Summarize the following court judgment. ition (Civil) No. 422 of 1987. (Under Article 32 of the Constitution of India). Dr. Y.S. Chitale	 K.J. John	 Atul Chitale and Miss Naina for the Petitioners. 577 K. Parasaran	 Attorney General	 T.S. Krishnamoorthy Iyer	 G.A. Shah	 V. Jagannatha Rao Advocate General	 B.B. Ahuja	 Miss A. Subhashini	 T.V.S.N. Chari	 Miss Vrinda Grover	 Badri Nath	 Dr. N.M. Ghatate	 M. Veerappa	 A.M. Khanwilkar	 A.S. Bhasme	 R. Mohan	 R. Ayyam Perumal	 A. Subha Rao	 M.N. Shroff	 J.R. Das	 D.K. Sinha	 S.N. Khare	 T.C. Sharma	 S.K. Bhattacharya	 Kailash Vasudev and Probir Choudhary for the Respondents. The Judgment of the Court was delivered by RANGANATH MISRA	 J. The India Cement Limited	 Chettinad Cement Corporation	 Dalmia Cement (Bharat) Limited and Tamil Nadu Cement Corporation Limited being petitioners 1	 6	 9 and 12 in this application under Article 32 of the Constitution are manufacturers of cement	 each of them having its manufacturing unit as also registered offices located within the State of Tamil Nadu; petitioners 2	 7	 and 10 are shareholders of petitioners 1	 6 and 9 respectively and are citizens of India	 while the remaining petitioners are authorised stockists of the different manufacturers having their places of business at different places located in the States of Karnataka	 Kerala and Tamil Nadu. Manufacturer petitioners have been selling their cement in the States of Karnataka and Kerala and for such purpose they have places of business within those States. The State of Andhra Pradesh in exercise of powers conferred under sub section ( 1) of Section 9 of the Andhra Pradesh General Sales Tax Act	 1957 made an order on January 27	 1987 (Annexure A) reducing the rate of tax on sale of cement made to the manufacturing units of cement products in the State of Andhra Pradesh. That order runs thus: "In exercise of the powers conferred by sub section ( 1) of Section 9 of the Andhra Pradesh General Sales Tax Act	 1957 (Andhra Pradesh Act	 No. VI of 1957)	 the Governor of Andhra Pradesh hereby directs that the tax leviable under clause (a) of sub section (2) of Section 5 read with Item 18 in the First Schedule to the said Act	 shall	 in respect of Cement manufactured by Cement Factories situated in the State and sold to the manufacturing units situated within the State for the purpose of manufacture of Cement products such as Cement sheets	 Asbestos Sheets	 Cement flooring stones	 Cement concrete pipes	 hume pipes	 Cement water and sanitary fitting	 concrete poles and other Cement products	 be at the reduced rate of four paise in the rupee at the point of first sale in the State with effect on 578 and from the Ist January	 1987. " On the same day	 another order was made to the following effect: "In exercise of the powers conferred by sub section (5) of Section 8 of the (Central Act 74 of 1956)	 Governor of Andhra Pradesh hereby directs that the tax leviable under the said Act	 shall	 in respect of the sales of cement in the course of inter State trade or commerce be at a lower rate of two per cent with or without 'C ' Form	 with effect from 1st January	 1987. " The State of Karnataka issued the following notification on 28.2.1987: "In exercise of the powers conferred by sub section (5) of Section 8 of the (Central Act 74 of 1956)	 the Government of Karnataka	 being satisfied that it is necessary so to do in public interest	 hereby reduces with immediate effect the rate of tax payable under the said Act on the sale of cement made in the course of inter State trade or commerce from 15% to 2%. " Petitioners in this application challenge the vires of Section 8(5) of the (Central Act 74 of 1956) and the notifications referred to above as ultra vires the provisions contained in Part XIII of the Constitution providing that trade	 commerce and inter course throughout the territory of India shall be free. According to the petitioners the three orders referred to above create trade barriers and directly impinge upon the freedom of trade	 commerce and inter course provided for in Article 301 of the Constitution. Since the vires of Section 8(5) of the Central Act 74 of 1956 had been assailed	 notice had been issued to the Union of India and learned Attorney General. Notice was also directed to all the States. Pursuant to the notice	 the State of Madhya Pradesh and Sikkim have filed their affidavits with reference to the challenge against Section 8(5) of the Act. At the hearing of the writ petition	 however	 learned counsel for the petitioners gave up that challenge. In that view of the matter	 reference to the counter affidavits of the States of Madhya Pradesh and Sikkim becomes irrelevant and the petition has to be con fined to the challenge against the two notifications of the State of T 579 Andhra Pradesh and the lone notification of the State of Karnataka. The return to the rule nisi on behalf of the State of Andhra Pradesh is made by the Commercial Tax officer	 Company Circle 11	 Hyderabad. He has stated that the State of Andhra Pradesh has surplus production of cement. In 1986 87	 the production of cement was around six million tonnes out of which local consumption was to the tune of about three million tonnes. In 1987 88 and 1988 89	 production was likely to go up by 1.5 million tonnes and three million tonnes respectively and the local consumption was estimated to be within the range of 40% of the production. 60% of the manufactured cement had	 therefore	 to be marketed out. Within the State there were certain bulk consumers of cement who use the commodity as raw material for manufacturing Cement sheets	 Asbestos sheets	 hume pipes	 Cement bricks	 tiles etc. Such bulk consumers found products of cement from outside the State to be cheaper in view of the higher incidence of local State tax. In this background Government considered it necessary to reduce the tax rate under the Andhra Pradesh General Sales Tax Act to help the Cement Industries in easing out their marketing difficulty. Keeping in view the fact that marketing of indigenous cement had to be inside the State	 Government decided to reduce the rate of tax under the Andhra Pradesh General Sales Tax Act to 4%. That is how the first notification was made reducing the rate of tax in respect of sale of cement to local manufacturers as aforesaid. Government by the second notification reduced the rate of tax leviable under the in course of inter State trade or commerce to 2% with or without 'C ' Form with effect from 1.1.1987. In another place of the same affidavit	 it has been pleaded: " The classification of the manufacturers and dealers in cement of Andhra Pradesh vis a vis the other States is a reasonable classification and it is not violative of Articles 14 and 19(1)(g)". "The concession in the rate of tax extended by the State of Andhra Pradesh to the manufacturers and dealers of Andhra Pradesh is well within the statutory powers of the State. It does not effect the business interest of the manufacturers and dealers of other States. It is the policy of the State of Andhra Pradesh to help the cement Industries to organise the marketability of their full production to improve the overall industrial activity of the country. Hence this contention tenable". 580 "As already mentioned earlier	 the notifications were issued in public interest and in the interest of State revenue". Yet at another place in the return. it has been stated: "The contention that the policy of the Legislature is to promote sales only through registered dealers is not based on correct appreciation of the law. Any law to that effect would impose a restriction on the rights of the common man and would result in the violation of the provisions of the Constitution which ensures certain fundamental rights to the common man. ' ' The State of Karnataka chose not to make any return to the rule nisi but its counsel joined at the hearing and contended that the order made by the Karnataka State did not affect the provisions in Part XIII of the Constitution. In view of the fact that counsel for petitioners gave up the challenge to the vires of Section 8(5) of the 	 learned Attorney General confined his submissions to the scope of of the Constitution and the effect of the notifications on the scheme contained in that part. In case the notifications operate against the provisions of Article 3o1 of the Constitution	 they have got to satisfy the requirements contained in that Part. We shall now refer to the relevant Articles and to several decisions of this Court which are binding precedents. The title for Part XIII is "Trade	 Commerce and Inter course within the Territory of India. " The relevant Articles in that Part are 30 1	 302	 303 and 304. We may now reproduce them: "3o1. Subject to the other provisions of this part	 trade	 commerce and intercourse throughout the territory of India shall be free. Parliament may by law impose such restrictions on the freedom of trade	 commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest (underlining is ours) 303 . ( 1) Notwithstanding anything in Article 302	 581 neither Parliament nor the legislature of a State shall have power to make any law giving	 or authorising the giving	 or any preference to one State over another	 or making	 or authorising the making of	 any discrimination between one State and another	 by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. (2) Nothing in clause (1) shall prevent Parliament from making any law giving	 or authorising the giving of. any preference or making	 or authorising the making of. any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. Notwithstanding anything in Article 30 1 or Article 303	 the Legislature of a State may by law: (a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject	 so	 however	 as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade	 commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purpose of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. " Judicial authority in regard to interpretation of this Part of the Constitution is abundant. We shall presently refer to some of the decisions of this Court . In Ataibari Tea Co. Ltd. vs The State of Assam & Ors.	 [1961] I SCR 609 a Constitution Bench of this Court was testing the validity of the provisions of the Assam Taxation (on goods carried by Roads and Inland Waterways) Act	 1954 by applying the provisions of this Part of the Constitution. At page 830 of the Reports. Sinha	 CJ	 stated: "Article 301	with which part III commences	con 582 tains the crucial words shall be free and provides the key to the solution of the problems posed by the whole Part. The freedom declared by this Article is not an absolute freedom from all legislations. As already indicated	 the several entries in the three Lists would suggest that both Parliament and State Legislatures have been given the power to legislate in respect of trade	 commerce and intercourse	 but it is equally clear that legislation should not have the effect of putting impediments in the way of free flow of trade and commerce. In my opinion	 it is equally clear that the freedom envisaged by the Article is not an absolute freedom from the incidence of taxation in respect of trade	 commerce and intercourse	 as shown by entries 89 and 92A in the List I	 entries 52	 54 and 56 to 6() in List II and entry 35 in List III. All these entries in terms speak of taxation in relation to different aspects of trade	 commerce and intercourse. The Union and State Legislature	 therefore	 have the power to legislate by way of taxation in respect of trade	 commerce and intercourse	 so as not to erect trade barriers	 tariff walls or imposts	 which have a deleterious effect on the free flow of trade	 commerce and intercourse. That freedom has further been circumscribed by the power vested in Parliament or in the Legislature of a State to impose restrictions in public interest. Parliament has further been authorised to legislate in the way of giving preference or making discrimination in certain strictly limited circumstances indicated in clause (2) of Article 303. Thus	 on a fair construction of the provisions of Part XIII	 the following propositions emerge: (1) trade	 commerce and intercourse throughout the territory of India are not absolutely free	 but are subject to certain powers of legislation by Parliament or the Legislature of a State; (2) the freedom declared by Article 301 does not mean freedom from taxation simpliciter	 but does not mean freedom from taxation which has the effect of directly impeding the free flow of trade	 commerce and intercourse; (3) the freedom envisaged in Article 301 is subject to non discriminatory restrictions imposed by Parliament in public interest (Article 302); (4) even discriminatory or preferential legislation may be made by Parliament for the purpose of dealing with an emergency like a scarcity of goods in any part of India (Article 303(2)); (5) reasonable restrictions may be imposed by the Legislature of a State in the public interest 583 (Article 304(b)); (6) non discriminatory taxes may be imposed by the Legislature of a State on goods imported from another State or other States	 if similar taxes are imposed on goods produced or manufactured in that State (Article 304(a)); and lastly (7) restrictions imposed by existing laws have been continued	 except in so far as the President may by order otherwise direct (Article 305)"; Gajendragadkar	 J.	 as he then was	 at page 843 of the Reports observed: "In drafting the relevant Articles of Part XIII	 the makers of the Constitution were fully conscious that economic unity was absolutely essential for the stability and progress of the federal policy which had been adopted by the Constitution for the governance of the country. Political freedom which had been won	 and political unity which had been accomplished by the Constitution	 had to be sustained and strengthened by the bond of economic unity. It was realised that in course of time	 different political parties believing in different economic theories or idealogies may come in power in the several constituent units of the Union	 and that may conceivably give rise to local and regional pulls and pressures in economic matters. Local or regional fears or apprehensions raised by local or regional problems may persuade the State legislatures to adopt remedial measures intended solely for the protection of the regional interests without due regard to their effect on the economy of the nation as a whole. The object of Part XIII was to avoid such a possibility. Free movement and exchange of goods throughout the territory of India is essential for the economy of the nation and for sustaining and improving living standards of the country. The provision contained in Article 301 guaranting the freedom. Of trade	 commerce and intercourse is not a declaration of a mere platitude	 or the expression of a pious hope of declaratory character; it is not also a mere statement of a Directive Principle of State Policy; it embodies and enshrines a principle of paramount importance that the economic unity of the country will provide the main sustaining force for the stability and progress of the political and cultural unity of the country . . " 584 Then came the case of The Automobile Transport (Rajasthan) Limited vs The State of Rajasthan & orS.	 [1963] SCR 491 Das	 J. who spoke for the Constitution Bench referred to the views expressed in Atiabari Tea Company 's case (supra) and proceeded to say: "We have tried to summarise above the various stand points and views which were canvassed before us and we shall now proceed to consider which	 according to us	 is the correct interpretation of the relevant Articles in Part XIII of the Constitution. We may first take the widest view	 the view expressed by Shah	 J. in the Atiabari Tea C0mpany 's case	 a view which has been supported by the appellants and one or two of the interveners before us. This view we apprehend	 is based on a purely textual interpretation of the relevant Articles in Part XIII of the Constitution and this textual interpretation proceeds in the following way. Article 30 I which is in general terms and is made subject to the other provisions of Part XIII imposes a general limitation on the exercise of legislative powers	 whether by the Union or the States	 under any of the topics taxation topics as well as other topics enumerated in the three Lists of the Seventh Schedule	 in order to make certain 'trade commerce and intercourse throughout the territory of India shall be free '. Having placed a general limitation on the exercise of legislative powers by Parliament and the State Legislatures	 Article 302 relaxes that restriction in favour of Parliament by providing that that authority 'may by law impose such restrictions on the freedom of trade	 commerce and intercourse between one State and another or within any part of the territory of India as may be required in the public interest '. Having relaxed the restriction in respect of Parliament under Article 302	 a restriction is put up on the relaxation by Article 303(1) to the effect that Parliament shall not have the power to make any law giving any preference to any one State over another or discriminate in between one State and another by virtue of any entry relating to trade and commerce in Lists I and III of the Seventh Schedule. Articles 303( 1) which places a ban on Parliament against the giving of preferences to one State over another or of discriminating between one State and another	 also provides that the same kind of ban should be placed upon the State Legislature also legislating by virtue of any entry relating to trade and commerce in Lists II and 585 III of the Seventh Schedule. Article 303(2) again carves out an exception to the restriction placed by Article 303( 1) on the powers of Parliament by providing that nothing in Article 303(a) shall prevent Parliament from making any law giving preference to one State over another or discriminating between one State and another	 if it is necessary to do so tor the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. This exception applies only to Parliament and not to the State Legislatures. Article 304 comprises two clauses and each clause operates as a proviso to Articles 301 and 303. Clause (a) of that Article provides that the Legislature of a State may 'impose on goods imported from other States and any tax to which similar goods manufactured or produced in that State are subject so	 however	 as not to discriminate between goods so imported and goods so manufactured or produced '. This clause	 therefore	 permits the levy on goods from sister States any tax which similar gods manufactured or produced in that State are subject to under its taxing laws. In other words	 goods imported from sister States are placed on par with similar goods manufactured or produced inside the State in regard to State taxation within the State allocated field. Thus the States in India have full powers of imposing what in American State Legislation is called the use tax	 gross receipts tax etc.	 not to speak of the familiar property tax	 subject only to the condition that such tax is imposed on all goods of the same kind produced or manufactured in the taxing State	 although such taxation is undoubtedly calculated to fetter interstate trade and commerce . Now clause (b) of Article 304 provides that notwithstanding anything in Article 301 or 303 the Legislature of a State may by law imposes such reasonable restrictions on the freedom of trade	 commerce or intercourse with or within that State as may be required in the public interest. The proviso to clause (b) says that no bill or amendment for the purpose of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. This provision appears to be the State analogue to the Union Parliament 's authority defined by Article 302	 in spite of the omission of the word 'reasonable ' before the word 'restrictions ' in the latter Article. Leaving aside the pre requisite of previous Presidential sanction for the validity of State 586 Legislation under clause (b) provided in the proviso thereto	 there are two important differences between Arti cles 302 and 304(b) which require special mention. The first is that while the power of Parliament under Article 302 is subject to the prohibition of preferences and discrimina tions decreed byArticle 303(1) unless Parliament makes the declaration contained in Article 303(2)	 the State 's power contained in Article 304(b) is made expressly free from the prohibition contained in Article 303(1)	 because the open ing words of Article 304 contain a non obstante clause both to Article 30 1 and Article 303. The second difference spr ings from the fact that while Parliament 's to impose restricC tions under Article 302 upon freedom of commerce in the public interest is not subject to the requirement of reason ableness	 the power of the State to impose restrictions on the freedom of commerce in the public interest under Arti cle 304 is subject to the condition that they are reason able". The next authority to which we may now refer is the case of State of Madras vs N.K. Nataraja Mudaliar	 ; Shah	 J.	 as he then was	 referred to Part XIII of the Constitution at page 839 of the Reports. On page 841 of the Reports	 the learned Judge proceeded to say: "Tax under the on inter State sales	 it must be noticed	 is in its essence a tax which encumbers movement of trade or commerce	 since by the definition in section 3 of the Act a sale or purchase of goods is deemed to take place in the course of inter State trade or commerce	 if it (a) occasions the movement of goods from one State to another; (b) is effected by a transfer of docu ments of title to the goods during their movement from one State to another. The question which then falls to be determined is whether the tax imposed in the present case is saved by the operation of the other provisions of Part XIII. Article 302 of the Constitution provides that Parlia ment may by law impose such restrictions on the freedom of trade	 commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. Thereby the Parliament is	 notwithstanding the protection conferred by Article 30 1	 authorised to impose restrictions on the freedom of trade	 587 commerce or intercourse in the public interest. The expression "between one State and another ' does not imply that it is only intended to confer upon the Union Parliament the power to remove the fetter upon legislative authority only so as to keep trade	 commerce or intercourse free between one State Government and another. It is intended to declare trade	 commerce and intercourse free between residents in one State and residents in another State. That is clear because Article 302 expressly provides that on the freedom of trade restrictions may be imposed not only as between one State and another	 but also within any part of the territory of India. As we have already observed	 Article 30I does not merely protect inter State trade or operate against inter State barriers: all trade is protected whether it is intra State or inter State by the prohibition imposed by Article 30I	 and there is nothing in the language or the context for restricting the power of the Parliament which it otherwise possesses in the public interest to impose restrictions on the freedom of trade	 commerce or intercoursc	 operative only as between one State and another as two entities. There is also no doubt that exercise of the power to tax may normally be presumed to be in the public interest . . It is worthwhile to refer to tne observations made by Hegde	 J. At page 855 of the Reports	 the learned Judge observed with reference to section 8(5) of the as follows; "Sub section (5) of section 8 provides for giving individual exemptions in public interest. Such a power is there in all taxation measures. It is to provide for unforeseen contingencies. Take for example	 when there was famine in Bihar	 if a dealer in Punjab had undertaken to sell goods to a charitable society in that State at a reasonable price for distribution to those who were starving	 it would have been in public interest if the Punjab Government had exempted that dealer from paying sales tax. Such a power cannot immediately or directly affect the free flow of trade. The power in question cannot be said to be bad. If there is any misuse of that power	 the same can be challenged. " The true purpose of the provisions contained in of the Constitution. as elucidated in the different decisions of the constitution 588 Benches	 is that the restriction provided for in Article 30 I can within A the ambit be limited by law made by the Parliament and the State Legislature. No power is vested in the executive authority to act in any manner which affects or hinders the very essence and thesis contained in the scheme of Part XIII of the Constitution. It is equally clear that the declaration contained in Part XIII of the Constitution is against creation of economic barriers and/or pockets which would stand against the free flow of trade	 commerce and intercourse There can be no dispute that taxation is a deterrent against free flow. As a result of favourable or unfavourable treatment by way of taxation	 the course of flow of trade gets regulated either adversely or favourably. If the scheme which Part XIII guarantees has to be pre served in national interest	 it is necessary that the provisions in theArticle must be strictly complied with. One has to recall the farsighted observations of Gajendragadkar	 J. in Atiabari Tea Co. case (supra) and the observations then made obviously apply to cases of the type which is now before us. The two notifications of the Andhra Pradesh Government may now be referred to. Under the first notification made under section 9(1) of the Andhra Pradesh General Sales Tax Act	 the rate of tax has been reduced to 4 per cent in respect of sales made by indigenous cement manufacturers to manufacturers of cement products. Admit tedly	 the Tamil Nadu producers have sales officers in Andhra Pradeshand in regard to their sale to such manufacturers of cement products the benefit of reduced rate of taxation is not applicable. The prescribed rate of tax under the Andhra Act is 13.75 per cent on cement. Thus under the Andhra Notification in regard to the local tax the indigenous producers of cement have a benefit of 9.75 per cent. The return made to the Court admits of the position that preference has been shown to local manufacturers. Two reasons have been advanced by way of justification. One is that it is beneficial to the State revenue and secondly it protects the local manufacturers too. The counsel for the State Government has not been able to demonstrate to us how the reduction in the rate of sales tax is beneficial to the State revenue. The other justification is what provisions of Part XIII of the Constitution do not permit. The reasonable restrictions contemplated in Part XIII have to be backed by law and not by executive action provided the same are within the limitations prescribed under the scheme of Part Xlll. Coming to the second notification relating to inter state transac 589 tions	 the justification pleaded by the State of Andhra Pradesh has already been extracted by us. We may usefully refer to the decision of the Constitution Bench in the case of Gwalior Rayon Silk Mfg. (Wvg) Co. Ltd. vs The Assistant Commissioner of Sales Tax & orS.	 [ ; At page 883 of the Reports	 Khanna	 J. speaking for the Court observed: "It has been argued on behalf of the appellants that the fixation of rate of tax is a legislative function and as the Parliament has	 under section 8(2)(b) of the Act	 not fixed the rate of central sales tax but has adopted the rate applicable to the sale or purchase of goods inside the appropriate State in case such rate exceeds lO per cent	 the Parliament has abdicated its legislative function. The above provision is consequently stated to be constitutionally invalid because of excessive delegation of legislative power. This contention	 in our opinion	 is not well founded. Section 8(2)(b) of the Act has plainly been enacted with a view to prevent evasion of the payment of the central sales tax. The Act prescribed a low rate of tax of 3 per cent in the case of inter State sales only if the goods are sold to the Government or to a registered dealer other than the Government. In the case of such a registered dealer	 it is essential that the goods should be of the description mentioned in subsection (3) of section 8 of the Act. In order	 however	 to avail of the benefit of such a low rate of tax under section 8(1) of the Act	 it is also essential that the dealer selling the goods should furnish to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer	 to whom the goods are sold	 containing the prescribed particulars in prescribed form obtained from the prescribed authority	 or if the goods are sold to the Government not being a registered dealer	 a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government. In cases not falling under sub section (1)	 the tax payable by any dealer in respect of inter State sale of declared goods is the rate applicable to the sale or purchase of such goods inside the appropriate state vide section 8(2) of the Act. As regards the goods other than the declared goods	 section 8(2)(b) provides that the tax payable by any dealer on the sale of such goods in the course of inter State trade or commerce shall be calculated at the rate of lO per cent or at the rate 590 applicable to the sale or purchase of such goods inside the appropriate State	 whichever is higher. The question with which we are concerned is whether the Parliament is not fixing the rate itself and in adopting the rate applicable to the sale or purchase of goods inside the appropriate State has not laid down any legislative pol icy and has abdicated its legislative function. In this con nection we are of the view that a clear legislative policy can be found in the provisions of section 8(2)(b) of the Act. The policy of the law in this respect is that in case the rate of local sales tax be less than 10 per cent	 in such an event the dealer	 if the case does not fall within section 8(1) of the Act	 should pay central sales tax at the rate of 10 per cent. If	 however	 the rate of local sales tax for the goods con cerned be more than 10 per cent	 in that event the policy is that the rate of the central sales tax shall also be the same as that of the local sales tax for the said goods. The object of law thus is that the rate of the central sales tax shall in no event be less than the rate of local sales tax for the goods in question though it may exceed the local rate in case thas t rate be less than 10 per cent. For example	 if the local rate of tax in the appropriate State for the non declared goods be 6 per cent	 in such an event a dealer	 whose case is not covered by section 8(1) of the Act	 would have to pay cent ral sales tax at a rate of lO per cent. In case	 however	 the rate of local sales tax for such goods be 12 per cent	 the rate of central sales tax would also be 12 per cent because otherwise	 if the rate of central sales tax were only lO per cent	 the unregistered dealer who purchases goods in the course of inter State trade would be in a better position than an intra State purchaser and there would be no disin centive to the dealers to desist from selling goods to unre gistered purchasers in the course of inter State trade. The object of the law apparently is to deter inter State sales to unregistered dealers as such inter State sales would faciliG tate evasion of tax. It is also not possible to fix the max imum rate under section 8(2)(b) because the rate of local sales tax varies from State to State. The rate of local sales tax can also be changed by the State legislatures from time to time. It is not within the competence of the Parliament to fix the maximum rate of local sales tax. The fixation of the rate of local sales tax is essentially a matter for the State 591 Legislatures and the Parliament does not have any control in the matter. The Parliament has therefore necessarily	 if it wants to prevent evasion of payment of central sales tax	 to tag the rate of such tax with that of local sales tax	 in case the rate of local sales tax exceeds a particular limit. " Reference may also be made to another decision of the Constitution Bench in the case of State of Tamil Nadu etc. vs Sitalakshmi Mills etc. 	[1974]1 1 SCR 1. At page 6 of the Reports	 Mathew	 J. stated: "As already stated	 section 8(2)(b) deals with sale of goods other than declared goods and it is confined to interState sale of goods to persons other than registered dealers or Governments. The rate of tax prescribed is 10 per cent or the rate of tax imposed on sale or purchase of goods inside the appropriate State	 whichever is higher. The report of the Taxation Inquiry Committee would indicate that the main reason for electing the provision was to canalize inter State trade through registered dealers	 over whom the appropriate Government has a great deal of control and thus to prevent evasion of tax: Where transactions take place between registered dealers in one State and unregistered dealers or consumers in another	 this low rate of levy will not be suitable	 as it is likely to encourage avoidance of tax on more or less the same scale as the present provisions of Article 286 have done. If this is to be prevented	 it is necessary that transactions of this type should be taxable at the same rates which exporting States impose on similar transactions within their own territories. The unregistered dealers and consumers in the importing States will then find themselves unable to secure any advantage over the consumers of locally purchased articles; nor of course will they	 under this system	 be able to escape the taxation altogether	 as many of them do at present. " (See Report of the Taxation Enquiry Commission	 195354	 Vol.3	 p. 57) In other words it was to discourage inter State sale to unregistered dealers that Parliament provided a high rate of tax	 namely	 IO%. But even that might not serve the 592 purpose if the rate applicable to intra State of such goods was more than 10%. The rate of 10% would then be favour able and they would be at an advantage compared to local cosumers. It is because of this that Parliament provided	 as a matter of legislative policy that the rate of tax shall be 10% or the rate applicable to intra State sales whichever is higher. If prevention of evasiorl of tax is a measure in the public interest	 there can be no doubt that Parliament is competent to make a provision for that purpose under Article 302 even if the provision would impose restrictions on the inter State trade or commerce. Variation of the rate of inter State sales tax does affect free trade and commerce and creates a local preference which is contrary to the scheme of Part XIII of the Constitution. The notification extends the benefit even to unregistered dealers and the observations of Hegde	 J. on this aspect of the matter are relevant. Both the notifications of the Andhra Pradesh Government are	 therefore	 bad and are hit by the provisions of Part XIII of the Constitution. They cannot be sustained in law. Now coming to. the notification of the Karnataka State	 we have already pointed out that no return has been made and no attempt has been made	 therefore	 to place facts and circumstances to justify the action. The notification suffers from the same vice as the second notification of the State of Andhra Pradesh suffers and no distinction can be drawn. We accordingly hold that the notification of the Karnataka Government is also bad in law. It may be pointed out that the rate of sales tax in Karnataka is 19.5 per cent.in regard to intra State sales. In view of what we have indicated above	 the writ petition has to succeed and the two impugned notifications of the Andhra Pradesh Government and the impugned notification of the Karnataka Government are quashed. The writ petition is accordingly allowed with costs. Hearing fees is assessed at Rs.5	OOO and this shall be shared equally by the States of Andhra Pradesh and Karnataka. section L. Petition allowed.

% The State of Andhra Pradesh in exercise of powers conferred under sub section (1) of section 9 of the Andhra Pradesh General Sales Tax Act	 1957	 made an order on January 27	 1987	 reducing the rate of tax on sale of Cement made to the manufacturing units of Cement products in the State. On the same date	 the State of Andhra pradesh made another order in exercise of the powers conferred by sub section (5) of section 8 of the 	 reducing the tax leviable under the said Act in respect of sales of Cement in the course of the inter State trade or commerce. The State of Karnataka in exercise of the powers conferred by sub section (5) of section 8 of the 	 issued a notification on 28.10.1987	 reducing the rate of tax payable under the said Act on the sale of Cement in the course of the inter State trade or commerce. The petitioners cement manufacturing concerns	 their shareholders and their authorised stockists filed this writ petition	 challenging the vires of section 8(5) of the (Central Act 74 of 1956) and the notifications referred to above as ultra vires the provisions contained in Part XIII of the Constitution providing that trade	 commerce and inter course throughout the territory of India shall be free. According to the petitioners the three orders referred to above created trade barriers and directly impinged upon the freedom of trade	 commerce and inter course provided for in Article 301 of the constitution. Since the vires of section 8(5) of the Central Act 74 of 1956 had been assailed	 notice had been issued to the Union of India	 Attorney General	 and all the States but at the hearing of the writ petition	 the 575 petitioners gave up the challenge against section 8(5) of the Central Act. In view of that	 the writ petition was confined to the challenge against the two notification of the State of Andhra Pradesh and the lone notification of the State of Karnataka. The return to the rule nisi was made on behalf of the State of Andhra Pradesh. The State of Karnataka chose not to make any return to the rule nisi	 but its counsel joined at the hearing and contended that the order made by the Karnataka State did not affect the provisions in Part XllI of the Constitution. The Attorney General confined his submission to the scope of Part III of the Constitution and the effect of the notifications on the scheme contained in that part. Allowing the writ petition	 the Court	 ^ HELD: The title for Part XIII. which contains the relevant Articles 30 l	 302	 303 and 304 is "Trade Commerce and inter course within the Territory of India. " The true purpose of the provisions contained in Part Xlll of the Constitution	 as elucidated in the different decisions of the Constitution Benches of this Court	 is that the restriction provided for in Article 301 can within the ambit be limited by law made by the Parliament and the State legislature. No power is vested in the executive authority to act in any manner affecting or hindering the very essence and thesis contained in the scheme of Part XIII of the Constitution. lt is equally clear that the declaration contained in Part XIIl of the Constitution is against the creation of economic barriers and or pockets which stand against the free now of trade	 commerce and inter course. [580F; 587H; 588A B] Taxation is a deterrent against free flow. As a result of favourable or unfavourable treatment by way of taxation	 the course of flow of trade gets regulated either adversely or favourably. If the scheme which Part XIII guarantees has to be preserved in national interest	 it is necessary that the provisions in the Article must be strictly complied with. One has to recall the far sighted observations of Gajendragadkar. J. in Atiabari Tea Co. Ltd. vs The State of Assam & Ors.	 [1961] 1.S.C.R. 609 and the observations then made obviously apply to cases of the type now before the Court.[588C D] Under the first notification made under section 9(1) of the Andhra Pradesh General Sales Tax Act	 the rate of tax was reduced to 4 percent in respect of the sales made by the indigenous cement manufacturers to manufacturers of Cement products. The Tamil Nadu producers had sales officers in Andhra Pradesh and in regard to their sale to such manufacturers of cement products	 the benefit of the reduced rate of 576 taxation was not applicable. Two reasons were advanced by way of justification. One was that it was beneficial to the State revenue and secondly	 that it protected the local manufacturers too. It could not be demonstrated to the Court how the reduction in the rate of sales tax was beneificial to the State revenue. The other justification was what the provisions of Part XIII of the Constitution did not permit. The reasonable restriction contemplated in Part XIII have to be backed by law and not by executive action	 provided the same are within the limitations prescribed under the Scheme of Part XIII.[588D H] The second notification related to the inter State transactions. Variation of the rate of inter State sales tax does affect free trade and commerce and creates a local preference which is contrary to the scheme of Part XIII of the Constitution. The notification extended the benefit even to the unregistered dealers. Both the notifications of the Andhra Pradesh Government were bad and hit by the provisions of Part Xlll of the Constitution. They could not be sustained in law.[592D] In the case of the notification of the Karnataka State	 as already said	 no return had been made and no attempt had been made to place the facts and circumstances to justify the action. The notification suffered from the same vice as the second notification of the State of Andhra Pradesh suffered	 and no distinction could be drawn. The notification of the Karnataka Government was also bad in law. [597E F] The writ petition succeeded and the two impugned notifications of the Andhra Pradesh Government and the impugned notification of the Karnataka Government were quashed. [592G] Atiabari Tea Co. Ltd. vs The State of Assam & Ors.	 ; The Automobile Transport (Rajasthan) Limited vs The State of Rajasthan & Ors.	 [1963] S.C.R. 491; State of Madras vs N.K. Nataraja Mudaliar.	 [1968] 3 S.C.R. 829; Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. vs The Assistant Commissioner of Sales Tax & Ors.	 [1974] 2 S.C.R. 879 and State of Tamil Nadu	 etc. vs Sitalakshmi Mills	 etc.; 	 	 referred to.