ADARSH KUMAR GOEL,J - (1.) THIS petition seeks declaration to the effect that the Haryana Tax on Entry of Goods into Local Areas Act, 2008 (hereinafter referred to as the 2008 Act') is unconstitutional and void.
(2.) CASE set out in the petition is that the petitioner was carrying on business of refining crude oil and manufacturing petroleum products for sale. It has its refinery at Panipat in Haryana for which crude oil is partly imported from foreign countries and partly supplied from Bombay High. The crude oil is unloaded through Single Buoy Mooring (SBM) facility in the Gulf of Kutch (off the coast of Gujarat). Submarine pipe lines are linked to Panipat refinery through underground pipeline network for which no facility or service is provided by the State of Haryana. On 5.5.2000, the State of Haryana issued Haryana Local Area Development Tax Ordinance 2000 (Ordinance No. 10 of 2000). The Ordinance was later replaced by Haryana Local Area Development Tax Act, 2000. Therein, provision was made for levy and collection of tax on entry of goods in local area. The validity of the said Act was challenged on the ground that it violated Articles 301 and 304 of the Constitution. CWP No. 6630 of 2000 (Jindal strips Limited and another v. State of Haryana and others) and connected petitions were dismissed by this Court on 21.12.2001. The said judgment is reported in (2003) 129 STC 534. Following the judgments of the Hon'ble Supreme Court, inter-alia, in M/s Bhagatram Rajeev Kumar v. Commissioner of Sales Tax, MP (1995) Supp.1 SCC 673 and State of Bihar v. Bihar Chamber of Commerce, (1996) 9 SCC 136, this Court upheld the validity of the said Act. It was held that the entry tax was compensatory as per parameters laid down by the Hon'ble Supreme Court in the said judgments and thus, did not violate Articles 301/304 of the Constitution. On appeal to the Hon'ble Supreme Court, the matter was referred to the Constitution Bench in Civil Appeal No. 3453 of 2002 vide order dated 26.9.2003. The said order is reported as Jindal Strips Ltd. v. State of Haryana, (2003)8 SCC 60. On 13.4.2006. The Constitution Bench delivered its judgment reported as Jindal stainless Limited (2) and another v. State of Haryana and others, (2006)7 SCC 241 (hereinafter referred to as the judgment in "Jindal Stainless Limited (2)") and reversed the earlier judgments in M/s Bhagat Ram Rajeev Kumar and Bihar Chamber of Commerce (supra). The Constitution Bench laid down the ingredients of compensatory tax as being value of direct, measurable and quantifiable special benefits provided by the State to tax payers on the basis of equivalence. The matter was thereafter placed before a Division Bench of Hon'ble the Supreme Court for decision in the light of judgment of the Constitution Bench. On 14.7.2006, the Division Bench of the Hon'ble Supreme Court in its order in Jindal Stainless Limited v. State of Haryana, (2006)7 SCC 271, observed that relevant data had not been placed before the High Court for determining the nature of tax and asked the High Court to deal with the basic issue whether the levy was compensatory in nature. Accordingly, the State filed data by means of affidavits and vide order dated 14.3.2007, (reported as Jindal Strips Limited v. State of Haryana and others, 2007(2) PLR 76 (to be called Jindal Strips Limited (3)), a Division Bench of this Court held that the levy was not compensatory in character and amounted to restriction on free flow of trade and commerce and violative of Articles 301/304 of the Constitution of India.
(3.) ON 16.4.2008, the State of Haryana repealed the 2000 Act and enacted Haryana Tax on entry of Goods into Local Areas Act, 2008, impugned in the present petition. According to the petitioner, the said Act was unconstitutional being violative of Articles 301 and 304 of the Constitution as the tax levied therein was not compensatory. The tax envisaged therein was for augmenting general revenue of the State without any facility or special benefits to the payers. No special service, benefit or facility whatsoever was rendered to the petitioner for transportation of crude oil to Panipat refinery. Provision for validation of tax already collected under the 2000 Act, by treating the same to have been collected under the 2008 Act, without ensuring appropriation of amount collected and already spent otherwise than by way of providing services to the payers and for the reasons for which the tax was held to be non-compensatory earlier, was liable to be struck down.;