Case Note & Summary
The dispute arose from a Notification issued under the Bihar Finance Act, 1981, which required transporters to carry specific declaration forms for goods transported into and out of Bihar. The respondent, a registered dealer, was penalized for not filling out the required details in the transport permit. The Patna High Court quashed the Notification, deeming it violative of Articles 301 and 304 of the Constitution, which guarantee freedom of inter-State trade. The State appealed, arguing that the Notification was a regulatory measure aimed at preventing tax evasion and did not hinder trade. The Supreme Court analyzed the nature of the restrictions imposed by the Notification, emphasizing that while Article 301 guarantees free trade, it allows for reasonable restrictions in the public interest. The court concluded that the Notification did not impose direct restrictions on trade but rather facilitated the assessment of sales tax, thus upholding its validity. The court's decision highlighted the balance between regulatory measures and the freedom of trade, affirming that such measures are permissible as long as they do not constitute a direct impediment to inter-State commerce. The Supreme Court allowed the appeal, setting aside the High Court's judgment and reinstating the Notification and penalty order.
Headnote
A) Constitutional Law - Freedom of Trade - Article 301 - The freedom of trade, commerce, and intercourse is not absolute and can be subject to reasonable restrictions in public interest. The court held that the impugned Notification did not impose direct restrictions on inter-State trade but rather facilitated tax assessment, thus being valid under Article 301 (Paras 808-816).
Issue of Consideration
Whether the Notification and adoption of Forms XXVIII A and XXVIII B for preventing evasion of sales tax were violative of Articles 301 and 304 of the Constitution.
Final Decision
The Supreme Court allowed the appeal, reinstating the Notification and the penalty order, holding that the Notification did not violate Articles 301 and 304 of the Constitution.
Law Points
- Freedom of trade
- reasonable restrictions
- regulatory measures
- inter-State trade
- Bihar Finance Act
- 1981
- Articles 301 and 304 of the Constitution
