JINDAL STAINLESS LTD. & ANR versus STATE OF HARYANA & ORS

JINDAL STAINLESS LTD. & ANR versus STATE OF HARYANA & ORS

Only taxes that are discriminatory in nature violate Article 301 and are prohibited by Article 304(a); compensatory tax theory is rejected; clauses (a) and (b) of Article 304 are to be read disjunctively; levy of non-discriminatory entry tax does not infringe the freedom of trade, commerce, and intercourse under...

Source-derived case information.

Parties
Appellant: Jindal Stainless Ltd.; Respondent: State of Haryana
Jurisdiction
India
Judgment Date
11 November 2016
Procedural Posture
Civil Appeal / Constitution Bench Reference Decision
Outcome
Reference answered; previous Supreme Court decisions in Atiabari, Automobile Transport, and Jindal cases overruled to the extent of reliance on compensatory tax theory.
Legal Topics
Entry Tax, Tax Discrimination, Freedom of Trade and Commerce, Compensatory Tax Theory
Constitutional Law Tax Law Trade and Commerce Entry Tax Tax Discrimination Freedom of Trade and Commerce Compensatory Tax Theory

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Parties

Jindal Stainless Ltd.

Appellant

State of Haryana

Respondent

Procedural Posture

Civil Appeal / Constitution Bench Reference Decision

Legal Issues

  1. 1 Whether entry tax statutes violate Article 301 on the freedom of trade, commerce, and intercourse?
  2. 2 Is the compensatory tax theory valid in Indian constitutional law?
  3. 3 Should Articles 304(a) and 304(b) be read conjunctively or disjunctively?

Ratio Decidendi

Only taxes that are discriminatory in nature violate Article 301 and are prohibited by Article 304(a); compensatory tax theory is rejected; clauses (a) and (b) of Article 304 are to be read disjunctively; levy of non-discriminatory entry tax does not infringe the freedom of trade, commerce, and intercourse under Article 301; incentives granted in a non-hostile manner for economic development do not violate Article 304(a).

Court Disposition

Reference answered; previous Supreme Court decisions in Atiabari, Automobile Transport, and Jindal cases overruled to the extent of reliance on compensatory tax theory.

Orders

  • Cases remitted to appropriate regular benches to determine if the specific levies satisfy the non-discrimination test under Article 304(a).
  • Compensatory tax theory stands rejected; only discriminatory taxes are prohibited by Article 304(a).