IMPORTANT POINT
The Bihar Tax on entry of Goods into Local Areas for consumption, use or sale therein Act, 1993 replacing earlier ordinances is compensatory in nature and assuming it is not, it is saved by Art. 304(b) r/w 255 of Constitution. It is within Legislature competence of Bihar State Legislature. The proviso to Section 3(1) and Section 6 of said Act are not violative of Art. 14 of the Constitution. The High Court was wrong in striking down the Act or any of its provisions as unconstitutional.

JUDGMENT

B.P. Jeevan Reddy, J.-Leave granted.

2. The Bihar Legislature enacted the Bihar Tax on entry of goods into Local Areas for consumption, use or sale therein Act, 1993 providing for levy of tax on entry of scheduled goods into a local areas for consumption, use or sale therein at a rate, not exceeding five percent, as may be specified by the State Government. The goods mentioned in the Schedule are (i) motor vehicles, (ii) tobacoo products [excluding beeris], (iii) India-made foreign liquor, (iv) vegetable and hydrogenated oils, (v) cements and (vi) crude oil. The Act replaces Bihar Ordinance No. 19 of 1993. [Indeed, the said Ordinance was preceded by yet another Ordinance.] The expression "Loal Areas" is defined in clause (f) of Section 2 to mean the areas within the limits of a (i) Municipal Corporation, (ii) Municipality, (iii) Notified Area Committee, (iv) Cantonment Board, (v) Town Board, (vi) Mines Board, (vii) Municipal Board. (viii) Gram Panchayat and (ix) any other local authority by whatever nomenclature called constituted or continued under any law for the time being in force.

3. Section 3 is the charging Section. The levy is upon the entry of scheduled goods into a local area for consumption, use or sale therein. The proviso to sub-section 3 empowers the Government to specify different rates of tax for different goods mentioned in the Schedule. Sub-section (2) of Section 3 says that the tax under the Act shall be paid by every dealer liable to pay tax under the Bihar Finance Act, 1981 (Sales Tax Act). Section 5 provides for registration of dealers under the Act while Section 6 empowers the State Government to exempt from levy of tax any class of dealers, persons or importers, subject to such conditions and restrictions as may be imposd in that behalf. Section 7 provides for punishment in case of contravention of the provisions of the Act. Section 8 says that the machinery under the Bihar Finanace Act, 1981 shall be the mechinery for assessment and collection of this tax. Section 9 confers the rule-making power upon the State Government.

4. A number of writ petitions were filed by dealers in the Patna High Court questioning the constitutional validity of the Ordinance/Act. Several grounds were urged in support of the said challenge. The High Court has, however, struck down the Act on the following grounds ; the State has failed to place any material before the Court to show that the impugned tax is either compensatory or regulatory in nature ; the levy must, therefore, be held to be impeding the freedom of trade, commerce or intercourse guaranteed by Article 301 of the Constitution ; the State cannot also invoke the protection of clause (b) of Article 304 for the reason that it has not established that the said tax constitutes a reasonable restriction imposed in public interest within the meaning of the said clause though it is true that the President has assented to the Bill ; the entire Act is void and inoperative on this score. The High Court has also held that the proviso to Section 3(1) and Section 6 of the Act are void being violative of Article 14 of the Constitution. It has held that both the said provisions confer an unguided and uncanllised power upon the Government. The High Court declined to consider the submission made by the petitioners based upon the Additional Duties of Excise (Goods of Special Importance) Act, 1957 [hereinafter referred to as "A.D.E. Act"] in view of the fact that it had already declared the Act void for violation of Article 301.

4. The State of Bihar has filed Special Leave Petition (C) nos. 14636-14644 of 1995 against the said judgment. the I.T.C. Limited, one of the writ petitioners before the High Court, has filed Special Leave Petition (C) No. 23172 of 1995 challenging the correctness of the judgment of the High Court insofar as it has negatived its contentions concerning the validity of the Act. Special Leave Petition (C) No. 23303 of 1995 is preferred by Vazir Sultan Tob