DIPAK MISRA, J. - (1.) REGARD being had to the similitude and interconnectivity of the controversy that is involved in this batch of writ petitions it is disposed of by a singular order. It is condign to state at the outset that in some of the writ petitions, the constitutional validity of the provisions contained in the M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (for brevity, "the 1976 Act") is called in question and prayer has been made to declare the entire enactment ultra vires articles 301 and 304(b) of the Constitution and in some of the writ petitions the assail is to the constitutional validity of the notifications issued under the 1976 Act on the foundation that they invite the frown on article 301 of the Constitution and also fall foul of article 14 of the Constitution. Keeping in view the nature of the challenge and the contours of the attack I will advert to the issue of validity of the Act first and thereafter I shall dwell upon the substantiality and sustainability of the notifications. For the sake of clarity and convenience I shall adumbrate the facts in W.P. No. 11642 of 2007 and wherever it is felt necessitous to delineate any other facets relating to the factual realm, I shall exposit and delve into the same so that a complete picture is frescoed.
(2.) BEFORE I advert to the pleadings that have been brought on record it is essential to advert to the factual backdrop in the context of the 1976 Act, for it is imperative to do so. The constitutional validity of the 1976 Act was challenged before a Division Bench of this court in Sanjay Trading Co. v. Commissioner of Sales Tax [1994] 93 STC 589 wherein the Division Bench dealt with articles 301 and 304(b) of the Constitution of India and eventually expressed the view as under : "21. In the present case, the State has taken the stand that the levy of entry tax is compensatory in character, i.e., to compensate the municipalities for loss of income by way of octroi which has been abolished in the State. This contention is met by learned counsel for the petitioners by pointing out that the legislative provisions indicative of the compensatory nature of the levy, have been deleted and, therefore, it is no longer open to the State to contend that the levy is compensatory in character. 22. Section 17 of the Act, as it originally stood, required that the tax collected shall be credited to the consolidated fund of the State and that net tax collection be placed to the credit of M.P. Octroi Compensation Fund under section 7B of the Sales Tax Act. By Act No. 24 of 1978, this provision was omitted with effect from April 1, 1978. Section 7B was introduced in the Sales Tax Act with effect from October 1, 1978, specifically providing for grant -in -aid for loss of octroi to the municipality. This provision was deleted in 1990. This is the foundation for the contention that the entry tax is not compensatory in character. 23. The Statement of Objects and Reasons of the Act states that it is enacted to levy a tax on entry of goods in lieu of octroi tax collected by the municipalities and municipal corporations and to make transportation of goods trouble -free by abolishing octroi check -posts. A copy of the Statement of Objects and Reasons is found in annexure A. R -1 appended to the additional submissions made on behalf of the respondents in M.P. No. 2289 of 1989. It indicates that the statute had the view of raising financial resources to compensate local bodies consequent upon abolition of octroi with a view to simplifying the taxation structure. Annexure A. R -3 gives summary in respect of levy and details of allotment made to local bodies. The document shows that during the period 1976 -77 till 1988 -89, provision was made in the budget to compensate the municipalities and the amount budgeted was made over. It also shows that with effect from the year 1983 -84, there has been a regular annual increase of 10 per cent in total compensation amount. Considering the Statement of Objects and Reasons and the particulars given in annexure A. R -3, the statutory changes referred to above have no significance. Entry tax remains compensatory in nature and, therefore, it is immune from challenge." The validity of the 1976 Act came for consideration in Bhagatram Rajeev Kumar v. Commissioner of Sales Tax, Madhya Pradesh [1995] 96 STC 654 (SC); [1995] Suppl 1 SCC 673 wherein their Lordships in paragraph 8 expressed the opinion as under : "8. Even the submission on article 301 of the Constitution is not well -founded. The article came up for interpretation by this court in Atiabari Tea Co. Ltd. v. State of Assam [1961] 1 SCR 809; AIR 1961 SC 232 and Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan [1963] 1 SCR 491; AIR 1962 SC 1406. A combined reading of the two decisions indicates that so long as a tax is regulatory and compensatory it is not within the mischief of article 301. In the counter -affidavit filed on behalf of the State which was not disputed, the nature of levy has been demonstrated to be compensatory. The appellants did not dispute the figure furnished by the State. It is settled by now that if the tax is compensatory then it is immune from challenge under article 301 (Khyerbari Tea Co. Ltd. v. State of Assam [1964] 5 SCR 975; AIR 1964 SC 925 and State of Karnataka v. Hansa Corporation [1981] 1 SCR 823; AIR 1981 SC 463). The submission of Shri Ashok Sen, learned Senior Counsel, that compensation is that which facilitates the trade only does not appear to be sound. The concept of compensatory nature of tax has been widened and if there is substantial or even some link between the tax and the facilities extended to such dealers directly or indirectly the levy cannot be impugned as invalid. The stand of the State that the revenue earned is being made over to the local bodies to compensate them for the loss caused, makes the impost compensatory in nature, as augmentation of their finance would enable them to provide municipal services more efficiently, which would help or ease free -flow of trade and commerce, because of which the impost has to be regarded as compensatory in nature, in view of what has been stated in the aforesaid decisions, more particularly in Hansa Corporation's case [1981] 1 SCR 823; AIR 1981 SC 463." At this juncture it is appropriate to state that in another decision in State of Bihar v. Bihar Chamber of Commerce [1996] 103 STC 1 (SC); [1996] 9 SCC 136 their Lordships while dwelling upon the tax imposed under the Bihar (Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein) Act, 1993 posed a question whether the amount taxed has been established to be compensatory or whether it can be called a regulatory measure. Dealing with the said facet in the backdrop of article 301 and clause (b) of article 304 their Lordships opined that the tax was compensatory in nature. In the aforesaid case their Lordships placed reliance on Bhagatram Rajeev Kumar [1995] 96 STC 654 (SC); [1995] Suppl 1 SCC 673.
(3.) AT this stage it is apposite to mention that a two -judge Bench (Jindal Stripe Ltd. v. State of Haryana [2004] 134 STC 303 (SC)) while dealing with the constitutional validity of the Haryana Local Area Development Tax Act, 2000 referred to the guarantee given in article 301 of the Constitution, the decisions rendered in Atiabari Tea Co. Ltd. v. State of Assam AIR 1961 SC 232, Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan AIR 1962 SC 1406, G. K. Krishnan v. State of Tamil Nadu [1975] 1 SCC 375, Shaik Madar Saheb v. State of Andhra Pradesh [1972] 4 SCC 635, International Tourism Corporation v. State of Haryana [1981] 2 SCC 318, Malwa Bus Service (Pvt.) Ltd. v. State of Punjab [1983] 3 SCC 237, B. A. Jayaram v. Union of India [1984] 1 SCC 168 and State of Maharashtra v. Madhukar Balkrishna Badiya [1988] 4 SCC 290 and opined that since the concept of compensatory tax has been judicially evolved as an exception to the provisions of article 301 and as the parameters of the said judicial concept are blurred particularly by the reasons of the decisions in Bhagatram Rajeev Kumar [1995] 96 STC 654 (SC); [1995] Suppl 1 SCC 673 and Bihar Chamber of Commerce [1996] 103 STC 1 (SC); [1996] 9 SCC 136 the interpretation of article 301 vis -a -vis compensatory tax should be authoritatively laid down with certitude by the Constitution Bench.;