VIDEO ELECTRONICS PVT. LTD. AND ANR. ETC. ETC. versus STATE OF PUNJAB & ANR. ETC. ETC .

Citation: [1989] SUPP. 2 S.C.R. 731 · Decided: 22-12-1989 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Dismissed

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Judgment (excerpt)

VIDEO ELECTRONICS PVT. LTD. AND ANR. ETC. ETC. 
A 
:r 
v. 
STATE OF PUNJAB & ANR. ETC. ETC . 
. DECEMBER 22, 1989 
[SABYASACHI MUKHARJI, CJ., S. RANGANATHAN AND 
B 
J.S. VERMA, JJ.] 
U.P. Sales Tax Act, 1948-Sections 4A, 5A and 48 and Notifica-
lion dated January 29, 1985 and December 26, 1985-Constitutional 
.. 
validity of Manufacturers of goods in stat,,__No liability to pay tax-
~ 
Dealers selling goods imported from outside stat,,__liable to pay tax- c 
whether discriminatory, legal and permissible. 
Constitution of India 195~Articles 14, 19, 38, 39, 301 and 304--
Sales Tax Law-Manufacturers of goods in the state exempted from 
Sales Tax-Non-manufacturer of same goods importing goods and 
selling-Liable to sales tax-Whether valid, legal and constitutional. 
D 
A common question of law having arisen for determination in 
these petitions flied under Article 32 of the Constitution, they are 
-7 
disposed of by a Common Judgment, though the petitionerr-dealers 
are different and carry on their business in different states and have 
challenged the respective provisions of law by which their cases are 
E 
governed. 
The petitioners in WP 803/88 carry on the business of selling 
cinematographic films and other equipments like projector, sound 
recording and reproducing equipments, X-Ray films etc. in the State of 
U.P. and in Delhi. The petitioners receive these goods from their F 
manufacturers outside the State of U .P. In U .P. there is a single point 
levy of Sales Tax. 
. The State of Uttar Pradesh issued two notifications under section 
4A of the Uttar Pradesh Sales Tax Act and under Section 8(5) of the 
Central Sales Tax Act exempting new units of manufacturers as defined G 
in the Act in respect of the various goods for different periods ranging 
from 3 to 7 years, from payment qf Sales Tax. The petitioners by these 
petitions challenge the constitutional validity of these Notifications. 
They have also challenged the constitutional validity of section 4A of the 
Uttar Pradesh Sales Tax Act and sections 8(5) of the Central Sales Tax 
Act, and the proceedings taken by the Ri>spondent under section SA of H 
:--. 
731 
732 
SUPREME COURT REPORTS 
[ 1989] Supp. 2 S.C.R. 
A the said Act. The case of the petitioners is that they are discriminated on 
account of these notifications as the manufacturers covered by these 
Notifications are entitled to sell the articles manufactured by them with-
out liability to pay sales-tax while the manufacturers in other states and 
non-manufacturers of the same article selling the same goods in the 
State are liable to pay sales tax under the local Sales Tax Act as well as 
B under the Central Sales Tax Act. Their contenton, therefore, is that 
they became subject to gross discrimination and their business was 
crippled. In these premises the petitioners challenge the provisions as 
ultra vires the constitution being violative of the provisions of Articles 
301 to 305 of part III of the Constitution as also Articles 14 and 19 of the 
Constitution. 
c 
The Respondents counter the assertion of the petitioners. Accord-
ing to them the contention put forward by the petitioners ignores the 
basic features of the Constitution and also the fact that the concept of 
economic unity may not necessarily be the same as it was at the time of 
the Constitution making; the state which was technically and economi-
D cally weak in 1950 cannot be allowed to remain in the same state of 
affairs. The state has to give subsidy and grant exemptions/conscessions 
for the economic development of the state to new industries. It was 
urged that if all the states are economically strong or developed then 
only can economic unity as a whole be assured or strengthened. 
E 
Dismissing the petitions, this Court, 
HELD: Sales Tax Laws in all the States provide for exemption. 
Power to grant exemption is inherent in all taxing Legislations. 
Economic unity is a desired goal. Development on parity is one of the 
F 
commitments of the Constitution. Directive Principles enshrined in 
Articles 38 and 39 mmt be hannonNld with economic unity as well as econ<>-
mic development of developed and under-developed areas. [756H; 757 A-BI 
Taxes may sometime amount to restrictions but it is only such taxes 
as directly and immediately restrict trade that would fall within the 
G 
mischief of Art. 301. [740E] 
See Atiabari Tea Co. Ltd. v. The State of Assam & Ors., [1961] 1 
SCR 809 and Automobile Transport (Rajasthan) Ltd. v. T

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