STATE OF KERALA versus A. B. ABDUL KHADIR & ORS.

Citation: [1970] 1 S.C.R. 700 · Decided: 30-07-1969 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

STATE OF KERALA 
v. 
A. B. ABDUL KHADIR & ORS. 
July 30, 1969 
[J.C. SHAH, ACTING C.J., V. RAMASWAMI AND A. N. GROVER, JJ.] 
Constitution of India, Arts, 301 and 304-Prohibition under Art. 301 
-When a tax is saved. 
To avoid the decision of this Court in A. B. Abdul Khadir v. The State 
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of Kera/a, 
[1962] 2 S.C.R. 741, wherein rules framed for the issue of 
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licences and payment of fee for storage of tobacco were held to be invalid, 
the appellant-State promulgated Ordinance I of 1963 w)lich was later 
replaced by Luxury Tax on Tobacco (Validation) Act 9 of 1964. Conse-
quently the appellant-State made a demand on the respondent to repay the 
amount which had been refunded to the respondent in accordance with 
the aforesaid judgment. Thereupon, the respondent filed a writ petition in 
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the High Court. The High Court relying upon the decision of this Court 
in Kal,vani Stores v. State of Orissa, [1966] 1 S.C.R. 865, held that in the 
absence of any production of tobacco inside the appellant-State it was 
not competent for the State Legis1atu:re to impose a tax on tobacco im-
ported from outside the State and therefore, the provisions of the Act 
(9 of 1964) violated the guarantee contained in Arts. 301 and 304 of the 
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Constitution. 
HELD : The High Court had not correctly appreciated the import of 
the decision in Kalyani Stores' case. The decision was based on the assump-
tion that the notifications therein enhancing duty on foreign liquor infring-
ed the guarantee under Art. 30 I and may be saved if it fell within the 
exceptions contained in Art. 304 of the Constitution. 
As no liquor was 
produced or manufactured within the State the protection of Art. 304 
was not available. 
This Court did not intend to lay down the proposition 
that the imposition of a duty or tax in every case \Vould be tantamount 
per se to an infringement of Art. 301. 
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Only such restrictions or impediments which directly and immediately 
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impede the free flow of trade, commerce and intercourse fall within the 
prohibition imposed by Art. 30 I. A tax may in certain cases directly and 
immediately restrict or hamper the fiow of trade, but every imposition of 
tax does not do so. Every case must be judged on its own facts and in its 
own setting of time and circumstance. 
In the present case the High Court had not gone into the question 
whether the provisions of the Act and the notifications constituted such 
restrictions or impediments as directly and immediately hamper the free 
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KERALA v. ABDUL KHADIR (Ramaswami, J.) 
70 I 
flow of trade, ,comQi.e1ce <lD;d intercourse, and, therefore, fell within th~ 
prohibition imposed uhder Art. 301 of the Constitution. 
Unless the High 
Court first comes to the finding whether or not there is the infringement 
of the guarantee under Art. 301 of the Constitution the further question 
as to _wt . ..!ther the statute is saved under Aft. 304(b) does not arise and 
the principle laid down in Kalyc.ni Stores' case cannot be invoked. 
This 
case, therefore must go :back to the High Court. [709 E-710 El 
Atiabari Ter. Co, Ltd. v. The State of Assam, [1961] 1 S.C.R. 809, 
Automobile Transport (Ra;asthan) Ltd. v. The State of Rajasthan, [1963] 
I S:C.R. 491, Andhra· Sugars Ltd. v. State of Andhra ·Pradesh. [1968] 1 
S.C.R. 705 and State' of Madras v. K. Naaraja Muda/iar, [1968] 3 S.C.R. 
829, refe'rred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 517 of 
1967. 
Appeal from the judgment and order dated October 3, 1966 
of the Kerala High C~urt'in Original Petition No. 934 of 1964. 
, 
M. R. K. Pillai; for the appellant. 
R. Gopalakrishna'!, for the respOiDdents. 
The Judgment 'of the Court was delivered by 
Ramaswami, : J. 
This appeal is brought by certificate from 
the judgment of the Kerala High Court in O.P. No. 934 of 1964. 
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. 
The respondents .are dealers in tobacco and tobacco prepara-
tions and are doing btisiness in Mattancherry in the name and style 
of A. S. Bava, T<;>ba9sonist. In the year 1909, Cochin Tobacco 
Act. 7 of 1084 (M.E.') was enacted by the Maharaja of Cochin. 
Section 4 of that, Act prohibited the transport, import of export, 
sale and cultivation of tobacco except as permitted by the Act and 
Rules framed ther~under. Sectibn 6 of the Act gave power to the 
Dewan to make n\Ies1 from time to time consistent with the Act, 
to permit absolutely or subject to any condition the possession for 
sale, or cultivation o~. tobacco. In pu

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