The main legal point established in the judgment is that the provision of section 5(4) of the Karnataka Sales Tax Act, read with the IV Schedule and explanation II, did not discriminate in the rate of tax on iron and steel manufactured within the State or outside the State, and therefore, was not violative of article 304(a) of the Constitution.

M. RAMA JOIS, J. - In these writ petitions presented by Mangalore Metal House, Mangalore. the following question of law arises for consideration :

"Whether section 5(4) read with item 2 of the IV Schedule read with explanation-II thereto of the Karnataka Sales Tax Act ('the Act' for short) is violative of article 304(a) of the Constitution of India ?"

2. The question is raised on the basis of the following facts and circumstances. The petitioner is a registered dealer under the Act. He is dealer various items of iron and steel. In particular he is a dealer in M.S. rounds. The petitioner purchases M.S. rounds locally as well as in the course of inter-State trade and commerce. In respect of sale turnover of M.S. rounds, the provision, levying tax applicable, in view of explanation incorporated at the Fourth Schedule, is to the following effect :

(i) For the period from 1st October, 1957, to 31st March, 1978, though the tax on the first sale turnover of M.S. rounds is four per cent., if such M.S. rounds had been manufactured out of the scrap iron, on the sale or purchase of which tax had been paid to this State, no tax is payable.

(ii) For the period on and after 1st April, 1978, in respect of M.S. rounds manufactured within the State, though the rate of tax is 4 per cent., a deduction to the extent of the amount of tax paid on the turnover of scrap iron, out of which M.S. rounds were manufactured, is allowed.

(iii) In respect of M.S. rounds manufactured outside the State and brought for sale within the State, the levy is 4 per cent., both prior to 1st April, 1978, and after 1st April, 1978.

3. On the basis of the above facts and circumstances, the plea raised by the petitioner is that there is discrimination in the rate of tax on sales of M.S. rounds manufactured within the State and M.S. rounds manufactured outside the State and brought within the State and sold, and therefore the provision is violative of article 304(a) of the Constitution. The stand of the State is that the same rate of 4 per cent. at single point is levied on locally manufactured as well as imported items of iron and steel and there was no violation of article 304(a) of the Constitution.

4. Before proceeding to consider the rival contentions of the petitioner and the State, it is necessary to refer in brief to the relevant provisions of the Constitution and of the Central Sales Tax Act, 1956, ("the Central Act" for short).

Article 304(a) of the Constitution, on the basis of which the validity of the provision in the Act is challenged, reads :

"304. Restrictions on trade, commerce and intercourse among States. - Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law -

(a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so however, as not discriminate between goods so imported and goods so manufactured or produced;"

Article 302 of the Constitution empowers the Parliament to make laws imposing restrictions on the freedom of trade, commerce and intercourse between one State and another as may be required in public interest. The Central Act has been enacted by the Parliament in exercise of its power under article 302 of the Constitution. Section 14 of the Central Act declares certain goods as of special importance in inter-State trade or commerce. These goods are defined as "declared goods" under section 2(c) of the Central Act. Various items of iron and steel are specified vide item (iv) in that section. Section 15 of the Central Act imposes restrictions on the power of the State regarding levy of sales tax on declared goods. The relevant portion of the said section reads :

"15. Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State. - Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods