Case Note & Summary
The petitioner, a company incorporated under the Companies Act, 1956, challenged the constitutional validity of the Goa Tax on Entry of Goods Act, 2000 before the High Court of Bombay at Goa. The petitioner sought a declaration that the impugned Act was beyond the legislative competence of the State Legislature and violated Articles 14, 19(1)(g), 265, 301 and 304(a) of the Constitution of India, and consequently sought refund of entry tax recovered by the State. The petition was instituted before the decision of the Nine Judge Constitution Bench of the Supreme Court in Jindal Stainless Limited v. State of Haryana, (2017) 12 SCC 1. The petitioner argued that the impugned Act created a hostile discrimination between goods sourced from within the State and goods imported from outside the State or outside India. It was contended that the Act provided no reduction or set-off for taxes paid on goods imported from outside the State, and that the limited relaxation under Section 3(3)(2) of the Act did not apply to an ultimate consumer like the petitioner who procured goods from outside Goa and did not resell them. The petitioner submitted that entry tax legislations in Gujarat, Andhra Pradesh and Karnataka provided for a level playing field by allowing reduction or set-off for both VAT and CST, and the absence of such provisions in the impugned Act violated Article 14. Reliance was placed on A.T.B. Mehtab Majivs v. State of Madras, AIR 1963 SC 928, to argue that if the tax burden on imported goods was higher than on local goods, the levy must be struck down under Articles 301 and 304. The petitioner also contended that declaring the entire State of Goa as a 'local area' was beyond the legislative competence under Entry 52 of List II of the Seventh Schedule, relying on Diamond Sugar Mills Ltd v. State of U.P., (1961) 3 SCR 242 and Shaktikumar M. Sancheti v. State of Maharashtra, (1995) 1 SCC 351. The respondents relied on Jindal Stainless Limited and Hindustan National Glass & Industries Limited v. State of Maharashtra, (2019) 3 Bom CR 625, and submitted that the petition deserved dismissal. The court noted that most contentions had been answered against the petitioner by the Nine Judge Constitution Bench in Jindal Stainless. The majority answers in that decision were quoted, including that taxes simpliciter are not within Part XIII of the Constitution, that only discriminatory taxes are prohibited by Article 304(a), and that a tax on entry of goods into a local area for use, sale or consumption therein is permissible. The court rejected the petitioner's attempt to distinguish the Bombay High Court decision in Hindustan National Glass, pointing out that the petitioner was itself a party in Writ Petition No. 1813 of 2013 which was part of that common judgment, and that the petitioner had failed to show any difference between the legislative provisions of Maharashtra considered therein and the provisions of the impugned Goa Act. The court held that the arguments based on the entire State being declared as a local area and on discrimination had to be rejected, and that there was no qualitative difference between the arguments made before the Principal Bench and in the present matter. Consequently, the court found no merit in the challenge and upheld the constitutional validity of the Goa Tax on Entry of Goods Act, 2000, rejecting the petitioner's claim for refund.
Headnote
A) Constitutional Law - Freedom of Trade and Commerce - Articles 301 and 304(a) of Constitution of India - Taxes simpliciter are not within Part XIII; only discriminatory taxes are prohibited; non-discriminatory entry tax does not violate Article 301 - Court relied on Nine Judge Constitution Bench in Jindal Stainless Ltd. and rejected petitioner's argument that entry tax discriminated against goods imported from outside the State; Held that levy of non-discriminatory tax would not constitute an infringement of Article 301 (Paras 12, 15). B) Constitutional Law - Legislative Competence - Entry 52, List II, Seventh Schedule of Constitution of India - State legislature may levy tax on entry of goods into a local area including entire State; declaration of whole State as local area not beyond competence - Court rejected petitioner's reliance on Diamond Sugar Mills and Shaktikumar Sancheti, holding the issue already settled by Jindal Stainless; Held that a tax on entry of goods into a local area for use, sale or consumption therein is permissible (Paras 7, 14-15). C) Constitutional Law - Equality and Trade Discrimination - Articles 14 and 19(1)(g) of Constitution of India - Absence of set-off or reduction for CST/VAT in entry tax legislation for goods imported from outside State does not necessarily violate equality or trade freedom - Court noted similar argument was rejected in Hindustan National Glass & Industries Ltd., a decision to which petitioner was party; petitioner failed to show difference between Maharashtra and Goa provisions; Held that no qualitative difference existed between arguments made before Principal Bench and this matter (Paras 4, 5, 13-14). D) Constitutional Law - Precedent and Stare Decisis - Binding Effect of Supreme Court and High Court Decisions - Nine Judge Bench decision in Jindal Stainless and Bombay High Court decision in Hindustan National Glass govern; petitioner as party to latter cannot distinguish - Court found petitioner's attempt to distinguish based on separate legislation untenable because principles laid down are decisive; Held that the petition must be rejected based on these binding precedents (Paras 3, 10, 14).
Issue of Consideration
Whether the Goa Tax on Entry of Goods Act, 2000 is constitutionally valid, particularly with respect to legislative competence under Entry 52 of List II of the Seventh Schedule, and whether it violates Articles 14, 19(1)(g), 265, 301 and 304(a) of the Constitution of India.
Final Decision
The court rejected the petitioner's contentions, finding no qualitative difference from arguments already decided in Jindal Stainless and Hindustan National Glass; it upheld the constitutional validity of the Goa Tax on Entry of Goods Act, 2000 and denied the refund claim.
Law Points
- Taxes simpliciter are not within contemplation of Part XIII of Constitution
- word 'Free' in Article 301 does not mean free from taxation
- only discriminatory taxes prohibited by Article 304(a)
- levy of non-discriminatory tax does not infringe Article 301
- clauses (a) and (b) of Article 304 to be read disjunctively
- violation of Article 304(a) cannot be saved by Article 304(b)
- compensatory tax theory evolved in Automobile Transport and modified in Jindal Stainless (2) has no juristic basis
- tax on entry of goods into local area for use
- sale or consumption therein permissible though it may affect free flow of goods
