vil Appeal Nos
1144 48 of 1987
From the Judgment and Order dated 2991986 of the Rajasthan High Court in DB Civil Special Appeal Nos
3 4 5 of 1978 and 79 of 198 1 and 354 of 1984
Dr LM Singhvi GL Sanghi VM Tarkunde Dalveer Bhandari Ms Rachna Joshi KN Toshi Lekh Rai Mehta Gopal Singh Sushil K Jain and Sudharshan Atreya for the Appellants
852 G Ramaswamy Additional Solicitor General PS Poti Badridas Sharma RC Maheshwari and Manoj Jain for the Respondents
The Judgment of the Court was delivered by OZA J
These appeals have come to this Court against the judgment of the Division Bench of the High Court of Rajasthan dated 29986 wherein the learned Judges disposed of the following appeals by the impugned judgment and against this after grant of leave these appeals are before us 1 The State of Rajasthan and Anr
vs Prajapati Grah Nirman Samiti Ltd DB Civil Special Appeal No 3 of 1978
2 The State of Rajasthan  Anr
vs Adhunik Grah Nirman Samiti Limited DB Civil Special Appeal No 4 of 1978
3 The State of Rajasthan and Anr
vs Ms
Jai Marwar Company Pvt Ltd DB Civil Special Appeal No 5 of 1978
4 Trustees of Major Maharaja Hari Singh Benefit of Defence Service Personnel Charitable Trust vs The State of Rajasthan and Others DB Civil Special Appeal No 79 of 1981
5 State of Rajasthan and another vs Maharaja Gaj Singh Ji DB Civil Special Appeal No 354 of 1984
Initially the three writ petitions were filed before the High Court of Rajasthan by i Prajapati Grah Nirman Samiti Limited ii Adhunik Grah Nirman Samiti Ltd and iii Ms Jai Marwar Company Private Limited
It was alleged that these three parties purchased respective areas of land for price by registered sale deeds two dated 41171 and one dated 51171 from Shri Gaj Singh the erstwhile ruler of the Jodhpur State
These lands form part of Khasra No 42 1 in the revenue records
There is yet another adjacent land which also was in dispute in other matters than these three which was Khasra No 426
Facts which are not in dispute are that after attainment of independence on 15th August 1947 the rulers of the erstwhile princely States of Banswara Bikaner Bundi Dungarpur Jaipur Jaisalmer Jhalawar Jodhpur Kishangarh Kota Mewar Partabgarh Shahpura and Tonk entered into a Covenant with the Government of India 853 integrating these states into one
Article 12 of the said Covenant provided for the private properties of the rulers of the Covenanting States
In clause 1 of this article it was prescribed that the ruler of each of the Covenanting State shall be entitled to the full ownership use and enjoyment of all private properties as distinct from State properties belonging to him on the date of his making over the administration of the State
In accordance with the aforesaid clause in the Covenant a list of private proper ties of the ruler of the former State of Jodhpur was pre pared andit was approved by the Government of India on 24th March 1949
In the said list of private properties the immovable properties were divided into three categories
Category A  consists of properties which were to be regard ed as the family property of the Maharaja of Jodhpur and which will not be transferred
Category B  consists of properties which were to be regarded as family properties of Maharaja of Jodhpur but which will be disposable by him if he and his heir agree to do so
Category C  consists of property which is the absolute property of the Maharaja of Jodhpur with full rights of disposal
In the case in hand we are only concerned with Category C  property and in this category Umaid Bhawan Palace alongwith the area as per plan attached including the Chittar Tank and the Bijolai Tank and buildings was included
Maharaja Hanwant Singh who was the signatory to the Covenant died in 1952 and after his death he was succeeded by his son Shir Gaj Singh who was minor at that time
During the minority of Shri Gaj Singh an administrator was appoint ed for the purpose of administration of the estate of the minor Maharaja
In 1964 the Rajasthan Legislative Assembly enacted the Act which received the ascent of the President of India on 641964 and was published in the Rajasthan Gazette dated 1341964
The Act was enacted to provide for the acquisi tion of the estates of landowners
Under Section 7 of the Act a provision was made for issuing a notification by the State Government appointing a date for the vesting in the State Government of the estates or all landowners situated anywhere in Rajasthan
In exercise of the powers under Section 7 a notification was issued on 11th August 1964 which was published in the Rajasthan Gazette dated 1381964 and by this notification the State Government appointed 191964 as the date of vesting of all the estates of land owners situated within the State
Notice under Section 9A of the said Act were issued on 19111975 to the petitioners by Collector Jodhpur stating that trans 854 fers of the aforesaid lands are null and void and they shall deliver possession before 29111975 or within 10 days of the receipt of the notice whichever is later to the Sub Divisional Officer Jodhpur
It appears that one more notice dated 8121975 was issued by the Sub Divisional Officer Jodhpur by which he appears to have taken the possession of the aforesaid lands by affixing a notice as required by Rule 8 of the Rajasthan Land Reforms and Acquisition of Land Owners Estate Rules 1964
The petitioner s case before the Court below was that this land is not liable to acquisition under the said Act and therefore they sought a direction that the said orders and notices be quashed
It was contended before the Court below that in the definition of land  as defined in Section 2F after sub clause d of this Act provide for properties which shall not be included in the definition of land  and as this property fell within the ambit of that property which was excluded from the definition of land  it was contended that it could not be acquired under the provisions of Sec 7 of the Rajasthan Land Reforms and Acquisition of Land owners  Estate Act
The learned Judge Justice ML Jain after examining the list of private properties and the material placed on record by both the parties came to the conclusion that these lands failing within Survey No 421 which fell within the property included in the schedule of private properties in category C  and therefore it being a private property included in the inventory prepared according to the Covenant the acqui sition under the provisions of this Act was held to be bad
The learned Judge on the basis of documents also came to the conclusion that on 1964 which was the relevant date noti fied as the date of vesting this property was not agricul tural land and was also included in the private property of the ruler of Jodhpur shown within the boundary of the site plan of Umaid Bhawan Palace
Consequently the learned Judge came to the conclusion that the transfer made by the ex ruler in favour of these petitioners was not bad
The learned Judge considering the submissions came to the conclusion Now Shri Gaj Singh is an Ex Ruler and therefore a landown er
The Schedule I of the Inventory of his private proper ties also specified the properties which are his absolute property with full rights of disposal
Item No 1a relat ing to Jodhpur is as follows 855 a Umaid Bhawan Palace as per
plan attached including the Chittar Tank
A plan was attached to the inventory which contains the heading site plan of Umaid Bhawan Palace
Private property of His Highness and Maharaja Sahib Sahadir Jodhpur is shown in the red
 It is admitted that the land in dispute to which these writ petitions relate fails within the area bounded by the red line in the said site plan
It is there fore futile on the part of the State Government to contend that the land though covered by the site plan is not part of the palace as specified in the inventory
The State maintains that the Umaid Bhawan Palace has its own walled enclosure and further a long line of hills separates the land in dispute from the main palace
The learned Dy
Gov ernment Advocate urged that what the law excludes is the palace and not all the lands which are shown in the site plan
The Word palace  should be constructed only to in clude the area of the palace which is bounded by walls
I do not see any force in this argument because the definition of land excludes the palace as specified in the inventory and the inventory specifies the area of the Umaid Bhawan Palace as per plan attached and the attached plan includes the land in dispute
I am therefore unable to give the word palace a restricted meaning as convassed by the learned Dy
Govern ment Advocate
That being so the disputed land fails out side the estate and has consequently not vested in the State Government
 The learned Judge after considering various documents which were filed and which were the records of the Government as regards the nature of the land as to whether it is agricul tural land or not came to the conclusion that The documents clearly demonstrate that the land in dispute is not an agricultural and rather it forms part of the Abadi land
In the revenue records Khasra Nos are allotted not only to agricultural plot but they are also allotted to Banjar land and to Abadi land as well
The copies of the Jamabandi and Girdwari filed by the State shows that the land is Padat and does not carry and land revenue
It is therefore clear that the land in question being an Abadi land is not covered by the provisions of the Act
It appears 856 as has been contended that the land in order that it vests in the State Government should be an agricultural land
The amended long title of the Act states that it is an Act to provide for the acquisition of the Estates of landowners and for other measures of agrarian reforms removal of intermedi aries allotment of land to landless person development of agriculture
If the acquired land is meant for allotment to agriculturist then the land must be an agricultural land as indicated above
The land in question was not an agricultur al land and if at all it was so at any time in the past it long ago ceased to be so at least as early as in 1948 when according to the private property settlement it was includ ed in the Umaid Bhawan Palace premises
 Trustees of Major Maharaja Hari Singh Benefit of Defence Service Personnel Charitable Trust also filed a petition before the Rajasthan High Court
This pertains to Survey No 426 and this came up for heating before Hon ble the Chief Justice of Rajasthan Shri KD Sharma who while considering the matter observed At the outset I may observe that it is not disputed before me that Umaid Bhawan Palace situated in Jodhpur is the absolute property of Maharaja Gaj Singh of Jodhpur who has full rights of disposal thereof
This fact is borne out by the inventory marked Annexure 1 which was prepared and approved by the Government of India in pursuance of Article 12 of the Covenant entered into by late Maharaja Hanwant Singh with the Government of India at the time of accession of the former Jodhpur State to the Union of India
It will not be out of place to mention that the term land  defined in section 2 of the Act as amended by the amendment Act 1975 does not include forts palaces buildings and build ing plots specified in the inventory
Hence Umaid Bhawan Palace of which Maharaja Gaj Singh is the absolute owner does not fall within the purview of the definition of the word land  given in the section 2 of the Act as amended upto date In Misc
Petition No 187275 filed by Maharaja Shri Gai Singh came up for consideration before Hon ble the Chief Justice of Rajasthan Shri Justice Banerjee and by order dated 2012
1983 relying on the judgment passed by Justice ML Jain in the case of Prajapati 857 Grah Nirman Samiti Ltd vs State of Rajasthan allowed the petition of Maharaja Gaj Singh and quashed the notices which were issued
It is thereafter that the State Government in the mat ters decided by Justice ML Jain and by Justice Banerjee and the trust in the case decided by Justice KD Sharma went up in appeal under Letters Patent and by the impugned judgment the Division Bench disposed of all these appeals and hence these appeals have come before us after grant of leave
Learned counsel for the appellants contended that this Act ie Rajasthan Land Reforms and Acquisition of Land owners Estate Act 1963 was brought into force in 1964
According to the definition of Estate  it could refer to either land or right title or interest in land held by landowner
The land according to the learned counsel is defined in section 2 sub clause f
This definition is an inclusive definition and it first refers to land held for the purpose of agriculture
Thereafter it has been further stated that it does not include forts palaces buildings building plots specified in the inventory and the inventory has also been defined in Section 2 sub clause g which refers to the inventory of the private properties made in pursuance of the Covenant and finally approved by the Cen tral Government
Learned Counsel for the appellants mainly raised two questions i that as these lands were not agri cultural lands they do not fall within the ambit of this definition of land 
It was also contended that in any event as it fails within the boundaries of Umaid Bhawan Palace which is a property included in the inventory as the private property of the rulers of Jodhpur approved by the Government of India this will not fall within the ambit of the definition of land  in Section 2F
Consequently it could not be said to be an estate as defined in Sec
2b and as such by application of this Act this could not vest in the State Government and in this view it was contended that the judgment delivered by the Division Bench has omitted to decide this question and for no reason felt that let a reference under Section 12 be decided
It was also contended that the Division Bench could not come to a different con clusion then one which was reached by Justice ML Jain and Hon ble Chief Justice Shri Banerjee
Learned counsel appearing for the State of Rajasthan attempted to contended that this property falls within the boundary of the Umaid Bhawan Palace according to the site plan could not be conclusively held as an attempt was also made to suggest that the original plan should have been summoned from the Central Government but the 858 learned counsel could not explain the admissions made at the various stages in these proceedings about the plan which was filed in these petitions and also could not give any expla nation as to why when these proceedings have been going on since 1975 the State Government could not obtain an offi cial copy of the site plan from the Government of India and produce it before the High Court
In fact the admission in the documents and affidavits filed before the High Court and the orders passed by the revenue authorities which have been at length dealt with by the learned counsel and relied upon by the High Court could not be explained by the learned counsel appearing for the State
Similarly the question as to whether this land was agricultural or not also was dis puted by the learned counsel on the basis that the revenue record entry showed that this has been agricultural land although the record referred to by the counsel for the appellants also indicated that this area during the State times was included in the development plan of the Jodhpur town
Counsel for parties frankly conceded that if the lands in dispute fail within the boundaries of the Umaid Bhawan Palace as shown in the site plan which was part of the inventory prepared at the time of the Covenant and approved by Government of India it is clear that these lands will not fall within the definition of land  as described in Sec
2g and therefore it could not vest in the State nor it could be acquired under the provisions of this Act and in that event these appellants are entitled to hold their lands and the question whether the lands are agricultural or not is not very material
Learned counsel for the respondent State distinguished the case of Naveen Grah Nirman Samiti on a different footing as they claimed to be the transferees from Jai Marwar Compa ny Private Limited and this transfer Was at a time when the transfer was prohibited and that question has not been gone into by the High Court as these petitioners have chosen to come to this Court when in fact they were not parties in the judgment before the High Court
Learned counsel for the petitioner in the petition by Naveen Grah Nirman Samiti in view of the objections raised by learned counsel for the respondent State frankly conceded that this petition was not before the High Court and in view of this he submitted that he may be permitted to withdraw this petition
Learned counsel for the respondent also raised an objec tion about the transfer of these lands in view of Section 32 of Rajasthan Urban Property Restrictions of Transfers Act 1973
Section 32 of 859 this Act provided that after the 16th day of August 1971 if any person has transferred any urban property owned by such person such transfer shall be deemed to be a transfer made to defeat the provisions of this Act and the property so transferred shall for the purposes of this Act be deemed to be owned by such person
On this basis it was contended that as the transfers have been effected by Maharaj Shri Gaj Singh after 16th August 1971 they will be void whereas learned counsel for the appellants contended that this Act was enacted in contemplation of the Rajasthan Urban Property Ceiling Act which was to be enacted and it was for the purpose of that Act that Sec
32 of this Act was enacted to restrict transfer of urban property but it did not de clare transfer to be void but said that in spite of the transfer the property will be deemed to be owned by such person ie transferor
The idea was that while applying the law of ceiling the holder of the property may not defeat the provisions of that Act by these transfers and ultimately this Act was repealed and the repeal was by Rajasthan Urban Property Restrictions of Transfers Repeal Act 1978 and that Act did not protect anyone of these provisions
In fact this question was raised before the Division Bench and the learned Judges of the Division Bench in the impugned judg ment observed In view of the repeal of 1973 Act the cloud which has been cast on the title of the petitioners in the writ petitions giving rise to these
appeals by section 32 of the 1973 Act was removed and therefore we are unable to accept the contention of the learned Government Advocate
 It is apparent that this Section prohibiting transfers was enacted keeping in view the Act on ceiling in contemplation and that is why as indicated earlier Section 32 did not provide that the transfer will be invalid but it only pro vided that in spite of the transfer the property will be deemed to be owned by such person thereby meaning the trans feror so that when the ceiling Act is brought into force the transferor may not take advantage of the transfer to defeat the provisions of the Ceiling Act
In fact after the Ceiling Act was brought into force a prohibition was again imposed on the transfer and admittedly the transfers with which we are concerned are not after that as it is clear that the Rajasthan Urban Property Ceiling Act 1972 when was enacted provided by Section 5 of that Act that the transfers which were made after the commencement of the Act was declared null and void
In fact the learned Judges of the Division Bench considered this aspect of the matter and negatived the contention advanced by the learned counsel for the respond ents in the words indicated above and in our opinion that conclusion could not be assailed
860 As regards the question as to whether the lands in dispute ie which fail within Khasra Nos 421 and 426 fall within the purview of the definition of land  as contained in Section 2F of the Act is concerned it is consistently held by the High Court that as the land fell within the exception of Section 2F it would not fail within the defini tion of land  Section 2f reads land means and land held or let for purposes of agricul ture or for purposes ancilliary thereto including waste land forest land land for pasture or sites of buildings and other structures occupied by cultivators of land agri cultural labourers and village artisans and includes a tanks lakes ponds river and water channels held for purposes of irrigation
b surface of hills c landing grounds or strips and d shikargah but does not include forts palace buildings and building plots specified in the inventory
 The last part of this provisions but does not include forts palace buildings building plots specified in the inventory is the relevant portion of the definition which was considered by the Court below and is the question which deserves to be considered
The Inventory has also been defined in Section 2d which means inventory of the private property of the ruler prepared in pursuance of Article 12 of the Convenant and finally approved by the Government of India
In the High Court in all these petitions the plea raised was that the inventory of the private property of the ex ruler of the Jodhpur State Maharaj Shri Gaj Singh contained an item of property shown as Umaid Bhawan Place and the boundaries therein were indicated to be in red in the site plan attached alongwith it
So far as the inventory and inclusion of this property in the inventory of the private property is concerned it is not disputed even before us
In the High Court the site plan and the properties included in the red boundary forming part of the property Umaid Bhawan Palace was also not disputed
All the judgments in the High Court are based on this admission and appa 861 rently the affidavits filed on behalf of the State before the High Court clearly and categorically admitted this position and even went to the extent of saying that this was verified and found to be correct and the plan filed with the petition having a red boundary was admitted and therefore it was not disputed that Khasra Nos
42 1 and 426 fell within the boundary of Umaid Bhawan Palace which in accordance with the definition of land  quoted above will be excluded from the definition and what is excluded from the definition of land  in Section 2F could not vest in the State in view of language of Section 7
Section 7 reads Acquisition of estates 1 As soon as may be after the commencement of this Act the Government may for the purpose of carrying out agrarian reform in accordance with the provisions of this Act by notification in the Official Gazetteappoint a date for the acquisition of landowner s estates in the State and for their vesting in the State Government
2 The date appointed under this Section in relation to the acquisition of landowners  estates in the State in this Act referred to as the date of vesting of such estates This talks of the vesting of the estate and the estate itself has been defined in Sec
2B which reads estate means land or right title or interest in land held by a landowner This clearly talks of land or right title or interest in land held by landowner and land as already discussed above is defined in Section 2F it is therefore clear that if this property did not fall within the ambit of the definition of land it could not be said to be estate under Section 2B and therefore could not vest in the State under Section 7
It was in this view that counsel for both the parties frankly conceded that if this falls within the exception to the definition of land  provided in Section 2F the further question about the land being agricultural or not is of no consequence
An attempt was made by the learned counsel during the course of arguments to suggest that it is no doubt true that all through the State Government and on behalf of the State Government the affidavits that were filed in the High Court this was admitted that these lands in 862 dispute fell within the red boundary of the site plan and the site plan is the site plan of the Umaid Bhawan Palace which is included in the inventory of the private property of the ruler finally approved by the Government of India
It is also not seriously disputed that there are orders passed by some revenue officers in respect of these matters where it has been held that these lands fell within the red bound ary which is the correct boundary of Umaid Bhawan Palace in the inventory approved by the Government of India as the private properties of the ex ruler
Only an attempt was made by Additional Solicitor General who appeared for the State to suggest that the Central Government alone may have the original and therefore wanted this Court to summon the original but learned counsel had no explanation why this could not be done in all these years to which he had no answer and therefore it is plain that so far as these facts are concerned the State could not now be permitted to raise any objection in respect of the site plan and the boundary in red of Umaid Bhawan Palace
After the hearing was concluded an attempt has been made on behalf of the State and certain papers have been filed which pertains to some returns filed in connection with the assessment in respect of the building Umaid Bhawan Palace which has been described as Hotel Marudhar and on that basis probably a suggestion is made that in this the ex ruler has submitted a plan for assessment of the property tax wherein he has not showed this part of the property which is the subject matter of the dispute
Apparently these papers pertain to some proceedings of assessment of property per taining to Marudhar Hotel with which we are not concerned and on that basis it could not be said that what has been admitted all through as the boundary of the Umaid Bhawan Palace is not correct
No reliance could be placed on these additional papers
Before the High Court in Writ Petition No 192475 Additional Collector Jodhpur who is also described as the Officer Incharge of the case has filed a counter in return and in this it is stated That the Photostat copy and the true copy of the Covenant and the site plan submitted by the petitioner alongwith the aforesaid application have been got verified to be the true and exact copies of the original covenant and the plan attached with the inventory of the private properties of the Ex ruler of Jodhpur
The duly verified copy of the plan is being submitted for your perusal
 863 and the same reply filed by the said Additional Collector has been verified on affidavit by the same officer who in his affidavit states That the photostat copy of the convenant as also the true copy of the plan referred in the Schedule of the inventory of the private properties of Ex ruler
Ex ruler Jodhpur supplied to the respondents have been got verified from the Chief Engineer PWD B  R Rajasthan Jaipur and the office of the General Administration Department Rajasthan Secre tariat Jaipur
 In view of these circumstances therefore so far as the land in dispute ie Khasra Nos 421 and 426 is concerned the admission made by the State and which was also clear from various documents which have been considered by the High Court in their judgments in these petitions clearly show that these lands were within the boundaries of the Umaid Bhawan Palace which is the private property in accordance with the inventory preparted and approved by Government of India and therefore which will not fall within the ambit of the definition of the land  as defined in Section 2F and thus will not fall within the ambit of the estate  which could vest under the provisions of this Section and in this view of the matter even without going into the the question about whether land being agricultural or not the view taken by Justice ML Jain is the only view which could be sus tained
Even as regards the question as to whether this land is agricultural or not it will be relevant to note
Learned counsel for the State has relied on some Khasra Girdwari and Jamabandi of Sam vat 2030to 2032 relating to Khasra No 421
It is described as Padat and it is contended that this land will be agricultural land as it also includes waste land
Even on the basis of the record on which reliance is placed by the learned counsel for the State that no land revenue is assessed on this land
On the contrary counsel for the appellant referred to a notification published in the Jodhpur Government Gazette dated February 10 1934 and this notification states that the Development Department shall have control over the disposal of land for building sites and the building regulation shall operate over the area within a radius of three miles from the Sojati Gate and it is not disputed that these lands fell within three miles radius from Sojati Gate
Learned counsel also referred to a letter written to Urban Improvement Trust
The Settlement Officer is alleged to have stated that the plan was careful ly perused checked and tallied with the corresponding old settlement record of Samvat 1979 together with the site plan of Umaid 864 Bhawan Palace which indicates the private property of His Highness the Maharaja Sahib Bahadur Jodhpur duly verified on 12111958 by the then Deputy Secretary GAD and the Commissioner Jodhpur Division Jodhpur wherein the said land is included in the premises of Umaid Bhawan Palace
The Settlement Officer further added that the fact that this land had never been assessed to rents that it never has been cultivated and that it is included within the Umaid Bhawan Palace is sufficient to show that it is abadi land within the meaning and definition under Section 158 of the Rajasthan Land Revenue Act 1956
The view expressed by the Government that this land does not appear to be agricultural land is fully established and it was on the basis of these documents that the learned Judge Shri ML Jain came to the conclusion that The documents clearly demonstrate that the land in dispute is not an agricultural and rather it forms part of the Abadi land
In the revenue records Khasra Nos are allotted not only to agricultural plot but they are also allotted to Banjar land and to Abadi land as well
The copies of the Jamabandi and Girdwari filed by the State shows that the land is Padat and does not carry any land revenue
It is therefore clear that the land in question being an Abadi land is not covered by the provisions of the Act
 It is clear that the contention raised by the learned coun sel for the respondent that this land is an agricultural land also cannot be accepted and in view of our conclusions reached above it is clear that the view taken by learned Judge Shit ML Jain is the only view which could be taken
Consequently the appeals filed by the appellants including Prajapati Grah Nirman Sahakari Samiti Ltd vs State of Rajasthan  Ors are allowed
The judgment passed by the Division Bench of High Court of Rajasthan in the appeals is set aside and it is held that no action under the provisions of Rajasthan Land Reforms and Acquisition of Landowners  Estate Act 1963 could be taken against the appellants and all notices or actions taken are hereby quashed
The appel lants shall be entitled to costs of these appeals
Costs quantified at Rs 10000
So far as Civil Appeal No 114587 Naveen Grah Nirman Sahkari Samiti Ltd vs State of Rajasthan is concerned we see no reason not to permit him to withdraw
The petition and appeal is therefore permitted to be withdrawn
NVK Appeals allowed


Summary:
In exercise of the powers conferred by sub section 2 a of section 31 of the Bihar Finance Act 1981 the Commission er of Commercial Taxes Bihar issued a Notification dated 28th December 1985 adopting Forms XXVIII A and XXVIII B as the declaration for the purposes of verification and assess ment of the sales tax payable
Clause 1 of the Notification provided that a person transporting goods exceeding the quantity notified under section 35 on a goods carrier or a vessel shall carry Form XXVIII A or XXVIII B duly filled up in respect of goods being brought into the State or being sent out of the State
Clause 2 of the Notification provided that in case a form is found blank or not containing all the particulars it shall be deemed to be a violation of the provisions of sub section 2 a of section 31 of the Act
The respondent a registered dealer under the Bihar Sales Tax Act and the Central Sales Tax Act purchased 165 bags of mustard in the State of Rajasthan and was transport ing the same therefrom to 797 Jamshedpur in the State of Bihar
The officers of the Inves tigation Bureau Jamshedpur Division seized the vehicle along with the goods on the ground that in the road permit the bill number had not been mentioned in column No 9 in Form XXVIII B
On a representation by the Singhbhum Chamber of Commerce and Industry the truck along with the goods was released
The Inspecting Officer issued a demand notice to the respondent imposing a penalty of Rs8330 and rejected the contention of the respondent that no permit was neces sary because it was violative of the respondent s Constitu tional right of freedom of inter State trade and commerce
The appellant filed a writ petition in the Patna High Court challenging the validity of the Notification on the ground of its being violative of Articles 301 and 304 and also the demand notice imposing penalty
The High Court held that the Notification imposed unwar ranted restrictions on the inter State trade and commerce and accordingly quashed the Notification as violative of Articles 301 and 304 and set aside the penalty order with demand notice
In this appeal by special leave on the question whether the impugned Notification and the adoption of Forms XXVIII A and XXVIII B for the purposes of preventing evasion of sales tax was violative of Articles 301 and 304 of the Constitution
Allowing the appeals and setting aside the judgment of the High Court HELD 1 Article 301 mandates free trade commerce and intercourse throughout the territory of India
The words throughout the territory of India extends the freedom not only to inter State but also to inter State transactions and movements
The mobility of goods throughout the territory of India has to be free
Free trade throughout the territory of India would be one with no tariffs and no restrictions or disadvantages of any kind of importing or exporting from the different States
Free trade means complete freedom of inter State trade without any restrictions on the movement of goods between the States
Anyone aggrieved by infringe ment of the provisions of Article 301 can seek his remedy from the Court against the offending legislative or execu tive action
808C E 2
The word trade  has been used synonymously with the word 798 business 
Trade or business would mean some real substan tial and systematic or organised course of activity or conduct with a set purpose
808E State of Bombay vs RMD Chamarbaug wala 1957 SCR 874 applied
Freedom under Article 301 does not mean absolute freedom but freedom from all restrictions and barriers except those which are provided in other Articles of Part XIII as well as regulatory and compensatory measures
The object of Part XIII is not to make inter State trade com merce or intercourse absolutely free
Reasonable restric tions in public interest are permissible
The reasonable restrictions contemplated in Part XIII have to be backed by law and not by executive action provided the same are within the limitations prescribed under the scheme of Part XIII
The power of the Union or the State to exercise legitimate regulatory control is independent of the restrictions im posed by Articles 302 305
808F 81 IG 812B State of Madras vs Nataraja   applied
While examining whether there is a violation of the freedom guaranteed by Article 301 one has to scrutinise whether the impugned legislative or executive act operates to restrict or barricade trade commerce or intercourse directly and immediately as distinct from creating some indirect or inconsequential impediment which may be regarded as remote
In other words regulatory or compensory measures cannot be regarded as violative of the freedom
Such meas ures cannot be challenged as interfering with the freedom guaranteed by Article 301 unless they are shown to be co lourable measures to restrict the free flow of trade com merce and intercourse
808H 809A B 5
Measures impeding the freedom of trade commerce and intercourse may be legislative or executive and may be fiscal or non fiscal
Taxing laws could be restrictions on trade commerce and intercourse if they hamper the flow of trade and if they were not what could be termed to be com pensatory taxes or regulatory measures
He who assails such a measure has to show that it is not regulatory but it directly and immediately interferes with the free flow of inter State trade or business
Freedom may be impeded by impediments on the individuals carrying on trade or busi ness on the business itself or on the vehicles carriers instruments and labour used in the trade or business
809B C 799 Atiabari Tea Co Ltd vs State of Assam and others   Automobile Transport Rajasthan Ltd vs State of Rajasthan and others 1963 1 SCR 491 Western Electronics vs State of Gujarat AIR 1988 SC 2038 and Indian Cement vs State of Andhra Pradesh AIR applied
When the legislature had the power to make a law with respect to any subject it had all the ancillary and inciden tal power to make that law effective
In the instant case the notification ex facie shows the purpose namely to prevent evasion and facilitate assessment of sales tax
The permits will indirectly help assessment by ascertaining whether tax would be payable or not
The permit would enable the carrier to cross the State territory by producing it if and when needed and thus would promote rather than impede inter State trade
A declaration may also serve the public purpose by finding out unauthorised trade or business to which freedom of trade commerce and intercourse would not apply
Thus the impugned notification is a measure in exercise of a power incidental to the levy of sales tax and it could not be said to have been a colourable exercise of power to impede restrict or barricade inter State trade in respect of which Bihar State Legislature has no power to legislate
813B E 61 Article 304b clearly permits the State Legislature to impose such a reasonable restriction on the freedom of trade commerce and intercourse with or within that State as may be required in the public interest
The word with  involves an element having its situs in another State
It cannot be therefore said that the insistence on the disclosure in respect of goods entering Bihar from another State if otherwise legitimate would not be protected by Article 304b
815C 62 To decide whether the notification impeded inter State trade the concept of inter State trade and its conti nuity has also to be taken into consideration
In the in stant case the notification clearly states that the declara tion in the permit is indeed for the purpose of verification and assessment of tax payable and there is no imposition of any tax
The notification only prescribed the declaration forms to be carried on a goods carrier or vessel for trans porting goods through the State of Bihar
It does not pro hibit transportation of the goods
Therefore there is no direct and immediate restriction of inter State trade commerce or intercourse as a result of the requirement to fill up and carry the forms
In other words the continuity of the transport will not be obstructed or interrupted
Therefore the notification and the adoption of the forms are reasonable and in public interest and not ultra vires the Articles 301 and 304 of the Constitution of India
815F 816F 800 Hans Raj Bagrecha vs State of Bihar and others   distinguished
Sodhi Transport Co vs State of U P 1986 1 SCR939 held applicable