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J. S. VERMA, S. RANGANATHAN, SABYASACHI MUKHARJEE
Video Electronics Private LTD. : Weston Electronics LTD. : Nikisin Marketing Association – Appellant
Versus
State Of Punjab: State Of Punjab: Union Of India – Respondent
The Supreme Court's ruling emphasizes that granting limited exemptions to new industries within a state for a defined period, aimed at promoting industrial development, does not automatically constitute "hostile discrimination." Such exemptions are viewed as legitimate measures to support economic growth and regional development, provided they are based on rational and justifiable reasons. The Court recognizes that these incentives are part of a broader strategy to achieve economic parity and development among different regions.
This understanding allows the State to justify the absence of Input Tax Credit (ITC) for importers by framing the exemptions as temporary and targeted measures to encourage new industries, rather than as discriminatory practices. As long as these exemptions are rational, non-discriminatory, and serve the legitimate objective of fostering industrialization, they are deemed valid and do not violate constitutional principles of equality or non-discrimination.
Judgment
SABYASACHI MUKHARJI, CJI. :- In these several writ petitions, we are concerned with the question of harmonising the power different States in the Union of India to legislate and/or give appropriate directions within the parameters of the subjects in List II of the 7th Schedule of the Constitution with the principle of economic unity envisaged in Part XIII of the Constitution of India. We are also concerned with the provisions of exemption, encouragement/ incentives given by different States to boost up or help economic growth and development in those States, and in so doing the attempt of the States to give preferential treatment to the goods manufactured or produced in those States. The question essentially is the same in all the matters but the question has to be appreciated in the context of the provisions and the fact situation of the different States involved in these writ petitions. It would, therefore, be appropriate to first deal with Writ Petition No. 803/88 (Niksin Marketing Associate & Ors. v. Union of India & Anr.) which is under Article 32 of the Constitution by four petitioners.
2. Petitioner No. 1 in W.P. No. 803/88 is a partnership firm carrying on business i
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