INDIAN CEMENT AND ORS. versus STATE OF ANDHRA PRADESH AND ORS.

INDIAN CEMENT AND ORS. versus STATE OF ANDHRA PRADESH AND ORS.

Notifications by the States of Andhra Pradesh and Karnataka reducing the rate of sales tax on cement through executive action, not backed by law, and creating trade barriers and preferences, are ultra vires Part XIII of the Constitution of India and violate the guarantee of free trade, commerce, and intercourse throughout the territory of India.

Parties
Petitioner: India Cement Limited, Chettinad Cement Corporation, Dalmia Cement (Bharat) Limited, Tamil Nadu Cement Corporation Limited, their shareholders and authorised stockists; Respondent: State of Andhra Pradesh; Respondent: State of Karnataka; Respondent: Union of India
Jurisdiction
India
Judgment Date
12 January 1988
Procedural Posture
Writ Petition (civil) No. 422 of 1987 / Original Jurisdiction – Final Judgment
Outcome
Petition allowed; notifications quashed
Legal Topics
Freedom of Trade, Commerce and Intercourse, Sales Tax, Ultra Vires, Notifications Under Sales Tax Acts
Constitutional Law Tax Law Trade and Commerce Freedom of Trade, Commerce and Intercourse Sales Tax Ultra Vires Notifications Under Sales Tax Acts

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Parties

India Cement Limited, Chettinad Cement Corporation, Dalmia Cement (Bharat) Limited, Tamil Nadu Cement Corporation Limited, their shareholders and authorised stockists

Petitioner

State of Andhra Pradesh

Respondent

State of Karnataka

Respondent

Union of India

Respondent

Procedural Posture

Writ Petition (civil) No. 422 of 1987 / Original Jurisdiction – Final Judgment

Legal Issues

  1. 1 Whether the notifications issued by Andhra Pradesh and Karnataka reducing sales tax rates are ultra vires Part XIII of the Constitution
  2. 2 Whether such notifications create trade barriers and violate Article 301
  3. 3 Whether the notifications are permissible under law or constitute executive actions not backed by legislative authority

Ratio Decidendi

Notifications by the States of Andhra Pradesh and Karnataka reducing the rate of sales tax on cement through executive action, not backed by law, and creating trade barriers and preferences, are ultra vires Part XIII of the Constitution of India and violate the guarantee of free trade, commerce, and intercourse throughout the territory of India.

Court Disposition

Petition allowed; notifications quashed

Orders

  • The two impugned notifications of the Andhra Pradesh Government and the impugned notification of the Karnataka Government are quashed.
  • Hearing fees assessed at Rs.5,000, to be shared equally by Andhra Pradesh and Karnataka.