JINDAL STAINLESS LTD. & ANR versus STATE OF HARYANA & ORS
[2016] 10 S.C.R. 1, Supreme Court of India, 2016
Outcome: Directions issued
Segment: Ratio
1o impose a tax on goods imported from other states or 
union territories so long as the tax is one which is imposed on 
similar goods nrnnufacturcd or produced in that state. The clause 
nf subjection in Article 301 and the non-obstante clause of Article 
304 can hence be harmonised. [Para 167)1609-F-H; 610-A-F] 
12. Article 306 as it was originally incorporated into the 
Constitution provided :i clear indicator tlrnt the founding fathers 
did not intend to use the expression 'restrictions' in 
conlrndistinction to taxes or duties on the import or export of 
goods bcl ween states. !Para 16911611-Fl 
13.1 Article 304(a) elaborates that a particular form of 
taxation - a non-discriminatory tax on goods -· shall not be 
construed to violate Article 301. But Article 304(a) is not 
exhaustive of the universe of taxation. Article 304(a) has three 
defining characteristics. The first is that the tax is a tax on goods. 
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[2016] 10 S.C.R. 
The second is that it is a tax on goods imported from other states. 
The third is the non-discrimination norm in relation to similar 
goods produced or manufactured in the state. A tax which fails to 
meet the yardstick embodied in Article 304(a) will violate Article 
301. But Article 304(a) cannot be a basis for holding that every 
fiscal measure (apart from a discriminatory tax) lies outside the 
puniew of Part XII I. For one thing, the rate of tax is but one 
clement of taxation. There arc other elements in a fiscal exaction 
including assessment, the machinery for collection and set offs 
and exemptions which can have an important bearing on whether 
the tax operates in a manner that impedes the freedom of 
interstate trade and commerce. Moreover, a discriminatory tax 
otherwise than on goods, does not attract the provisions of Article 
304(a). Finally, a non-discriminatory tax may also become an 
impediment on the freedom of trade and commerce where the 
tax is so high as to render it confiscatory. Hence, a discriminatory 
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fiscal imposition of the nature which offends Article 304(a) is 
illustrative of but not exhaustive of fiscal impediments on the 
freedom of trade and commerce. !Para 170][611-F-H; 612-A-C] 
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13.2. The Constituent Assembly, while adopting Article 304 
incorporated a marginal note which describes the ambit of the 
provision as : "restrictions on trade, commerce and intercourse 
amongst states". The
marginal note is a broad indicator of 
cc11,stitutional intent. It is a constitutional indicator of the position 
that a restriction on the freedom of trade and commerce can be 
fisi;al or non-fiscal in origin. The marginal note evidently utilizes 
the expression "restrictions" in relation to the entirety of the 
article. Though a marginal note cannot override constitutional 
text nor can it control the specific meaning of the words used in 
the text, it is a broad indicator or pointer to the meaning intended. 
For these reasons, it would be untenable to postulate as a general 
principle that it is only a discriminatory tax falling within the ambit 
of Article 304(a) that is subject to Part XIII of the Constitution. 
!Paras 171, l 72]1612-D-F] 
Tax legislation - .Judicial review and Part XIII 
Taxation and Part XII 
II 
14.J A law which imposes a tax is not immune from
,--JDAL STAlNLFSS LTD. v. STATE Of HARYANA 
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conslitulional challenge merely because taxation is a manifestation 
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of the sovereign power of the slate or because there is a 
presumption that a tax is imposed by the legislature in lJUblic 
interest. Taxing legislation is sub,ject to constitutional restraints 
originating in lhe legislative competence of the legislature to enact 
lhc law, the guarantees of fundamental freedoms contained in 
Part Ill and constitutional limitations originating in the provisions 
of the Constitution. !Para 1761[614-E-Fl 
The standard of judicial review 
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14.2 The standard of .iudicial review in relation to taxing 
legislation however recogni;~cs that there inheres in the 
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legislature the power to determine the ob,jects on which a tax 
should he levied and lo classify persons or properties for the 
purposes of the levy. Uthe classification is rational, a taxing statute 
cannot be challenged merely because different rates of taxation 
arc prescribed fo1· different categories of persons or objects. The 
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validity of a taxing statute cannot be challenged merely on the 
ground that the rate of taxation is excessive. However, if the 
statute is a colourable piece of legislation or a fraud on legislative 
power, ii would be open to challenge on the ground that while 
enacting the law, the legislature has adopted a cloak or devise to 
confiscate the property of a citizen who is taxed. But such a 
conclusion cannot be reached merely on a
finding that the tax 
which is imposed is unreasonably high or excessive. 
Conccpt.nally, the availability of judicial review in regard to taxing 
legislation is distinct from the standard of judicial review. Taxing 
legislation is nol immune from constitutional challenges based 
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on a lack of legislative competence, a breach of fundamental rights 
or a violation of a constitutional limitation or provision. But the 
standard of judicial 1·eview in relation to fiscal statutes recognizes 
that lhe legislature must possess a wide latitude to classify persons 
or objects for the purposes of the levy. [Paras 177, 178]!614-G; 
615-A-D] 
Ramji/al v. Income Tax Officer; Mohindargarh (1951) 
2 SCR 127; K111111athat Thathunni Moopil Nair v. The 
State of' Kera/a 1961 (3) SCR 77; Balaji v. Income Tax 
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Office1; S)1ecial !11vestigatio11 Officer 1962 (2) SCR 983; 
Chhotahhai Jethahhai Patel & Co. v. Union of India 
(1962) Supp. (2) SCR ] ; Raja Jagan11ath Baksh Singh 
i: State of' UP (1963) I SCR 220; Federation of' Hotel 
& Restaurant Assn. of flldia etc. v. Union of India & 
Ors. 1989 (2) SCR 918 : (1989) 3 SCC 634 - referred 
to. 
14.3 Taxation is indeed a manifestation of the sovereign 
power of the slak to raise revenues for public purposes. Bui the 
exercise of sovereignty is subject lo the constitutional limitations 
of a written constitution. Enactment of law by a law making body 
which possess a legislative competence over the subject maUer 
upon which it legislates is one of the constitutional limitations. 
The Constitution distributes legislative powers between the 
lJ nion and States. \Vhile doing so it carves out fields of legislation 
which arc reserved to the Union and the States respectively. 
Legislative powers in relation to taxation are also distributed 
between the Union and the States. Uenee, all legislative power 
(of which the legislative power to impose a tax is a part) is subject 
to the distribution provided in the Constitution. Exercise of 
sovereign power is governed by the norms of a written 
Constitution. Taxing statutes, like other legislation, arc subject 
to co11stil11tio11al limitations including those contained in Part XIII. 
Hence, the general notion that taxation is a
manifestation of 
sovereign pow('rs must also comprehend within that 
conceptualisation, the limitations which the Constitution imposes 
upon all legislative power of which the taxing power is a part. 
!Para 18011616-G-II; 617-A-C! 
14.4 Article 245 mandates that all laws are subject to the 
provisions of the Constitution. From that basic premise, it must 
follow that the l~mitations on the taxing power are not only those 
which are referable to Part XII. A sub.ject such as taxation may 
be referable to a specific part of the Constitution, such as Part 
XII.. This does not mean that its validity must be assessed only 
with reference In the provisions of that Part. The provisions of 
the Constitution are not isolated 01· watertight compartments.
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
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Constitutional provisions do not rest in silos.· As regards the A 
third rationale undoubtedly, the revenues which the state raises 
from fiscal exactions generate resources which arc also utilized 
to augment trade and commerce. This, however, does not confer 
an immunity from a challenge that a law which is enacted in 
pursuance of the taxing 110wer breaches specific provisions of B 
the Constitution. [Paras 181, 18211617-D-F'] 
14.5 While the concept of public purpose is implicit in tax 
law, it is also implicit in all legislation which is presumed to be in 
the public interest. Yet the presumption of constitutionality or of 
legislation being in the public interest docs not confer a protection 
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or immunity against a specific challenge on the ground that it 
violates a constitutional limitation such as that originating in 
legislative competence, the fundamental rights or constitutional 
proYisions. !Para 18311617-G] 
Presidential sanction : the proviso to Article 304(b) 
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15. Article 303 prohibits both Parliament and the legislature 
of a state from enacting laws granting preferences to one state 
over another or making discrimination between one state over 
another. Article 303(2) makes an exception in respect of Union 
legislation enacted to deal with a situation of scarcity of goods in 
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any part of the territory of India. The prohibition contained in 
clause 1 of Article 303 is, hence, lifted in the case of
Parliament 
by clause 2. In the case of a state legislature, Article 303(1) is 
attracted where it grants preferences or makes a discrimination 
between one slate and another. Article 304 in its non-obstante 
clause refers inter a!ia to Article 303. Consequently, where a state 
legislature seeks to enact legislation granting a preference to 
one state over another or to make a discrimination of the nature 
referred to in Article 303(1), it must comply with the requirements 
of a Presidential sanction under the proviso to Article 304(b ). 
Where the law enacted by the state legislature would result in a 
preference or discdmination prohibited under Article 303(1), the 
embargo can be lifted upon obtaining the previous sanction of 
the President under the proviso to Article 304(b ). [Paras 185, 
186]1618-D-G] 
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Article 304(a) : The principle of non-discrimination 
16. While understanding Article 304 (a), this Court has to 
analyse the meaning of the expressions (i) 'goods imported from 
other states'; (ii) 'any tax to which similar goods manufactured 
or produced in that state m·e subject'; and (iii) 'so, however, as 
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not to discriminate between goods so imported and goods so 
manufactured'. \Vhilc defining the meaning of these cxp1·cssions, 
judici:1l 1·cview is confronted with the basic question of when Article 
304(a) would apply and the situations in which the requirement 
of a non-discriminatory ta1' is fulfilled. An important aspect of 
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Article 304(a) is whether it permits a classification by the state 
legislature based on the need to achieve the economic 
development of the state. If development is a legitimate priority, 
to what extent docs Article 304(a) condition the power of the 
state legislature to encourage the growth of its own industries by 
the grant of incentives. rebat.es and exemptions through fiscal 
legislation'? !Para 18711618-11; 619-B-D] 
5;1ate of Madhava Pradesh v. Ahdeali 1963 SCR 704 : 
AIR 1963 SC I 237; Firm .L TB. lvlehtah Majid v. State 
of :\1adrm· (1963) Suppl. (2) SCR 435; A Hajee Abdul 
Shakoor i: State of' i'v!adms 1964 AJR 1729: 1964 SCR 
217; State of Madras v. :V.K. Na/arajo Muda!iar (1968) 
3 SCR 829; Ka!wmi Stores v. l/1e State o/Orissa (1966) 
1 SCR 865; Srat<' ofKemlc1 v
.. ·1.B. Ahdul Khadir (1970) 
I SCR 700; Ra/Ian Lui de Co. v. The .·1ssessing Authority 
( 1969) 2 SCH 544; V G11ruviah .Vaid11 and Sons v. State 
of fomi! Nadu 1977 (1) SCR 1065 : 1977 (1) SCC 
234; Stale of Kamawka v. Hansa Cmporation 1981 
(I) SCR 823 : 1980 (4) SCC 697; Wes/Un Electronik.I· 
'" Slate of Gujarat 1988 (3) SCR 768 : 1988 (2) 
SCC 568; Video Electronics v. State al Punjab 1989 
(2) Suppl. SCR 731 : (1990) 3 SCC 87; Shree Mahavir 
Oil Mi11s v. State of J&K 1996 (9) Suppl. SCR 356 : 
1996 (11) sec 39 ·- referred to.
JINDAL STAINLESS LTD. v. STATE Of HARYANA 
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Article 304(a) and reasonable classification 
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17.l Does Article 304(a) prohibit a state from making a 
reasonable classification? Article 303 contains a prohibition on 
the legislature of a state granting a preference to one state over 
another and for making a discrimination. Article 304 operates, 
inter alia, as an exception to the norm contained in Article 303 as 
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a result of its 11011-obsta11te provision. Under clause (a) of Article 
304 a state may impose on goods which are imported from other 
states "any tax" to which similar goods manufactured or produced 
in that state are subject. This is followed by the further 
requirement that the imposition of such a tax shall "so however'' 
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not discriminate between goods so imported and goods so 
manufactured or produced. The principle which underlies clause 
(a) of Article 304 is non-discrimination between goods imported 
from another state and goods produced or manufactured within. 
Clause (a) enables the state legislature to impose a tax on goods 
imported, in the exercise of its legislative power, so long as that 
tax is imposed also on similar goods manufactured or produced 
within. The latter part of clause (a) which contains a mandate 
against discrimination must have some meaning. In drafting the 
provision, the founding fathers evidently did not confine it merely 
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to a norm providing a parity of taxes between imported goods 
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and similar goods produced or
manufactured within. While 
stipulating that "any tax" to which similar goods produced or 
manufactured in the state are subject can be imposed on goods 
imported into the state from other states, clause (a) contains the 
mandate that there should be no discrimination between goods, 
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I hat ar·c imported and goods that are manufactured within. The 
.iudgmcnt in Video Electronics construed Article 304(a) as not 
precluding a state from taking steps to promote the growth of its 
own nascent industry. Jn the case of the State of Punjab, the 
defence of the State was that a reduced rate of sales tax was 
imposed to boost the electronics manufacturing industry and to 
stop existing industrial units shifting to neighbouring states, 
particularly having regard to "the prevailing peculiar 
circumstances of PunJab". Moreover, while states, such as 
GuJarat and Maharashtra were fully developed industrial states, 
Pun.iah at that stage was backward in terms of industrial growth. 
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These factors undoubtedly weighed wilh this Court in sustaining 
the notification. !Para 207] f636-E-H; 637-A-D] 
17.2 A state docs have a legitimate concern and interest in 
ensuring the growth and development of its own industry. Levels 
of indnstrial growth and economic development arc not uniform 
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across the countr~'· A state legislature can have a legitimate 
interest, in the exercise of its law making power, to ensure 
balanced development and growth of its industry, particularly, in 
the nascent stage of industrial development. Yet, while doing so 
and granting incentives the legislature or as its delegate, the 
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state government must ensure that the grant of incentives is 
carefully structured so as not to defeat the underlying spirit and 
object of Article 304(a). Moreover, when the grant of such an 
incentive is challenged, it is for the state to justify it with reference 
to circumstances which have a bearing on legitimate state 
interest. [Para 208][637-D-Ff 
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Formal and substantive equality 
18.J Equality and non-discrimination are elements of the 
same universe. Equality has both a formal and substantive 
content. In a formal sense, equality perceives of governance under 
the same legal regime and the application of the same legal 
principles. Uniform application of law fulfills the norm of formal 
equality. Substantive equality looks beyond formal equality. That 
which may satisfy the requirements
of formal equality may be 
inadequate and insufficient to meet the vision of substantive 
equality. S11bsta1ifive equality recognises that there are histories 
of discrimination based on social background, gender and access 
to resources. They determine the pursuit of opportunity. Hence, 
formal equality may not necessarily result in just outcomes. 
Treating all individuals alike may perpetuate deprivation and 
denial of economic opportunity to those for whom the social order· 
has not provided equal access to education or to the resources 
necessary for economic advancement. Hence, substantive 
equalit~' is premised on the foundation that in order to produce 
just outcomes and a real equality between individuals who are 
unequally situated, the legal regime must comprehend an 
understanding of their past histories of discrimination, disability
JINDAL STAINLESS J;l'D. v. STATE OF HARYANA 
99 
and injustice. !Para 209]!637-G-ll; 638-A-C] 
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18.2 Regions within a nation arc not equal in a real sense 
in terms of economic advancement and social development. 
Typically, economic development has spread along areas which 
dcvclo1>cd around the availability of infrastructure and resources. 
As ports and rnilways developed over the last century and a half, 
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the benefits of development permeated to regions where 
economic opportunity was available. Yet, other areas of the country 
have remained in a state of comparative under-development as a 
result of circumstances such as geographical isolation and the 
absence of developed means of communication. Many regions 
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have suffered from the absence of education and unavailability of 
access to health and sanitation. Social deprivation and 
discrimination have been the defining characteristic of large 
swathe8 of the nation. In this background, substantive equality 
like its mirror image-non-discrimination-construes the need for 
development in terms of mitigating regional histories of suffering 
and strife, and of denial, deprivation and discrimination. !Para 
210)1638-D-F] 
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18.3 Article 304(a) is an amalgam of formal as well as 
substantive norms of equality. At a formal level, the provision 
requires that when a state imposes a tax on imported goods, the 
tax must likewise be imposed on similar goods which are 
manufactured or produced in the state. Parity of tax
between 
domestic goods produced and manufactured in a state with those 
which are imported from other states is the first and formal 
requirement. But beyond this, Article 304(a) brings into focus 
substantive principles by embodying a norm of non-discrimination 
in its latter stipulation. Non-discrimination in a substantive sense 
requires a level playing-field. Two states in the nation may not be 
comparable in terms of social development and economic 
advancement. One state may be industrialised with a growth of 
capital investment in urban infrastructure while another state may 
be predominantly agricultural. Article 304(a) does not prohibit a 
state from taking steps that are necessary for development and 
growth within its territories. [Pua 211]1638-G-ll; 639-A-BJ 
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Produclion and manufacture within the home state 
19. Another aspect which needs close analysis is whether 
under Article 304(a), it is necessary that a state must actually 
produce or manufacture goods similar to goods imported from 
other states which arc sought to he taxed. The crucial words are 
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"any tax to which similar goods manufactured or produced in that 
state arc subject". Art.icle 304(a) is not in the nature of a 
countervailing duty. The words "similar goods manufactured or 
llroduced" arc common to both Article 304(a) and Entry 51. 
llowever, the notion of a countervailing duty under Entry 51 (as 
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the judgment in Kalyani Stores explains) is intended to 
counterbalance the duty of excise levied on articles which arc 
produced or manufactured in the state. The countervailing duty 
is imposed on articles which arc produced or manufactured 
elsewhere in India. Jn the context of a countervailing duty, this 
Court in Kalyani Stores held that it postulates the actual production 
or manufacture of goods. This principle cannot be extrapolated 
to Article 31l4(a) where the tax which is imposed is not in the 
nature of a countervailing duty. Article 304(a), when it refers to 
a tax on goods, covers taxes on any aspect of goods which fall 
within the legislative competence of the state legislature. The 
latter part of Article 304(a) which contains the words "so however 
as not to discriminate between
goods so imported and goods so 
manufactured and produced" is not a surplusage. The object of 
the latter part is to ensure that there is no discrimination between 
goods which are produced or manufactured in the state and goods 
which are imported from other states. If a particular rate of duty 
is levied on goods which arc produced or manufactured in a state, 
a higher rate of duty cannot be levied on goods imported from 
othe1· states. This, however, does not preclude a state from 
imposing a duty on imported goods where it does not actually 
produce or manufacture goods of that description. The 
ohservations of this Court in Kalyani Stores were made in the 
context of a countervailing duty under Entry 51 of List IJ which 
is distinguishable. H a state does not manufacture or produce 
goods similar to the imported goods on which a tax is imposed, 
no question of disuimination will arise. The object of Article 
J04(a) is to prevent disparity of freatment between goods that
JINDAL STAINLESS LTD. v. STATE Of HARYANA 
101 
are produced or manufactured in a state and goods which a state ·A 
imports from other states. \Vhere a state docs not actually 
prnduce or manufacture goods of that description, no issue of 
discdmination qua Article 304(a) would arise. !Paras 212, 213] [639-
G; 640-D-ll; 641-A-DI 
Entry Tax/Octrois and Terminal taxes 
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20. Entry 52 of List II to the Seventh Schedule of the 
Constitution provides for " Taxes on the entry of goods into a 
local area for consumption, use or sale therein." The legislative 
history surrounding the incorporation of Entry 52 is a significant 
guide to interpreting its provisions. Section SOA of the 
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Government of India Act, 1915 defined the powers of the 
provincial legislatures. In the Government of India Act, 1935, 
Entry 49 of the legislative lists (list 11) provided as follows: 
" Ccsses on entry of goods into a local area for consumption, use 
Ill" sale therein. Terminal taxes were placed in List I." In the 
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Government of India Act, 1935, Entry 49 used the expression 
"entry of goods into a local area for consumption, use or sale 
therein", instead and in place of "octroi'' (as contained in the 
Devolution Rules under the Act of 1915). The Constitution 
incorporated Entry 52 in List ll in language which corresponds 
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to Entry 49 of List II under the Government of India Act, 1935 
but with the difference that the expression 'taxes' is used instead 
of 'cesses'. 
Octroi was a tax levied
on the entry of goods into 
areas which were administered by local bodies. When the 
draftsmen of the Constitution incorporated Entry 52 in List II, it 
was with the knowledge that the expression 'local area' had been 
used in the Government of India Act, 1935. Moreover, it could 
not but have been present to the minds of the framers that the 
expression ·octroi' which was used in the Devolution Rules had 
heen replaced subsequently in Entry 49 of List II in the 
Government of India Act of 1935 with a description rather than 
label : the label being descriptive of the entry of goods into a 
local area; the purpose being consumption, use or sale therein. 
The exp1·ession 'therein' also indicates that the goods enter for 
the purpose of being used, consumed or sold within the local 
area. Entry 52 having used the expression "local area" rather 
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than "area", the Constitution did not intend that the entry of 
goods into just any area in the state would attract the entry. The 
entry had to be into a local area. A local area is an area 
administered by a local authority such as a municipality, a district 
or a local board or a panchayat or some other body constituted by 
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law for administering the governance of local affairs in any part of 
the s1atc.f Paras 214, 215, 216, 218, 2201[641-E-F, G-11; 642-C-
E; 643-B-C; 645-A-BJ 
Ranga1ore Woo/1e11 Cotton and Silk Mills Co. Ltd. v. 
Corporation of the City ol Bangalore (1961) 3 SCR 
707; Burnwh She1! Oil Storage and Distrilmtion Co. 
India /Jd. v. 771e !Jelgium Borough Municipality (1963) 
Supp. 2 SCR 216 - referred to. 
Enti-y taxes and Article 304(a) 
21. The first significant as1>ect of the matter is the inter-
play between entr-y tax legislation and Article 304 (a). The 
interface between the two arises hccause entry tax is levied on 
the entry of goods into a local area for consumption, use or sale 
therein. If the goods odginate in any other. state, the imported 
goods would upon entry into a local area he liable to entry tax 
since the charging event is the entry of the goods into the local 
area for consumption, use or sale. Issues of discrimination arise 
on whether similar goods produced or manufactured within the 
state arc sub_jcct to entry tax. Article 304 permits the state 
legislature to impose on
goods importe~ from another state any 
tax to which similar goods produced or manufactured in the state 
arc sub.icct. The object is to ensure that there is no discrimination 
between the goods "so imported" and the goods "so produced 
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or manufactured". The critical requirement of Article 304 (a) is 
that the tax must be origin neutral. Hence, where the state 
legislature levies an entry tax on goods entering a local area 
(without making any discrimination based on whether or not the 
goods originate in the state or are imported from outside) the 
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mandate of Article 304(a) would be met. The issue is whether
JINDAL STAINLESS Ll'D. v. STA.TE Of HARYANA 
103 
Article 304 (a) would be breached by imposing an entry tax only 
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upon goods that are imported from other states. Plainly, if a tax is 
imposed on goods which are imported from other states without 
subjecting similar goods produced or manufactured within the 
state to the tax, there would be a violation of Article 304(a). This 
would constitute an unconstitutional discrimination between 
goods imported from other states which are subject to I.ax and 
goods produced or manufactured within the state which are not 
subject to the levy. Such an act of discrimination may take place, 
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for instance, in a situation where state law defines the entire area 
of the state as a local area or by incorporating a specific definition 
of the expression dealer or importer lo mean an importer of goods 
from outside the state. For instance, goods may be subject to 
entry tax only when they cross the state boundary. Movement of 
goods exclusively within the state, is not sub.ject to entry tax. 
Alternative!~', the expression local area may be defined with 
reference to the entire state. If the legislation imposes a tax only 
upon the entry of goods originating outside the state into the 
state, while goods produced and manufactured within the state 
are not sub.iect to the levy, this would constitute a hostile 
discrimination prohibited by Article 304 (a). [Paras 227, 228, 
22911648-A-HJ 
Meaning of 'Local area' 
22. The Seventy-third
amendment to the Constitution has 
incorporated Part IX which deals with Panchayats while the 
Seventy fourth amendment has incorporated Part IXA which deals 
with Municipalities. Article 243(d) defines Panchayats as 
institutions of self-government constituted under Article 243(b) 
for the rural areas. Article 243(b} requires the constitution in 
eve1·y state of Panchayats at the village, intermediate and district 
levels. Article 24311 (a) empowers the legislature of a state by 
law lo authorize a Panchayat to levy, collect and appropriate such 
taxes, duties, tolls and fees in accordance with such procedure 
and subject lo such limits. Article 243Q provides for the 
constitution of a Nagar Panchayat, a Municipal Council and a 
Municipal Corporation. Article 243X empowers the legislature 
of a state by law to authorize a Municipality to levy, collect and 
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appropriate such taxes duties, tolls and fees in accordance with 
such procedure and subject to such limits. With these 
amendments, local areas now have assumed a constitutional 
context and significance. In the judgment in Diamond Sugar Mills, 
the Constitution Bench emphasized that in i1sing the expression 
local area, the framers of the Constitution were aware of the 
previous legislative history and meant an area administered by a 
body (such as !Vlunicipalities, Panchayats or local board) 
constituted under the law for the governance of local affairs in 
any part of the stale. This statement of principle in the decision 
in Diamond S11Kar Mills now stands fortified in view of the 
constitutional amendments brought by the insertion of Parts IX 
and IXA into the Constitution. A local area cannot be defined 
with reference to the entire state but will comprehend within the 
state, an area that is administered by a local body constituted 
under the law. [Paras 231, 232][650-B-G] 
Diamond Sugar Mills /Jd v. 7/1c Stale al Uttar Pradesh 
(1961) 3 SCR 242; Shaktik11mar M. Sancheti v. State 
of Maharashtra 1994 (6) Suppl. SCR 98 : 1995 (1) 
sec 351 -- relied on. 
Sevcrability 
23. A discrimination between goods imported from outside 
the slate and goods produced or manufactured within the state 
for the levy of a tax would be violative of Article 304(a). Where 
the state legislature has committed an act of hostile
discrimination 
hy imposing a tax only upon goods originating outside the state 
upon their entry within it, the court must strike down such a 
provision which violates Article 304(a). The provision cannot be 
re-written by judicial interpretation to mean that the tax will be 
levied both on goods originating outside the state and goods 
originating within the state and entering a local area. Re-writing 
a legislative provision is impermissible in the exercise of judicial 
review. [Para 233][650-11; 651-C-E] 
Equality of lax burdens 
H 
24.1 Article 304(a) refers to the imposition of any tax on
JINDAL STAINLhSS LTD. v. STATE Of HARYANA 
105 
goods. The provision is not either a source of legislative power 
A 
nor docs it prescribe fields of legislation. The expression "any 
tax on goods" is of a generic nature and covers. all taxes which a 
state is competent to impose on any aspect of goods under Articles 
245 and 246 read with List JI of the Seventh Schedule. The 
expression 'any tax' would mean any exaction in the nature of an 
impost or levy which the state legislature is competent to enact 
by virtue of its legislative powers. The expression 'any tax' must 
mean what it says: it means an~· levy which the state is 
constitutionally competent to legislate. The second aspect of 
Article 304(a) is the latter 1rnrt which provides that the state shall 
B 
c 
ad : "so, however, as not to discriminate between goods so 
imported or goods so manufactured or produced." 
The 
fundamental reason fo1· the incorporation of this provision is to 
prohibit discrimination being practiced by the state against 
imported goods by embarking upon protectionist policies. A state 
cannot impose taxes in a manner that would make the goods of D 
another state non-competitive so as to effectively bar the inflow 
of trade by utilizing fiscal exactions. Thirdly, the latter part of 
Article 304(a) is prefaced by the expression "so however". In 
\:Vords and Phrases, the expression however has been explained 
as indicating "an alternative intention, a contrast with a previous 
clause and a
modification or it under circumstances". The latter 
part or Article 304(a) follows upon the first which enables the 
state to impose on goods which are imported from other states 
any tax to which the goods produced or manufactured within the 
stale arc subject. The latter part constitutes a positive re-
aflirmation that in any case, at all events and at any rate there 
shall be no discrimination between goods manufactured or 
prnduced within the taxing state and goods imported from other 
states. This narrative is the dominant theme of Article 304 (a). 
Fourthly, an expression of some significance that is used in the 
latter part or Article 304(a) is "between". That expression has 
been employed so as to mandate that there shall be no 
discrimination between goods imported into the taxing state from 
other states and goods that are manufactured and produced 
within. The use of the expression "so" in the latter part is an 
obvious reference to the imported goods and the goods 
E 
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SUPREME COURT RFl'OJUS 
r2016J IO S.C.R. 
A 
manufactured or produced within, referred to in the first part. 
H 
c 
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H 
The expression 'between' postulates that imported goods and 
local goods must be allowed a level playing field in the taxing 
slate. Imported goods from another state cannot be placed at a 
comparative disadvantage. The expression 'between' also 
signifies that goods produced or manufactured within the taxing 
stale should also not be discriminated against. In seeking parity 
of treatment, it is as much the obligation of the taxing state to 
ensure that there is no discrimination against goods originating 
in other states, as much as it is its concern to ensure that domestic 
goods ;ire not discrirninalcd against. The former is a matter of 
constitutional obligation. However, il does not exclude a similar 
obligation and concern of the taxing state in respect of goods 
produced and manufactured within its territorial limits. Both must 
go hand in hand. Discrimination both in a positive manner against 
imported goods and a reverse discrimination against domestic 
goods arc within the ambit of Article 304(a). The fifth important 
principle which requires emphasis is that our Constitution does 
not embody a requirement that the state legislature while enacting 
a legislation must legislate separately in respect of each subject 
of legislation contained in List JL A law enacted by the state 
legislature imposing a fiscal levy may cover more than one
subject 
of legislation falling within its legislative competence in List II. 
In contrast, Section 55 of the Australian Constitution mandates 
that there shall be one tax law on one subJect. The Indian 
Constitution does not. impose such a restriction on the states. 
Considered from a different perspective, "rag-bag" legislation 
is constitutionally permissible under the Indian Constitution and 
it is open to a single enactment to draw sustenance from more 
than one entry which falls within the legislative competence of 
the enacting legislature. !Paras 240, 241, 242)[653-E-H; 654-A-
G; 655-A-II; 656-A) 
Ujagar Prints (ll) v. Union of India 1988 (3) Suppl. 
SCR 770 : 1989 (3) SCC 488 - relied on. 
Wordl" and Phrases Permanrnl Eel. Vol. 19A , Oxford 
dictionary; P Ramanatha Aiyar's Lcrw Lexicon 4th Ed. 
Vol. III, Id. at p. 3134 -- referred to
JINDAL STAINLESS LID. v. STAl'E OF HARYANA 
24.2 As a matter of constitutional doctrine, there is no 
restraint on the plenary powers of Parliament as well as the state 
legislatures which requires the legislative body enacting a statute 
to legislate only upon one head of legislation falling within its 
competence. The legislature can distribute or allocate its 
regulatory or law making requirements (both fiscal and non-fiscal) 
in a manner which best sub-serves its needs and concerns. Once 
this be the position, its impact upon the interpretation of Article 
304(a) is that it is open to the state legislature to have due regard 
to the equality of tax burdens, when it legislates to impose "any 
tax" so long as it does not breach the notion of non-discrimination 
as between goods that arc imported from other states and goods 
which are produced or manufactured within. It is legitimately 
entitled to ensure that the tax burden should not discriminate 
between locally produced or manufactured· goods of that state 
107 
A 
B 
c 
and goods originating in other states. The substance must prevail 
over form. Once there is no constitutional necessity that the form 
D 
in which legislation is enacted in India must cover only one 
legislative entry, the legislature is entitled to devise a law in a 
suitable manner which while being consistent with the norm of 
non-discrimination also preserves a parity of tax burden between 
goods imported and domestic goods. This is t.he foundation
of E 
the theory of equivalence. (Para 24311656-B-EJ 
24.3 The burden of establishing that there is a 
discrimination against goods which are imported from other states 
lies on the person who sets up such a plea. In answering a plea of 
discrimination, it would be open to the state to establish that the 
legislative provision which it has enacted maintains the principle 
of non-discrimination between goods produced and manufactured 
within the state and goods imported from other states while at 
the same time bringing about parity in terms of tax burden between 
domestic and imported goods. Sales tax is referable to Entry 54 
of List II ("taxes on the sale or purchase of goods other than 
newspapers, subject to the provisions of Entry 92A of List I"). 
Enlry tax is referable to Entry 52 of List II ("taxes on the entry 
F 
G 
of goods into a local a1·ea for consumption, use or sale therein"). 
Both sets of taxes fall within the competence of the state 
legislature. Tax11ble events under entries both entries are distinct H
108 
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SUPREME COURT REPORTS 
[2016] 10 S.C.R. 
: in the case of one the sale of goods and in the case of the other, 
entry of goods into a local area for consumption, use or sale 
therein. Both deal with separate aspects of the taxation of goods; 
the taxable events being proximate though distinct. The 
expression "any tax" recognises the full panoply of taxes on goods 
falling within List II. If a law can cover Entry 52 and Entry 54 of 
List II, there is no reason to prohibit the state Jaw making 
authority from having due regard to the tax burdens imposed on 
domestic goods and goods imported from other states under entry 
tax and sales tax legislation, taken as a composite whole. "Any 
tax" docs not mean a tax under one ent.ry of List II as a discrete 
and isolated legislation independent of any another entry. Any 
adjustment, exemption or set off based on the payment of sales 
tax may be intended to avoid double taxation and discrimination. 
Whether this objt1ct has been legitimately achieved by the 
enacting law is a matter to be determined on its interpretation 
and application. !Para 244]1656-F-G; 657-A-DJ 
24.4 It is trite Jaw that every discrimination involves a 
differentiation hut every differentiation docs not implicate 
discrimination. The enquiry into whether a state has practiced 
discrimination against goods imported from other states will 
r: 
commence with an investigation into whether the state legislation 
has made any differentiation between
the two sets of goods. This 
is not merely in terms of the rate of tax but there arc other 
important aspects including: proccdui-cs and machinery including 
aspects such as licencing, recognition and compliance: J\ieasure 
F 
G 
II 
of the tax; and Exemptions or set offs; Beyond this enquiry, the 
court would need to analyse the reasons for the differentiation 
and then to determine a~ to whether there has been a 
discrimination violative of Article 304(a). fP.ara 245)[657-D-GI 
Entry tax and imported goods 
25.1 Entry 83 of List I provides for "duties of customs 
including export duties". The taxable event referable to a Jaw 
enacted under Entry 83 of List l (in relation to an import customs 
duty) is the act of import by which goods originating in a foreign 
country ai·e hrought into India. Section 2(23) of the Customs Act, 
1962 defines the expression import to mean "bringing into India
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
109 
from a place outside India". The ex1Jression imported goods is 
A 
defined to mean "any goods brought into India from a place 
outside India" but so as not to include goods which have been 
cleared for home consumption. Section 2(26) defines the 
expression importer in relation to any goods at any time between 
their importation and the time when they arc cleared for home 
consumption, to include any owner or any person holding himself B 
out to be an importer. !Paras 246, 24711658-B, D-E] 
25.2. The Constitution distributes subjects of legislation 
including, amongst them, those covering fiscal matters between 
the Union and the States. The fields or subjects of legislation are 
C 
elaborately defined so as to exclude the possibility of overlapping 
bet ween entries in List I and those in List IL Even where the 
fields may appear to overlap, they must be construed to be 
mutually exclusive. Entry 83 of List I and Entry 52 of List II have 
separate and distinct fields of operation. Entry 41 of List I deals 
with trade and commerce with foreign countries; import and export D 
across customs frontiers; and definition of customs frontiers. The 
distribution of powers with reference to the taxing entries in List 
I and ll is mutually exclusive. The principle of law is hence well-
settled : the taxing powers of the Union and the states are mutually 
exclusive. [Paras 249, 250 and 2561[659-D-E, F-G; 663-G-H] 
E 
Province of' Madras
l'. Messrs. Boddu Paidanna & Sons 
1942 F.C.R.90; Governor General i11 Council v. 
Province ol Madras AIR (1945) PC 98; Kamptee, Union 
ol 111dia 1950 SCR 15 : AIR 1950 SC 11; The 
Jiyajeerao Collon Mills Ltd v. State ol Madhya Pradesh 
(1962) Supp. 1 SCR 282; D G Gose & Co. (Agents) (P) 
J,td. v. State ol Kera/a and am'. 
1980 (l)· SCR 804 : 
(1980) 2 SCC 410; Union of India v. HS Dhillon 1972 
(2) SCR 33 : 1971 (2) SCC 779; Lt. Col. Sawai 
Bhawani Singh v. Stale of Rajasthan 1996 (2) SCR 145 
: 1996 (3) SCC 105; Mh RR Engineering Co. v. Zila 
Parishad Bareillv 1980 (3) SCR 1 : 1980 (3) SCC 330; 
Hoechst Pharmaceuticals v. State of Bihar (2004) 10 
SCC 2011; Stare of Wesr Bengal" Kesoram Industries 
(1963) 3 SCR 787 - referred to. 
G 
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SUPREME COURT REPORTS 
r10l6l IO S.C.R. 
;\ 
25.3 Entry of goods into a local area for consumption, use 
I\ 
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11 
or sale therein attracts the charging provision of entry tax 
legislation. The levy which is referable to Entry 52 of List II is 
attracted the moment the goods enter a local area for consumption, 
use or sail'. The Customs Act, 1962 has made a beneficial 
provision for allowing goods to be deposited in public or private 
warehouses and for the clearance of goods for home consumption. 
These provisions cannot and do not dclract from the power of 
the state legislatures under Entry 52 nor do they denude the 
states from levying an entry tax once the taxable event under 
state law has occurred. The taxable event for the imposition of 
a duty of customs is distinct from the taxable event in respect of 
an cnt1·y tax, which is the entry of goods into a local area for 
consumption, use and sale therein. !Paras 257, 259]1664-E-G; 
665-C-D I 
Direct and inevitable effect test 
26.l \Vhether taxes per .~e constitute an impediment upon 
the freedom of trade, comme1·cc and intercourse is an issue which 
has resu!lcd in two contrary positions, neither of which has been 
subscribed to in this judgment. At one end of the spectrum is the 
theory that all taxes impede the freedom of trade, commerce and 
intercourse. If this theory were to he accepted, the entire tax 
regime and the state taxing power would he controlled by Part 
XIII of the Constitution. The stales
which arc sovereign within 
their own sphere would in the exercise of their constitutional 
powc1· to raise revenues by way of taxation be subject to the dgours 
of Part XII I. Such an extreme view is not acceptable either from 
the stand point of textual construction or from its consequence 
for the federal structure of the Constitution. All taxes do not 
impede the freedom of trade, commerce and intercourse. In fact, 
taxes provide the means by which revenues can be raised under 
a regime of law made by law making bodies at the federal and 
state level. Absent a taxing power, the states would be bereft of 
revenues needed for maintaining order and governance. Trade, 
commerce and intercourse cannot survive in the abstract and 
without conditions of stability and order created by the state. 
Moreover. the revenues which arc made available to the state
JINDAL STAINLESS lTD. v. STATE OF HARYANA 
111 
provide the basis for creating infrastructure and amenities, both 
A 
direct and incidental, through which trade and commerce can 
effectively be transacted and can flourish. Hence, the extreme 
proposition that all taxes constitute a restriction or impediment 
upon trade has been eschewed. !Para 260]1665-E-H; 666-A-B) 
26.2 At the other end of the spectrum lies the view that 
taxes do not constitute a restriction upon the freedom of trade, 
commerce and intercourse. If this view were to be accepted, Part 
XUI would have no role as a constit.utional limitation on taxing 
legislation save and exce1>t for discriminatory taxes of the kind 
that arc prohibited by Article 304(a). The position that Article 
304(a) constitutes the entire universe of taxation for the purpose 
of Part XIII has been rejected by this judgment on the ground 
that it suffers from fundamental fallacies and is contrary to the 
text of Part XIII. The grounds for so holding arc : Laws for the 
purposes of Part XIII must mean all laws and not to the exclusion 
of taxing legislation; The constitutional validity of Parliamentary 
legislation imposing sales tax has been upheld on the basis of 
B 
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D 
the provisions of Article 302 which enables Parliament to impose 
restrictions on the freedom of trade and commerce in the public 
interest. If taxing legislation is regarded as a restriction for the 
purposes of Article 302, there is no reason to exclude the same 
E
interpretation for the purposes of Article 304; Article 304(a) deals 
with a specific area of taxation - taxation of goods. The legislative 
powers of the state legislatures in List 11 of the Seventh Schedule 
enables them to tax persons, activities or things. Article 304(a) 
covers only the last category namely a tax on goods. It does not 
cover taxes 011 persons (profession taxes or luxury tax) or taxes 
F 
on activities (betting and gambling); Article 301 guarantees free 
trade, commerce and intercourse throughout the territory of 
India. Inter-state trade as well as trade and commerce within a 
state is guaranteed. Article 304(a) covers only taxes imposed on 
goods imported from other states. Article 304(a) in other words 
G 
docs not cover imposts on goods traversing within a state; Article 
306 of the Constitution, as it stood 1>rior to its repeal contemplated 
that restrictions could take the form of duties and imposts; and 
The expression '1·cstrictions' has been utilized in Part XIII of 
the Constitution, as the provisions of Articles 302, 303, 304 and 
H
112 
SUPREME COURT RFPORTS 
[2016] 10 S.C.R. 
A 
306 would indicate in a manner that would not exclude taxing 
legislation. jI'ara 261 j j666-C-II; 667-A-C] 
c 
26.3 
Near!~', five decades of jurisprudence lrnving 
developed in support of the above principle, there is neither any 
rationale of constitutional principle or law that should leave this 
Court to make a departure from the position and to hold that 
taxes can in no circumstances constitute a restriction on the 
freedom of trade and commerce. Moreover, it has been accepted 
even as a matter of judicial precedent that taxation serves not 
only the purpose of raising revenues but is also a powerful 
instrument of social control. The states and the Union in the 
exercise of their lcgislatin powers, utilise taxation not only as a 
means of raising revenues to support their developmental 
activities but also as a measure of achieving social objects. 
Whether the pursuit of those social objects or the pursuit of social 
regulation infringes upon the area of free trade and commerce 
cannot he decided a priori. The power of taxation is capable of 
being used in a manner which can constitute, in a given case, a 
restraint or impcdirncnt on the freedom of trade and commerce. 
In determining as to when taxes can constitute a restriction on 
the freedom of trade and commerce, the direct and immediate 
J'. 
effect test (as refined subsequently) provides a judicially 
manav;eable framework. The test of direct and immediate effect
was enunciated in the judgments in Atiabari and Automobile 
Transport. The test is firmly entrenched as a part of our 
jurisprudence. jParas 262, 26311667-G; 668-A-DI 
F 
A liahari Tea Compa11v Ltd. v. The Stale of Assam 
(1961) I SCR 809; A11to111ohile 71-ansport (Rajasthan) 
Ud. 1·. The State of Rajasthan (1963) I SCR 491 -
partly affirmed. 
H 
Godfi·ey Philips India Ltd v. State ol U.P 2005 (1) 
SCR 732 : (2005) 2 SCC 515; R C Cooper v. Union o{ 
lndia (1970) l SCC 248; il K Gopalan v. The State of 
Madras (I 950) 1 SCR 88; Bennett Coleman & Co. v. 
Union oflndia 1973 (2) SCR 757 : 1972 (2) SCC 788; 
Maneka Gandhi i·. Union of India 1978 (2) SCR 621 
J 978 (1) sec 248 - referred to.
JINDAL STAINLESS ITD. v. STATE OF HARYANA 
113 
26.4 In order to determine whether a law providing for the 
A 
imposition of a tax constitutes a restriction on the freedom of 
trade, commerce and intercourse, the principle that must be 
applied is whether the direct and inevitable effect or consequence 
of the law is to impede trade and commerce. The burden must lie 
on the person who alleges that such is the effect of the tax to 
B 
plead and establish to the satisfaction of the court that the 
consequence which is alleged docs in fact exist. The direct and 
inevitable consequence for the purposes of Part Xlll of the 
Constitution is not the same as an infringement of the fundamental 
right to carry on an occupation trade or business under Article 
19(l)(g). Under Article 19 (l)(g), it is the individual's right to 
carry on trade or business which is guaranteed as a fundamental 
freedom. When a legislative measure seeks to curtail that 
freedom, the test is whether the right of the individual has been 
infringed or cviscernted. In the context of Part Xlll, the matter 
c 
is looked at. from the perspective of trade and commerce as a 
whole. Hence, in a case which falls under Part XIII of the 
Constitution it is for the petitioner to demonstrate and establish 
that the direct and inevitable effect of the law imposing a tax is to 
impede or restrict the flow of trade and commerce. The mere 
fact lhat the activity which is taxed is related to the flow or 
movement of trade and
commerce is not sufficient in itself to 
lead to the inference that a tax on that activity impedes or restricts 
il. Businessmen and traders must and do necessarily factor in 
lhc requirement of tax compliance as a part of an overall business 
plan. Hence, the mere fact lhat the lax is imposed with reference 
to an activity or thing which constitutes an aspect of trade or 
comme1·cc is not sufficient in itself lead to the consequence that 
D 
E 
F 
it is a restriction or impediment of trade and commerce. The 
petitioner with such a gi-ievance must cross the threshold of 
establishing in cogent terms before the Court that the direct and 
inevitable effect of the tax law is to constitute an impediment of G 
lrade and commerce. [Paras 265, 2661[670-C-H; 671-A] 
26.5 In the context of entry tax, it is said on behalf of the 
petitioners that, there cannot be an entry into a local area of goods 
for consumption, use or sale unless the tax is paid. If the tax is 
not paid there can be no entry of goods. This is the basis for 
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114 
SUPREME C'. >URI REPOIUS 
[2016] 10 S.C.R. 
A 
urging that entry tax constitutes a direct impediment or restriction 
on the freedom of trade and commerce. This approach to the 
issue cannot be accepted. In the regulatory sphere, adherence 
to a regulatory statute may be made a condition precedent to 
engaging in a particular line of activity involving business, trade 
B 
(' 
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E 
F 
or commerce. However, the requirement of compliance docs not 
by itself render the statute an impediment of trade and commerce. 
Similarly, in the fiscal arena, the fact that a tax liability has to be 
discharged as an incident of or a pre-condition for engaging in a 
line of activity does not by itself - and without actual proof of 
impediment or restraint - constitute a restriction. A conclusion 
that the inevitable consequence and effect of the legislation is to 
impede or restrict trade and commerce can be drawn only on the 
basis of demonstrable material that establishes that the impact 
of the tax is to result in that consequence. The burden to establish 
this is on the person who seeks to do so as a ground for relief. 
In a regulatory area as well as in a fiscal context, the legislature 
may prescribe the fulfilment of certain requirements subject to 
which a line of business, trade or commerce may be pursued. 
The fulfilment of those requirements may be set down as a 
condition precedent. A statutory regulator may for instance 
stipulate requirements of liccncing or registration
before a 
commercial activity which it regulates can be undertaken. 
Licencing or registration norms may stipulate financial and other 
requirements which-need to be fulfilled as a pre-condition for 
carrying on an activity or business. The fact that a statute allows 
for or prescribes such norms which constitute a condition 
precedent is not reason enough to hold that they constitute 
restrictions in themselves or an impediment of trade and 
commCl"ce. The right to carry on trade and commerce is not a 
right to be free from regulation that ensures orderly conditions 
for the pursuit of the activity. Nor can a right be exercised in 
Ci 
such a manner as would create chaos through unregulated actions 
of numerous participants. In other words, the fact that a 
requirement operates as a pre-condition is not sufficient in itself 
to hold that it impedes or restricts trade. In order to constitute 
an impediment, the condition must be demonstrated to cause, as 
a direct and inevitable consequence of its operation a restriction 
H
.JINDAL STAINLESS r.:rD. v. STATE Of HARYANA 
115 
of trade or commerce. Every regulalo1·y requirement does nol 
A 
restrict or impede trade and commerce even if at the threshold, 
its fulfilment is a condition enabling a person or entity to engage 
111 a regulated activity. [Paras 267, 26811671-B-ll; 672-A-BI 
26.6 Jn a fiscal context, the payment of an impost or levy is 
attracted when lhc taxing event occurs. The lax may be on 
13 
persons, activities or things. It is the taxing event which incurs 
the charge or liability to tax. The charge may be associated with 
an aspect of an activity or thing. The mere fact that this aspect is 
connected with the flow or movement of trade or commerce does 
not in itself lead to the conclusion that the tax constitutes an 
impediment or restriction. The impediment does not lie in the 
aspect of the activity or thing which is the subject of the tax but 
in ils consequence. Every tax or movement on entry does not 
impede trade or commerce. The volume of trade in a commodity 
is determined by numerous variables including the nature of the 
product, availability of raw material, transportation and 
infrastructure, the nature and extent of competition, market cycles 
as well as the elasticity of demand and supply. The tax structure 
is one ingredient which has a bearing on the allocation of 
resources. For a tax to constitute a restriction, there must be 
demonstrable material to indicate that its direct and inevitable 
effect or
consequence is to obstruct or impede trade or 
commerce. Before the tax is held to be a restriction, the threshold 
must be crossed by demonstrating that the immediate and 
necessary consequence is to restrict impede or obstruct trade 
as a whole. t:nless the impact of the financial levy is demonstrated, 
in terms of its direct and inevitable consequence, to restrict trade 
01· commerce the provisions of Article 304 (b) would not be 
attracted. For, there has to a restriction in the first place before 
c 
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the issue of its reasonableness arises. Consequently, it is not 
possible to hold that lhe mere fact that the charge of the tax is 
associated with an aspect of the movement of trade and commerce 
G 
indicates that it is a restriction in every case. The burden lies 
upon the individual or entity asserting the existence of a restriction 
to demonstrate its impact in terms of the direct and inevitable 
effect test as adopted above. Hence, there can be no a priori 
assumption that an entry tax constitutes a restriction or H
A 
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SlJl'RFME CCURT REPORTS 
[2016] JO S.C.R. 
impediment to trade and commerce. While recognising 
sovereignty in the fields assigned to the centre and the states, 
the Constil ution subjects its sovereign arms to constitutional 
limitalions which are designed to preserve the balance which it 
has created. Hence all legislative power, including of a fiscal nature 
has to abide by the norms of the written constitution .. Judicial 
review of fiscal legislation however recognises the wide latitude 
which inheres in the legislatures both at the national and state 
level lo classify persons, objects and things for the purpose of 
raising rcvenues.jPara 269, 276]1672-B-IJ; 674-Cj 
.-1 hmeda!wd St. Xm·ier Co!!age Society v. State of" 
(iujoror 1975 (I) SCR 173 : (1974) 1 SCC 717; !ndirn 
Saw/mer 1·. UOJ 1992 Supp. (3) SCC 215; Supreme 
C ourr AdFocales on Record Association v. UOJ 1993 
D 
(3) SCR 669 : (1993) 4 SCC 441; SR Bommai v. UOJ, 
(1994) 3 SCC 1; Attomev General of" India v. Amritlal 
Prajvandas (1994) 5 SCC 54; Mafatlal Industries v. 
UOJ 1996 (10) Suppl. SCR 585: 1997 (5) sec 536; 
Special Reference No. I of I 998 1998 (2) Suppl. SCR 
I·. 
400: (1998) 7 SCC 739; 1.R.Coe!ho v. State of TN 2007 
(1) SCR 706 : (2007) 2 sec 1 - cited. 
PER ASUOK BIIUSIIAN, .J. (Partly dissenting) 
1. From the legislative hislor:v and the ex lent of freedom of 
F 
trade and commerce as emerged from Constituent Assembly 
Debates, it is abundantly clear that the taxes were treated as
rcstric1ion on freedom of trade and commerce and it was further 
comprehended that restriction on freedom of trade and commerce 
can be put by taxation also. !Para 15511734-B] 
(i 
ll 
Ke.1·a1·,111m1da !?harati v. State of Kera/a 1973 Suppl. 
SCR I : (1973) 4 SCC 225 -- followed. 
State of Rajastlwn and others I". U11io11 of India and 
others 1978 (I) SCR I : (1977) 3 SCC 592; Special
JINDAL STAINLESS LTD. v. STATE Of HARYANA 
117 
Reference No. 1 of' 1964: In the matter of.' Under Article 
A 
143 of' the Constitution of' India, (1965) l SCR 413; 
S.R. Bommai v. Union of'Jndia 1994 (2) SCR 644 : 1994 
(3) SCC 1; Ku/dip Na.var v. Union of' India 2006 (5) 
Suppl. SCR l : (2006) 7 SCC 1 - rererred to. 
A.V. Dicey "The Law of' the Constitution .. - referred to. 
B 
Nature or Federalism in Constitution or India 
2. Federalism in the Constitution is limited and controlled 
hy the Constitution and the exercise of powers of both the States 
C 
and the Centre arc controlled by express provisions of the 
Constitution. IJ>ara 17 3117 46-A] 
Limitation on the legislative power of the State under the 
C 011Stjt11ti0 II 
3.1 It is well settled that legislative power of the State is 
subject to the provisions of the Constitution. The words 'subject 
to the prnvisions of this Constitution' had lo give its full meaning 
and content. Thus, limitation of the legislative powers wherever 
found in the Constitution has to be given effect to. There can be 
no doubt that Part XIJ of the Constitution deals with "Finance, 
Property, Contracts and Suits" and there are various express 
limitations provided in Part XII, namely, Articles 276, 286 and 
certain other Articles but can Part XII be treated as the only 
limitations on the legislative powers of the States, the answer 
has lo be in negative. All legislative powers is subject to 
limitations in the Constitution, be it fiscal
statutes or non-fiscal 
statutes. !Paras 182, 18511750-G-II; 751-A; 752-F] 
Slate ol Kercila and others v. Mar Apprae111 Kuri 
Co111pam· Urnited and another 2012 (4) SCR 448 : 
(2012) 7 SCC 106; K111111athat Tha1lw1111i Moopil Nair 
v. The Srate of' Kera/a and anot/1e1: (1961) 3 SCR 77; 
Hari Krishna Blwrgav v. U11io11 of' India and another 
1966 SCR 22 : 1966 AIR SC 619 - relied on. 
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3.2 Whether Part XIII also contains limitations on the 
legislative power of the State. Part XIII of the Constitution has 
been included in the Constitution after great deliberation and 
debates in the Constituent Assembly. Part XIII contains one of 
the most important right and principle on which country was to 
march to attain economic freedom. [Para 1861(752-G-H) 
3.3 Article 245 which is a source of all legislative power 
puts a general limitation on all legislative power which lrns been 
expressly made 'subject to the provisions of this Constitution'. 
When all legislative powers arc subject to the provision of 
Constitution, Part XIII being also a part of the Constitution, all 
legislative power has also to be subject to Part XIII. [Para 
188][753-F-G] 
3.4 Article 303 is an express provision which provides for 
'restriction on the legislative power of the Union and the States 
with regard to trade and commerce'. Article 304 is another 
provision which although empowers the legislature of the State 
to put restriction on trade, commerce and intercourse among 
the States by law, but law to be made by the State is hedged by 
various restrictions as contained in Article 304(a) and 304(b). 
Thus Article 304 is also a limitation on legislative power of the 
State. Part XIII of the Constitution contains limitation on the 
legislative power of the State and all legislative power of the State 
whether fiscal
or non-fiscal has to conform Part XII of the 
Constitution. [Parns 189, 192][753-H; 754-A-B, G) 
Stale cif Tamil Nadu and Olhers v. Sitolaxmi Adills and 
O!hers 1974 (3) SCR 1 : 1974 (4) SCC 408; G.K. 
Krishnan v. Sla/e <if Tamil Nadu 1975 (2) SCH 715 : 
(1975) 1 sec 375 - referred to. 
Whether Part XIII of the Constitution covers "tax 
legislation" and word "restriction" used therein includes tax 
legislation. 
4.1 Part XIII covers all tax legislations which impede the
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
freedom of trade, commerce and intercourse: (a) The express 
use of word tax in Article 304(a) and 306 (as it existed before its 
repeal by Constitution's 7th Amendment Act, 1956) indicates that 
taxes were expressly included in Part XIII. Had the taxes, apart 
from as mentioned in 304(a) were not to be covered under Part 
XIII, Article 306 ought not to have been engrafted which 
permitted continuance of tax or duty on the import and export of 
the goods, in Part B States for a period not exceeding ten years 
from the commencement of the constitution. The framers of the 
Constitution were conscious that unless an overriding effect is 
given to taxes which are continuing in the State the same shall 
fall foul to Article 301. (b) Article 302 uses the phrase, 
"Parliament may by law". Whereas Article 303 uses the phrase 
"neither Parliament nor the legislature of the State shall have 
power to make any law ..... " Article 304 uses the phrase the 
legislature of a State "may bv law". All laws framed by Parliament 
or State in exercise of legislative entries under VII'" Schedule 
arc law. Article 302 - 304 contain exception according to which, 
freedom of trade, commerce and intercourse as guaranteed under 
Article 301 can be overridden. The word law is wide enough to 
include both fiscal and non-fiscal legislations. (c) Article 303 
imposes restriction on the legislative power of the Union as well 
as of the State with regard to trade
:md commerce. Article 303(1) 
provides that a State shall have no powers to make any law giving 
or authorising the giving of, any preference to one State over 
another, or making or authorising the making of, any 
discrimination between one State or another, by virtue of any 
entry relating to trade and commerce in any Lists of the VTI"' 
Schedule. The legislative power of the State, which is restricted 
under 303(1) cannot be held to be confined only to law as referred 
to in 304(a) rather it can extend to a legislation by virtue of any 
entry relating to the trade and commerce in List II. From this, it 
is clear that tax legislation which arc covered under Part Xlll 
arc not confined to only Article 304(a). (cl) ln the event, the 
submission is accepted that all taxes arc outside Part XIII except 
non-discriminatory taxes as permitted under Article 304(a), the 
same will lead to giving right to the Parliament and State 
Legislature to pass facially non-discriminatory laws but creating 
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restrictions on trade and commerce by other means by providing 
arbitrary procedure and various other kind of restraints. The 
taxation which can impede the trade, commerce and intercourse 
thus cannot he confined only to non-discriminatory taxation. Even, 
non-discriminatory taxes which create restraint on trade have to 
he held to fall foul to Article 301. In the event of accepting the 
ahovc submission, the restraint in trade by other means offa:rntion 
sh:tll be out of reach of Part XIII, which is never the intention of 
the framers of the Constitution. (c) Article 304(a) covers 
imposition of taxes on goods imported from other States. Article 
(' 
304(a) docs not apply to imposition of taxes on intra-State trade. 
Can it be presumed that intra-State taxation, if it contains restraint 
on trade between one local area to another local area or is 
discriminatory, the same is outside the reach of Article 301'? The 
answer is obviously no. Trade and commerce throughout the 
territory of India is to be free. Thus reach of Article 301 is not 
J) 
confined to taxation as contemplated by 304(a) rather Part XIJI 
embraces in itself all kind or tax legislation, which contains 
restraint on trade, commerce and intercourse. (f) Article 304(a) 
only covers taxes on goods imported from other Stale and Union 
Territories. List II of VII 11' Schedule contains various other entries 
which cm1rnwer the State to levy taxes. Entry 49 to Entry
<>2 
enumerate various fields of taxing legislation. In the event, the 
submission is accepted that it is only taxes referred to under 
Article 304(a), arc covered hy Part XIII, all taxing legislations 
as enumerated in List II shall go out of reach of Part XIII. Whether 
Constitution framers contemplated that restriction in freedom of 
F 
trade, commerce and intercourse can be imposed by the State by 
taxing legislation other than those referred to in 304(a), answer 
has to he negative. Other taxing legislation apart from those, 
mentioned in Article 304(a) are not immuned from restriction 
contained in l'a1·t X IJJ. For example, Entry 49 provides 'taxes on 
(i 
lands and buildings'. A State Legislation is passed imposing taxes 
on buildings where I rade and commerce is carried, the effect of 
which is to impede the trade and commerce, can it be said that 
such tax legislation cannot be questioned as violating Article 301. 
The answer is that such legislation has also to comply with Article 
301. Thus, Article 304(a) is not the only taxation which is covered 
11
JINDAL STAINLESS r:rD. v. STArE OF HARYANA 
121 
by Part Xlll. But it is only species of taxation which has been 
A 
expressly indicated for carving out gateway for the State 
Legislature to impose tax which may not impede Article 301. 
(g) Lastly, there arc no provision in Part XIII which negate the 
applicability of Part XIII on taxes which operates as restriction 
to trade, commerce and intercourse. Something which is not 
expressly excluded in Part Xlll cannot be excluded by way of 
intcrprclal ion. !Para 19911756-F-ll; 757-A-ll; 758-A-G] 
4.2 While discussing the subject 'Legislative History and 
Debates in Constituent Assembly' on freedom of trade, commerce 
and intercourse, it was found that taxes were treated as restrictions 
on freedom of trade and commerce and it was further 
comprehended that 1·cstrictions on freedom of trade and 
commerce can he put by taxation also. Apart from above, there 
arc following reasons which support conclusion that word 
'restriction' used in Part XIII includes tax legislation: (i) The 
textual interpretation of Part XIII itself indicates that taxes were 
contemplated to be included in word ·restriction'. The heading 
of Article 304 reads 'restrictions on trade, commerce and 
intercourse among States'. Although the heading refers to 
"restrictions' but Article 304(a) uses the word 'any tax'. (ii) The 
same conclusion is drnwn from the Article 306 as it was enacted. 
Article 306 also contained a heading 'power of certain States in 
Part
B of the I'' Schedule to impose restriction on 'trade and 
commerce'.' 
Article 306 contained a 11011 obstante clause 
empowering Part B, States to continue to levy and collect such 
tax, subject to an agreement with the Government of India which 
was being levied at the time of commencement of the Constitution. 
The heading only referred to restrictions on trade and commerce 
whereas section referred to imposition of taxes. Thus textual 
interpretation of Article 304 and 306 clearly indicates that word 
"1-cstriction' was used as inclusive of taxes. (iii) The word 
'restriction' has been used in Part Ill, in Article 19(2) to Article 
19(6). The word 'restriction' has also been used in Part Xlll. 
The word 'restriction' appearing in Part Ill and Part Xlll have 
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the same meaning and should be construed as such. It is well 
known principle of statutory interpretation of Constitution that 
when the same words or phrases arc used in different parts of H
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the Constitution, the same meaning should be ascribed to such 
word unless the context demands otherwise. (vi) The word 
'resfriction' used in Article 304(h) has also to be interpreted in 
the same manner. Article 304(a) covers limited field to taxes on 
goods imported from other States. Article .104(a) does not cover 
intra-State taxation. An Intra-State Tax Legislation, impeding the 
freedom of trade, commerce and intercourse between one local 
area to another local area, has also to fall foul to Article 301. 
There may he valid reasons for State legislature to impose 
restriction with regard to intra-State taxation and there may be 
reasons for fixing different rate of taxes with 1·egard to different 
local areas, which may be a restriction on the trade, commerce 
and intercourse. Article 304(b) is a window by which a State can 
impose reasonable restriction in public interest. In the event, it 
is held that Article 304(b) does not cover taxes, the State will 
have no mechanism to impose restriction on intra-State trade 
and with regard to imposition of taxes other than goods imported 
from other States, which can not be the intention of framers of 
the Constitution. jPara 20011758-11; 759-A-U; 760-A-ll; 761-A-
B I 
K. T Alnopi/ Nair v. State of' Kera/a and Anr. 1961 (3) 
l '. 
SCH 77 - referred lo. 
F 
If 
Legislative history and constituent assembly debates 
relating to Article 304(a)and 304(b) 
5. Article
244 which was subsequently approved as Article 
274D in Part XA and was adopted as Article 304 of the 
Constitution. The above indicates that initially the provisions 
empowered the State "to impose on goods imported from other 
States any tax to which similar goods manufactured or produced 
in that State arc subject'', and hy an amendment another 
restriction i.e. "so, however, as not to discriminate between goods 
so imported and goods so manufactured or produced" was added. 
Article .104(a) contains both the above restrictions on the 
legislative power of the State. The proceedings of the Constituent 
Assembly, thus, clearly indicate that both the above conditions 
have hcen added in lhe provision as separate conditions and the 
second condition was added by way of amendment in addition to
JINDAL STAINLESS LTD. v. STATE or HARYANA 
the first condition which already existed. Now coming to Article 
304(b) which was similar to draft Article 244(b), Constituent 
Assembly debated the above Article threadbare. It is clear that 
ohjcclion:: with regard to Article 274D sub-clause (b) whi<:h is 
now Article 31H(b) \HTC raised before the Constituent Asr;cmhly 
hut the objections were overruled by retaining Article 2740 snb-
clausc (h) which is now Article 304(b), thus, inclusion of Article 
304(h) in <he Con~:titntion was consequent to well deliberated 
Constitutional Scheme and was accepted as restriction on the 
power of State to have uniform fiscal 1101icy. and uniform an 
economic policy. !Paras 207, 216][764-D-F; 770-C-D] 
Interpretation, scope and ambit of Article 304(a) and Article 
304(b) 
123 
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6.1 
'Article 304 begins with a 11011 obsta11te clause i.e. 
'notwithstanding anything in Article 301 or 303'. Article 301 
declares that trade, commerce and intercourse throughout the 
D 
tenitory of India shall be free. Article 304 has overriding effect 
over Article 30 I, Article 304 provides for 'restrictions on trade, 
commerce and intercourse' amongst States, as is clear by its 
heading, which otherwise would not have been permissible under 
301. Article 304 also overrides restrictions on the legislative 
power of the State as provided for in Article 303. Article 304 
empowers legislature of a State by law to impose on gooc;s 
imported from other States or
Union Territories any tax. A rlain 
reading of Article 304(a) indicates that it contains certain 
conditions for imposition of taxes on goods imported from other 
States. Article 304(a) can be divided in following parts:- i. Impose 
E 
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on goods irnpor·tcd from other States or Union Territories; ii. 
Any tax to which similar goods manufactured or produced in that 
State arc subject;iii. So, however, as not to discriminate between 
goods so imported and so manufactured or produced. !Paras 218, 
219][771-B-El 
6.2 Article 304 is, in nature of enabling provisions to the 
State, to impose taxes on goods imported from other States. 
Framers of the Constitution had stated that the goods coming 
from other· parts of the India in the units concerned cannot escape 
duties and taxes to which the goods produced in the units arc 
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subjcd. 
Th~rc is specific purpose and object in enabling lhe 
State to impose tax on goods imported from other States only 
when similar goods manufactured or produced in that State arc 
sub_ject. The object is that trade and commerce throughout the 
trrritory of India has to be free, as required by Article 301 and 
limited power to State was given to tax the outside goods when 
local goods arc subject to taxes. In event, locally manufactured 
or produced goods arc not subject to any tax, State has no 
jurisdiction to impose tax on similar goods coming from other 
States. Tax on the locally manufactured or produced goods is 
c 
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condition precedent for imposing tax on similar goods coming 
from other States. Idea is that when State docs not tax its locally 
manufactured or produced goods, similar goods coming from out 
of the State he permitted a free flow which is a part of freedom 
guaranteed under Article 301. jPara 22011772-A-DI 
6.3 The last condition that 'so, however, as not to 
discriminate between goods so imported and goods so 
manufactured or produced ... " is another limb of restriction which 
prohibits the State from discriminating in imposing taxes on 
imported goods as compared to goods manufactured or produced 
locally. The question of discrimination shall arise only when first 
E 
condition that is locally manufactured or produced goods arc taxed 
hy a State. In event, a particular good is nol produced or
manufactured in a State, State cannot be allowed to impose tax on 
goods coming from other States. First condition that is, taxing of 
the local goods being not fulfilled, the question of discrimination, 
does not arise. The power under Article 304(a) for imposing 
taxes on the imported goods can be exercised by a State only 
when similar goods manufactured or produced locally are subject 
to tax. When the similar goods are not subject to tax or similar 
goods are not available in the State, the State is obliged to permit 
G 
11 
free flow of goods from other States which is cardinal principle 
enshrined in Article 301 and the relaxation to the States has been 
given only on a condition that State imposes taxes both on local 
goods and outside goods. [Para 2211[772-E-H I
JINDAL STAINLESS r:rD. v. STATE Of HARYANA 
Firm A.TR.Mehtahmajid and Company v. State of 
Madras and 11nother.1· 1963 SCR Suppl. (2) 435; State 
of Madhl'a Pradesh i,: Bhailal Bhai and Others 1964 
(6) SCR 261 -- aflirmed. 
7.1 Imposition of tax only on imported goods when no such 
tax is levied on local goods violates Article 304(a). Articles 304(a) 
and 304(1.>) are joined with conjunction 'and'. According to the 
principles of statutory intcq>retation the word 'and' is normally 
used conjunctively and word 'or' is normally used disjunctively 
hut at times they arc used as vice versa to give effect to the 
manifest intention of the Legislation as disclosed in the context 
of the Legislation. Article 304 is an exemption granted to the 
State when State can impose taxes and impose restrictions on 
the freedom of trade and commerce which freedom is guaranteed 
under Article 301 of the Constitution of India. Article 304 begins 
with the words "Notwithstanding anything in Article 301 or Article 
303, the Legislature of a State may by law-". Two sub-clauses 
(a) and (b) are enabling powers given to the State by which taxes 
can be imposed on imported goods and rcs_trictions can lie 
imposed on the freedom of trade, commerce or intercourse. In 
the event, we tend to read conjunction 'and' as 'or' it may mean 
that the State may exercise only one of the enabling powers as 
given in the clauses (a) and (b). It is not the intention of Article 
304 to empower the State to only
exercise either of the powers, 
the clear intendment of the State is that the State may by law 
impose on goods imported from other States any tax- clause (a); 
and impose reasonable restrictions on the freedom of trade, 
commerce or intercourse with or within that State - clause (b ). 
The use of word 'may' in the beginning of Article 304 indicates 
that the power is enabling and States are entitled to exercise 
either or both the powers as may be required in the facts of the 
case. Furthc1; there is no compulsion on the State to exercise 
powers given in clauses (a) and (b) both. The State may choose 
to exercise only power given in clause (a) or power given in clause 
(h). (Paras 234, 235, 236 and 238]1779-C, D-E, G; 781-A-E) 
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7.2 The word 'and' between clauses (a) and {b) has to be 
read as joint and several, both meaning can be assigned as per 
requirement of a State Legislature. With regard to law made by 
State Legislature exercising the power under clause (a) of Article 
304 which does not ii.npose any restriction on the freedom of 
trade, commerce and intercourse need not comply with Article 
304(b). llowever, a law even though may comply with Article 
304(a) but contains restrictions on the freedom of trade, 
commerce and intercourse has to obtain sanction of the President 
·as contemplated by proviso to clause (b). The requirement of 
obtaining previous sanction of the President has to be decided in 
accordance with the nature and content of the State Legislation. 
Article 304(b) proviso is one of such Constitutional Schemes 
where the State power is restricted and limited to the above 
extent. The Constituent Assembly Debates clearly bring about 
the rationale of introduction of the requirement of Presidential 
assent in respect of certain laws by which State Legislature put 
restriction on the freedom of trade, commerce and intercourse. 
In the Constituent Assembly there was serious objection raised 
against clause (b) of Article 304 and amendment was moved for 
deletion of clause (b) from the Constitution. The above 
amendment after great discussion was negatived by approving 
the limited restraint 1rnt on the State
Legislature as cngrafted in 
Article 304(b) proviso. [Paras 240, 24211782-G; 783-D-E; 786-F-
G] 
7.3 Article 304(a) is only with regard to the imposition of 
tax on goods imported from other States. Article 304(a) does not 
refer to taxes imposed on the local goods. In the event, the State 
Legislature imposes restrictions on the freedom of trade and 
commerce by taxing legislation covering local goods, whether 
the validity of it cannot be tested on anvil of Article 301. Further, 
State in public interest requires imposition of reasonable 
restriction by imposing tax on the local goods, what procedure it 
has to follow so as to not impede Article 301. There cannot be 
any dispute that power to legislate including tax legislation is the 
power allocated to State Legislature under the Constitutional 
Scheme under Article 245 and 246. Article 304 is not a source of 
power of legislation by State rather as the heading of the section
JINDAL STAlNLESS !TD. v. STATE Of HARYANA 
127 
indicates that it is a "Restriction on trade, commerce and 
A 
intercourse among States." Article 304(a) only deals with goods 
imported from other States hence for imposing reasonable 
restrictions in the pulJlic interest on trade, commerce and 
intercourse with regard to local goods, only way out for a State to 
save its legislation is to go through the route as provided under 
B 
Article 304(b). We cannot imagine that merely because State 
Legislature has competence to frame tax law with regard to local 
goods, it can impose taxes which amoui1t to impeding the freedom 
of trade and commerce, whereas the Constitution does not 
provide any exemption to State Legislature in that regard. [Para 
24911791-B-F'] 
7.4 A State Legislature in exercise of its legislative power 
referable to any of the Entries of List ll can frame law both fiscal 
or non-liscal. When Article 304 uses words "by law" and the law 
is a wider term which embraces both fiscal and non-fiscal 
legislation with regard to clause (b), it cannot be limited as only 
non-fiscal law. If it is held that Article 304(b) does not refer to tax 
law, a different meaning would be given to wor.ds "by law" used 
in the beginning of Article 304 which governs both clauses (a) 
and (b). The mere fact that clause (a) uses the words 'any tax' 
and clause (b) does not use the word 'tax' is not of much 
significance since the word restrictions used in clause (b) is wide 
enough to
cover any kind of restriction by fiscal law. Neither 
Article 302 no·r Article 303 uses the word 'tax'. Both Articles 
are dealing with freedom of trade and commerce, non-use of word 
'tax' in Article 304(b) is also inconsequential. Thus, the word 
'restrictions' under Article 304(b) is vide enough to include 
restrictions placed both by fiscal or non-fiscal law. Article 304(b) 
operates in a very limited field and plenary legislative power of 
the State, in no manner, is restricted by Article 304(b). Thus, the 
apprehension that Article 304(b) operates serious restraint on 
the legislative power is misplaced. Thus, word 'restriction' as 
used in Part XII I as well as in Article 304(b) at the Constitution 
includes tax legislation also. [Paras 251, 253][791-G-H; 792-A-
B, F-GI 
State of Madhaya Pradesh v. Ahdeali 1963 SCR 704 : 
AIR 1963 SC 1237 - distinguished. 
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A 
Union o/ !ndia and others v. Wood Papers Ltd. And 
another 1990 (2) SCR 659 : 1990(4) SCC 256 -
affirmed. 
Andhra Steel Corpora/ion v. 
Co11imissioner of 
Commercial Taxes in Karna/aka, 1990 (Suppl.) SCC 
B 
617; Shree Mahavir Oil Mills and anolher v. Slate of' J 
& Kand others, 1996 (9) Suppl. SCR 356 : (1996) 11 
SCC 39; Weston Electronics and t11101her 1•. State of' 
Gujaral and others 1988 (3) SCH 768 : ( 1988) 2 SCC 
568 - referred to 
c 
7.5 For a legislation to be within four corners of 304(a), 
two conditions arc necessary to be fulfilled (1) State can impose 
on goods imported from other States any tax to which similar 
goods manufactured or produced arc subject, (2) so however, as 
D 
not to discriminate between goods so imported and goods so 
manufactured or produced. The first condition is tbat goods 
manufactured or produced in the State are subject lo tax, when 
exemption is granted in payment of tax to a specified category on 
fullillmenl of certain condition, it pre-supposes that goods are 
r: 
subject to tax. The exemption granted on a specified class of 
goods, subject to condition, docs not militate against the tax to 
which the goods arc subject. Thus in cases of grant of exemption 
to a specified category on conditions mentioned therein, first 
condition as noted above is not breached. Now coming to the 
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second condition i.e. so, however, as not to discriminate goods 
expo1·ted and goods locally
manufactured or produced. Goods 
exempted fall in a different category then the bulk of goods 
produced and manufactured in the State. Exemptions under 
different statutes have been upheld due to legislative policy i1s 
delineated in a particular statute. [Para 277][808-G-H; 809-A-C] 
7.6 The exception carved out in Video Electronics upheld 
exc1J1pt.ion notification where it is limited to specified type with 
short pe.-iod. The gcncrnl exemption and exemption in wider term 
has never hccn approved. The ratio of Video Electronics has to 
he read as justifying only exemption limited to a specified category
JINDAL STAINLESS LTD. v. STATE OF l-IARYANA 
for a short periocl. Exemption in general terms of unlimited in 
nature cannot he approved. The exemption cannot he usecl as 
measure of cliscrimination between goocls imported from other 
States ancl goocls manufactured or proclucecl in the State. The 
exemption has to he a limitecl exemption to the tax which is 
imposecl on the similar goocls. In the event exemption is total 
ancl general in nature, the said exemption is clearly violative of 
Article 304(a). Similarly, set off of a particular tax which is general 
ancl not limited to specified category has also to be clisapprovecl. 
State Legislature in exercise of its· taxing power can grant 
exemption/set off to local goocls, only to a limited extent hasecl 
on intelligible clifferentia which is not in the nature of general/ 
unspecifiecl exemption. The exemption/set off which tend to 
become general exemption violates Article 304(a). [Paras 279, 
28011810-F-H; 811-A-BJ 
Videv Electrvnics Pvt. Ltd. And anvther v. State uf 
Punjab and anuther 1989 (2) Suppl. SCR 731 : (1990) 
3 SCC 87 - Clarified. 
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Entry 52 of list II of VII th schedule of the Constitution 
E 
8.1 Legislative fielcl uncler State List, Entry 52 is 'taxes on 
the entry of goods into a local area for consumption, use or sale 
therein'. The Entry 52 itself clemonstrate that there are inherent 
limitations as regarcl the nature ancl character of the levy. In orcler 
to have a levy of tax to come
within the purview of Entry 52, such 
F 
levy has to satisfy three conclitions: (I) The levy uncler the State 
Entry must be 'on the entry of goods' which constitutes the 
taxable events. (ii) The levy in question must be in respect of 
'into a local area'. The local area has been defined as ' an area 
aclministered by local body like a municipality, a clistrict board, a 
G 
local boarcl, a union board, a panchayat or the like'. (iii) The goods 
must enter into the local area for the purpose of 'consumption, 
use or sale therein'. [Para 281 ][811-D-F) 
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8.2 The cx1Jrcssion Entry Tax has to be understood in its 
plain meaning and ulso in the backdrop -0f historical imposition of 
taxes of this kind. The tax commonly known as octroi was in 
force in 190 l and j( was subsequently included in VII'h Schedule 
of Lisi II of Government of India Act, 1935. The Constitution of 
India docs not use the word octroi. List I Entry 89 provides for 
'terminal tax on goods and passengers carried by railways, sea 
or air; taxes on railway fares and flights'. Taxes levied under 
Entry 52 is commonly known as entry tax. While noticing the 
Constituent Assembly debates, it is seen that freedom of trade 
and commerce was envisaged as freedom from border taxes, 
custom barriers etc., which was prevalent in Indian States. Section 
297 of 1935 Act had contained a prohibition for imposing taxes 
on entry of goods from other States. The Constitution framers 
decided that States have to be conceded some taxing powers for 
revenue 1rnrposes and for purpose of carrying out various 
development pro.iects. Article 301 provides freedom of trade, 
commerce and intercourse throughout the territory of India, 
simultaneously, exception to such freedom have been engrafted 
in Article 302 - 306. jParas 282, 283J[811-G-H; 812-A-C] 
8.3 The Ent1·y Tax is related to movement of goods. 
Movement of goods have been treated to be an integral part of 
trade and commerce. 
A law, made under the subject
matter of 
f<:ntry 52 List 11, would thus clearly be a tax on the movement of 
goods and thus would fall within the purview of the inhibition of 
Article 301 and the said law can only be saved if it complies with 
the Article 304. It is well settled that there is a clear distinction 
between incidence of a levy and the machinery provisions 
contained in law to give effect to such levy. The incidence of levy 
is on entry of goods hence incidence of tax is complete as the 
goods enters into the local area, whether the tax is collected 
immediately or subsequently has no relevance with the incidence 
of taxation. !Paras 285, 28711812-D; 813-C, El 
State ol Kamataka v. Hansa Corporation 1981 (1) 
SCR 823 : 1980 4 SCC 697 -- referred to.
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
8.4 The trade and commerce being contemplated to be free 
throughout the territory of India, any restriction on movement of 
goods per .se has to be treated as violating Article 301 unless the 
tax is saved by exceptions provided in Part XIII. However, there 
may be a tax which though complies Article 304(a) but still contains 
the restriction to trade and commerce which is an area where 
much difficulty has been felt. All taxes which comply with Article 
304(a) need not to be routed through Article 304(b) and it is only 
those taxes which contain restrictions on trade, commerce and 
intercourse which need to be routed through 304(b). This can be 
demonstrated by taking a simple example. An Entry tax legislation 
is passed complying Article 304(a) levying Entry Tax on goods 
imported from outside the State as well as local goods at the rate 
131 
A 
B 
c 
of one percent of value of goods. Normally, such levy cannot be 
treated as any restriction on the trade and commerce and shall 
1iass muster of Article 304(a) and need no compliance of Article 
304(b). But in a case wliere, Entry Tax is levied to the extent of D 
hundred per cent of the value of goods both on imported goods 
and locally produced or manufactured goods, the said levy is clear 
restriction on trade and commerce and has to be routed through 
Article 304(b). For taking out such levy, from the effect of Article 
301 both 304(a) and 304(b) needs to be complied with.
Entry 
Tax legislation which is a tax on movement of goods, trade and 
commerce is inhibited by Article 301 and such State legislation 
can be saved under Article 304. Whether a particular Entry Tax 
Legislation is valid and docs not contravene Part XIII of the 
Constitution, can be decided only after looking into the nature, 
content and extent oflcgislation and its impact on trade, commerce 
and intercourse. [Paras 288, 289][813-F-H; 814-A-D] 
Meaning of "restriction" as used in Part XIII 
9.1 Freedom of trade, commerce and intercourse 
throughout the territory of India is guaranteed under Article 301. 
The framers of the Constitution were conscious that the freedom 
cannot be absolute and it may be necessary in several 
circumstances to restrict the freedom in public interest. Article 
302 - 306 enumerates exceptions to the freedom as guaranteed 
E 
F 
G 
H
132 
SUPREMF COl !RT REPORTS 
12016] JO S.C.R. 
A 
under Article 301. What is the meaning and contents of word 
'restriction' as used in Part Xlll? The word 'restriction' has 
also been used under Article 19 (2) to 19 (6) while empowering 
the State to impose reasonable restrictions on the fundamental 
rights guaranteed under Article 19(1) (a) to 19 (1) (g). The 
restriction thus is an act to limit, confine and restrain. The 
'restriction', in Part XHI has been used in the context of 
restriction to freedom of trade, commerce and intercourse. The 
law, which restrict or limit such right are called restrictions. !Paras 
290, 29211814-E-F; 815-CI 
c 
I) 
G 
H 
illdia11 Cement and Others v. State o( Andhra Pradesh 
1988 (2) SCR 574: 1988 1 SCC 743 - referred to. 
New Webster Dictionary; The Black's Law Dictionary 
--· referred to. 
9.2 Article 302 - 306 contain provisions, by which 
restriction can he put on the freedom of trade and commerce. 
Some restrictions have been expressly mentioned in said articles. 
Article 303 provides for 'restrictions on the legislative powers 
of the Union and of the States with regard to the trade and 
commerce'. As per Article 303, sub-article Clause I following 
arc treated to be restrictions:- (i) Any law giving or authorising 
the giving of any preference to one State over another, (ii) Any 
law making or authorising the making of, any discrimination 
between one State and another. Thus preferences and 
discrimination both are treated as
restriction in the context of 
freedom of trade and commerce. Coming to Article 304(a) any 
law framed by legislature is restriction on freedom of trade and 
commerce which:- a). Imposes on goods imported from other 
Slate, any tax when no such tax is imposed on similar goods 
manufactured or produced in that State, b). Imposes on goods 
imported from other States any tax which discriminates between 
goods so imported and goods so manufactured or produced. 
!Paras 294, 29511816-C-H]
JINDAL STAINLESS lTD. v. STATE OF HARYANA 
9.3 Again in Article 304 sub-clause(b) State is empowered 
to impose reasonable restrictions in the public interest. Article 
306, as it was initially enacted, contained heading 'power of certain 
States in Part B of the Schedule to impose restriction on trade 
and commerce'. Article 306 permitted any tax on duty on import 
of goods into the State from other States or on the export of goods 
from the State to another States which was being imposed by a 
State specified in Part B to continue by an agreement between 
Government of lndia and Government of States for a period, not 
exceeding ten years. The article contemplates continuance of 
tax or duty which was treated to be 1·estriction and was allowed to 
continue only with an agreement for a maximum period of ten 
years. The restriction which can be imposed, as contemplated by 
above provisions of law, have to be such limitation on the right of 
freedom of trade and commerce which should not be arbitrary or 
of excessive nature beyond what is required in the context of the 
power. ll'aras 296, 298] 1817-A-C, l~I 
Slm:e Mahavir Oil Mills and Another i: State of Jammu 
& Kashmir and Others 1996 (9) Suppl. SCR 3S6 : 1996 
11 SCC 39; State of Madras v. V G Row 19S2 SCR 
607; Keshav Mills Co. Ud. 
v. CIT 196S SCR 908 : 
AIR 1965 SC 1636; K. K. Koch11ni and Others v. State 
nl :\!ladros and Others. (1960) 3 SCR 887; K. T. Moopil 
Nair ''- State of Kera/a and Others (1961) 3 SCR 77;
Godlrey Philips India Ltd v. State of UP 200S (1) 
SCR 732 : (200S) 2 SCC SIS; Maharaj Umeg Singh 
and others v. The State of Bomhav and others (19SS) 2 
SCR 164; State of Madras v. N.K. Nataraja Mudaliar 
1968 (3) SCR 829; ITC Ltd. v. State of Tamil Nadu and 
Others 120071 7 VST 367; Madras; Kaiser-I-Hind Pvt. 
Ltd. and another i-: National Textile Co17m. (Maharashtra 
North) Ltd. and others 2002 (2) Suppl. SCR SSS : (2002) 
8 sec 182 - referred to. 
133 
A 
B 
c 
D 
E 
F 
G 
H
134 
SUPREME COURT REPORTS 
[2016] IO S.C.R. 
A 
9.4 Allhough the word 'restriction' may also in certain 
B 
c 
I) 
E 
G 
H 
circumstances includes prohibitions but restriction is not to be 
understood with complete prohibition or stopriage of business, 
effect of tax when it hinders the trade & commerce, it becomes 
restriction and prohibited under Article 301. The issue as to 
whether the restriction contained in any taxing statute impede 
the freedom of trade and commerce is a question which will vary 
from case to case. The nature of restriction and the magnitude 
of the restriction are all relevant factors to determine whether 
trade is impeded or not. It is well settled that provisions in a 
statute which is regulatory in nature which facilitates the trade 
have not been treated as restriction impeding the freedom of 
trade and commerce. Traffic regulations, registration of motor 
vehicles for plying in the State, collection of toll have not been 
treated to be restriction in freedom of trade and commerce. [Paras 
299, 30311818-A; 820-D-FJ 
/"axmi Khandwri Etc. v. State of U.P 1981 (3) SCR 92; 
G. K. Krishnan and Others v. State of Tamil Nadu and 
Others 1975 (2) SCR 715 : (1975) 1 SCC 375; 
Federation of Hotel and Restaurant Association of India, 
Etc. v. Union of India and Others 1989 (2) SCR 918 : 
( 1989) 3 sec 634 - referred to. 
9.5 
What has been expressly prohibited in Article 302 -
306 arc all restrictions in the freedom of trade and commerce 
which shall
obviously contravene Article 301, bnt there may be 
other instances when a law is treated to be restriction although 
not expressly enumerated in Part 302 to 306. Article 301 is not 
attracted in a legislation which does not contain any kind of 
restriction to the freedom of trade and commerce. The question 
of applicability of Part XIII arises only when the legislation 
contains restrictions which hamper, restrict, impede and 
adversely affect the freedom of trade and commerce directly & 
immediately. !Para 304)1820-F-H I
JINDAL STAINLESS LJ'D. v. STATE or HARYANA 
135 
Whether 'direct and immediate effect test' as laid down in 
A 
Atiabari and approved in Automobile Transport is no longer a 
correct test 
10.1 Our Constitution framers were well aware of the 
provisions of the Australian Constitution and the difficulties which 
arose in the Australia and different views expressed on the 
B 
interpretation of Section 92, the Constitution framers though took 
inspiration from Section 92 but they did not stop there, rather 
they expressly provided for qualification to the right and freedom 
guaranteed under Article 301 by Article 302 - 306. In Atiabari in 
all the three opinions expressed by Sinha, C.J., and 
C 
Gajendragadkar, J., and Shah, J., it was noted that in our 
Constitution, there is a departure from A.ustralian Constitution 
and the Australian judgments are not relevant. .Justice 
Gajendragadkar, has referred to two Privy Council judgments 
dealing with Australian Constitution to know how judicial minds 
have resrwnded to the challenge presented by similar provisions. 
D 
In the above spirit, references of those two Privy Council 
judgments were made. Thus Gajendragadkar, J., did not base his 
judgment on the test, which was laid down in the Australian 
judgments but found justification for his conclusion from the 
aforesaid judgments. Further, the primary reason why the 
Australian High Court in Cole Vs. Whitfield rejected the 'trade 
and immediate effect test' is, that because the
freedom guaranteed 
under Section 92 applies only "between the States" i.e. to the 
interstate trade, i.e., The doctrine accordingly ended up 
discriminating against intrastate trade as it 1>rovided some sort 
of immunity to interstate transactions which intrastate transaction 
did not enjoy. In Part Xlll of the Constitution, the Constitution 
framers had provided for non-discriminatory taxation between 
the intrastate and interstate trade with provision for dealing with 
all situation including a case whether restriction has to be imposed, 
on both interstate or intrastate trade that is Article 304(b). 
Although the Australian High Court rejected the idea of 'direct 
and immediate effect test' as being artificial, this Court has 
continued to adopt the said doctrine whenever legislation is 
decided on the touchstone of reasonable restriction and the 
doctrine has been applied consistently in the vast number of cases 
E 
F 
G 
H
Ll(i 
SUPREME COURT REPORTS 
12016) 10 S.C.R. 
A 
for decades which have stood the test of time. [Paras 312, 
31311824-F:-F; 825-A-F] 
10.2 The commerce class of the American Constitution 
Article I, Section 8, Clause 3 provides "to regulate commerce 
with foreign nations and among the several States and with the 
f3 
Indian tribes;" Part Xl!J of the Constitution has not adopted the 
American model and the interpretation on the commerce class is 
hardly relevant for interpretation of Part XUI. Non-discriminatory 
taxation by State in reference to interstate and intrastate trade is 
ingrained in Article 304(a) itself, and no abstract theory needs to 
C 
he referred to for following Non-discriminatory Theory. I Paras 
314, 3151[826-B-Ci 
10.3 The concept as evolved in Australia and America with 
regard to freedom of trade and commerce, cannot be adopted in 
respect of interpretation of our Constitution, despite arguing 
D 
against the relevance of foreign judgments, the States themselves 
arc now relying on the foreign .iudgmcnts in context of 'direct 
and immediate effect test theory'. The change in the legal position 
in Australia and America does not have any bearing on the Indian 
legal position as our Constitutional framework is different from 
those countries. No hard and fast formula can be laid clown to 
determine as to whether a particular legislation/taxation violates 
rights of freedom of trade and commerce under Article 301. It is 
for the Court to examine facts of
each case and come to a 
conclusion. The submission for the State that 'direct and 
immediate effect test' is no longer a correct test, cannot be 
i: 
accepted. Each case has to he determined on facts of each case. 
1-1 
The 'direct and immediate effect test' as laid down in Atiabari 
and approved in A11to111obile Tramport still holds good. [Paras 316, 
317, 3181[826-D-E, F; 828-A-BI 
James v. Commonwealth al Australia (1936) AC 578; 
Co11mw1111:ealth of' Australia and Others v. Rank ol New 
SOLtlh Wales and Another (1950) AC 235; Cole v. 
Whirfie!d (1988) 78 ALR 42; S]Jector Morar Services. 
Inc. i·. q "Connor 430 US 289 (1951); Complete Auto 
fransir v. Bradr 430 US 274 (1977); Stale of' Marv/and 
1: Stale ol J,011isia11a 451 US 725 - referred to.
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
137 
Compensatorv Tax Theory 
A 
11.1 Can a tax which is compensatory in nature lllso fall 
foul Article 301 of the Constitution '!" and "What are the tests 
for determining whether the tax or levy is compensatory in 
nature'"? It is an accepted proposition that one of the 
characteristics of tax is that it is an imposition made for public 
B 
purpose without reference to any special benefit to be conferred 
on the payer of the tax. The taxes imposed by the Legislature, 
apart from being source of Revenue is also expended for various 
public welfare measures and when it's object is in no way 
connected with the public interest or public welfare it loses its 
C 
character of taxation, becomes a levy which is unconstitutional. 
[Paras 319, 325][828-C; 831-B-C] 
Khyerbari Tea Company Ltd. v. State ()f Assam (1964) 5 
SCR 975; Co111111issione1~ Hindu Religious Endowme11ts. 
D 
A1adras v. Sri Lakshmindra Thirtha Swamiar ()f Sri 
Shina· Mutt, 1954 SCR 1005 : AIR 1954 SC 282-
referred to. 
M"Culloch v. Stale of Maryland. 17 US 316 (1819); 
Duncan v. The State 4 Quee11sla11d, (1916) 22 CLR 
E 
556; Mc Carter v. Brodie, (1950) 80 CLR 432; Hughes 
a11d Vale Proprietwy ltd. v. State of New South Wales, 
(1955) AC 241; Armstrong v. State <~l Victoria .Vu.2, 
(1957) 99 CLR 28; Co111111011wealth ()/" Austrulia v. Bunk 
of New South Wales (1950) AC 235; Commonwealth 
F 
Freighters Property ltd. v. Sneddon (1959) 102 CLR 
280; Duncan and Others 1'.
State of Queensland and 
Another (1916) 22 CLR 556. AfcCarter and Another 1~ 
Brodie, (1950) 80 CLR 432; Hughes and Vale 
ProprietmJ1 Ltd v. State <if ,'Vew Solllh Hides and Others 
[1955) AC 241 - referred to. 
11.2 Law of compensatory charge as developed in Austrnlia 
was clue to the fact that Section 92 dicl not contain any qualification 
G 
H
A 
B 
SUPREME COURT REPORTS 
[2016] IO S.C.R. 
to !he absolute freedom of trade and commerce granted therein. 
Various qualifications and restrictions to the above freedom were 
culled out by judicial decisions of the High Court of Australia and 
Privy Council to justify the said qualifications and restrictions. 
The ratio contained in various judgments of the High Court of 
Australia and the Privy Council on Section 92 of the Constitution 
of Australia cannot be a guiding factor for interpreting Part XIII 
of the Constitution of India. [Para 350][845-F-G] 
Co111111omrea!th of Australian and Others v. Bank of Nett: 
C 
South Wales and Others [19501 AC 235; Hinson v. Lott, 
8 Wall, 75 US 148 (1869); Harold H. Henneford et al., 
v. Silas Mason Company, Inc. 300 US 577; Associated 
industries Of Missouri, et al., v. Janette M. Lohman 128 
L Ed 2d 639; Oregon Waste s:vsrems v. Department oj' 
!) 
Enl'iro11111e11tal Quality of the State of Oregon 511 US 
93 (1994); Fulton Corporation v Jenice H. Folk11e1; 
Secrelm:v of Revenue of North Carolina 516 US 325, 
133 L Ed 2d 796 - referred to. 
r 
11.3 The answer to the question as to whether a 
compensatory tax is out of reach of Article 301 has to be found 
out from the Scheme of Part Xlll of the Constitution itself and 
not from the theory of compensatory charge as evolved in 
Australia or United States of America. Two fundamental principles 
F 
of taxes are: (i) that it is an imposition made for public purpose, 
(ii) without
reference to any special benefit to be conferred on 
the payer of the tax. [Para 3541f848-f:-FJ 
Stale of Bomhay v. R. M.D. Chamarhaugivala and 
another 1957 SCR 874 : AIR 1957 SC 699 -
relied 
G 
on. 
H 
11.4 The compensatory doctrine evolved in Automobile 
Transport is that compensatory tax is to compensate for facility 
extended, for example, wear and tear of the Road. The
JINDAL STAINLESS r;ro. v. STATE OP HARYANA 
compensatory tax can be imposed only for public purpose which 
fact is not denied by any of the parties. Can it be said that a tax 
which is a compensatory in nature need not to be subject to 
restriction as contained in part Xill ? If it is accepted that once a 
tax is held compensatory tax it goes out of reach of Part Xlll, it 
will be carving a new exception to Article 301 which is not 
contemplated in the constitutional scheme. The framers of the 
Constitution after providing for freedom of trade, commerce and 
intercourse in Article 301 laid down exceptions to the said 
freedom in Article 302 to 306. The exceptions laid down in the 
constitutional scheme arc self-contained and no new exception 
can be added by judicial interpretation. Can a compensatory tax 
not impede trade, commerce and intercourse even if it is a non-
discriminatory tax ? For example, Entry Tax is imposed on 
vehicles carrying goods in a local area to the extent of 50% of 
the value of goods, the statute further declares that entire amount 
received from tax will be expen"ded for providing facilities to the 
entrants in the local area, i.e., on roads, lights, free fooding, free 
lodging, facility for free servicing, repairs of the vehicles, etc.etc. 
Can the mere fact that entire amount collected is expended for 
providing facilities shall take out the statute from the scrutiny of 
Part XIII ? Answer has to be in negative. The fact that a tax 
statute
compensates the payer of the tax does not take out the 
statute beyond Part XIII, all taxes, being for one or other public 
purposes. The tax legislation which professes to compensate the 
payer cannot take the tax legislation on a higher pedestal beyond 
the reach of Part Xlll, making such legislation "not subject to 
Constitution". When all legislative power is "subject to 
Constitution" as per Article 245 and 246 of the Constitution, a 
legislation, namely, compensatory tax legislation cannot be said 
to be beyond Part XHI. Any such interpretation is clearly against 
the constitutional scheme. Thus the judgments of the High Court 
139 
A 
B 
c 
]) 
E 
p 
of Australia and the Privy Council relied in Automobile Transport 
G 
did not furnish a foundation for evaluation of compensatory tax 
theory in part XIII of the Constitution. [Paras 355, 3561[848-G-
H; 849-A-.Fl 
12. The scheme of Constitution of India indicates that 
wherever it was contemplated to insulate any provision from 
H
140 
A 
B 
c 
]) 
F 
(".' J 
H 
SUPREME COURT REPORTS 
[2016] JO S.C.R. 
challenge, expressed provisions have been made to provide for 
such insulation. Article 31 B is one of such examples which 
provides that none of the Acts and Regulations specified in IXth 
Schedule shall be deemed to be void or ever to have become 
void on the ground of such Act, Regulation or provision is 
inconsistent with or lakes away or abridges any of the rights 
conferred by Part Ill. The Constitutional Scheme as delineated 
by Part XIII docs not indicate that a particular type of legislation, 
i.e., compensatory tax is out of Part XIII. Reading any such 
protection to compensatory tax legislation is against the 
constitutional provision. The compensatory theory as evolved in 
A11to111obile 'J'ramport is not compatible to the constitutional 
scheme and a compensatory tax legislation cannot be insulated 
from challenge under Part XIIJ of the Constitution. It is always 
open to scrutinize the true nature and character of legislation to 
decipher as to whether it contains any restriction on freedom of 
trade, cornmei-cc :rnd intercourse violating Article 301. A 
legislation which is compensatory in nature may shed light while 
determining whether it contains restriction on trade, commerce 
and intercourse or facilitate the trade, commerce and intercourse. 
But all legislations be it a compensatory tax legislation or 
otherwise has to be tested in accordance with provisions of Part 
XJII of the
Constitution. The ratio of judgment of Automobile 
Transport is overruled in so far as it lays down that the 
compensatory tax legislations are out of part XIII of the 
Constitution. !Paras 357, 3581[849-G-H; 850-A-D] 
.ltialwri Tea Co. Ud. v. State of .1.ssam & Ors. 1961 
SCR 809; Automohile Jhmsport (Rajasthan) Ltd. etc. 
v. State of Rajasthan & Ors.1963 SCR 491 - Partly 
ove1..-ulecl. 
Jindal Stripe Ltd. and Am'. \'. State of Harvana and Ors. 
2003 (4) Suppl. SCR 154 : (2003) 8 SCC 60; Jindal 
Stainless Ltd (2) and Aw v. State ofHarvana and Ors. 
2006 (3) SCR 1095 : (2006) 7 SCC 241; Jindal Strips 
Umited v. State of Harvana 2006 (3) Suppl. SCR 569
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
: 2006 (7) SCC 271; Jaiprakash Associates Limited v. 
State (?f Madhya Pradesh and Ors. 2008 ( 17) SCR 1282 
: (2009) 7 SCC 339; Jindal Stainless Limited and Am: 
v. State of Haryana and Ors. 2010 (4) SCR 743 : (2010) 
4 SCC 595; Mis. Rhagatram Rajeev Kumar v. 
Commissioner uf Sales Tax. MP. and Ors. 1994 (6) 
Suppl. SCR 91: 1995 Supp (1) SCC 673; Slate ofBihar 
and Ors. v. Bihar Chamber of Commerce and Ors. 1996 
(2) SCR 1S4 : (1996) 9 SCC 136 - referred to. 
Case Law Reference 
141 
A 
B 
Per T.S. Thakur, C.JI (for himself and A.K. Sikri and A.M. 
C 
Khanwilkar, .JJ.) 
1961 SCR S09 
overruled 
Para2 
1963 SCR 491 
overruled 
Para2 
D 
1994 (6) Suppl. SCR 91 
referred to 
Para2 
1996 (2) SCR 1S4 
referred to 
Para2 
2003 (4) Suppl. SCR 154 referred . to 
Para3 
200S (17) SCR 12S2 
referred to 
Para 7 
2010 (4) SCR 743 
referred to 
Paras 
E 
1965 SCR 90S 
referred to 
Paras 
1975 (2) SCR 715 
referred to 
Para S 
1992 (1) SCR 6S6 
referred to 
Para 11 
2002 (3) Suppl. SCR 5S7 referred to 
Para 11 
F 
1979 (l) SCR 26 
referred to 
Para 11 
1973 Suppl. SCR I 
referred to 
Para 11 
1963 SCR 220 
relied on 
Para 15 
2000 (3) SCR 509 
relied on 
Para 16 
G 
. 2009 (S) SCR 9S3 
relied on 
Para 17 
19S3 (3) SCR 130 
affirmed 
Para 19 
2004 (1) SCR 564 
relied on 
Para 19 
H
142 
SUPREME COURT REPORTS 
[2016) 10 S.C.R. 
A 
2012 (4) SCR 448 
relied on 
Para 19 
1989 (1) Suppl. SCR 623 relied on 
Para 20 
1955 SCR 164 
affirmed 
Para 28 
1966 Suppl. SCR 81 
affirmed 
Para 28 
R 
1994 (2) SCR 644 
relied on 
Para 33 
2006 (5) Suppl. SCR 1 
referred to 
Para 34 
1965 SCR 413 
relied on 
Para 36 
1958 SCR 1422 
relied on 
Para 38 
c 
AIR 1991 Patna 75 
referred lo 
Para 63 
1954 SCR 1005 
referred to 
Para 64 
1954 SCR 1046 
referred to 
Para 64 
1961 SCR 537 
referred to 
Para 64 
1965 SCR 477 
D 
referred to 
Para 64 
1979 (3) SCR 1217 
referred to 
Para 64 
1994 (5) Suppl. SCR 392 referred to 
Para 64 
2004 (3) SCR 956 
referred to 
Para 64 
2004 (1) SCR 564 
referred to 
Para 64 
E 
1987 (2) SCRl 
relied on 
Para 74 
2002 (1) SCR 441 
relied on 
Para 81 
1981 (2) SCR 364 
relied on 
Para 83 
1951 SCR 127 
relied on 
Para 92 
F 
1961 SCR 77 
relied on 
Para 94 
AIR 1955 SC 3 
relied on 
Para 95 
1963 SCR 778 
referred to 
Para 95 
1968 SCR 829 
relied on 
Para 112 
G 
1963 SCR 220 
referred to 
Para 116 
1989 (2) SCR 918 
referred to 
Para 116 
AIR 1959 SC 894 
referred to 
Para 116 
1980 (1) SCR 804 
referred to 
Para 116 
H
,tNDAL STAINLESS LTD. v. STATE OF HARYANA 
143 
1996 (8) Suppl. SCR 947 referred to 
Para 116 
A 
2006 (3) SCR 1095 
overruled 
Para 126 
(t 996) 2 sec 39 
distinguished 
Para 130 
1989 (2) Suppl. SCR 731 affirmed 
Para 131 
1952 SCR 435 
affirmed 
Para 132 
B 
1996 (10) Suppl. SCR 585 referred to 
Para 137 
1963 SCR 809 
referred to 
Para 138 
1977 (l) SCR 1065 
referred to 
Para 139 
1983 (2) SCR 1009 
referred to 
Para 140 
c 
(1966) 1 SCR 865 
held inapplicable 
Para 122 
Per S. A. Bobde, J. 
D 
1961 SCR 809 
referred to 
Para3 
Per Shiva Kirti Singh, J. 
1961 SCR 809 
Not good law 
Para3 
E 
1963 SCR 491 
Not good law 
Para3 
Per N. V. Ramana, J. 
F 
1961 SCR 809 
Not good law 
Para 1.1 
1963 SCR 49 
Not good law 
Para 1.1 
1975 (2) SCR 715 
reforrecl to 
Para 1.1 
1994 (6) Suppl. SCR 91 
referred to 
Para 1.1 
G 
1996 (2) SCR 184 
referred to 
Para 1.1 
2006 (3) SCR 1095 
referred to 
Para 1.1 
2008 (17) SCR 1282 
referred to 
Para 1.1, 2.1 
H
144 
A 
B 
c 
D' 
E 
F 
G 
H 
SUPREME COURT REPORTS 
2010 (4) s.c.c 595 
[20031 129 S.T.C 534 
referred to 
referred to 
2003 (4) Suppl. SCR 154 referred to 
2006 (3) Suppl. SCR 569 referred to 
(2009) 21 V.S.T 10 (P&H) referred to 
1964 SCR 787 
referred to 
1965 SCR 908 
referred to 
2004 (6) Suppl. SCR 1054 referred to 
1964 SCR 99 
referred to 
1967 SCR 762 
1966 SCR 744 
1967 SCR 170 
1970 (3) SCR 530 
1971 (3) SCR 9 
1973 Suppl. SCR 1 
1975 (1) SCR 173 
referred to 
referred to 
referred to 
referred to 
referred to 
referred to 
referred lo 
1992 Supp. (3) S.C.C 215 referred to 
1993 (3) SCR 669 
referred to 
(1994) 3 S.C.C J 
refened to 
1996 (10) Suppl. SCR 585 referred to 
1996 (10) Suppl. SCR 472 referred to 
2002 (3) Suppl. SCR 587 referred to 
2007 (1) SCR 706 
referred to 
1987 (2) SCR 1 
referred to 
1939 FCR 18 
1986 (1) SCR 399 
1981 (I) SCR 206 
11964] I SCR 371 
[19781 2 SCR 1 
referred to 
referred to 
refetTed to 
referred to 
referred to 
[2016] 10 S.CR. 
Para 1.1, 2.1 
Para 1.2 
Para 2.1 
Para 2.1 
Para 2.1 
Para 2.2 
Para 2.2 
Para 2.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 4.2 
Para 5.1 
Para 5.2 
Para 5.3 
Para 5.4 
Para 5.8 
Para 5.8
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
145 
1965 SCR 413 
referred to 
Para 5.8 
A 
2002 (1) SCR 441 
referred to 
Para 5.8 
1973 Suppl. SCR 1 
relied on 
Para 5.8 
2004 (1) SCR 564 
referred to 
Para 5.8 
1963 SCR 220 
referred to 
Para 6.1 
B 
2000 (3) SCR 509 
referred to 
Para 6.1 
2009 (8) SCR 983 
referred to 
Para 6.1 
(1921) 62 S.C.R 424 
referred to 
Para 7.27 
(1964) 5 SCR 975 
referred to 
Para 7.35 
c 
1980 < 4) sec 463 
referred to 
Para 7.38 
1955 SCR 164 
referred to 
Para 7.40 
1958 SCR 1422 
referred to 
Para 7.40 
1989 (2) Suppl. SCR 731 affirmed 
Para 8.16 
D 
Per R. Banumatbi, J. 
2003 (4) Suppl. SCR 154 referred to 
Para5 
2008 (17) SCR 1282 
referred to 
Para6 
E 
2010 (4) SCR 743 
referred to 
Para 6 
2011 (13) SCR 636 
referred to 
Para 13, 30 
2012 (4) SCR 448 
referred to 
Para 14 
1973 Suppl. SCR 1 
followed 
Para 31 
F 
1992 (1) SCR 686 
relied 011 
Para 31 
2002 (3) Suppl. SCR 587 relied on 
Para 32 
(1963) l SCR 220 
relied on 
Para 38 
2004 (1) SCR 564 
relied on 
Para 39 
G 
1990 (1) Suppl. SCR 381 relied 011 
Para 39 
(1991) 4 sec 139 
relied ou 
Para 39 
1992 (2) SCR 13 
relied on 
Para 39 
H
146 
SUPREME COURT REPORTS 
[2016] 10 S.C.R. 
A 
2000 (3) SCR 509 
relied on 
Para 39 
1989 (2) SCR 880 
referred to 
Para 41 
1955 SCR 164 
referred to 
Para 43 
1985 (2) SCR 287 
affirmed 
Para 50 
B 
1988 (2) SCR 49 
affirmed 
Para 51 
1994 (1) SCR 682 
affirmed 
Para 51 
(1964) 1 SCR 897 
relied on 
Para 56 
1966 SCR 22 
relied on 
Para 57 
c 
1954 SCR 1005 
relied on 
Para 60 
1995 (5) Suppl. SCR 110 relied on 
Para 60 
2004 (3) SCR 956 
relied on 
Para 60 
1989 (2) SCR 918 
relied on 
Para 61 
D 
1989 (2) SCR 893 
relied on 
Para 62 
1961 SCR 809 
overruled 
Para 64 
(1963) 1 SCR 491 
overruled 
Para 67 
2013 (13) SCR 464 
relied on 
Para 91 
1950 SCR 88 
relied on 
Para 92 
E 
(2002) 8 sec 182 
affirmed 
Para 100 
1963 SCR Suppl. (2) 216 referred to 
Para 106 
119611 3 SCR 242 
referred to 
Para 109 
1995 (2) SCR 900 
referred to 
Para 109 
f 
1988 (2) SCR 574 
referred to 
Para 123 
1988 (3) SCR 768 
referred to 
Para 124 
1997 (1) SCR 914 
not good law 
Para 125 
1989 (2) Suppl. SCR 731 affirmed 
Para 127 
G 
(1952) SCR 435 
affirmed 
Para 137 
1996 (9) Suppl. SCR 356 not good law 
Para 139 
1999 (5) Suppl. SCR 428 affirmed 
Para 140 
1963 Suppl. SCR 435 
referred to 
Para 140 
H
JINDAL STAlNLESS LTD. v. STATE OF HARYANA 
147 
(1968) 3 SCR 829 
referred to 
Para 140 
A 
(1966) 1 SCR 865 
not good law 
Para 146 
1970 (1) SCR 700 
referred to 
Para 147 
AlR 1942 FC 33 
relied on 
Para 162 
AIR 1945 PC 98 
referred to 
Para 163 
B 
1950 SCR 15 
referred to 
Para 164 
2005 (2) SCR 1038 
relied on 
Para 165 
1983 (3) SCR 130 
relied on 
Para 166 
2004 (1) SCR 564 
relied on 
c 
Para 166 
AIR 1942 FC 33 
relied on 
Para 169 
AIR 1951 SC 318 
relied on 
Para 169 
(1954) SCR 53 
relied on 
Para 169 
D 
1984 (2) SCR 664 
relied on 
Para 170 
1975 (2) SCR 715 
referred to 
Para 181 
1981 (2) SCR 364 
referred to 
Para 182 
1996 (2) SCR 184 
affirmed 
Para 184 
E 
2015 (9) SCR 148 
referred to 
Para 186 
1994 (5) Suppl. SCR 392 referred to 
Para 186 
1990 (2) SCR 13 
referred to 
Para 186 
2006 (3) SCR 1095 
overruled 
Para 191 
F 
1994 (6) Suppl. SCR 91 
affirmed 
Para 191 
(1990) 1 sec 109 
referred to 
Para 194 
1999 (1) Suppl. SCR 146 referred to 
Para 194 
1996 (10) Suppl. SCR 585 relied on 
Para 196 
G 
2005 (1) SCR 732 
relied on 
Para 197 
H
148 
SUPREME COURT REPORTS 
[2016) I 0 S.C.R. 
A 
Per Dr. D. Y. ehandrachud, J. 
1975 (1) SeR 173 
cited 
Para 1 
1992 Supp. (3) sec 215 
cited 
Para 1 
B 
1993 (3) SCR 669 
cited 
Para 1 
(t 994) 3 sec 1 
cited 
Para I 
(1994) 5 sec 54 
cited 
Para 1 
1996 (10) Suppl. SCR 585 cited 
Para l 
c 
1998 (2) Suppl. SCR 400 cited 
Para 1 
2007 (1) SeR 706 
cited 
Para 1 
(1961) 1 SCR 809 
partly affirmed 
Para 35 
(1963) 1 SCR 491 
partly affirmed 
Para 35 
D 
(1964) 5 SeR 975 
referred to 
Para 77 
1972 (2) SCR 853 
referred to 
Para 82 
1975 (2) SCR 138 
referred to 
Para 82 
1975 (2) SCR 715 
referred to 
Para 84 
1981 (2) SCR 364 
referred to 
Para 83 
E 
1983 (2) SCR 1009 
referred to 
Para 82 
1983 AIR 1283 
referred to 
Para 82 
1983 (3) SeR 624 
referred to 
Para 82 
1988 (2) Suppl. SCR 482 referred to 
Para 82 
F 
1994 (6) Suppl. SCR 91 
referred to 
· Para 89 
1981 (I) SCR 823 
referred to 
Para 90 
1996 (2) SCR 184 
referred to 
Para 91 
l 989 (1) Suppl. SCR 692 referred to 
Para 91 
G 
2003 (4) Suppl. SCR 154 referred to 
Para 93 
2006 (3) SCR 1095 
referred to 
Para 93 
1992 (1) SCR 686 
relied on 
Para 112 
2002 (3) Suppl. SCR 587 relied on 
Para 112 
H
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
149 
119641 I SCR 371 
referred to 
Para 115 
A 
(1961) 1 SCR 413 
referred to 
Para 117 
1994 (2) SCR 644 
referred to 
Para 118 
2002 (1) SCR441 
referred to 
Para 119 
2006 (5) Suppl. SCR 1 
referred to 
Para 119 
B 
2012 (4) SCR 448 
referred to 
Para 124 
1964 SCR 897 
referred to 
Para 128 
1992 (2) SCR 13 
referred to 
Para 128 
2000 (3) SCR 509 
referred to 
Para 128 
c 
1955 SCR 164 
referred to 
Para 129 
1966 Suppl. SCR 81 
referred to 
Para 129 
(1953) 1 BLJR 48 
referred to 
Para 131 
1996 (10) Suppl. SCR 472referred to 
Para 137 
D 
1985 (2) SCR 287 
referred to 
Para 140 
1987 (1) SCR 232 
referred to 
Para 141 
(1988) 1 sec 266 
referred to 
Para 131 
1989 (2) SCR 893 
referred to 
Para 141 
1994 (1) Suppl. SCR 602 referred to 
Para 141 
E 
(1986) Supp. I sec 201 referred to 
Para 142 
1958 SCR 1422 
referred to 
Para 147 
1968 SCR 829 
referred to 
Para 150 
1974 (3) SCR l 
referred to 
Para 151 
F 
(1964) 4 SCR 280 
referred to 
Para 153 
(1953) 4 SCR 1069 
referred to 
Para 154 
. 
1986 (3) SCR 866 
referred to 
Para 155 
(1964) 4 SCR 280 
referred to 
Para 155 
G 
(1951) 2 SCR 127 
referred to 
Para 173 
1961 (3) SCR 77 
referred to 
Para 174 
1962 (2) SCR 983 
referred to 
Para 174 
H
150 
SUPREME COURT REPORTS 
[2016) 10 S.C.R. 
A 
(1962) Su11p. (2) SCR 1 referred to 
Para 174 
(1963) 1 SCR 220 
referred to 
Para 175 
1989 (2) SCR 918 
referred to 
Para 179 
1963 SCR 704 
referred to 
Para 188 
B 
(1963) Suppl.(2) SCR 435referred to 
Para 190 
1964 SCR 217 
referred to 
Para 191 
(1968) 3 SCR 829 
referred to 
Para 192 
(1966) 1 SCR 865 
referred to 
Para 194 
c 
(1970) 1 SCR 700 
referred to 
Para 195 
(1969) 2 SCR 544 
referred to 
Para 196 
1977 (1) SCR 1065 
referred to 
Para 197 
1981 (1) SCR 823 
referred to 
Para 198 
D 
1988 (3) SCR 768 
referred to 
Para 199 
1989 (2) Suppl. SCR 731 referred to 
Para 200 
1996 (9) Suppl. SCR 356 referred to 
Para203,211 
(1961) 3 SCR 242 
relied on 
Para 217 
(1961) 3 SCR 707 
referred to 
Para 221 
E 
(1963) Supp. 2 SCR 216 referred to 
Para 222 
1994 (6) Suppl. SCR 98 relied on 
Para 230 
1988 (3) Suppl. SCR 770 relied on 
Para 242 
2007 (9) SCR 147 
referred to 
Para 242 
r 
2002 (3) SCR 278 
referred to 
Para 242 
1999 (5) Suppl. SCR 428 referred to 
Para 245 
1942 F.C.R.90 
referred to 
Para 251 
AIR (1945) PC 98 
referred to 
Para 251 
G 
1950 SCR 15 
referred to 
Para 252 
(1962) Supp. 1 SCR 282 referred to 
Para 252 
1980 (1) SCR 804 
referred to 
Para 253 
1972 (2) SCR 33 
referred to 
Para 254 
H
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
151 
1996 (2) SCR 145 
referred to 
Para 254 
A 
1980 (3) SCR 1 
referred to . 
Para 255 
2005 (1) SCR 732 
referred to 
Para 255 
(2004) 10 sec 2011 
referred to 
Para 256 
(1963) 3 
SCR 787 
referred to 
Para 256 
B 
(1970) 1 sec 248 
referred to 
Para 263 
(1950) 1 SCR 88 
referred to 
Para 263 
1973 (2) SCR 757 
referred to 
Para 263 
1978 (2) SCR 621 
referred to 
Para 264 
c 
Per Ashok Bhushan , J. 
1961 SCR 809 
partly overruled 
Para 35 
D 
1963 SCR 491 
partly overruled 
Para 3, 7 
1994 (6) Suppl. SCR 91 
referred to 
Para 12 · 
1996 (2) SCR 184 
referred to 
Para 12 
2003 (4) Suppl. SCR 154 referred to 
Para 13 
2006 (3) SCR 1095 
referred to 
Para 14 
E 
2006 (3) Suppl. SCR 569 referred t<i 
Para 15 
2008 (17) SCR 1282 
referred to 
Para 17 
2010 (4) SCR 743 
referred to 
Para 17 
1965 SCR 908 
referred to 
P~1ra 62 
F 
1975 (2) SCR 715 
referred to 
Para 63 
(1960) 3 SCR 887 
referred to 
Para 117 
2005 (1) SCR 732 
referred to 
Para 121 
(1965) 1 SCR 413 
referred to 
Para 164 
G 
1973 Suppl. SCR 1 
followed 
Para 165 
1978 (1) SCR 1 
referred to 
Para 167 
1994 (2) SCR 644 
referred to 
Para 169 
H
152 
SUPREME COURT REPORTS 
[2016] 10 S.C.R. 
/\ 
2006 (5) Suppl. SCR J 
referred t.o 
Para 172 
2012 (4) SCR 448 
relied on 
Para 180 
(1961) 3 SCR 77 
relied on 
Para 182 
1966 SCR 22 
relied on 
Para 184 
B 
J 974 (3) SCR 1 
referred to 
Para 191 
1975 (2) SCR 715 
referred to 
Para 192 
1973 Suppl. SCR 1 
referred to 
Para 200 
1968 (3) SCR 829 
referred to 
Para 200 
c 
1966 1 SCR 865 
referred to 
Para 223 
[20071 7 VST 367 Madras referred to 
Para 234 
2002 (2) Suppl. SCR 555 referred to 
Para 243 
1988 (3) SCR 768 
referred to 
Para 258 
.D 
1988 (2) SCR 574 
referred to 
Para 260 
1989 (2) Suppl. SCR 731 elarilied 
Para 262 
1990 (Suppl.) sec 617 
referred to 
Para 267 
1996 (9) Suppl. SCR 356 referred to 
Para 268 
1963 SCR 704 
distinguished 
Para 271 
I·: 
1990 (2) SCR 659 
affirmed 
Para 276 
1981 (l) SCR 823 
referred to 
Para 286 
1963 2 SCR 435 
affirmed 
Para 293 
1988 (2) SCR 574 
referred to 
Para 293 
F 
1%4 (6) SCR 261 
affirmed 
Para 297 
1996 (9) Suppl. SCR 356 referred to 
Para 297 
1952 SCR 607 
referred to 
Para 298 
1981 (3) SCR 92 
referred to 
Para 300 
G 
1989 (2) SCR 918 
referred to 
Para 302 
(1964) 5 SCR 975 
referred to 
Para 320 
1954 SCR 1005 
referred to 
Pam 324 
1957 SCR 874 
relied on 
Para 351 
H
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
153 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3453 
A 
of 2002. 
From the Judgment and Order dated 21.12.2001 of the High Court 
of Punjab and Haryana at Chandigarh in Civil Writ Petition No. 6630 of 
2000 
WITH 
C. A. Nos. 6383-6421, 6422-6435, 6436, 6437-6440of1997, 
C.A. Nos. 3381-3400, 3592, 4651 ofl998, 
C.A. No. 918of1999, 
C.A. Nos. 2769 and 4471 of2000, 
C.A. No. 3314 of2001, 
C.A. Nos. 3454, 3455, 3456-3459, 3460, 3461, 3462-3463, 3464, 
3465,3466, 3467,3468,3469,3470,3471,4008,5385,5740,5858of 
B 
c 
200~ 
D 
W.P. (C) Nos. 512 and 574 of2003, 
C.A. Nos. 2608, 2633, 2637, 2638, 3720-3722, 6331, 8241, 8242, 
8243,8244,8245, 8246,8247,8248,8249,8250,8251,8252, 1956of 
2003, 
T.C. (C) No. 13 of 2004, 
W.P. (C) No. 66 and 221 of 2004, 
E 
C.A. Nos. 997-998, 3144, 3145, 3146, 4953, 4954, 5139, 5141, 
5142,5143,5144,5145,5147,5148,5149,5150,5151,5152,5153,5154, 
F 
5155,5156,5157,5158,5159,5160,5162,5163,5164,5165,5166,5167, 
5168, 5169, 5170, 7658 of 2004, 
SLP(C) Nos. 9479, 9496, 9569, 9832, 9883, 9885, 9891, 9893, 
9898,9899,9901,9904,9910, 9911,9912,9950,9964,9976,9989,9991, 
9993,9998,9999, 10003, 10007, 10129, 10133, 10134, 10153, 10154, 
G 
10156, 10161, 10164, 10167, 10206, 10207, 10232, 10366, 10381, 10382, 
10384, 10385, 10391, 10402, 10403, 10404, 10407, 10417, 10449, 10493, 
10495, 10497. 10501, 10505, 10539, 10557, 10563, 10566. 10567, 10568, 
10569, 10571, 10704. 10706,10708, 10736, 10906, 10907, 10909, 10908,
10910, 10923, 10929, 10977, 11012, 11266, 11271, 11274, 11281, 11320, 
11326, 11328, 11329, 11370 of 2004, 
H
154 
SUPREME COURT REPORTS 
[2016] I 0 S.C.R. 
A 
SLP(C) No. 14380 of2005, 
SLP(C) Nos. 1101, 1288, 6914, 9054, 10694, 12959, 13806, 14070, 
14819, 14820, 14821, 14823, 14824, 14826, 14828, 14829, 14830, 14832, 
14833, 14835, 14837, 14838, 14839, 14841, 14842, 14845, 14846, 14847, 
15082-15085, 15807, 16351, 17589,17590, 17905, 17906, 17907, 17908, 
B 
17909, 17910, 17911, 17913, 17914, 17915, 17916, 17917, 17918, 17919, 
17920, 17921,17922, 17923, 17924,17925, 17926, 17929, 17930,17933, 
17934, 17936, 17937, 17938,17939,17941, 17942, 17943, 17944, 17957, 
17959, 17960, 17961, 17962, 17963, 17964, 17965, 17972, 17973, 17974, 
17975, 17976,17977, 17978,17979,17980, 17981,17983, 17984, 18036, 
c 
18037, 18038, 18039, 18040, 18041, 18042, 18043, 18044, 18045, 18046, 
18047, 18048, 18049, 18050, 18051, 18053, 18054, 18055, 18056, 18057, 
18058, 18059, 18061, 18062, 18063,18064, 18065, 18066, 18067,18068, 
18069, 18073, 18074, 18075, 18076, 18077, 18078, 18079, 18080, 18081, 
18082, 18083, 18084, 18085, 18086, 18087, 18088, 18089, 18090, 18091, 
18092, 19049,19050, 19051,19052, 19053, 19055, 19057, 19059, 19060, 
D 19062, 19064,19066, 19068, 19070,19071, 19072, 19073, 19074, 19076, 
19077, 19094, 19095, 19096, 19099,19100, 19101, 19102, 19103, 19104, 
19105, 19106, 19107, 19108, 19110, 19111, 19113, 19114, 19505, 19506, 
19507, 19508, 19510, 19511, 19512, 19513, 19514, 19515, 19516, 19518, 
19521, 19522, 19523-19528, 19529, 19530, 19531, 19543-19547,20527, 
E 20529, 20559, 21841,
21843, 21844, 21845, 21846, 21847, 21848, 21849, 
21851,21855,218~4,21866, 21867,21871-21904,21905,21907,21908, 
21909, 21910, 22947, 22958, 24934-25066 of2007, 
F 
G 
H 
SLP(C) Nos. 742, 746, 747, 3230, 3231, 3233, 3234, 3236, 3237, 
3238-3262 of2008, 
C.A. Nos. 4715, 5041-5042 of 2008, 
SLP(C) Nos. 5407, 5408, 6148-6152, 6831, 7914, 8053-8077, 8199, 
9227, 12424-12425, 13327, 13889, 14232-14252, 14454-14778, 14828, 
14829, 14875, 15047, 15078, 15090, 15161, 15164, 15179, 15253, 15273, 
15274, 15286-15287, 15288-15289, 15324, 15325, 15326, 15327, 15328, 
15329, 15330, 15331,15335, 15337, 15356, 15357, 15369,15405, 15491, 
15492, 15493, 15495, 15496, 15498, 15540, 15551,15579, 15605, 15618, 
15623, 15628, 15629, 15630, 15631, 15632, 15633, 15636,15643, 15647, 
15652, 15653, 15655, 15656, 15657, 15659,15660, 15666, 15684, 15700, 
15711, 15819, 15845, 15934,16664, 16667, 16689, 16733, 16754, 16832,
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
155 
l6837, 16841, 16865, 16885, 16926, 16930, 17187, 17192, 17193, 17203, A 
17204, 17233, 17267, 17269,17271, 17272, 17274, 17276,17277, 17279, 
17280,17282. 17367, 17368, 17369,17370,17372, 17373, 17374, 17375, 
l7376, 17377, 17408, 17865, 17892, 18001, 18030, 18034, 18035, 18040, 
l8066-18067, 18344, 18346, 18354, 18360-18364, 18379, 18405,18532, 
18533, 18582, 18684-18714, 18850, 18857, 18865, 18870, 18871,19019, 
B 
19026, 19030, 19049, 19120, 19141, 19372,19421, 19425,19460, 19470, 
19714, 19722, 19731, 19737, 19802, 19847, 19849, 19867, 19873, 19876, 
19986,20068,20089,20165,20766,20795,21107,21117-21125,21127, 
21506,21509,21510,21819,22081,22083,22084,22086,22100-22101, 
22195,22707,22735,22931,23075,23077,23270,23277,23383,23609, 
23623,25378,25498,26377,26543,26571,26572,26593,26750,26813, c 
26972, 27442-27444, 27606, 27927, 29194, 29196, 29561-29570, 29763, 
29764, 30276, 30533, 30534-30540, 30542, 8204 of 2008, 
SLP(C) ... CC No. 15314 of2008, 
SLP(C) ... cc Nos. 2867, 5143, 5311, 5803 of2009, 
D 
SLP(C) Nos. 3276, 4720, 5371, 5376, 5381, 5383, 5384, 5393, 
5395,5396.5399,5401,5403,5405,5406,5408,5409,5410,5411,5412, 
5413,5414,5420,5421,5422,5424,5426,5493-5494,5495,5883,6254, 
6669,6670,6675,6676,6682,6683,6684,6685,6686,6687,6688,6689, 
6690,6692,6693,6694,6696,6698,6699,6700,6701,6702,6703,6704, 
E 
6705,6708,6709,6710,6711,6712,6713,6714-6715,6953,7345,8244, 
9548,9699, 10040, 10041, 10042, 10045, 10047, 10048,
10049, 10050, 
10051, 10053-10054, 10192, 10279,10952, 10954-10956, 11042, 11122, 
11603-11611, 11646, 12948, 13270-13274, 13483, 13496, 13517, 
13611-13612, 14429, 14484, 14488, 14623, 14856, 14949, 15723, 
l6253, 16757-16760, 16784, 16789. 16888-16898, 17332-17333, 
F 
17394-17396, 17488, 17490, 17491, 17492-17498, 17722, 17731,17744, 
19695,22293,22295,22302,22303,22304,22306,22307,22308,22309, 
22310,22311,22312,22313,22316,22317,22318,22320,22321,22322, 
22323,22324,22325,22408,22425,22428,23990,24149,24430,24822, 
25157,25390,25399-25400,25467,25470,25474,25753,25797,26116, 
G 
26236,26509,27883,28509,28583,28696,28775,29597,29868,30383, 
30746-30845,30847,31410,31411,31412,33176,33663-33665,33672, 
34253,34859,35038,35585,35587,35740,35742,35743-35746,35747, 
35749,35750,35751,35752, 35753,35754,35755,35756,35757,36193, 
36196, 36219, 36271, 16116, 30594 of 2009, 
H
156 
SUPREME COURT REPORTS 
[2016j 10 S.C.R. 
A 
W.P. (C) Nos. 11, 42, 43, 44, 46, 48, 63, 71 of 2010, 
SI.P(C) Nos. 104, 245, 247, 248, 1820, 1876, 2459, 3387, 4102, 
4362.4388,4389,4390,4511,4572,4720,5151,5308,5309,6037,6723, 
6762, 6763, 6765, 6770, 6811, 7356, 7426, 7776, 7929, 9022, 9077, 9702. 
9723, 10361, 11419, 11423, 12690, 14845, 14886, 15015, 15903, 16694, 
B 
I <>720, 18318. 18834, 19194, 19199, 19217, 22327, 22520, 23836, 29578, 
36486 of 20 I 0, 
SLP(C) ... cc Nos. 886, 1082 of2010, 
C.A. No. 5343-5344 of2010, 
C 
W.P. (C) Nos. 31, 497 of2011, 
C.A. Nos. 905, 2041, 2042, 9900-9903 of 2011, 
SLl'(C) Nos. 1308, 3433, 4730, 4743, 4747, 4750, 5094, 5105, 
5106,5110,5112.6351,6492,8571,9758, 12605, 13451, 13525, 13526, 
14144, 14269,14342, 18858, 18859,18862, 18863, 18864,33344of2011 
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SLl'(C) ... CC No. 2103 of 2011, 
W.P.(C) Nos. 278, 290 of 2012, 
C.A.No.4210,5860,5861,8275,8278,8280,8283,8284,8286, 
8290,8292,8294,8295,8296,8297,8298,8299,8300,8301,8302,8303, 
8304,8305,8306,8307,8308,8309,8311,8312,8313,83!4,8315,8316, 
8333,8734,8735,8736,8737,8738,8739,8740,8741,8744,8745,8832, 
8833,8834,8836,8837,8839,8840,8841,8842,8843,8844,8845,8846, 
9148,9149,9150,9151,9152,9153,9154,9155,9156,9157,9158,9159, 
9160, 9161, 9162, 9163, 9164, 9165, 916(i, 9167, 9168, 9169, 9170, 9292, 
F 
'J293 of 2012, 
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SLP(C) Nos. 16535-16536, 16538, 18602, 28173, 33954, 36187, 
37455,37680,37708-37709,37712,37728,38304,38919,39998,40146, 
40147, 33923 of 2012, 
T.C. (C)
No. 149 of 2013, 
SLP(C) Nos. 449, 1426, 8939, 9844, 10466, 10516, 10879, 11060, 
16744-16746, 16867, 16869, 16870,27001-27002,30986,32256,33600 
of2013,
JINDAL STAINLESS LJ'D. v. STATE Of HARYANA 
157 
C.A. Nos. 539, 540, 541, 542, 543, 544, 545, 546, 547, 548 of A 
2013, 
C.A. Nos. 1838, 9216, 9214 of2014, 
SLP(C) No. 29119 of2014, 
SLP(C) No. 208, 2 J 2. 315-317, 320, 336, 352, 3 76, 411- 421, 380, 
B 
437,445.457,508,510,567,561-562,585,621,638,641,661,664,662, 
669,668,671,672,675.674,683,690-691,684-686,693-694,712,1270, 
1424, 1596, 1631, 1714, 1851-1852, 1943-2001,2038,2054,2063-2065, 
2081,4557,4581.91,4657,5046,5107,5131,5143,5375,5447,5610, 
5966, 6086, 6143, 6158, 6240-6243, 6565, 6575, 6631, 4600, 5007, 6728, c 
6754-6755,6823,6907,6909-6910,6939,6956,4386, 7319,7957-7958, 
8089, 2483, 8248, 8325, 8350-8351, 8527, 9585, 11830, 8798, 9584, 
5311-5329, 11204-11205,9164,9167,9176,9181,11832,9188,9348,5908, 
9484, 9582, 7874, 11080- 11086, 12839, 11156, 11170, 12844, 8162, 11484, 
12847, 11582, 11592,13200,13201,4219-4227,2966-2999,11888,11203, 
14828, 14854, 15856,15857,15858, 11458-11465,18213,18333,16312, D 
18334, 18335, 15855, 18338,18184, 18179,8775-8777,5303,16853,21720, 
23673-23674,23764,23765, 15353,22349,21718,24547,23757,26751, 
9117,2214,2531,2289,2530,2392,2499,2502,2538-2543,2426,2358, 
2401,2389,2485,2495,3163-3164,3666,3679,3723,3321,4198-4199, 
3325,3466,3635,3318,30396,2636,2680,2952,2641,2588,2928,2737, 
E 
2682, 8197-8 l 98, 4197of2015, 
C.A. No. 8240 of2015, 
C.A.Nos. 110, 109,583.3925,5534,5536,5137,5537,5538,5533, 
4642-4643 of 2016 and 
SLP(C) Nos. 4945, 8253, 2057, 86, 72, 14539-14541, 16820
of 
2016. 
Mukul Rohatgi, Ju gal Kishore Gilda, A Gs, P. S. Narsimha, Maninder 
Singh, Tushar Mehta, ASGs., Harish N.Salye, S. K. Bagaria, 
F 
A. K. Ganguli, T. R.Andhyarujina, Arvind Vanna, Kavin Gulati, Rakesh 
G 
Kr. Khanna, Rakesh Dwivedi, Jagdeep Dhankar, Ashok K Parija, V. Giri, 
N. Venkatraman. Dinesh Dwivedi, Amit Singh Chadha, Ravindra 
Shrivastava, Ashok K Gupta, S. B. Upadhyay, Ms. Vibha Dutta Makhija, 
Arvind P. Datar, Gopal Jain. Shyam Diwan, P. P. Rao, Dr. J. N. Dubey, 
Ashok K Parija, Dhruv Agarwal, Ajit Kr. Sinha, Vivek K Tankha, Guru 
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SUPREME COURT REPORTS 
[2016] 10 S.C.R. 
Krishna Kumar, Subramonium Prasad, Jagabandhu Sahoo,Anil K. Kher, 
Dr . .J. N. Dubey, Arvind Varma, Ms. Kiran Suri, Sudhir Gupta, Sr. Advs., 
S. S. Shamshery, Suryanarayana Singh, Devadatt Kamat, Ms. Nidhi 
Gupta, Alok Sang wan. Pushpendra Kaurav, Shiv Mangal Sharma, C. D. 
Singh, Edward Belho, AAGs., A. T. M. Sampath, Ms. fereshte D.Setlma, 
Tushar Jarwal, Sachit Jolly, Rahul Sateeja, Gautam Swarup, Ms. Tanya 
Chanda, Aditya Sarin. Ms. Gayatri Goswami. Karan Lahiri, Mmuneet 
Singh Gulati. Ms. Vijay Lakshmi Menon, Mahesh Agarwal, Ms. Neha 
Nagpi!l, Ms. Shally Bhasin. Shashank Manish, Ms. Shruti Garg, E. C. 
Agrawala, Syed Slrnhid Hussain Rizvi, Sanjeev K Singh, N.A. Usmani, 
Sunil K Jain, Pawanshree Agrawal, Hibekananda Mohanti, Ajit Kumar 
Singh, Akarsh Garg, T. N. Durga Prasad, Nikhil Nayyar, Arnboj Agrawal, 
N. Sai Vinod, Ms. Smriti Shah, Divyanshu Rai, Arunabh Ganguli, Raj iv 
Agnihotri, Rajesh Kumar, R. K. Srivastava, P. N. Srivastava, K. S. 
Mahadevan, Devavrat Anand, Ms. Poonam Kumari, Ms. Mala Dubey, 
Krishnakumar R. S., K. K. L. Gautam, U. A. Rana, Mrinal Elkar 
Mazumdar, 1-!imanshu Mehta, Sidharth Sijoria, Avirat Kumar (for Mis. 
Gagrat & Co.), Anand S. Pathak, Amit K Mishra, Akshat lfansaria, Ms. 
Hima Lawrence, Kesav Raychaudhari, Vinay P Singh, Ms. Aditi Mohan, 
Ms. Ajita Tandon, Ms. Kopal Shrivastava, Sunil Kumar Jain, Shaantanu 
Jain, Pravcen Kumar, Ms. Babita Sant, Kartik Kurmy, Kumar Ajit
Singh, 
Ms. Sunaina Kumar, Ms. Ruby Singh Ahuja, R. N. Karanjawala, Vishal 
Gehraria, Chahat Chawla, Mrs. Manik Karanjawala, Milinda Sharma 
(for Mis. Karanjawala & Co.), Ro hit Sthalekar, D. K.Gandhi, Ms. 
Vasudha /,utshi, Anish Agarwal, Avi Tandon, T. Mahipal, Shekhar 
Sharma, Puneet Agrawal, Dr. Rashmi Khanna, G. L. Bhatti, Pranav 
Vyas, Ms. Shefali Jain, Anirudh Tanwar, Surya Kant, Vikram Hegdc, 
Chanchal Kumar Ganguli, Barnali Basak, Ms. Narmada Singh, Anurag 
Rana, Mrs. Kirti Renu Mishra, Ms. J'reetika Dwivedi, Rajesh Kumar, 
Ms. Apurva Upmanyu, Ms. Apoorva Garg, Kedar Nath Tripathy, M.A. 
Aleem Majid, Ms. PriyankaParida, Gaurav Kejriwal, Sujit Keshri,Avnish 
Kr. Sharma. Harsh Trivedi, Mrs. Manik Karanjawala (for Mis. 
Karanjawala & Co.), M. P. Devanath, Abbay A. Jena. Ms. Bina Gupta, 
G. Prakash, Jishnu M. L., Ms. Priyanka Prakash, Mohammed Sadique 
T. A., Svadha Shankar. Manav Vohra, .J. Krishna Dev, Ms. Beena 
Prakash, Manu Srinath. Siddhesh Kotwal, Ms. Bansuri Swaraj, Ms. 
Shreya Bhatnagar. Raghunatha Sethupathy, Ms. Urvashi Sandhu, 
Nirnimesh Dube, Mahcsh Agarwal, Sayaree Basu Mallik, Chaitnaya,
INDAL STAINLESS lJ'D. v. STATE OF HARYANA 
Lakshmeesh Kamath, Abhimanyu Tiwari, Hitesh Kumar Sharma, 
Kalinder Mishra, Ashish Kumar Sinha. Shree Pal Singh, S. Nanda Kumar, 
Parivesh Singh. P. Srinivasan, Sanand Ramakrishnan, Rajeev Mishra, 
Prateek Gupta, Parmanand Pandey, Anup Kumar Mishra, Ms. Jayashri 
Venkataraman. \/. Ubhaya Bharthi, Minchu Mariam Punnoose, Cynduja 
Crislman, Ganjcndra Maheshwari. Ms. Prema Chopra, Ms. Swati Thapa, 
Parivesh Singh. Subblrn Somu, Ranjeet Singh, \/. N. Raghupathy, 
Narendera M Sharma, Ms. Prachi Johri. Abhishek Sharma. Ms. Sakshi 
Mchley, Ms. Prachi Gupta, Ra.iesh Prasad Singh, Ravi Prakash Mehrotra, 
Ashutosh Kumar Sharma, Vibhu Tiwari, Sunil K Jain, Pawanshree 
Agarwal, Shaantanu Jain. Dileep Tandon, Shailesh Madiyal, Ms. Neha 
Tandon. Jagjit Singh Chhabra, Tarun Gulati, Sparsh Bhargava, Neil 
Hildreth. Shashi Mathews, Kishore Kuna!, Anupam Mishra, Ms. Ishita 
Parsaiya, Ankit Sachdeva. Ms. Rachana Yadav, Rony 0. John, Ms. Vipin 
Upadhayay, Nikhil Gupta, Rahul Jain, Manish Rastogi, Pranav Bansal, 
R. Chandrachud, B. R. Menon. Rohit Choudhary, Ms. Preeti Khewani, 
Ms. B. Vijay Lakshmi Menon. Ms. Kaadambari Singh Puri. Ms. Abha 
Sinha. Rameshwar Prasad Goyal, Kumar Gaurav, Dr. Farrukh Khan, 
Ms. Rubina Jawed. Vir Bahadur Singh, Hitesh Kumar Shanm. Ms. Shanti 
Kumar Jaisani. R. P.Goyal. Kapil Joshi, Amit Pai, Arun S. Bhati, Suraj 
Prakash Singh. Divyesh Pratap Singh, Ms. Kriti Joshi, Mrs. Mm1ju Shanna 
Jelley, Mrs. Vanita Bhargava, Ajay
Bhargava, Jeevan Ballav Panda, 
Ms. Abhisaar Bairagi. Anshuman Sharma, Ms. Abhisaar Bairagi (for 
Mis Khaitan & Co.), Ms. Yugandhara Jha, Ms. Prasanna Mohan, Pulkit 
Tare, Siddharth Shrivastava, Kuna! Venna, M.A. Krishna Moorthy, Kuna! 
Verma, Ritin Rai, Prateek Rath.\/. K. Monga, Azim H. Laskar, Sachin 
Das, A. \/. Manavalan, Ms. Sampa Sengupta Ray, PR Abal, Pratap 
Singh Solanki,Abhijit Sengupta, Lakshmi Raman Singh, Ms. Udita Singh, 
Ms. Preeti Singh, S.P. Singh Chauhan. Gagan Deep Sharma, Satya 
Prakash. Kapil Dahiya, Nikhil Jain, Deepak Kanwar, S. \/(jay Kanth. 
Vipin Maurya. Sudhir Kumar, Ms. Firoza Matta, Sudarshan Singh Rawat, 
Vijay K. Gupta. P. K. Manohar. Rahul Kaushik, K. C. Kaushik, Mrs. 
Rhuvneshwari Pathak, Mrs. Shilpi Satya Priya Satyam, Sanjay Grover, 
Ms. Meenakshi Grover, Rajesh Kumar. Ms. Poonam Kumari, Krishna 
KLimar R. S .. K. K. L. Gautam, Vinod Pandey, K. S. Mahadevan, R. K. 
Srivastava. P. N. Srivastava, Shiv Lal Singh, Balaji Srinivasan, Saurabh 
Ajay Gupta, Nishant Bishnoi, Rajeev Singhal, Saurabh Singhal, Vishal 
Gehraria, Rajiv Shankar Dvivedi, S. K. Sarkar, Ms. Madhavi Shanna, 
159 
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SUPREME COURT REPORTS 
12016] 10 S.C.R. 
Balkrishan Shanna,Abinash Kumar, Md. ZiauddinAhmad, Pankaj Ghiya, 
Milan Ghiya, Suman Yadav, Ms.Aakanksha Muqjlrnl, Harsh Trivedi (Ml 
s Karanjawala & Co.), S. S. Ray, Vaibhav G., Ms. Rakhi Ray, T. K. 
Majumdar. Ms. Reshmi Rea Sinha, Sankar Ch. Ghosh, V. N. Koura, 
Ms. Aruna Mathur, Ms. Paramjeet Benipal, Sumit Benipal, Avneesh 
Arputham, Yusuf Khan, Ms. Anuradha Arputham (for Mis Arputham 
Aruna Co.), Rajeev Sharma, V. Madhukar, Mohit D. Ram, Ms. Monisha 
Handa, Ms. Anvita Cowshish, Lubna Naaz, Pushpinder Singh, Niraj Kr. 
Jain, Pankaj Kr. Bohra, Anurag Rana, Mernsagar Samantaray, Debmalya 
Bane1:jee, Jasmeet Singh, A. S. Aman, Manish Sharma, Ms. Anuradha 
Dutt, Amit Sharma, Prateek Yadav,Ankit Raj, Milind Kumar, P. Venkat 
Reddy, A. Ramesh, Syed Ahmad Naqvi, Ms. Shilpi Gupta, Mis Venk:at 
Palwai I.aw Associates, Nakul Dewan, l'radhuman Gohil, Vikash Singh, 
Ms. 1~1runa Singh Gobi!, Ms. Jaikriti S. Jadeja, Himanshu Chaubey, 
Shivarama Krishnan M. S., Vinayak Pannicker, Ms. Aanchal Basur, 
Purvesh Malkan, Ajoy K Roy, Ms. Nandita Chauhan, Ms. Gargi Jha, S. 
S. Shroff, Anand Raja, Pawan Upadhyay, Sarvjit Pratap Singh, Mrs. 
Anisha Upadhyay, Kaustuv P. Pathak, Ab.sh Tyagi, Nishant Kumar, 
Ratik Sharma.Arindam, Param Mishra, Ms. Sharmila Upadhyay. Varun 
K. Chopra, Shishir Deshpande. Amit Yadav, Pulkit Tare •. Akshat 
Shrivastava, Abhijeet Shrivastava. Ms. Ruchi Sahay, Ms. Akanksha 
Sisodia, Siddharth
.Shrivastava, Jarun Gulia, Anshuman Shrivastava, 
Sarabjeet Dutta, Mohit Arora, Ms. Divya Roy, T. Natarajan Durga 
Prasad, Akarsh Garg, Kaushik Choudhury, Sunil Kumar Jain, Sridhar 
Potaraju, Gaichangpou Gangmei, Arjun Singh, Ms. Sindoora V. N. L., 
Ms. Ankita Sharma, Ms. Madhavi Divan, Ms. Ranjeeta Rohatgi, Ms. 
Movita, Ms. Misha Rohatgi, Ms. Akhila J., Thangathurai, Diksha Rai, 
Ms. Nidhi Khanna, Ms. Aishwarya Bhati, S.N. Terdal, B. Krishna Prasad, 
M. K. Maroria, Syed Shahid Hussain Rizvi, Sanjeev K Singh, N.A. 
Usmani, Surajita Pattanaik, D.S. Mabra, Rajesh Kumar, Ms. M. Prasad, 
Ms. Surekha Raman, Pratap Venugopal, Aman Shukla, Anuj Sanna, Ms. 
Niharika (for Mis K. J. John & Co.), Krishnayan Sen, Uddyam 
Mukhe1:jee, 1-limanshu Bhushan, Ankit Jain, Atul Jha, Ms. Divya 
Balasundaram, Sandeep Jha, Dhannendra Kumar Sinha, T. K. Majumdar, 
Ms. Reshmi Rea Sinha, Sankar Ch. Ghosh. Kuna! Mimani, Ms. Vandana 
Anand, Ritunjay Gupta, Dheeraj Nair. Ravinder Narain, Ajay Aggarwal, 
Ms. Kanika Gamber, Ms. Mallika Joshi, Kishan Rawat, Ms. Ruchik:a, 
Rajan Narain, Ms. Deepti Sarin, Nakul Gandhi, Sanjiv Kumar Singh,
JINDAL STAINLESS LfD. v. STATE Of HARYANA 
161 
Ms. Tahira Karanjawala, Ms. Aakanksha Munjal (for M/s. Karanjawala 
A 
& Co.), Ms. Nandini Gore, Trishala Kulkarni, Ms. Neha Khandelwal 
(for M/s. Karanjawala & Co.), Abhishek Roy, A1:jun Sharma, Rajeev K 
Pandey, Rajeev Maheshwaranand Roy, Matrugupta Mishra, Ms. Shikha 
Ohri, Piyush Singh, Hernant Singh, Nimesh Kr. Jha, Ms. Shannila 
Upadhyay, Ms. Pragati Neekhra, Dr. M. V. K. Mo01thy, Hitendranath 
Rath, Ms. T. Anamika, Ajay Kumar, Shivam Ojha, Ms. ·Richa Srivastava, 
Ms. Krishna Sanna, Av~jit Roy, Ms. Vartika Sahay (for M/s Corporate 
Law Group), Ranjit B. Raut, Abbay Anand Jena, Ms. Bina Gupta, Ms. 
Surbhi Kapoor, Raghav Shankar, Joseph Aristotle S., Mrs. Priya Aristotle, 
Rajesh Kumar Singh, Pankaj Pandey, Rajesh Inamdar, Javedur Rahman, 
Parikshit, Kamal Mohan Gupta, franklin Caesar Thomas, Chand Qureshi, 
M. P. Siddiqui, Ms. Bina Madhavan, Anil Grover, Sl).meer Rohatgi, 
Udayaditya Bane1:jee, Akshay Puranik, Devashish Bharuka, Sanjay 
Kumar Visen, Ravi Bharuka, Ms. Jaya Bharuka, Vaibhav Niti, Ms. Arpita 
Bishnoi, Ms. Anu Tyagi, Gautam Sharma, Akshay Puranik, Dr. Monica 
Gusain, Kedar Nath Tripathy, Raghenth Basant, Abhishek Tripathi, Ms. 
Aanchal Tikmani, Senthil Jagadeesan, C. D. Singh, Sagar Suri, Ms. Sakshi 
Kakkar, Ms. Sylona Mohapatra, Ms. Saumya Kalra, Ms. Sukanya Basu, 
Sandeepan Pathak, Udit Arora, Swarnendu Chatterjee, Ms. Ananya 
Sarkar, M. P. Srivignesh, Lalitendu Mohapatra, Puneet Parihar, Adhi 
Raj Singh
Rajawat, Vivek R. Mohanti, Sitesh Narayan Singh, Shrey 
Kapoor, Ms. Ruchi Mohli, Saurabh Raj pal, Amit Shanna, Prateek Yadav, 
Ankit Raj, Ms. Ruchi Kohli, Atul Jha, A. P. Mayee, A. Selvin Raja, An up 
Gilda, Nikhil Swami, Ms. Divya Swami, Mrs. Prabha Swami, Raghenth 
Basant, Abhishek Tripathi, Ms. Aanchal Tikmani, Ms. Liz Mathew, 
Anurag Dubey, Ms. Anu Sawhney, Ms. Meenakshi, S. R. Setia, Sujit 
Keshri, Ashok Kumar Juneja, Vijendra Kasana, Kamal Mohan Gupta, 
Ms. Manju Shaima Jetley, Lakshmi Raman Singh, Wills Mathews, Ginesh 
P., Ashish Kumar Sinha, Shreepal Singh, Mandeep Kalra, C. Mukund, 
S.Sukumaran, Anand Sukumar, Bhupesh Kumar Pathak, Ms. Meera 
Mathur, Ms. K. Enatoli Sema, Amit Kumar Singh, K. Luikang Michael, 
Flix Gangmei, Nalin Kohli, Ankit Roy, Ms. Sansriti Pathak, Avijit Roy, 
Shuvodeep Roy, Manoj Goel, Shuvodeep Roy, Guntur Prabhakar, Ms. 
Prerna Singh, Sree Vignesh, Swarnendu Chatte1:jee, K. R. Sasiprabhu, 
Raghav Shankar, Shubhranshu Padhi, Ashwin Dave, Vishnu Sharma, 
Ms. Shruti .lain. Somiran Sharma, Biju P. Raman, Raghu Chandra, 
1-limanshu Suman, Karan Lahiri, D. K. Singh, Pradeep Shukla, Ms. Koma! 
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SUPREME COURT REPORTS 
[2016] JO S.C.R. 
Mundra, A. D. Agrawal, Saurabh Agrawal, Abhijit Sengupta, Ravinder 
Narain, Ms. Kanika Gomber, Ms. Mallika Joshi, Rajan Narain. Ms. Vimla 
Sinha, Riturnj Biswas. M.anish Kumar. Shivam Singh, Aditya Raina, 
Shreyas Jain. Advitya Awasthi, Ms. Varsha Poddar, Chandan Kumar, 
Gopal Singh, Ms. Ranja1rn Roy Gawai, Ms. Vasudha Sen,Abhay l'ratap 
Singh, Anshumaan Bahadur. Ms. Divya Roy, Pushkar Taimani, Ms. 
Chandra Bhushan, Shashank Singh, R. K. Ojha, Ms. Chhaya Kumari, S. 
K. Divakar, Ms. Priyanka Tyagi,Abhijit Sinha,Anil K. Jha, Gopal Prasad, 
Srijan Sinha, V. Lakshmikumaran, M. P. Devanath, Ms. L. Charnaya, 
Abhishek Anand, Adity;i Bhattachary;i, Hemant Bajaj. Anandh K., Aniket 
Ghosh, Vivek Sharma, Victor Das, Govind Manoharan, Ms. Shruti Iyer, 
Joydeep Mazumdar, Gaurav Ghosh. Par\jat Sinha, Sachin Pujari, D. 
Kumanan, Ahhishek Atrey, Rishabh Sancheti, Raj Singh Rana, Ms. 
Anti ma Bazaz, Makrand Pratap Singh, D. N. Dubey, Rakesh Kr. Mudgal, 
Pawan Kunrnr Shukla, Ritin Rai, Prateek Rath, V. K. Monga, K. V. 
Mohan, Rupesh Kumar, Ms. Pankhuri Shrivastava, Pravesh Bahuguna, 
Ji tin Singlrnl, Prateek Raoka, Ms. Neelam Sharma, Amatjit Singh, Ms. 
Srikala Gurukrishna Kumar, Ms. Shikha Sandhu, Prasanna Venkat, Ms. 
Sneha R. Iyer, Ms. Charulata Chaudhary, Prashanth K. Mukandan, 
Mohan, K. R. Sasiprabhu, Somiran Shan11a, Biju P. Raman, Raghu Reddy. 
Sandeep Narain (for Mis. S. Narain & Co.), Mrs. Priya Puri, S. K. Puri, 
Ranjay
Dubey, Ms. Churchi Mandakini, Shubail Farook, Faisal Farook, 
Jayant Sud. Amit Pathak, Ms. Suruchii Aggarwal, Ms. Indra Sawhney, 
Bibekananda Mohanti, Mr. Rajesh Jain, Ms. Roohina Dua, C. George 
Thomas, Ms. Akriti Chaubey, Ms. Kriti Awasthi, Fai·az Maqbool, Ms. 
Qurratulain, Ms. Tanya Shree, Maninder Singh, Abhimanyu Bhandari, 
Atul N., Ma yank Pandey, Dr. Ravindra Chingala, Ms. Kamakshi S. 
Mehlwal, Sanveer Mehlwal, Ms. Geetanjali, K. L. Janjani, Roy Abraham, 
Ms. Reena Roy, Ms. Seema Jain, Ms. Chandrani Prasad, Himinder Lal, 
Ms. Kamini Jaiswal, Jatinderpal Singh, Rajesh Kr. Singh, Ms. Romy 
Chacko, Pawanshree Agarwal, Manish Panda, Tarun Jain, Asit Das, 
Vinoo Bhagat, Vijay Kr. Gupta, Abhishek Gupta, Ms. Shweta, P. K. 
M;inohar, Devashish Bharuka, P. N. Puri, Tanm Johri, Ms. Shiiin Khajuria, 
Sibo Shankar Mishra, Ravi Prakash Mehrotra, Virvijay Singh, Ashok 
Mathur, Ramesh Babu M. R., B. Balaji, S. Ramsubramanian, Muthuvel 
l'alani, A. Arvind Athithan, Utkarsh Srivastava, R. Gopalakrishnan, S. 
Udaya Kumar Sagar, Ms. Bina Madhavan, Ms. Akanksha Mehra,
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
Mrityunjai Singh (for Mis Lawyer's Knit & Co.), Mohan Pandey, Mrs. 
B. Sunita Rao, Ms. Sujatha, .layant Kumar Mehta, Narendera M Sharma, 
Ms. Prachi Johri, Rajesh Prasad Singh, Ashok Kumar Gupta,-II, Ashok 
Panigrahi. Tejaswi Kumar Pradhan, V. N. Raghupathy, M. Paikaray, N. 
Paikray, Rishipal Singh, Ms. Vinakshi Kadan, Tejaswi Kumar Pradhan, 
Dr. Rajeev Sharma, Anirudh Sanganeria. Chinmay Deshpande, Parikshit 
Angadi, Amjid Maqbool, Vinay Garg, Kumud Lata Das, Ms. Padma 
l'riya, Rishabh Sancheti. Dr. Sanjeev Johri, Dinesh Mehta, Bishwa 
Bandhu, D. Subaramanian. T. Mahipal, Pankaj Kr. Mishra, A. S. Bhasme, 
Ms. Manali Singhal, Santosh Sachin, Abhijat P. Medh, Gaurav Srivastava, 
Rohit Kaul, lJdayan Tandan, Deepak Singh Rawat, Ms. Mamta Rani, 
Vodafone Essar Ms. Ruby Singh Ahuja, Ms. Suman Yadav, Ms. 
Aakanksha Munjhal, Debmalya Bane~jee, .lasmeet Singh, A. S. Aman, 
Manish Sharma, K. K. Mani, Sharad Puri, Ms. Aruna Mathur, V. N. 
l(oura, Ms. Anma Mathur, Ms. Paramjit Benipal, Avneesh Arputbam, 
Yusuf Khan, Ms. Anuraclha Arputham, M/s. Arputham Aruna & Co., 
Arvind Minocha, Shaclan rarasat, Ahmed Said, Gunnam Venkateswara 
Rao, Ms. Prerna Mehta, S.K. Sabharwal, Jai Prakash Pandey, Ms. 
Sadapurna Mukhetjee, Vivek Jain, Ratan Kumar Singh, Vipin Kumar 
Jai, Anil Shrivastav, Rituraj Biswas, Krishnanancl Pandey, Jayesh Gaurav, 
Abhijeet Sinha, Shashank Singh, Srijan Sinha, Amrenclra Kr. Chobey, 
Mel. Waquas, Anand, Ms. Ameyvikarama, Ms.
Susluna Suri, P. V. Dinesh, 
Radha Shyam Jena, Ms. Ginny J Rautray, Dharmencler Rautray, Mrs. 
Kanchan Kaur Dhodi, Manish Kumar, Nakul Jain, Ms. Divya Roy, Mrs. 
Naresh Bakshi, Parijat Sinha, Ms. Priyanka Paricla, Saksham 
Maheshwari, Jagjit Singh Chhabra, Sunil Kumar Jain, Dinesh K. Garg, 
Abhishek Garg, Dhananjay Garg, Deepak Mishra, Ratan Kumar 
Choudhuri, .layesh Gaurav, Ms. Soojan, Sumeet Lal, Jogy Scaria, Ms. 
Manjeet KirpaL Mrs. Raj di pa Behura, Mrs. Y. S. Lakshmi, A. Venayagam 
Balan, S. K. Bhattacharya, Niraj Bobby Paonam, S. Chandra Shekhar, 
M/s Mitter & Mitter Co., Pankaj Pandey, Ms. C. K. Sucharita, Shibashish 
Misra. Mrs. Anil Katiyar, Sarvesh Singh Baghel, Pramit Saxena, Rahul 
Aggarwal, Mrs. Shally Bhasin, H. D. Thanvi, Ms. Preeti Thanvi, Rishi 
Mato Ii ya. Balkishan Ladania, Mukul Kumar, Raj iv Shankar Dvivedi, S. 
K. Sarkar, Ms. Maclhavi Sharma. Balkrishan Shanna, Abinash Kumar, 
Mel. Ziaudclin Ahmad. Punit Dutt Tyagi. Pankaj Kumar Singh, D. N. 
Dubey, Ms. Rinku Mishra, Ms. Parul Shukla, Ms. Varsha Rana, M. 
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SUPREME COURT REPORTS 
[2016] 10 S.C.R. 
Dubey. Dr. Vinod Kumar Tewari, Mrs. K Sarada Devi, Bijan Kumar 
Ghosh, Raj Singh Rana, Makrand Pratap Singh, Ms. Varsha Rana. Rakesh 
Kr. MudgaL D. N. Dubey, Pa wan Kumar Shukla, San jay Bhatt, Dushyant 
Kumar, Naveen Kumar, Joydeep Mukherjee, Rabin Majumder, Sameer 
Jain, Siddharth Jain, Harsh Vardhan, Sandeep Bajaj, Ms. Nishtha Sikroria, 
Anurag Gupta, Sandir Kalia, Nand Ram, Aditya Chopra, Ms. Sayali 
Qureshi. Gajendra Maheshwari, Ms. Swati Thapa, Ms. Prema I ,al, Dheer 
Srivastava, Ms. Tripti Dhar, Ms. Shikha Bhardwaj, Ashwarya Sinha, 
Anurag, Ankur Mittal, Farrukh Rasheed, Ms. Garima Prashad, Vikas 
Singh Jangra, Bbakti Vardan Singh, Amit Kumar Pathak, Gaurav Singh, 
Jivesh Mehta, Sanjay Krnnar Das, Mullapudi Rambabu, Ajay Choudhary, 
Kush Chaturvedi, A. P. Sinha, Brajesh Kumar; Sudhanshu Palo, Ms. 
Anuj Bhandari, Rahul Pachauri, Ankit Mishra, Mordhwaj Singh, S. 
Thananjayan, K. R. Nambiar, M. P. Viond, M. T. George, Rajiv Mehta, 
R. Sathish, Ms. Baby Krishnan. C. N. Sree Kumar, Aruneshwar Gupta, 
TV. George. Mis J. S. Wad & Co., Vijay K. Gupta, Mrs. Sunita Sharma, 
Rohan P. Shah,Alok Yadav, Udit .lain, Somnath Shukla, Avinash Tripathi, 
1-larish Pandey. Raj iv Agnihotri, Nisbit Agarwal.Ms. Babita Sant, Yash 
Agarwal, Ms. Sunaina Kumar, Raj iv Agnihotri, Ramesh Agarwal. Kartik 
Kurmy, Shrish Kumar Misra, Ralrnl Prasanna Dave, Shakil Ahmed Syed, 
Sanjay Kapur, Anmol Chandan, Ms. Priyanka Das, Partha Sil,
Vijay 
Pratap Singh, K. S. Rana, Aditya Sharma, Ms. Rekha Sethi, B. K. Satija, 
Amlan Kumar Ghosh, Bhargava V. Desai, Ms. Akriti Dewan, Anurag 
Dubey. Mrs. Meenakshi, Ms. Anu Sawlmey, Rajesh Pandey, S. R. Setia, 
Prashant Kumar, Gaurav Agrawal, M. K. Dua, Devashish Bharuka, 
Sanjay Jain, Y. Prabhakara Rao, M. K. Michael, A. Raghunath, Vishnu 
Sba1111a, Ms. Anupama Sharma, Tripurari Ray, K. Rajeev, Deba Prasad 
Mukherjee, R. V. Kameshwaran, T.G. Narayanan Nair, V.K. Sidharthan, 
P. N. Puri. C.K. Sasi, Mrs. S. Janani, Ms. Malini Poduval, Mis T. T. K. 
Deepak & Co., Vijay Kumar, E. M. S. Anam, S. Sukumaran, Anand 
Sukumar, Bhupesh Kumar Pathak, Ms. Meera Mathur, V.K.Siddharthan, 
.logy Scaria. Ms. Beena Victor, Senthil Jagadeesan, Govind Manoharan, 
Ms. Shruti Iyer, Bijoy Kumar Jain, Samir Ali Khan, A. Radhunath, 
Chiraranjan Addey, Ghanshyam Joshi, Jai Prakash Pandey, Manish K 
Bislmoi, Narinder Kumar Verma, Venkat Poonia, Sanjay KathiyaL Deepu 
Kr. Jha, M. P. Vinod, Dileep Pillai, Ajay K. Jain, Atul Shankar, Rauf 
Rahim. Somiran Sharma, K. V. Mohan, A. V. Rangam, Buddy A. 
Ranganadhan, D. V. Raghu Vamsy, Prem Prakash, Punit Dutt Tyagi, Y.
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
Raja Gopala Rao, Ajay Choudhary, Raj iv S. Roy, Avrojyoti Chatte1jee, 
Abh~jit S. Roy, Pranab Kumar Mullick, Aditya Mehrotra, Sukumar, Sebat 
Kumar Devria, Prem Sunder Jha, Somnath Bane1jee, Satya Mitra Garg, 
Siddhaiiha Choudhury, Sanjiv Kumar Singh, Sanjeeb Panigrahi, S. Ravi 
Shankar, Biswajit Das, Nayanika Pattnaik, Ms. Vanshika Chandra, Ms. 
Asha Gopalan Nair, Ms. Indra Sawhney, Ms. K. V. Bharthi Upadhyay, 
Ms. Manjula Gupta, Ciccu Mukhopadhaya, Ms. PunamKumari, A.G. 
Garg, Rakesh Garg, Ms. Shweta Garg, Abhisth Kumar, P. P. Singh, Niraj 
Sharma, Ms. Krishna Sarma, Avijit Roy, Ms. Vartika Sahay (for Mis 
Cmvorate Law Group), Anil Shrivastav, Rituraj Biswas, Pragyan Pradip 
Sharma, Shikhar Garg, Ganesh Bapu TR., Ravi Kant Pal, P. V. 
Yogeswaran, B. S. Banthia, Ms. Anitha Shenoy, Ms. SurabhiAggarwal, 
Ranjith K., Ms. Shally Bhasin, Bhaskar Y. Kulkarni, Ms. Sushma Shanna, 
Amit Pawan, Ravindra Bana, Nikhil Majithia, Ms. Shirin Khajuria, Y. 
Raja Gopala Rao, Rakesh K. Sharma, T.N. Rama Rao, Hitesh Kumar 
Sharma, T. Veera Reddy, Ms. C. K. Sucharita, G.N. Reddy, P.A. Noor 
Muhmed, Nitin Bhardwaj, Shishir Pinaki, Rajiv Kumar Sinha, lrshad 
Ahmad, Sandip Kalia, Krishna, Nand Ram, C. Balakrislma, Ms. Bharti 
Tyagi, Kaushik Poddar, Adarsh Upadhyay, S. K. Verma, N. Ganpathy, 
Arijit Mazumdar, Abhinav Muke1:ji, Ms. Archana Pathak Dave, Ms. 
Ankita Chaudhary, Ardhendumauli Kumar Prasad, Mrs. Pratibha Jain, 
Ms. Nilofar Khan, R. C. Gubrele,
Anant K. Vatsya, Dr. Sanjay Gupta, 
Ajay Singh, Dr. Sushi! Balwada, Ambhoj Kumar Sinha, Pradeep Kumar 
Dubey, Viswajit Singh, Naresh Kumar, Merusagar Samantaray, Renjith 
Marar, Vinodh Kanna B., S. J. Amith, Gautam Kumar, Dr. (Mrs.) Vipin 
Gupta, P. B. Suresh, Vipin Nair, Tishampati Sen, Ms. Nandini Sen, D. P. 
Mukherjee, Amai:iit Singh Bedi, Umang Gupta, Varun Chandiok, Srisatya 
Mohanty. Ab hay Kumar, Khalid Akhtar, Bilal Khan, A. R. Madhav Rao, 
Rajat Mittal, Pawanshree Agrawal, Amar Gupta, Ritunjay Gupta, Divyam 
Agarwal, Pankaj Bhagat, Ms. Babita Sant, Ms. Sunaina Kumar, Nitesh 
Jain, Shubhranshu Padhi, Kush Chaturvedi, M. Yogesh Kanna, Ms. 
Ni th ya, Sunil Roy, Raj iv Tyagi, Divakar Kumar, Gyanendra Shanna, Rahul 
Tyagi, Ajay Bansal, Gaurav Yadava, Viswapal Singh, Naveen Shanna, 
Mishra Saurabh, Ankit Kumar Lal, Ms. Vanshaja Shukla, Biswajit Das, 
Nayanika Pattnaik, Ms. Asha G. Nair, Ms. Sonu Bhatnagar, Anil Kumar, 
Nishant Ramakantrao Katneshwarkar, R. Nedumaran, Ms. Rashmi 
Singhania, Ayush Sharma, Nupur Shanna, ShaileshK. Kapoor, Sanjay 
Kumar Singh, Advs. for the appearing parties. 
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[2016] 10 S.C.R. 
The following .Judgments and Order of the Court were delivered: 
T. S. THAKUR, C.11 (for himself and A. K. Sikri and A. M. 
Khanwilkai; .J.J.) I. These appeals bring to fore for our determination 
vexed questions touching the interpretation of Articles 301 to 307 
comprising Pmi XIII of the Constitution which have been the subject 
matter or several Constitution Bench decisions of this Court, all but one, 
decided by majority. The questions assume in a great measure 
considerable public importance not only because the same deal with the 
powers of the State legislatures to levy taxes but also because any 
pronouncement of this Court is bound to impact the federal character of 
our polity and the Centre-State relationship in legislative and fiscal matters. 
There is no gainsaying that it is the importance of the questions that lies 
al the bottom of the present reference to a larger Bench made in the 
following circumstances. 
2. ln exercise of their legislative powers under Entry 52 of List II 
of the Seventh Schedule to the Constitution several States in the country, 
at least 14 of whom are parties to these proceedings, have enacted laws 
that provide for levy of a tax on the "entry of goods into local areas 
comprising the States". The constitutional validity of these levies was 
questioned in different High Courts by assesses/dealers aggrieved of 
the same, inter a!ia, on the ground that the same were violative of the
constitutionally recognised right to free trade commerce and intercourse 
guaranteed under Article 301 of the Constitution of India. The levies 
were also assailed on the ground that the same were discriminatory and, 
therefore, violative of Article 304(a) of the Constitution oflndia. Absence 
of Presidential sanction in terms of Article 304(b) of the Constitution of 
r 
India was also set-up as a ground of challenge to the levies imposed by 
the respective State legislatures. Writ Petition (Civil) No. 8700 of2000 
filed before the High Court of Punjab and Haryana was one such petition 
that assailed the constitutional validity of the Haryana Local Development 
Act, 2000. Relying upon the decisions of this Court inAtiabari Tea Co. 
G Ltd. v. State of Assam & Ors. (AIR 1961 SC 232); Automobile 
Transport (Ra)astllan) Ltd. etc. v. State of Ra}asthan & Ors. (AIR 
1962 SC 1406); Mis. Bhagatram Rajeev Kumar v. Commissioner 
of Sales Tax, M.P. and Ors. (1995 Supp [1] SCC 673 ); and State of 
Bilwr and Ors. v. Bihar Chamber of Commerce and Ors. (1996) 9 
H
JINDAL STAINLESS ITD. v. STATE OF HARYANA 
[T. S. THAKUR, CJl] 
SCC 136, a Division Bench of the High Court of Punjab and Haryana 
dismissed the said petition and connected matters on the ground that the 
levy was compensatory in character hence outside the purview of Article 
301. 
3. The correctness of the said order was assailed before this Court 
in Jindal Stripe Ltd. and Am: v. State of lla1J1a11a and Ors. (2003) 
8 SCC 60. A two-Judge Bench of this Court, however, referred the 
matter to a larger Bench as it noticed an apparent conflict between the 
pronouncements of this Court in Atiabari (supra) and Automobile 
Tramport (supra) cases on the one hand and Bhagatram (supra) and 
Bihar Clrnmber of Commerce (supra) on the other. The Court after 
noticing the development of law on the subject observed: 
"25. To sum up: the pre-1995 decisions held that an 
exaction to reimh11rse/recompense the State the cost of 
an existing facility made available to the traders or the 
cost o{ a specific facility planned to he provided to the 
traders is compensatory tax and that it is implicit in such 
a levy that it must, more or less, be commensurate with 
the cost of the service or facility. 
The decisions 
emphasized that the imposition of tax must he with the 
definite pwpose of meeting the expenses on account o{ 
providing or adding to the trading facilities either 
immediately or in fitture provided the quantum of tax 
sought to he generated is based on a reasonable 
relation ro
the actual or projected expenditure on the 
cost of the service or facility. 
26. 111e decisions in Bhagatram and Bihar Chamber of 
Commerce now sav thar even if the purpose o{ imposition 
of the tax is not mere~v to confer a special advantage 
on the traders hut to benefit the public in general 
including the traders. that levy can still he considered 
to he compensarmy. According to this view, an indirect 
or incidental hene/it lo traders hy reason o{ stepping 
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[2016] 10 S.C.R. 
A 
up the developmental activities in various local areas 
of' the State ca11 be legitimately brought within the 
co11cept of' compensatory tax, the nexus het\1'een the 
tax k11ow11 as compensatOI)' tax and the tradingfacilities 
not heing necessari(v either direct or specific. 
B 
2 7. Since the concept of compensatorv tax has hee11 
judicial!\' evolved as an exception to the provisions of 
Article 301 and as the parameters of this judicial 
co11cept are h!urred, partintlar!y by reason of the 
C 
decisions in Blrngatram and Bi/tar Cltamber of 
Commerce we are of the view that the interpretation of 
Article 301 vis-a-vis compensatory tax should be 
authoritatively laid dmvn ivith certitude by the 
Constitution Bench under Article 145(3). 
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28. !11 the circumstances let all these matters he placed 
hefime the Hon 'hie the Chief .Justice for appropriate 
directions. " 
4. The matters were. pursuant to the above, placed before a 
Constitution Bench of this Court in Jindal Stainless Ltd. (2) and A11r. 
v. State <~f IlmJ•ana and Ors., (2006) 7 SCC 241 which resolved the 
conflict noticed in the reference order by holding that the working test 
propounded by seven Judges in Automobile Transport case (supra) was 
incompatible with the test of 'some connection' enunciated by the 
three Judge Bench in Bhagatram'.~ case (supra). The Court held that 
the test of 'some connection' as propounded in Bhagatram 's case 
(supra)
had no application to the concept of compensatory tax. The 
Court, accordingly, ovenuled the decisions rendered in Bhagatram and 
Bihar Chamber of Commerce cases and held that the doctrine of' direct 
and immediate effect' of the impugned law on trade and commerce 
under Article 301 as propounded in Atiabari (supra) and the working 
test enunciated in Automohile Transport (supra) cases for deciding 
whether a tax is compensatory or not will continue to apply. The Cou1t
JINDAL STAINLESS LTD. v. STATE Of HARYANA 
[T. S. THAKUR, CJI] 
observed: 
"53. We reiterate that the doctrine of "direct and 
immediate effect·· of the impugned law on trade and 
commerce under Article 301 as propounded in Atiabari 
Tea Co. Ltd. v. State of Assam and the working test 
e111111ciated in Automohile 7/·ansport (Rajasthan) Ltd. v. 
State of Rajasthan for deciding whether a tax is 
cmnpe11sat01y or not vide para 19 of the Report (AIR), 
H·ill continue to apply and the test of "some connection" 
indicated in para 8 (of SCC) of the judgment in 
Bhagatram Rajeevkumar v. CST and followed in State 
of Bihar v. 
Bihar Chamber of Commerce is, in our 
opinion, not good law. Accordingly, the constitutional 
validity of various local enactments which are the 
s11hject-matter.1· of pending appeals, special leave 
petition.1· and writ petitions will now he listed for being 
disposed of in the light of this judgment. " 
5. The matters were. in terms of the above direction, listed before 
a two-Judge bench for hearing of the appeals in the light of the above 
pronouncement of the Constitution Bench. The two-Judge Bench, 
however, noticed that although the basic issue in the appeals revolved 
around the concept of compensatory tax, the High Courts had not 
examined the same as they had considered themselves bound by the 
view taken in Bhagatram and Bihar Chamber of Commerce cases 
(supra). The Court further found that in the absence of relevant data 
before the High Courts, the
issue whether the levies were compensatory 
could not have been considered and accordingly referred the matter 
back to the High Courts to decide the said aspect. The appeals were, in 
the meantime, adjourned to await the finding from the High Courts on 
the question whether the levies were indeed compensatory in nature 
having regard to the decisions of this Court inAtiabari and Automobile 
Ji'amport cases (supra). 
6. The matters were accordingly taken up by the High Courts, 
after the remand, who came to the conclusion that the impugned levies 
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[2016] 10 S.C.R. 
were neither compensatory in character nor was the procedure stipulated 
by Article 304(b) and the proviso to the same followed. The levies were 
on that basis held to be in violation of Article 301 being an impediment to 
free trade, commerce and intercourse and accordingly struck down. 
The High Courts of Assam, Arunachal Pradesh, Jharkhand, Kerala and 
T1mil Nadu struck down the levies imposed by their respective States 
also on the ground that they were discriminatory in nature hence violative 
of Article 304(a) of the Constitution. 
7. All these judgments and orders of the High Courts. passed 
after the remand, then, came to be challenged by the States concerned 
C 
in the appeals filed against the same. These appeals initially came-up 
before a two-Judge Bench of this Court comprising .Justice Arijit Pasaya! 
and Justice S.H. Kapadia. Their Lordships referred the same to a 
Constitution Bench for an authoritative pronouncement on as many as 
ten questions formulated in the reference order (Jaipralws!t Associates 
I) 
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Limited v. State of Mad/Jya Prades/J and Ors. (2009) 7 SCC 339). 
The Court noticed the arguments advanced on behalf of the assessees 
that entry taxes were, in essence and ill the classical sense, in the nature 
of 'a fee' and not 'a tax'. It also noted the contention that all the cases 
on which the parties had placed reliance related to entry tax in the context 
of tax on vehicles in
contradiction to taxes on entry of goods. The Court 
was of the view that while the Constitution Bench in Jindal Stainless 
Ltd. (2) (supra) had dealt with some aspects of the matter, certain other 
important constitutional issues remained to be examined especially 
because a conceptually and contextually different approach may be 
required vis-rl-vi.1· "transport cases" on the one hand and cases of·'entry 
tax on goods" on the other. The questions formulated by the Court for 
determination by the Constitution Bench were in the following words: 
"(l) Whether the State enactments relating to levy of 
entrv tax have to he tested with reference to hoth clauses 
(a) and (h) of Article 304 of the Constitution for 
determining their validity and whether clause (a) of 
Article 304 is conjunctive with or separate fi'om clause 
(h) of Article 304? 
(2) Whether imposition of entry tax levied in terms of 
Entry 52 Ust II of the Schedule VJJ is violative of Article
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
171 
IT. S. THAKUR, CJl] 
301 of the Constitution? If the answer is in the 
A 
affirmative whether such levy can he protected if entry 
tax is cmnpensatorr in character and if the ansiver to 
the af(Jresaid question is in the a{firmlitive what are the 
yardvtick.I· to he applied to determine the compensatmy 
character of the rntr)' tax? 
B 
(3) /!Vhether En Irr 52 Ust II, Schedule VII of the 
Co11s1it11tion like 01her taxing entries in the Schedule, 
men· , J>mvides a taxing field for exercising the po1ver 
to /el'.1' a11d whether collection of entry tax which 
ordinarilv would he credited to the Consolidated Fund 
C 
of the State being a revenue received by the Governme/11 
of the State and 1vould have to he appropriated in 
accordance ivith law and for the purposes and i11 the 
manner provided in the Constitution as per Article 266 
and there is nothing express or explicit in Entry 52 List 
fl, Schedule VII 1\'hich would compel the State to spend 
the tax collected within the local area in which it was 
collected? 
(1) Will the principles of quid pro quo relevant to a fee 
D 
applv in the matter of' taxes imposed under Part XIII? 
E 
(5) Whether the entry tax may he levied at all where the 
goods meant .for heing sold, used or consumed come to 
rest (standvtill) afier the movement of the goods ceases 
in the ''local area"? 
(6) Whether the entry tax can he termed a tax on the 
movement of goods when there is no har to the entry of
good1· at the State horder or when it passes through a 
local area within which they are not sold, used or 
C0/1Sl/11Jed? 
(7) Whether inte17Jretation o/Articles 3()1 to 304 in the 
co/1/ext ol tax on vehicles (commonly known as 
"transport") cases in Atiahari case and A utomohile 
11-ansport case applv to e1111y tax cases and !f so, to 
whal extenr'! 
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[2016] l 0 S.C.R. 
(8) Whether the 11011-discriminatorv indirect State tax 
which is capahle of' heing passed on and has heen 
passed 011 hy traders to the consumers infi·inges Article 
301 of' the Constitution? 
(<J) Whe!her a tax on good1· within the State vvhich directlv 
impedes the trade and thus violates Article 301 of the 
Constitution can he saved hy ref'erence to Article 304 
of the Constitution alone or can he saved hy any other 
article? 
(10) Whether a fe1~y under E1111y 52 List JI, even if held 
to he in nature of' a compensatory levy, must, on the 
principle of equivalence demonstrate that the value of 
the quantifiahfe henefit is represented hy the costs 
incurred in procuring the facifitylservices (v..-!1ich costs 
in tum become the hasis of rei111hursement/reco111pe11se 
for the provider of the services/facilities) to he provided 
in the "local area .. concerned and whether the entire 
State or a part thereof' can he comprehended as local 
area fiir the pwpose of' entn· tax?" 
8. The matter was accordingly placed before a five-Judge Bench 
of this Court (.Jindal Stainless Limited and Am: v. State of llaryana 
and Ors. (2010) 4 SCC 595) who briefly refe1Ted to the decisions in 
Atiabari, Automobile Transport cases (supra) and Kesltm• Mills Co. 
Ltd. v. CIT (AIR 1965 SC 1636) and a few others and refe1Ted the 
matters to a larger Bench for reconsideration of the judgment of this 
Court in Atiabari and
Automobile Tramport (supra). The Court noted 
that the correctness of the view taken in the said two cases had been 
doubted as early as in the year 1975 in G.K. Krishnan v. State of 
Tamil Nadu (1975) 1 SCC 375. The reference order briefly set out 
some of the questions that required consideration by a larger Bench. 
The Court said: 
"l J. Some of' these aspects which need consideration 
hr a farger Bench of' this Cowt may he hriefly
JINDAL STAINLESS Ll'D. v. STATE Of HARYANA 
[T. S. THAKUR, CJl] 
e111111ierared. Interplay/interrelationship hetvveen Article 
301(a) 011d ,1rticle 304(/J). The significa11ce of the word 
"and" he/ween Articles 304(a) a11d 304(h). 
The 
significance of the non ohstante clause in Article 304. 
The halancing o{.fi'eedom of trade and commerce in 
llrticle 301 vis-a-vi.1· the Srates' authority to levy taxes 
under Articles 215 and 246 of the Constitution read 
with the appropriate legislative entries in the Seve11th 
Schedule. particularly in the context of movement of 
trade and cmnmerce. 
12. Whether Article 301(a) and Article 304(/J) deal with 
differe111 suhjccts? Whether the impugned taxatio11 law 
to he valid under Article 301 (a) must also fu(fil the 
conditions mentio11ed in Article 304(/J), including 
Presidential assent? Whether the ivord "restrictions" 
in Article 302 and in Article 304(/J) includes tax laws? 
Whether validity al a /av.; impugned as violative of 
Article 301 should he judged only in the light of the 
test of non-discrimination? 
Does Article 303 
circumscribe Article 301? Whether "internal good.1·" 
H'mild come under Article 304(/J) and "external goods·" 
under Article 304(a) '! Whether "per se test" propounded 
in Atiahari case should or should not he rejected? 
Wherher tax simpliciter constitutes a restriction under 
Part Xlll of the Constitutibn? Whether the word 
"restriction" in Article 304(h) includes tax lmvs? ls 
taxation justiciahle? Whether
the "working test" laid 
dmrn in A tiahari makes a lax law per se violative of' 
Article 30 l '! Jrzterrelationship hetween Article 19(1 )(.g) 
and Article 301 of the Constitution? These are some of 
the questions v.11ich warrant reconsideration of the 
judgments in Atiahari Tea Co. Ltd. and Automobile 
hansport (Rajasthan) Ltd by a larger Bench of this 
Court. " 
9. At the hearing before us learned counsel for the parties agreed 
after a day-long exploratory exercise that the questions that fall for 
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SUPREME COURT REPORTS 
[2016] I 0 S.C.R. 
A 
determination by this Cou1t could be re-framed as under: 
I. Can the levy of a non-discriminatory tax per se constitute 
infraction of Article 301 of the Constitution of India? 
2. If answer to question No. I is in the affirmative, can a tax 
B 
which is compensatory in nature also fall foul of Article 301 
of the Constitution of India? 
3. What are the tests for determining whether the tax or 
levy is compensatory in nature? 
C 
4. Is the Entry Tiu levied by the States in the present batch 
of cases violative of Article 301 of the Constitution and in 
particular have the impugned State enactments relating to 
entry tax to be tested with reference to both Articles 304(a) 
and 304(b) of the Constitution for determining their validity'! 
o 
I 0. We have heard learned counsel for the parties at considerablt: 
length on the above questions which we shall now take up for discussion 
ad-seriatim. 
E 
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Re: Question No. 1 
l I. Whether no11-discri111inato1y fiscal measures also impede free 
trade, commerce and intercourse and thereby fall foul of Article 30 I of 
the Constitution can be answered only if one keeps in view the 
Constitutional scheme underlying separation of powers in a federal 
system of governance like the one chosen by us. The answer would also 
depend upon the way we look at. understand and interpret the provisions 
of the Constitution and in particular the provisions of Parts XI, XII and 
Xlll thereof.
Interpretation of these and indeed every other provision 
must have due regard to what are recognised as the basic features of 
the Constitution. In doing so, the approach of the Courts can neither be 
rigid nor wooden or pedantic. Being a I iving and dynamic document, the 
Constitution ought to receive an equally dynamic and pragmatic 
interpretation that harmonizes and balances competing aims and objectives 
and promotes attainment of national goals and objectives. It must, as
JINDAL STAINLESS LTD. v. Sl~.\TE OF HARYANA 
[T. S. THAKUR. CJ!] 
observed by this Court. in Ki/1010 Hollo/um I'. Zttcl1il/hu (1992) Supp 
2 SCC 651 be read as a logical whole. The Constitutional provisions 
cannot be read in isolation. nor can they be interpreted in a manner that 
renders another provision redundant declared this Court in T.M.A. Pai 
Fo1111d11tion and others 1•. State of Kamatakll (2002) 8 SCC 481. If 
words used in the provision are imprecise, protean or evocative or can 
reasonably bear meaning more than one. it would be legitimate for the 
Court to go beyond the literal confines of the provision and to call in aid 
other well recognised rules of construction such as legislative history, 
the basic scheme and framework of the statute as a whole, the object 
sought to be achieved and the consequence flowing from the adoption 
of one in preference to the other possible interpretation observed this 
Court in Chief Justice of Audhm Pradesh anti others. v. L. V. A. 
Dixit11l11 lint! others (1979) 2 SCC 34. Reference may also be made 
to the decision of this Court in Ke.mw111<111da Blwrati v. State ofKemla 
(1973) 4 SCC 225 where this Court quoted with approval Lord Greene:~ 
observations in the following words: 
'"56 . ... ... It is not riah/ to construe words in vacuum 
and then insert the meaning info an arlicle. Lord Green 
observed i11 Bidie v. General Accident. Fire and Life 
Assurance Corporation [1948] 2 All E.R. 995: 
The first thing one hos to do. I
venture to think. in 
construing words in a section <~f w1 Act 1if Parliament is 
not to take those words in vacuo. so to speak. and 
attribute to them what is sometimes called their natural 
or ordinary meaning. Few words in the E11glish 
language have a natural or ordinary 111ea11i11g in the 
sense that they must be so read that their 111eani11g is 
entirely independenl of their context. The method 14" 
construing statutes that I prefer is not to take particular 
words and attribute to them a surf of prima facie 
meaning which you may have to di.1place or modify. ft 
is to read the statute as a whole and ask 011eself the 
question: '!11 this state, in this context, relating to this 
subject-matte1; what is the true meaning of that word. 
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5 7. 1 respect/idly adopt the reasoning of Lord Green in 
co11strui11g the expressio11 "the amendment of the 
Constitution .... 
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61. 1 may also refer to the ohservatio11 of Gwve1; CJ., 
a11d Lord Wright: 
"A grant of the power in general terms, 
standing hy itself, would no douht he construed in the 
vvider sense; hut it mav he qualified by other express 
provisions in the same e11actment, hy the implications 
ol the context, and even hy considerations arising out 
of H1wt appears to he the general scheme of the Act." 
(Per GH·1•e1: CJ -
The Central Provinces and Berar 
Act, 1939, FCR 18 at 12 MR). 
"The question. then, is one olconstruction and 
in the ultimate resort must he determined upon the actual 
words used, read not 111 vacua but as occurring in a 
single complex instrument, in which one part may throw 
light on anotha The Constitution has heen described 
as the federal compact, a11d the Construction 11111.1·t hold 
a balance hetween all its parts. " (Per Lord Wright -
James v. Co111111011wea!th olAustralia, 1936 AC 578 at 
613.)" 
12. It is trite that a nanow interpretation that may have the potential 
or tendency to subvert the delicate balance which the framers of the 
Constitution had in mind while distributing legislative businesses including 
the sovereign power to levy taxes must be avoided and a construction 
that is most benefici.al for a harmonious relationship between
different 
limbs of the State including that between the Centre and the States or 
States inter se adopted. This may. at times, involve ironing out of rough 
edges which exercise a Constitutional Court must necessarily undertake 
to avoid confusion and resultant negation of the Constitutional objectives. 
13. Having said so. we must sail smooth on certain fundamentals
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
[T. S. THAKUR, CJ!] 
before we address the question whether levy of taxes per se operate as 
an impediment or restriction on the right to free trade, commerce and 
intercourse. That is because a true and correct answer to Question 
No. I can be found only if we constantly keep those fundamentals in 
mind while attempting to resolve what has been found to be somewhat 
difficult to resolve. For instance, whether levy of a tax is an attribute of 
sovereignty and if so whether Article 246 of the Constitution recognises 
the sovereign power of the State to make laws including the power to 
levy taxes on subjects enumerated in List II of the Seventh Schedule of 
the Constitution is an important dimension that must be addressed as a 
part of the interpretative exercise. So also, we must examine whether 
pO\verto tax if held to be subservient to Article 30 I, shall h~ve the effect 
of denuding the States of their sovereignty in the matter of levy of taxes 
and in the process affect the federal structure of the polity envisaged by 
the Constitution. If levy of taxes is always presumed to be reasonable 
and in public interest, whether such levies could be said to be within the 
contemplation of Article 304(b) when it provided for imposition of 
"reasonable restrictions in public interest'' is yet another aspect that must 
be explored especially when the reasonableness of any restriction within 
the comprehension of Article 304(b) is not free
from judicial scrutiny by 
Courts. These are some of the broad and fundamental issues that need 
to be examined before we attempt to answer the question whether levy 
of taxes per se acts as an impediment for free trade, commerce and 
intercourse. We may now briefly refer to these fundamentals before 
adverting to the provisions of Part Xlll that fall for our interpretation . 
. Power to Tax : an Attribute of sovereignty 
14. Power to levy taxes has been universally acknowledged as an 
essential attribute of sovereignty. Cuvley in his Book on Taxation -
Volume-I (4'" Edn.) in Chapter-2 recognises the power of taxation to be 
inherent in a sovereign State. The power, says the author. is inherent in 
the people and is meant to recover a contribution of money or other 
property in accordance with some reasonable rule or apportionment for 
the purpose of defraying pub! ic expenses. The following passage from 
the book is apposite: 
"57. Power to tax as an inherent attribute of.wJJ'ereignty. 
The power (~l taxation is an essential and inherent 
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attribute of' sovereignty, belonging as a murter of' right 
to every independent government. 
It is possl'ssed by 
the government without being expressly conferred by 
the people. The power is inherent in the people because 
the sustenance of' the government relJUires cun1ril111tio11s 
Ji-inn them. In fac:t the power of taxation may be defined 
as "'the puwer inherent in the sovereign state to rec:uver 
a contribution 
r~f money or other property, iii 
accordanc:e 
with 
some 
reasonable 
rule 
or 
apportionment. Ji"om the property or oc:c:upations within 
its jurisdiction for the purpose of defi·aying the public 
expenses. " Constitutional provisions rel11ting lo 1he 
power of taxation do not operate 11s grants <~f the puwer 
of taxation tu the government but instead merely 
constitute limitations upo11 a power whic:h would 
otherwise be practically without limit. 
This i11here11t 
D 
power to tax extends to everything over which the 
sovereign power extends, but not to anything beyond 
its sovereign power. Even the federal gover111ne111 :1· 
power of taxation does not inc:lude things beyond its 
sovereign pmFe1: But where exclusive j11risdictio11 over 
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land is granted to another stale or co1111t1J', the land 
remains suNect to the taxing power <~/the state within 
whose boundaries it is located. " 
15. To the same effect is the decision of this Court in Raia 
Jllga11nlltfl Bllksh Singh v. State of U.P. &
Anr. (AIR 1962 SC 1563) 
where this Court observed: 
The power of taxation is. no doubt. the sovereign 
ri<,£ht of the State: as was observed bv Chief' .Justice 
~Marshall in lvf'Culloc:h v. Marv/and U Law Edn. 5 79 
p.6071 : "The power of taxing the people and their 
properrv is essential tu the verv existenc:e o{Govern111e11t, 
and mav be legitimatelv exercised 011 the obiects to which 
it 'is upplicahle to the utmost extent to which the
JINDAL STAfNLESS LTD. v. s·1~<\TE OF HARYANA 
[T. S. THAKUR, CJ!] 
Government mav choose to carrr it." In that sense. it is 
not the function of the court tu eni-1uire whether the 
power of taxation has been reasonably exercised either 
in respecr of the amount taxed or in re.1pecl of the 
property which is made the object of the tax. Article 
265 of the Constitution provides that no tax shall be 
levied or collected, except by authority of law: and so. 
for deciding whether a tax has been validly levied or 
not. it would be necessmy first to enquire whether the 
legislature which passes the Act H'llS competent tu pass 
it or 1101. " 
(E111p/1t1sis supplied) 
16. Reference may also be made to Dena Bank v. Bhik/iahlrni 
Prabhudas Parekh & Co. (2000) 5 SCC 694 where this Court held: 
"8. 
The principle of priority of government debts is 
founded on the rule of necessity and of public policy. 
The basic justification jiJr the claim jiJr priority of State 
debts rests on the well-recognised principle that the State 
is entitled to raise monei· bv taxatio11 because unless 
adequate revenue is received bv the Stale. ii would nut 
be able to function as a so1•ereign Government at all. It 
is essential that as a sovereign, the Stale should be able 
to discharge its priman: governmental functions and in 
order lo be able to discharge such f1111ctions efjicientlv, 
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it must be in possession of necessan• funds and this 
F 
consideration emphasises the necessity and
the wisdom 
~ of conceding to the State, the right to claim priorit): in 
re.1pec1 of its tax dues (.~ee Builders Supply Cu11111.[AIR 
1965 SC 1061: (1965) 56 !TR 91])" 
(E111pflt1sis supplied) 
17. In Commissioner of Income Tax, Udit1p11r, Rajastlian v. 
MCtlowell and Co. Ltd. (2009) 10 SCC 755 where this Court reiter.1ted 
the legal position in the following words: 
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"2 I. "Tax". "dutv ··. ''cess" ur "fee" cu11stiluting a class 
denules tu l'ariuus kinds u{ impusts bv State in its 
sovereign power of taxation lo raise r11ve1111e (or the 
Stale. Within the expressiu11 uf each specie each 
expression denotes different kind of impost depending 
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on the purpose for which they are levied. This power 
can be exercised in w1y uf its 111a11ifestatio11 only under 
any law authori.1ing levy and collection of lax as 
e11l'isaged under Article 265 which uses only the 
expression thal no "tax" shall be levied and collec!ed 
excepl authorised by law. It in ifs elementary meaning 
conveys that to support a tax legisla!ive action is 
essential, it cannot be levied and collecled in the ahse11ce 
r!f any legislative sanction by exercise uf executive 
power rif Stale under Article 73 hy the U11io11 or Article 
I 62 by the State. 
22. Under Article 366(28) "Taxation" has been defined 
lo include the imposition of any lox or impost whether 
general or local or special and tax shall be construed 
accordingly. "Impost" meuns compulsory levy. The wqJl-
known a11d well-settled characteristic of "tax" in its 
wider sense includes oil imposts. Imposts i11 the context 
have fi1llowing characteristics: 
(i) The pol1'er to tax is an incident of sovereig111v. 
F 
(ii) "Law" ill the context <~f Article 265 mew1s an Act c~f 
legislature and cannot comprise an executive ordl!I' or 
rule without express
statutm:v authority. 
(iii) The term "tax" 1111der Article 265 read with Article 
366(28) includes imposts of everr kind viz. tax, duty, 
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cess or fees. 
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(iv) As an i11cide11t ofsovereigntv and in the nature of 
compulsorv exaction. a liabilitv fin11llled 011 principle 
of contract cannot be a "tax" in its t<!Chnical sense us 
w1 impost. general, local or special. .. 
(Emphasis Supp/ietl)
JINDAL STAINLESS LTD. v. S'fATE OF HARYANA 
181 
[T. S. THAKUR, CJI] 
Power o{ Taxation 1111der tile Co11.stitutio11: 
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18. We shall presently turn to the Constitutional limitations on the 
sovereign power to tax but before we do so we need to point out that 
while the power to levy taxes is an attribute of sovereignty, exercise of 
that power is controlled by the Constitution. This is evident from the 
provisions of Article 265 which forbids levy or recovery of any tax except 
B 
by the authority of law. It reads: 
"265. Taxes not to he imposed sm•e by a11tl10ri(v of law 
- No fax shall be lei!ied or co/leered except by auihorify 
of law." 
c 
The authority of law referred to above must be traceable to a 
provision in the Constitution especially where the legislative powers are 
shared by the Centre and the States as is the case with our Constitution 
D 
which provides for what has been described as quasi federal system of 
governance. 
The source of power to enact laws is contained in Articles 245 
and 246 of the Constitution which read: 
"245. Extent of laws made by Parli11111e11t and by the 
Legislatures of State~· - (I} Subject fo the provisio11s of 
this Constitution. 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. 
(2) No law made by Parliament shall be deemed to be 
invalid 011 the ground that it would have extra-territorial 
operation. 
246.
Subject-matter of law.~· made by Parliament and 
by the Legislatures of States -
(1) Notwithstanding 
anything in clauses (2) and (3). Parliament has exclusive 
power to make laws with respect lo any of the mal/ers 
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enumerated in List I in the Seventh Schedule (in this 
Constitution referred to as the "Union List"). 
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(2) Notwithsta11di11g anything in clause (3), Parliament 
and , .whject to clause (1), the J"egislature of any State 
also, have power to make laws with respect to any of 
the matters enumerated in Ust Ill in the Seventh 
Schedule (in this Constit11tio11 referred to as the 
"Concurrent List"). 
(3) Suhject to clauses (1) and (2), the Legislature of 
any State has exclusive power to make laws for such 
State or any part thereof ·with respect to any of the 
matters enumerated in List 11 in the Seventh Schedule 
(in this Constitution referred to as the 'State J,ist '). 
(4)Parliame11t has power to make laws with respect to 
a11y matter for any part of the territory of India not 
i11cluded {in a State] notwithstanding that such matter 
is a matter enumerated in the State List. " 
l 9. Interpreting Articles 245 and 246, a three-Judge Bench of this 
Court in Mis. lloechst Pliarmace11tical.1· Ltd anti Ors. v. State of Bihar 
and Ors. (1983) 4 SCC 45, held on a review of the available decisions 
that the Constitution effects a complete separation of taxing powers of 
the Union and the States under Article 246 and that there is no overlapping 
anywhere in the exercise of that power. The sources of taxation are 
clearly delineated, observed the Court. The Court also held that there is 
a distinction between general
subjects of legislation and taxation for the 
former are dealt within one group while the later is dealt with in a separate 
group. The result is that the power to tax cannot be deduced from a 
general legislative entry. That view was approved by a Constitution 
Bench of this Court in State of West Bengal v. Kesoram Industries 
Ud. (2004) 10 SCC 201. The propositions stated in the two decisions 
must therefore be treated to be fairly well settled. Reference may also 
be made to the decision of this Court in State of Kera/a anti ors. v. 
Mar Appmem Kuri Co. Ltd. and Anr. (2012) 7 SCC 106 where this 
Court explained the sweep and purport of Articles 245 and 246:
JINDAL STAINLESS LTD. v. STATE OF HARYANA 
[T. S. THAKUR, CJ!] 
"35. Article 2./5 deals with ex/en/ of' laws made by 
Par/iamelll and by the legislatures of States. The verb 
"made", in pas/ tense, finds place ill the Head Note lo 
Arlicle 2./5. The verb "make", i11 the present tense, exists 
in Article 2-15(1) whereas the verb "made", in the past 
tense. finds place in Article 2./5(2}. While the legislative 
power is derived fru111 Article 2-15. !he entries ill the 
Seventh Schedule of the Collstitwion 011/v demarcate 
!he legislative fields o( the respective /egislalures and 
do llOI confer legislative power as such. While 
Parliament has power lo make laws for the whole or 
any parf of !he territory of India. the legislature of a 
Stale cw1 make laws only fiJr the Stale or par/ the1w!f 
Thus, Article 2-15 inter aliu indicates the ex/e11/ of laws 
made by Par!iame11/ and by the Stale Legislatures. 
36. Article 246 deals with the subject-mu/fer of laws 
made by Parliament and by the legislatures (!f States. 
The verb "made" once again finds place in the Head 
Note to Article 2-16. This article deals with distribution 
o(/egislative powers as betweell the Union and the State 
Legislatures. with reference lo the different Lists in the 
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Seventh Schedule. Jn iihorl, Parliame11l has full and 
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exclusive powers lo legislate with re.1pec/ lo mailers in 
Lisi I and has also power tu legislate with respect lo 
mailers in Lisi Ill, whereas the Stale Legislatures,
on 
the other hand, have exclusive power lo legislate with 
respect to matters in Lisi fl, minus mattersfi11/i11g in Lisi 
F 
I and List 111 and have concurrenl power with respect 
lo matlers in Lisi 111. (.'lee Subrahmanyan Chell iar v. 
Jvluttuswami Goundan) 
37. Article 246. thus, provides for dislribulio11, as 
between Union and the Stales. o( the legislative powers 
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which are conferred bv Article 2-15. Article 2-15 begins 
with the expression ''subject to the provisions of this 
Constitution". Therefore, Article 2-16 must be read as 
"subject to other provisions of the Conslitulion ". 
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38. For the purposes (}f this decision, the point which 
needs to be emphasised is that Article 245 deals with 
co11(erment o( legislative powers whereas Article 246 
provides fin· distribution of the lc<.;islative por1'as. 
Article 245 deals with extent o( laws whereas Article 
246 deals with distribution of/egi.,/ative puwers. 111 these 
articles. the Constitutio11 Framers have used the word 
··make" and 110! "comme11ce111e111" which has a specific 
legal co111101ation. [See Section 3(13) of the General 
Clauses Act. 1897.j" 
(Emphasis supplied) 
Limitatio11s 011 the Exercise o(Power 
20. Exercise of sovereign power is. however. subject to 
Constitutional limitations especially in a federal system like ours where 
the States also to the extent permissible exercise the power to make 
laws including laws that levy taxes. duties and fees. That the power to 
levy taxes is subject to constitutional limitations is no longer res-integra. 
A Constitution Bench of this Court has in Sy11tltetics and Chemical.~· 
Ltd. and Ors. 11. St{l/e of U.P. {Int/ Ors. (1990) 1 SCC 109 recognised 
that in India the Centre and the States both enjoy the exercise of sovereign 
power, to the extent the Constitution confers upon them that power. This 
Court declared: 
·· 56 ... We would not like, howeve1'. to embark upon 
any theory (4 police power because the 111dia11 
Constitution does not rec"gnise police power as such. 
But we
must recognise the exercise of Sovereign j)O"Wer 
which gives the State sufficient authority to enact any 
law subject to the limitations of the Constitution to 
discharge its fimctions. Hence. the Indian Constitution 
as a sovereign State has power to legislate on all 
branches except to the limitation as to the division of 
powers between the Centre and the Stales and also 
subject to the fi111da111e11ta! rights guaranteed under the
JlNDAL STAINLESS LID. v. STATE OF HARYANA 
[T. S. THAKUR, CJI] 
Constitution. The Indian States. hetween the Centre and 
the States, has sovereign powe1: 
The so1'ereign pmver 
is plcnar)' and inherent in every sovereign State to do 
a11 things H'hich promote the health, peace, morals, 
education and good order of' the people. Sovereignty is 
difficult to define. 
This power of' sovereignty is. 
hm1·c1'er. suhiect to constitutional limitations. "This 
p011·c1: according to some constitutional authorities. is 
to the puhlic iv/wt 11ect'ssi1y is to the individual. Right 
10 la.\' or lev1• impost must he in accordance with the 
prm·ision> of' the Constitution ... 
21. What then are the Constitutional limitations on the power of 
the State legislatures to levy taxes or for that matter enact legislations in 
the field reserved for them under the relevant entries of List ll and Ill of 
the Seventh Schedule. The first and the foremost of these limitations 
appears in Article 13 of the Constitution oflndia which declares that all 
laws in force in the territory of India immediately before the 
commencement of the Constitution are void to the extent they are 
inconsistent with the provisions of Part Ill dealing with the fundamental 
rights guaranteed to the citizens. It forbids the States from making any 
law which takes away or abridges, any provision of Part Ill. Any law 
made in contravention oflhc said rights shall to the extent of contravention 
be void. There is no gain saying