WESTON ELECTRONIKS & ANR. versus STATE OF GUJARAT & ANR.

Citation: [1988] 3 S.C.R. 768 · Decided: 29-04-1988 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Case Allowed

Cited by 1 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

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WESTON ELECTRONIKS & ANR. 
v. 
STATE OF GUJARAT & ANR. 
APRIL 29, 1988 
[R.S. PATHAK, C.J. AND RANGANATH MISRA, J.J 
Gujarat Sales Tax Act, 1969-S. 49(2)-Read with Arts. 30 I, 
303( I) and 304(a)-Jmposition of tax must not be such as to discrimi-
nate between goods imported from other States and similar goods 
manufactured within the State--Discrimination cannot be supported by 
reference to Art. 39(b) and (c)-The proper course to be followed by the 
Court while striking down such discriminatory measures to give effect to 
the statutory intention. 
By availing nf its powers under sub-s. (2) of s. 49 of the Gujarat 
Sales Tax Act, 1969 to exempt, in the public interest, any specified class 
of sales from payment of the whole or any part of the tax payable under 
the Act, the Government of Gujarat issued two notifications prescribing 
l) lower rate of tax for goods manufactured within the State as com-
pared to similar goods imported from outside the State. The petitioners, 
who are manufacturing electronic goods, including television sets etc., 
in factories located outside the State, challenged the validity of these 
notifications as ·violative of Art. 301 of the Constitution. The State 
Government contended that the rate of tax was reduced in order to 
provide as incentive for encouraging local manufacturing units and 
sought to draw support for its action from clauses (b) and (c) of Art. 39. 
Allowing the Petition and quashing the notifications aforesaid, 
HELD: Art. 301 declares that subject to the provisions of Part-
XIII, trade, commerce and intercourse throughout the territory of 
India shall be free. Clause (I) of Art. 303 prohibits the legislature of a 
State from making any law giving, or authorising the giving of, any 
preference to one State or another, or making, or authorising the 
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making of, any liliscrimination between one State and another. The 
terms of the prohibition are subject to Art. 304. Clause (a) of Art. 304 
provides that the legislature of a State may, by law, impose on goods 
imported from other States any tax to which similar goods manu-
factured or produced in that State are subject so, however, as not to 
discriminate between goods so imported and goods so manufactured or 
H produced. It is apparent that while a State Legislature may enact a law 
768 
WESTON ELECTRONIKS v. STATE OF GUJARAT 
769 
imposing a tax on goods imported from other States, as is levied on 
similar good• manufactured in that State, the imposition must not be 
such as to discriminate between goods so imported and goods so 
manufactured. We do not think any support can be derived from the 
two clauses of Art. 39 to justify the reduction in the rate of tax in the 
case of goods manufactured locally. Clause (a) of Art. 304 is clear in 
meaning. An exception to the mandate declared in Art. 301 and the 
prohibition contained in cl. (1) of Art. 303 can be sustained on the basis 
of cl. (a) of Art. 304 only if the conditions contained in the latter provi-
sion are satisfied. [770H; 771A-B, 772F·G I 
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Firm A. T.B. Mehtab Majid & Co. v. State of Madras & Anr., 
[1963] Suppl. 2 S.C.R. 435; Atiabari Tea Co. Ltd. v. The State of 
Assam and Ors., I 1961] 1 S.C.R. 809; The Automobile Transport C 
(Rajasthan) Ltd. v. The State of Rajasthan & Ors., [1963] l s;c.R. 491 
and H. Anraj etc. v . . Government of Tamil Nadu etc., I 1986] l S.C.C. 
414, relied on. 
(ii) The next question is whether, for the purpose of ensuring the 0 
same rate of tax between the petitioners and the local manufacturers, 
the levy of the higher rate of tax suffered by the petitioners should be 
quashed and they be held entitled to the levy of the lower rate applied to 
the local manufacturers, or, should the higher rate imposed on the 
petitioners be maintained and the notifications imposing the lower rate 
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on local manufacturers be quashed. The grievance of the petitioners has 
arisen only because the local manufacturers have been favoured by a 
lower rate of tax. The rate levied on the petitioners is the rate 
prescribed under s. 7 of the Act. That is the rate applied generally. It 
represents the normal standard of levy. The lower rate applied to local 
manufacturers has been applied by invoking sub-s. (2) of s. 49 of the 
Act. It represents a departure from, or exception to, the general 
norm. In cases such as this, the Court should, when granting relief, 
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choose the alternative which would give effect to the statutory 

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