Adarsh Kumar Goel, J. - This matter has been placed for hearing before us in pursuance of order of the honourable Supreme Court dated July 14, 2006 in C.A. No. 3453 of 2002 and connected matters reported in Jindal Stainless Limited v. State of Haryana [2006] 7 SCC 271 [hereinafter referred to as "Jindal Stainless Limited (3)"].

Appeals before the honourable Supreme Court arose from the judgment of this court dated December 21, 2001, Jindal Strips Limited v. State of Haryana reported in [2003] 129 STC 534 (P&H).

When the appeal against judgment of this court was placed for hearing before a Bench of the honourable Supreme Court, correctness of the view taken by the honourable Supreme Court in earlier judgment in Bhagatram Rajeev Kumar v. Commissioner of Sales Tax [1995] 96 STC 654; [1995] Supp. 1 SCC 673, which was followed in State of Bihar v. Bihar Chamber of Commerce [1996] 103 STC 1 (SC); [1996] 9 SCC 136, was doubted and the matter was referred to a Constitution Bench to decide with certitude, the parameters of the judicially evolved concept of compensatory tax vis-a-vis article 301 of the Constitution. The said order dated September 26, 2003 is Jindal Stripe Ltd. v. State of Haryana reported in [2004] 134 STC 303 (SC); [2003] 8 SCC 60, [hereafter referred to as "Jindal Stainless Limited (1)"]. The Constitution Bench decided the issue referred to it vide its judgment dated April 13, 2006, Jindal Stainless Limited v. State of Haryana reported in [2006] 145 STC 544 (SC); [2006] 7 SCC 241 [hereafter referred to as "Jindal Stainless Limited (2)"].

The issue arose in the context of challenge to the constitutional validity of the Haryana Local Area Development Tax Act, 2000 (hereinafter referred to as, "the Act") on the anvil of article 301 of the Constitution. Contention raised on behalf of the petitioners was that the impugned levy was hit by article 301 as the same was not compensatory or regulatory but imposed for augmenting general revenue. On the other hand, the stand taken by the State was that the impugned tax was compensatory in character. It was also submitted that the tax did not directly or immediately affect the movement of trade. Facilities provided in the local area ultimately led to better trade and commerce and benefited the traders.

This court rejected the contentions raised on behalf of the petitioners. Reliance was placed, inter alia, on judgments of the honourable Supreme Court in Bhagatram [1995] 96 STC 654; [1995] Supp. 1 SCC 673 and Bihar Chamber of Commerce [1996] 103 STC 1; [1996] 9 SCC 136 cases. It was concluded that the impugned tax was compensatory tax and did not come within the purview of "restriction" contemplated in article 301 of the Constitution. This court also took into account provisions incorporated in the Constitution of India by 73rd and 74th Constitutional Amendment Acts by way of Parts IX and IXA, providing for conferring powers on panchayats and local bodies to enable them to function as institutions of self government in respect of functions listed in Eleventh and Twelfth Schedules to the Constitution. It was observed that provisions relating to roads, bridges, streets, markets, water supply and sanitation were meant to facilitate free-flow of trade and since section 22 of the Act provided for distribution of tax collected among local bodies, the same was compensatory.

This court observed :

44. We have given serious thought to the respective arguments. Article 245(1) declares that subject to the provisions of the Constitution, the Parliament may make laws for the whole or any part of the territory of India and the Legislature of a State may make laws for the whole or any part of the State. Article 246 deals with subject-matter of laws made by the Parliament and the Legislatures of the States. Clause (1) of article 246 declares that notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List