A tax on the sale or purchase of goods does not violate the freedom of trade guaranteed under Article 301 of the Constitution.

( 1 ) THE constitutionality of the Andhra Pradesh General Sales Tax (Second Amendment) Act, (II of 1959) is put in issue in these writ petitions.

( 2 ) THE impugned Act amended items 5 and 6 of Schedule III (Paddy rice) to the Andhra Pradesh General Sales Tax Act, 1957, which enumerates the goods in respect of which a single point purchase tax only is leviable under Section 5 (3) (b) of that Act, by enhancing the sales tax payable thereon from 3 naya paise to four naya paise in the rupee. The notices on the petitioners demanding the tax as permitted by the amending Act have occasioned the resort to Article 226 of the Constitution by them for the issue of directions to the respondents to forbear from giving effect to the notices.

( 3 ) THE validity of the Act is questioned on three grounds, namely (i) that it operates as a restriction on the freedom of trade contemplated by part XIII of the Constitution, especially. Article 304 (b) and, consequently, it falls within the protection of the proviso and that since the requirement as to the assent of the President was not satisfied, the legislation is void; (ii) that the present Act having been assented to by the President, the amending Act could not become law unless and until the President had accorded his assent to it; and (in) that the impugned Act was a colourable piece of legislation as in pith and substance this enactment has modified the Central Sales Tax Act, 1956.

( 4 ) WE will proceed to deal with these contentions seriatim. Dealing first with the argument based upon Part XIII of the Constitution, needless to say that it is devoid of substance. It is convenient to read Article 304 here in so far as it is immediately relevant. It reads:"notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law- XXXX XX (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest. Provided that no Bill or amendment for the purposes of Clause (b) shall be introduced or moved in the Legislature of "a State without the previous sanction of the President"

( 5 ) IT is clear from the language of Clause (b) and the proviso that it is only taxes that hamper the freedom of trade or commerce that are attracted by the proviso. In our considered opinion, a tax on the sale or purchase of goods does not interfere with the flow of trade, commerce or intercourse. Its impact on trade or commerce is not to restrict the trading or commercial activity. Taxes which are levied for augmenting the revenues of the State cannot come within the ambit of Clause (b), unless it is shown that they directly affect the trade or commerce. If they impinge indirectly or remotely, it is difficult to bring them within the mischief of Clause (b ). Consequences which are indirect and remote cannot be governed by this clause.

( 6 ) IT is unnecessary for us to pause here any longer, having regard to the principles stated by the Supreme Court in Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan, AIR 1962 SC 1406 at p. 1420. The following passage, which occurs in the judgment of Das J. , who delivered the leading opinion of the Court, is instructive. "for the tax to become a prohibited tax it has to be a direct tax the effect of which is to hinder the movement part of trade. So long as a tax remains compensatory or regulatory, it cannot operate as a hindrance. " His Lordship added:"the Constitution-makers must have intended that under those items the States will be entitled to raise revenues for their own purposes. If the widest view is accepted, then there would be for all practical purposes, an end of State autonomy even within the fields allotted to them under the distribution of powers envisaged by our Constitution. An examination of the entries in the lists of the Seventh Schedule to the Constitution would show that there are a large number of entries in the State list (li