: RUMA PAL
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Judgment (excerpt)

A 
JINDAL STRIPE LTD. AND ORS. 
v. 
STATE OF HARYANA AND ORS .. 
SEPTEMBER 26, 2003 
B 
[RUMA PAL AND P. VENKATRAMA REDD!, JJ.] 
Constitution of India, 1950 : 
. 
' 
Articles 301and304(b)-Entry tax-Hwyana Local Area Development 
C Tax Act, 2000-Providingfor levy and collection of tax on entry of goods 
into local areas of the State-Constitutional validity of-Held, the position 
of lmv as deducible ji-om decided cases is that tax levied upon entry of 
goods into a local area for purposes of use, consumption or sale therein 
has a direct impact on movement of goods and on the flow of trade and 
commerce-It can be saved only if the levy is in the nature of compensatory 
D tax/or the use oftradingfacilities or it comes under the protective umbrello 
of Article 304-The pre 1995 decisions held that an exaction to reimburse/ 
recompense the State the cost of an existing facility made available to the 
traders or the cost of a specific facility planned to be provided to the 
traders is compensatory tax and that it is implicit in such a levy that it 
E must, more or less, be commensurate with the cost of the sen1ice or 
facility-These dr;cisions emphasized that the imposition of tax must be 
with the definite pwpose of meeting the expenses on account of providing 
or adding to the trading facilities either immediately or in future provided 
the quantum ofta'r sought to be generated is based on a reasonable relation 
F to the actual or projected expenditure on the cost of the service or facility--
However, the decision in Bhagat Ram* and Bihar Chamber of 
Commerce** say that even if the pwpose of imposition of the tax is not 
merely to confer a special advantage on the traders but to benefit the public 
in general including the traders that levy can still be considered to be 
compensatory-Since the concept of compensatory ta..; has been judicially 
G evolved as an exception to the provisions of Article 30 I and as the 
parameters of this judicial concept are blurred particularly by reason of 
the decision in Bhagat Ram* and Bihar Chamber of Commerce**, the 
interpretation of Article 301 vis-a-vis compensat01y tax should be 
authoritatively laid down with certitude by the Constitution Bench under 
H Article 145(3)-Matter be placed before Hon 'ble the Chief Justice for 
154 
JINDAL STRIPE LTD. v. ST ATE 
155 
appropriate directions. 
A 
*Bhagat Ram v. Commissioner of Sales Tax fl 9951 Suppl. 1 SCC 
673; **State of Bihar v. Bihar Chamber of Commerce, 11996) 9 SCC 136; 
Atiabari Tea Co. v. State of Assam, [19601 1 SCR 809; Automobile 
Transport (Rajasthan) Ltd. v. State Rajasthan, [ 1962] l SCR 491; G.K. B 
Krishnan v. State of Tamil Nadu, [ 19751 1 SCC 375; Kama/it Singh v. 
Municipal Board, [1986] 4 SCC 174 and State of Karnataka v. Hansa 
Corporation, [1980] 1 SCC 697, referred to. 
Haryana Local Area Development Tax Act, 2000: 
Levy and collection of tax on ent1y of goods into local areas of the 
State-Constitutional validity of-Matter referred to Constitution Bench. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3453 of 
2002. 
From the Judgment and Order dated 21.12.2001 of the Punjab and 
Haryana High Court in C.W.P. No. 6630 of 2000. 
WITH 
c 
D 
C.A. Nos. 3454-63, 3465-71, 5858/2002 and SLP (C) Nos. 9537, E 
11698. 11558, 11595, 12260, 12424, 13995, 14388, 14400, 14409, 16555 
and 22462 of 2002. 
Shanti Bhushan, Jayant Bhushan, Dr. A.M. Singhvi, R.P. Gupta, M.L. 
Verma, H.N. Salve, A.K. Ganguli, P.P. Rao, Mahendra Anand, Jaideep F 
Gupta, Ejaz Maqbool, Ujjwal Kumar Jha, Ms. Minakshi Nag, Rajesh 
Bindal, Rajesh Jain, Kuldeep Kumar Jain, Sanjai K. Pathak, P.K. Bansal, 
Rajiv Agnihotri, Pankaj Kumar Singh Rajesh Kumar, K.L. Janjani, Ms. 
Kamakshi, S. Mehlwal, Binod Kumar Jha, Pravesh, Roy Abraham, Mrs. 
Dr., Seema Jain, Himinder Lal, Ms. Kadambri, Sacchin Puri, Ms. Punita 
Khanna, P.N. Puri, Ms. Veena Nanda, Atul Nanda, S.K. Sabarwal, Ms. G 
Vijayalakshmi Menon, Rakesh K. Khanna, Ms. Rashmi Khanna, Reetesh 
Singh, Surya Kant, Nikhil Nayyar, Prakash Jha, H.K. Puri, S.K. Puri, 
Ujjwal Banerjee, Mahabir Singh, S.P. Singh Chauhan, Ajay Pal, Ms. Nitu 
Samita Das Rakesh Dahiya, Ms. Vanita Bhargava, Tarun Johri, R.K. 
Maheshwari, Ms. Varuna Bhandari Gugnani, Neeraj Kumar Jain, Vinay H 
156 
SUPREME COURT REPORTS [200:] SUPP. 4 S.C.R. 
A Kumar Garg, Bharat Kumar, Sanjay Sen, Chetan Prabhakar, Rana 
Mukherjee, Rana S. Biswas, Ms. Indira Sawhney, J.P. Dhanda, Ms. Kavita 
Wadia and Kamlendra Misra for the appearing parties. 
The foll
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