JINDAL STAINLESS LTD Vs. STATE OF HARYANA

JUDGEMENT

(1.) By order dated 26-9-2003, the referring Bench of Honble Ruma Pal, J. and P. Venkatarama Reddy, J. doubted the correctness of the view taken in M/s. Bhagatram Rajeevkumar vs. Commissioner of Sales Tax, M.P. and others, (1995) 1 Suppl. SCC 673, relied on in the subsequent decision of this Court in the case of State of Bihar and Ors. vs. Bihar Chamber of Commerce and Ors., (1996) 9 SCC 136. Accordingly, all the matters were ordered to be placed before the Honble the Chief Justice for appropriate directions and accordingly, the matter has come to the Constitution Bench to decide with certitude the parameters of the judicially evolved concept of "compensatory tax" vis-a-vis Article 301. The referral order is in the case of Jindal Strips Ltd. and Anr. (now known as Jindal Stainless Ltd.) vs. State of Haryana and Ors., (2003) 8 SCC 60, under Article 145(3).

(2.) For this purpose, we are required to examine the source from which the concept of compensatory tax is judicially derived, the nature and character of compensatory tax and its parameters in the context of Article 301.

(3.) In a batch of appeals, the constitutional validity of the Haryana Local Area Development Tax Act, 2000 has been challenged on two grounds : (1) that, the Act is violative of Article 301 and is not saved by Article 304; and (2) that, the Act in fact seeks to levy sales tax on inter-State sales, which is outside the competence of the State Legislature. However, the referral order is confined to the abovementioned first question.