The judgment establishes that the provisions of Section 4-B were unconstitutional and in violation of Article 404 of the Constitution of India, particularly Articles 301 and 304(a).

V. K. SINGHAL, J.

( 1 ) VALIDITY of Section 4-B of the Karnataka Tax on Entry of Goods Act, 1979 and notification dated March 31, 1997 issued thereunder have been assailed in these petitions. The provisions of Section 4-B of the Act are as under : 4-B. Levy of tax.-- (1) Notwithstanding anything contained in Section 3, there shall be levied and collected a tax on the entry of any motor vehicle into a local area for use or sale therein by an importer which is liable for registration, or assignment of a new registration mark in the State under the Motor Vehicles Act, 1988.

( 2 ) IT is submitted that the above provision is unconstitutional and ultra vires Article 404 (b) of the Constitution of India as the tax is sought to be levied on the entry of motor vehicle into the local area for consumption, use or sale therein, only when such motor vehicles are entered into the local area from any place outside the State. The motor vehicle coming from other part of the state and entering into the local area are outside the charging provision. The discrimination between the two types of the motor vehicle is hit by the provisions of Article 404 (a) of the constitution of India.

( 3 ) DEFINITION of "importer" under Section 4-A (1) (c) provides importer means a person who brings a motor vehicle into a local area from any place outside the State for use or sale therein and who owns the vehicle at the time of entry into the local area. The words "outside the State", since have created a charge only on the imported vehicles, the levy is contrary to the decision given by the apex Court as well as the division Bench of this Court in the case of State of karnataka v. Hansa Corporation AIR1981 SC 463 , (1980 )4 SCC697 , [1981 ]1 SCR823 while upholding the validity of the Act it was observed : "tax under the impugned legislation would be levied on scheduled goods either manufactured or produced within Karnataka State or imported from outside on their entry into a local area. Thus, this tax is non-discriminatory. In view of the declaration of law as above, the impugned notification is violative of Constitution of India. " reliance is placed on the decision given in the case of Shree Mahavir Oil Mills v. State of jammu and Kashmir 1996 IX AD (SC )165 , JT1996 (10 )SC 837 , 1996 (8 )SCALE595 , (1996 )11 SCC39 , [1996 ]supp9 SCR356 , [1997 ]104 STC148 (SC ). While interpreting the provisions of Article 404 (a) of the Constitution of India it was observed : ". . . . . . . though worded in positive language has a negative aspect. It is, in truth, a provision prohibiting discrimination against the imported goods. In the matter of levy of tax--and this is important to bear in mind--the clause tells the State Legislatures--'tax you may the goods imported from other States/union territories but do not, in that process, discriminate against them vis-a-vis goods manufactured locally'. In short, the clause says : levy of tax on both Ought to be at the same rate. This was and is a ringing declaration against the States creating what may be called 'tax barriers'--or 'fiscal barriers', as they may be called--at or along their boundaries in the interest of freedom of trade, commerce and intercourse throughout the territory of India, guaranteed by Article 401. " decision in the case of State of Uttar Pradesh v. Laxmi Paper Mart AIR1997 SC 950 , JT1997 (2 )SC 238 , 1997 (1 ) SCALE679 , (1997 )2 SCC697 , [1997 ]105 stc1 (SC ) is also referred to show that once the discrimination is made out, the enquiry by the court ends. The price structure of the imported goods vis-a-vis the locally manufactured goods or the economics of the importer need not be gone into.

( 4 ) I have considered over the matter. Article 404 of the Constitution of India reads as under : "304. Restrictions on trade, commerce and intercourse among States.--Notwithstanding anything in Article 401 or Article 403, the Legislature of a State may by law- (a) impose on goods imported from other States or

Click Here to Read the rest of this document