Partly allowed

Hansraj Bagrecha v. State of Bihar & Ors.

Supreme Court18 Sept 19701970 INSC 196 · [1971] 2 S.C.R. 4121970 INSC 196

Case brief

AI extract

What is this about?

Jute dealer challenged Bihar purchase-tax provisions and a transport-restriction rule. The Supreme Court upheld sections 3A and 5A as neither violating Article 301 nor conflicting with the Central Sales Tax Act, but struck down Rule 31B and the notification restricting inter-State despatch as ultra vires.

What did the court decide?

Writ issued declaring Rule 31B and the December 26, 1967 notification ultra vires and the Superintendent's letter to railway authorities unauthorised; no order as to costs.

What the court decided

Hansraj Bagrecha versus State of Bihar & Ors. — Income Tax | Supreme Court (1971)

412

HANSRAJ BAGRECHA

STATE 01<' BIHAR & ORS.

¶6

September 18, J 970

¶7

[J. C. SHAH, K. S. HEGDE AND A, N. GROVER, JJ.J

¶8

Constitmion of India, A.·rts. 301 & 304-The Bihm· St1les Tax A.ct, l9S9.as amended by BiharFinance A.ct, 1966, ss. 3A, SA., & 42-The Bihar Sales Tax Rules, 1959, R.31B-Levy of purchase tax on goods whether pe1· se restrlct/\•e of freedom of tarade-Pres/demial msent whether rt· q1rlrd for levy o tax-Stctlons 3A. d SA. of Bll1ar A ct whether lnva,Jld 011 gro11nd of contra~·entlon of .s. 15 of Ctnlral S<ole.1· T11x Act, 1956Rules 3 IB restricts tran.1port of goods p11rs11an1 to tr1111.1·1wtlon.1 In course .uf inter-State trade-Hence Invalid. Under s. SA of the Bibar Sales Tax Act J 959 a< umende.d by the Bihar Finance Act, 1966 the purchase tax on goods declared under s. 3A was to be levied at the point of purchase made from a person .other than a registered dealer. By a notification dated September 14, i966 the Governor of Bihar declared jute as a commodity liable to purchase tax at the rate specified in the notification. The .ippellant carried on business in jute. In the course of his business he purchased raw jute from producers in West Bengal, transported it to Kishenganj Railway Station in Bihar and then re-exported it to purchasers in West Bangal. He also bought raw jute in Bihar and exported it to merchants. and mill-owners in West Bengal by rail from Kishenganj Railway Station. After the enactment of ss. 3A and 5A the State Government issued a notification dated December 26, 1961 purporting io exercise power under s. 42 of the Bihar Sales Tax Act, 19591 read with r. 31B of the Bihar Sales Tax Rules, 1959 notifying that no person shall tender nt any railway station mentioned in Sch. ll any consignment of goods mentioned in Sch. I exceeding the quantity specified for transport to any place inside the State of Bihar and no person shall accept such tender in accordance with the conditions laid dow:i in the said R; 3 IB. Under Sch. I jute exceeding 800 kg. could nor be tendered for transport without a despatch permit and Kishenganj was one of the railway stations mentioned in Sch. II. In July 1967 the Superintendent of Co.n· mercial Taxes prohibited the railway authorities from loading and despatching jute goods from any railway station in Purnea district without the production of a registration certificate. For non-production of such certificate the railway authorities refused to despatch from Kishenganj the jute goods booked by the appellant. The appellant moved :i writ petition iri the High Court of Patna challengir.g inter alla the validity of ss. 3A and SA of the Bihar Sales Tax Act and of R.3 !B. The High Court dismissed the petition. With certificate t,he present appeal was filed. In support of the petition it was urged (i) that ss. 3A and SA infringed the guarantee of freedom of trade under Art. 301 of the Constitution and since the amendment by the Finance Act, 1966 intro· ducing these sections did not receive the assent of the President under A'rt. 304(bl the amendment was not saved; (ii) that ss. 3A and SA were contrarv to s. 15 of the Central Sales Tax Act, 19S6 and accordingly void; (iii) that R. 318 framed hv the State Govcr~ment and. the notification issued on December 26. 1967 were unauthomcd and hable to be struck down. HELD : (i) The aS>umption that the levy of purchase tax must be deemed in all circun1stancc.s to violate the guarantee unJi:r Art. 301 and

HANSRAJ v. B!HAR (Shah, .J.)

¶17

413

¶18

A the levy will be valid oolY. if the Act is enacted by the State U$islature with Ille previous sanction of the President cannot be accepted a8 correct. Imposition of tax may in certain circumstances impede free fiow of trade, commerce and intercourse. But every tax does not have that effect. [417 G; 419 EJ

¶19

State of Madras v. N. K. Nataraja Mudaliar [1968] 3 S.C.R. 829. Atiabari Tea Co. Ltd. v. State of Assam, (1967] l S.C.R. 809 alld The B Andhra Sugars Ltd. v. State of Andhra Pradesh, 21 S.T.C. 212, applied.

¶20

In the present case the petitioner has made no averments in his petition which supported tho plea that imposition of purchase-tax directly and lmmcdlatefy mtricta or impedes · the free 11ow of trado. Since power to Impose purchase tax under 1. 3A wa1 not shuwn to l'i"Strict or Impede the free 11ow of trade directly ano immediately, it neod not seok to derive for its validity, support from Art. 304(b). 1.419 OJ

¶21

c (Ii) By •· IS of the Central Sales Tax Act1 tax liable in respect of doclared aoods on transactions of sale or purc.naie is restricted to 3 % and ii not leviable at more than one staae. There was no dispute that the purchase tax on ju,le was leviable at the ftrst point of purchase under a. 3A of the Bihar Sales Tax Act, and the rate of tax was not shown to exceed the maximum prescribed by s. 15 of the Central Sales Tax Act. The provisions of ss. 3A and SA of the Bihar Sales Tax Act Ill'• not therefore inconsistent with the provisions of s. 15 of the Central Sales D Tax Act. [420 E] (ill) Rule 31B of the Bihar Sales Tax Rules must however be struck down as ultra vires. (420 Fl

¶22

The power of the State Legislature is restricted to legislate in respect of intra-state transactions of sale and purchase and to matters ancillary or incidental thereto : it has no power to legislate for levy of tax on sales and purchase in the course of inter-State transactions. The power E conferred by s. 42 authorising the imposition of restriction or transport or movement of goods may ooly be exercised in respect of transactions which facilitate levy, collection and recovery of tax on transactions of intra-State sale or purchase. w.ben r. 3 IB prohibits transport of gQ(>d~ to any place outside the State of Ribar unless a certificate is optained from the appropriate authority, it seeks to prohibit transport of goods put'!'uant to transactions wihich may not even be of the nature of sale or purchase transactim1s; in any case it restricts transport pursuant to F transactions in the course of inte-State trade and commerce. The operation of the rule is not restricted only to transactions in the course of intra-s!ate trade and commerce. The role authorises restiictions on inter.state transactions and is on that account unaulborise4. ·For the same, reasons the notification issued on December 26, 1967 must be regarded as also unauthorised. [421 E-G]

¶23

CML APPELLATE JURISDICTION : Civil Appeal No. 1'985 of

¶24

G 1969.

¶25

Appeal from the judgment and order !Jated. Janullry 4, 1969 of the Patna High Court in Civil Writ Jurisdiction case No. 520 of 1967.

¶26

M. C. Chag/a, D. P. Singh and V. J. Francis, for the appellqnt.

¶27

H L. M. Singhvl and U. P. Singh, for respondents Nos. 1 to 4.

¶28

[1971] 2 ~.R.

¶29

414

¶30

SUPREME COURT REPORTS

¶31

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The Judgment of the Court was delivered by SHAH, J. This appeal is filed with certificate granted by the High Court of Patna urider Art. 133( 1) (a) of the Constitution. The appellant Hansraj Bagrecha carries on business in jute. In the course of his business the appellant buys raw jute from proB ducers in West Bengal, transports it to Kishanganj Railway Station (which is within the State of Bihar) and then re-exports it to purchasers in West Bengal. He also buys raw jute in Bihar and exports it to the merchants or mill owners in West Bengal by rail from Kishanganj Railway Station. The Bihar Sales Tax Act, 1959, as originally enacted did not c ,provide for levy of purchase tax. By the Bihar F'inance Act, · 1966, with effect from April l, 1967, among others the following · sections were incorporated in the Bihar Sales Tax Act, 1959 : S. 3 A "'The State Government may from time to time, by notification declare any goods to be liable to D purchase tax on turnover. of purchase : Provided that general sales tax and special sales ta.X shall not be payable on the sale of goods or class of goods declared under. this section." S. SA· "The purchase tax on goods declared under section 3A shall be levied at the point of purchase made E from a person other than a registered ,dealer." .By a notification dated September 14, 1966 the Governor ofBihar declared 'jute' as a commodity liable to purchase tax at the rate specified in the notification. Section 42 of the Bihar Sales Tax Act by the first sub-section F provided: "No person shall transport from any railway station, steamer station, air-port, post office or any other placi:, ·whether of similar nature. or otherwise, notified in this behalf by the State Govt., any consig1m1ent of such goods, exceeding such quantity, as may be specified in G the notification, except in accordance with such conditions as may be prescribed and such conditions shall be made with a view to ensuring that there is no evasion of tax payable under this Act." Section 46 of the Act invested the State Government with power II to-make rules for all matters expressly required or allowed by the Act to be prescn"bed and generally for carrying out the purposes of the Act and regulating the procedure to be followed, forms to

¶33

HANSRAJ v. B!HAR (Shah, J.)

¶34

415

¶35

be adopted and fees to be paid m connection with proceedings under the Act and all other matters ancillary or incidental thereto. In exercise of the powers conferred under s. 46( l) •the State of Bihar promulgated under Rules 31 B and 8C, Rule 31B, which provided : ·

¶36

B " ( 1) No person shall tender at any railway station, steamer station, air-port, post-office or any other place, whether of similar nature or otherwise, notified under section 42, any consignment of such goods exceeding such quantity, as may be specified in the notification, for transport to any place outside the State of Bihar, unless such person has obtained a despatch permit in c Form XXVIII-D from the appropriate authority referred to in the ExplanBlion to rule 31 and no person shall accept such tender unless the said permit is surrendered to him."

¶37

¶38

Rule 30 ( 1) provided :

¶39

D "

¶40

"The first purchase of goods declared under section 14 of the Central Sales Tax Act, 1956, shall be leviable to tax in terms of sections 3, 3A and SA of the Act and no subsequent safos or purchases in respect of the said goods shall be liable to any tax under the Act."

¶41

!j: After the enactment of ss. 3A and SA the State Government issued a notification dated December 26, 1967 purporting to exercise power under s. 42 of the Bihar Sales Tax Act, 1959 read with r. 31B of the Bihar Sales Tax Rules, 1959, notifying that no person shall tender at any railway station mentioned in Sch. II, and consignment of goods mentioned' in Sch. I, exceeding the

¶42

r quantity specified for transport to any place outside the State of Bihar and no person shall accept such tender in accordance with the conditions prescribed in r. 3 lB of the Bihar Sales Tax Rules, 1959. Under Sch. I 'Jute' exceeding 800 Kg. could not be tendered for transport without "a despatch permit", and Kisha11ganj was one of the Railway Stations mentioned in Sch. Il.

¶43

In July 1967 the Superintendent of Commercial Taxes addres-

¶44

G sed a letter prohibiting the railway authorities from loading jute goods and despatching them from any railway station within the Pumea District of Bihar, except on production of a "registratioa certificate". By his Jetter dated July 10, 1967 the Station Master Kishanganj called upon the Secretary, Jute Merchants Association, Kishanganj, to produce a .certificate as required in the letter Gf the

¶45

H Superintendent of Commercial Taxes, before "loading jute goods for despatch was commenced" and informed them thaf in default wagons allotted to the jute merchants shall be cancelled and

¶46

I S-L308SupCint

¶47

[1971] 2 s.c.t.

¶48

416

¶49

SUPREME COURT REPORTS

¶50

¶51

registration fees , forfeited and that "demurrage" will be charged. The appellant's request that jute booked by him be despatched from Kishanganj was turned down by the railway authorities, because the registration certificate issued by the Superintendent of Commercial Taxes, Purnea for the movement of jute from the place was not produced.

¶52

¶53

¶54

The appellant then moved a petition before the High Coun of Patna on August 29, 1967 challenging the villidity of ss. 3A, SA, 42 and 46 and r. 31B of the :Bihar Sales Tax Rules, 19S9. The High Court of Patna dismissed the petition. With certificate granted by the High Coun this appeal has been preferred by the appellant.

¶55

In support of the appeal counsel for the appellant raised three

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contentions : (I) that ss. 3A & SA as incorporated 4th Finance .Act of 1966 infringed the guarantee of freedom of trade under Art. 301 of the Constitution and since the amendment made by the Finance Act, 1966 did not receive the assent of the President under Art. 304 (b) the amendment was not saved;

¶57

(2) that ss. 3A & SA and r. SC "wc(e contrary to" s. IS of the Central Sales Tax Act, 19S6 and were void on that account; and

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(3) that r. 31B framed by the State Government and the notification issued. on December 26, 1967 were unauthorised and liable to be struck down.

¶59

Article 301 of the Constitution guarantees freedom of trade, commerce and intercourse throughout the territory of India. By Art. 302 the Parliament is authorised by law to impose such restrictions on the freedom of trade, commerce o~ intercourse between one State and another or within any part of the territory of India as may be required in the public interest. Art. 303 ( 1) imposes restrictions upon the power which the Parliament or the Legislature of a State may exercise 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 and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. But that clause does not operate to restrict the power of the Parliament to make any law giving, or authorise 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

HANSRAJ "I'. BIHAB. (Shah, /.)

¶67

417

¶68

scarcity of goods in any part of the territory of India; Art. 303 (2). Art. 304 provides in so far as it is relevant :

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"Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law-

¶70

¶71

(a)

¶72

(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 :

¶73

Provided that no Bill or amendment for the purc pose of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President."

¶74

Art. 304 is in terms a restriction on the freedom guaranteed by Art. 301. Notwithstanding the amplitude of the freedom of trade, commerce and intercourse throughout the territory of India, the D Legislature of a State may by law impose among others such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest. But that authority to impose reasonable restrictions on the freedom of trade, may only be exercised by the Legislature of a State if the Bill or amendment for the purpose of E cl. (b) is introduced or moved in the Legislature of a State with the previous sanction of the President.

¶75

It was contended that since s. 3A providing for the levy of purchase tax imposes a restriction on the freedom of trade, commerce and intercourse and on that account violates the freedom of F trade guaranteed by Art. 30 l, it may be saved only if it is legislation of the nature comtemplated by Art. 304 (b) and the Bill which was enacted into the Act received the previous assent of the President. The assumption that the levy of purchase tax must be deemed in all circumstances to violate the guarantee under Art. 301, and the levy will be valid only if the Act is enacted by the State Legislature with the previous sanction of the President, G cannot be accepted as correct. This Court in The State of Madras v. N. K. Natara;a Mudallor(')-examined the validity of laws which impose taxes on sale in the light of Art. 301. It was observed at p. 839 :

¶76

¶77

¶78

"This Article (Art. 301) is couched in terms of the widest amplitude; trade, commerce and intercourse are thereby declared free and unhampered throughout the territory of India. The freedom of trade

¶79

(I) [1968) 3 S. C. R. 829.

¶80

[1971] 2 S.C.R. .

¶81

418

¶82

SUPREME COURT REPORTS

¶83

so declared is against the imposition of barriers or obstructions within the State as well as inter-State : all restrictions which dir1=Ctly and immediately affect the movement of trade are declared by Art. 301 to be ineffective. The extent to which Art. 30 I operates to make trade and commerce free has been considered by this Court in several cases. In Atiabari Tea Co. Ltd. v. The State of Assam and others(') Gajendragadkar, J., speaking for himself and Wanchpo and Das Gupta JJ, observed at p. 860 :

¶84

" ...... we think it would be reasonable and proper to hold that restrictions, freedom from which is guaranteed by Art. 30 I, would be such restrictions as directly and imma:!iately restrict or impede the free flow or move-· ment of trade.''.

¶85

"In Automobile Transport (Rajasthan) Ltd v. The State of Rajasthan and others (² ) the view expressed by Gajendragadkar, J., in Atiabari Tea Co's case was . accepted by the majority. Subba Rao, J., who agreed With the majority observed that the freedom declared under Art. 301 of the Constitution of India referred to the right of free movement of trade without any obstruc0 tions by way of barriers, inter-State or intra-State, or other impediments operating as 'such barriers. The same view was expressed in Firm A.T.B. Mehtab Majid and Company v. State of Madras and Another(•) by a unanimous Court. It must be taken as settled Jaw that lhe restrictions Or impediments which directly and imma:liately impede or hamper the free flow of trade, commerce and . intercourse fall within the prohibitlon · imposed by Art. 301 and subject to the other provisions of the Constitution they may be regarded as void; .

But it is said that by imposing tax on sale&, .. no restriction hampering trade is imposed. In the Atiab<lrl Tea Company's case, Gajendragadkar, J., observed :

¶93

"Taxes may and do amount to restrictions; but it ·is only such taxes as directly and imma:!iately · restrict trade that would fall within the purview of, Art., 301. The argument that all taxes should be governed by Art. 301 whether or not their impact on trade is ·immediate or mediate, direct or remote, adopts, in our. opinion, an extreme approach which cannot be-upheld."

¶94

In a recent judgment of this Court in The Andhra Sugars Ltd. '11uJ Another v. The State '!f Andhra Pradesh and . othert(') (I) [' 961] I S.C.R. ll09. (2) [1963} S•Jpp. [1963} S•Jpp. S•Jpp. 2 S. C. Jl. 435. Jl. 435. 435. (3)[1963] I S.C.R; 491. (4) 21 21 S.T.C. 212

¶95

(2) [1963} S•Jpp. [1963} S•Jpp. S•Jpp. 2 S. C. Jl. 435. Jl. 435. 435. (4) 21 21 S.T.C. 212

¶96

¶97

419

¶98

HANSRAJ v. B!HAR (Shah, /.)

¶99

A Bachawat, J., speaking for the Court after r:ferri!1g to the observations made by Gajendragadkar, J., m Atiabari Tea Company's case(') observed :

"This interpretation of Article 301 was not dissented from in Automobile Transport ( Rajasthan) Ltd. v. State. of Raj<Mtluin(² ). Normally, a tax on sale ot goods does not directly impede the free movement or transport of goods. Section 21 is no exception. It does not impede the free movement or transport of goods and is not violative of Article 301."

¶104

Section 21 of the Andhra Pradesh Sugar Cane (Regulation of Supply and Purchase) Act which was referred to in tile judgment authorised tile State Government to levy a tax at such rate,

¶105

"not exceeding five rupees per metric tonne as may be prescribed on tile purchase of cane required for use, consumption or sale in a factory. It must, therefore, be regarded as settled law that a tax may in certain cases directly and immediately restrict or hamper the flow of trade, but every imposition of tax does not do so."

¶106

Imposition of tax of the nature of purchase tax does not by itself restrict freedom of trade, commerce or intercourse. Imposition of tax may in certain circumstances impede free flow of trade, commerce or intercourse. But every tax does not have E that effect. Imposition of a purchase-tax by the State does not by itself infringe tile guarantee of freedom under Art. 301

¶107

The argument tllat imposition of· sales or purchase tax must be regarded in all cases as infringing the guarantee of freedom under Art. 301 cannot be accepted as correct.

¶108

¶109

F The appellant filed tile petition out of which their appeal arises soon after the Station Master informed the Jute Merchants Association about his inability to book consignments of jute. He h~s made no averments in the petition which support the J!lea that imposition of purchase-tax "directly and immediately restricts or impedes" tile free flow of trade. Since power to impose G purchase tax under s. 3A on notified goods is-not shown to restrict or impede the free flow of trade directly and immediately, it need not seek to derive, for its validity, support from Art. 304(b).

¶110

The contention tllat ss. 3A & SA are inconsistent with s. 15 of the Central Sales Tax Act, 1956 is without substance. By s. 14 of the Central Sales Tax Act, 1956 certain classes of goods are II declared goods of special importance in inter-State trade or c<>mmerce. Jute is one of such classes of goods. By s. 15 as (ll [1961] IS. C.R. 809. (2) [1%3] IS. C.R. 491.

¶111

[1971} 2 S.C.R.

¶112

420

¶113

SUPREME COURT REPORTS

¶114

¶115

amended by the Central Sales Tax Second Amendment Act XXXI of 19 5 8 it is provided :

¶116

"Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely :--

¶117

·'

¶118

¶119

(a) the tax payable under that Jaw in respect of any sale of purchase of such goods inside the state shall r.ot exceed three per c:nt of the sale or purchase price therQef, ancl such tax shall not be levied at more than one stage;

¶120

( b) where a tax has been levied under that law in respect of the sale or purchase inside the state of any declared goods and such goods are sold in the course of inter-state trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State."

¶121

By s. 15 of the .Central Sales Tax Act in respect of the declared goods on transactions of sale or purchase the tax leviable is restricted to 3% and is not Jeviable at more than one stage. There is no dispute that the purchase tax on jute is leviable at the first point of purchase under s. 3 A of the Bihar Sales Tax Act, and the rate of tax also is not shown to exceed· the maximum prescribed by s. 15 of the Central Sales Tax Act. The provisions of ss. 3A & SA of the Bihar Sales Tax Act are not therefore inconsistent with the provisions of s. 15 of the Central Sales Tax Act.

¶122

But, in our judgment, r. 31B of the Bihar Sales Tax Rules, 1959 and the notification issued on December 26, 1967 are unauthorised and must be struck down. The Bihar Sales Tax Att is enacted by the Legislature to consolidate and amend the law relating to the levy of tax on the sale and "purchase of goods in Bihar. The State Legislature is competent in enacting sales-tax legislation to make a provision which is ancillary or incidental to any provision relating to levy, collection and recovery of sales-tax and purchase-tax. A provision which is,made by the Act or by the Rules which seeks to prevent evasion of liability to pay tax on intra-State sales or purchase would therefore be within the competence of the Legislature or the authority competent to mah> the rules. But the State Legislature has rio power to legislate for the levy of tax on transactions which are carried on in the coune of inter-State trade or commerce or in the course of export. Section 42 of the Bihar Sales Tax Act, 1959, prevent~ any person. from transporting from any railway station, steamer station,

· E

!-'

HANSRAJ v. BIHAR (Shah, /.)

¶131

421

¶132

A air-port, post office or an¥ other place any consignment of such goods exceeding the quantity specified with a view to ensuring that there is no evasion of tax payable under the Act. But the power under s. 42 can only be exercised in respect of levy, collection and recovery of intra-State or purchase tax. It cannot be utilised for the purpose of ensuring the effective levy of Inter-State sales B or purchase tax.

¶133

The appellant purchased jute both within and without the State of Bihar. In respect of transactions of purchase within the State of Bihar and despatch of goods liability to pay purchase-tax at the point of purchase may arise. In respect of goods which are purchased in the State of West Bengal and brought within the c State of Bihar and then despatched to other States in the course of inter-State transactions no question of levy of purchase-tax under the Bihar Sales Tax Act arises. R. 3 IB framed by the State Government seeks to prohibit transport in pursuance of transactions which are inter State, for in terms it prohibits transporting of goods to any place outside the State of Bihdr. Again transD port of goods for personal consumption o~ use, or of goods gifted, pledged or dealt with otherwise than by sale, falls within the in~ junction contained in r. 3 lB.

¶134

The power of the State Legislature is restricted to legislate in

¶135

respect of intra-State transactions of sale and purchase and to matters ancillary or incidental thereto : it has no power to legis-

¶136

E late for levy of tax on sales and purchase in the course of interstate transactions. The power conferred by s. 42 authorising the imposition of restriction on transport or movement of goods may only be exercised in respect of transactions which facilitate levy, collection and recovery of tax on transactions of intra-State sale or purchase. When r. 3 lB prohibits transport of goods to any

¶137

F place outside the State of Bihar unless a certificate is obtained from the appropriate authority, it seeks to prohibit transport of goods pursuant to transactions which may not even be of the nature of sale or purchase transactions; in illlY case it restricts transport pursuant to transactions in the course of inter-State trade and commerce. The operation of the rule is not restricted only to transactions in the course of intra-State trade and com-

¶138

G merce. The rule authorises restrictions on inter-State transactions and is on that account unauthorised. For the same reasons the notification issued on December 26, 1967 must l>e regarded as also unauthorised.

¶139

In the view we have taken r. 31 B and the notification issued

¶140

H by the State Government on December 26, 1967 must be declared ultra vires, and since r. 3 lB and the notification are ultra vires the communication issued by the Superintendent of Commercial

¶141

·--~ •) ') SUPREME COURT REPORTS

¶142

[1971] 2 S.C.R.

¶143

¶144

Taxes to the Railway Authorities must also be declared unauthorised. A writ will therefore issue dechiring r. 3 !B and the notification issued by the Government of Bihar on December 26, i 967 ultra i-ires, and the letter written by the Superintendent of Commercial Taxes to the Railwav Authorities is also declared unauthorised. ·

¶145

Having regard to the circumstances, we think there should be no order as to costs.

¶146

G.C.

Hansraj Bagrecha v. State of Bihar & Ors.

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Hansraj Bagrecha v. State of Bihar & Ors.

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