JUDGMENT

Kapadia, J.—By order dated 26.9.2003, the referring Bench of Hon’ble Ruma Pal, J. and P. Venkatarama Reddy, J. doubted the correctness of the view taken in M/s Bhagatram Rajeevkumar v. Commissioner of Sales Tax, M.P. & others1 relied on in the subsequent decision of this Court in the case of State of Bihar & Ors. v. Bihar Chamber of Commerce & Ors.2. Accordingly, all the matters were ordered to be placed before the Hon’ble the Chief Justice for appropriate directions and accordingly, the matter has come to the Constitution Bench to decide with certitude the parameters of the judicially evolved concept of “compensatory tax” vis-a-vis Article 301. The referral order is in the case of Jindal Strips Ltd. & Anr. (now known as Jindal Stainless Ltd.) v. State of Haryana & Ors.3 under Article 145(3).

2. For this purpose, we are required to examine the source from which the concept of compensatory tax is judicially derived, the nature and character of compensatory tax and its parameters in the context of Article 301.

3. In a batch of appeals, the constitutional validity of the Haryana Local Area Development Tax Act, 2000 has been challenged on two grounds: (1) that, the Act is violati