STATE OF UTTAR PRADESH AND ANR. versus M/S. LAXMI PAPER MART AND ORS.

Citation: [1997] 1 S.C.R. 914 · Decided: 04-02-1997 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Dismissed
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Judgment (excerpt)

A 
STATE OF UTTAR PRADESH AND ANR. 
v. 
MIS. LAXMI PAPER MART AND ORS. 
FEBRUARY 4, 1997 
B 
[B.P. JEEVAN REDDY AND K.S.PARIPOORNAN, JJ.] 
Constitution of India, 1950: Articles 301 and 304(a). 
Sales Tax-Inter-State sale-Purchase of raw material-Within or 
C without the State-Discrimination between-Exemption of tax on exercise 
books made from paper purchased within the State while subjecting other 
exercise books to tax-Validity of Held: Levy of such tax on exercise books 
made outside the State but brought and sold in the State ultra vires Art. 
304(a), although the rate of tax on paper was same-Price stntcture of the 
imported goodS vis- a-vis locally manufactured goods or the economics of the 
D importer, need not be gone i11to-However, validity of such tax on exercise 
books made in the State but out of paper purchased from outside the State, 
not considered. 
The appellant-State issued two notifications the effect of which was 
E that exercise books made from paper purchased within the State was 
exempt from sales tax whereas all other kinds of exercise books were liable 
to sales tax @ 5%. The respondent- dealer filed a writ petition before the 
High Court challenging the validity of the aforesaid notifications. The High 
Court dealt with three categories of cases, (1) exercise books made from 
paper purchased within the State. (Sale of paper within the State attracted 
F sales tax @ 5%), (2) exercise books made outside the State and brought ' 
into and sold in the State and (3) exercise books made in the State but out 
of the paper purchased from outside the State. The High Court had held 
that insofar as the second category was concerned, it was hit by Article 301 
read with Article 304(a) of the Constitution. So far as the third category 
G was concerned, the High Court did not find fault with it. Being aggrieved 
by the judgment of the High Court the appellant preferred the present 
appeal. 
Dismissing the appeal, this Court 
H 
HELD: 1.1. The High Court was right in holding that exempting the 
914 
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STATEv. LAXMIPAPERMART[B.P.JEEVANREDDY,J.] 
915 
exercise books produced in the State and subjecting the exercise books A 
produced outside the State but sold within the State to sales tax @5% was 
discriminatory. Once the discrimination is made out, the enquiry by court 
ends. The price structure of the imported goods vis-a-vis the locally 
manufactured goods or the economics of the importer need not be gone 
into. [916-D, 917-F] 
Finn A. T.M. Mehtab Majid & Co. v. State of Madras, [1963) Suppl. 2 
SCR 435 and Shree Mahavir Oil Mills & Anr. v. State of Jammu & Kashmir, 
JT (1996) 10 SC 837, relied on. 
B 
1.2. Since there is no appeal by the dealer the question whether the C 
decision of the High Court with respect to the third category viz., exercise 
books made in the State but out of the paper purchased from outside the 
state, is correct or not need not be considered. [916-8) 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1833 of 
1977. 
D 
From the Judgment and Order dated 21.8.74 of the Allahabad High 
Court in W.P. No. 1165 of 1974. 
R.C. Verma and R.B. Misra for the Appellants. 
. 
V. Adhiyarujina, Solicitor General and Subrat Birla for the Union of 
India. 
H. K. Puri for the Respondent. 
The Judgment of the Court was delivered by 
E 
F 
B.PJEEVAN REDDY, J. A simple measure by the State of Uttar 
Pradesh has invited the wrath of Article 301 read with 304( a) of the 
Constitution of India. Two notifications were issued by the Government of 
Uttar Pradesh on December 1, 1973. The effect of these two notifications 
was that exercise books made from paper purchased within Uttar Pradesh G 
were exempt from sales tax whereas all other kinds of exercise books were 
liable to sales tax @ 5%. The High Court dealt with three categories of 
cases, (1) exercise books made from paper purchased within Uttar 
Pradesh. (Sale of paper within Uttar Pradesh attracted sales tax @ 5%.) 
(2) exercise books made outside the State of Uttar Pradesh and brought H 
916 
SUPREME COURT REPORTS 
[1997) 1 S.C.R. 
A into and sold in Uttar Pradesh and (3) exercise books made in Uttar 
Pradesh but out of the paper purchased from outside the State of Uttar 
Pradesh. The High Court has held that insofar as the second category is 
concerned, it is hit by Article 301 read with Article 304(a). So far as the 
third category is concerned, the High Court did not find fault with it. It 
B declared that "Notification No. 6624 insofar as i
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