JUDGMENT A. K. MATHUR, C.J. - All the aforesaid writ petitions involve common questions of law and facts; therefore, they are disposed of by this common order. 2. For convenient disposal of all aforesaid writ petitions, the facts given in the case of Shri Digvijay Cement Co. Ltd. v. State of M.P. (Miscellaneous Petition No. 553 of 1994) are taken into consideration. 3. The petitioners by this writ petition have prayed that the impugned notifications dated July 3, 1993 (annexure P-2) and amended notifications dated March 30, 1994 and June 20, 1995 (annexures P-3 and P-3A) issued by the State Government may be quashed and it is also prayed that the respondents may be prohibited from implementing the above three notifications. 4. The petitioner No. 1, M/s. Shri Digvijay Cement Co. Ltd., is a public limited company with its registered office at Sikka in the State of Gujarat and branch office at G-18, Hans Bhavan, Bahadurshah Zafar Marg, New Delhi. The petitioner No. 2 is a shareholder of the petitioner No. 1. It is alleged that the State of Madhya Pradesh in exercise of power conferred under section 8(5) of the Central Sales Tax Act, 1956 (hereinafter referred to as "the Act of 1956") issued notification whereby the Central sales tax on sale of cement in Madhya Pradesh State was reduced from 12 per cent to 8 per cent. It is alleged that as a result, there is a large scale dumping of cement by Madhya Pradesh manufacturers in the State of Gujarat to the detriment of the manufacturers. It is submitted that in an identical situation, such kind of notification has been quashed by the honourable Supreme Court in the case of Indian Cement Ltd. v. State of Andhra Pradesh [1988] 69 STC 305; AIR 1988 SC 567 . 5. In order to appreciate the controversy involved in the matter, it will be proper to refer to the relevant provisions of law. Section 8 of the Act lays down the rates of tax on sales in the course of inter-State trade or commerce. It also says that so far as the normal rate for the goods of description referred in sub-section (3) shall be liable to pay tax under this Act, which shall be 4 per cent of his turnover. Section 8 of the Act lays down the rates of tax on sales in the course of inter-State trade or commerce. It also says that so far as the normal rate for the goods of description referred in sub-section (3) shall be liable to pay tax under this Act, which shall be 4 per cent of his turnover. It further lays down that in a case of goods other than declared goods, the rate shall be calculated at the rate of 10 per cent or at any rate applicable to the sale or purchase of such goods inside that appropriate State, whichever is higher. However, sub-section (5) which starts with non obstante clause, lays down that notwithstanding anything contained in this section, the State Government may, if it is satisfied that it is necessary to do so in the public interest, by notification in the official gazette and subject to such conditions as may be specified therein direct that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of inter-State trade or commerce, from any such place of business of any such goods or classes of goods as may be specified in the notification or that the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) or sub-section (2), as may be mentioned in the notification. We are concerned with sub-section (5) of section 8 of the Act which reads as under : "Section 8(5). We are concerned with sub-section (5) of section 8 of the Act which reads as under : "Section 8(5). Notwithstanding anything contained in this section, the State Government may, if it is satisfied that it is necessary so to do in the public interest, by notification in the official Gazette, and subject to such conditions as may be specified therein, direct, - (a) that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of inter-State trade or commerce, from any such place of business of any such goods or classes of goods as may be specified in the notification, or that the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) or sub-section (2) as may be mentioned in the notification; (b) that in respect of all sales of goods or sales of such classes of goods as may be specified in the notification, which are made, in the course of inter-State trade or commerce, by any dealer having his place of business in the State or by any class of such dealers as may be specified in the notification to any person or to such class of persons as may be specified in the notification, no tax under this Act shall be payable or the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) or sub-section (2) as may be mentioned in the notification." In exercise of powers under this sub-section, the State Government issued notification dated 3rd July, 1993 (annexure P-2), which reads as under : "Madhya Pradesh Rajpatra, Bhopal, dated 3rd July, 1993. F. No. A-3-11-93-ST-V(57). F. No. A-3-11-93-ST-V(57). - Whereas, the State Government is satisfied that it is necessary so to do in the public interest; Now therefore, in exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (No. 74 of 1956), the State Government hereby directs that during the period from the date of publication of this notification in the 'Madhya Pradesh Gazette' to 31st March 1994, the tax payable under the said section of the said Act, by any dealer in respect of the sales of cement from his place of business in Madhya Pradesh in the Course of inter-State trade or commerce shall be calculated at the lower rate of 8 per cent on his turnover of such sales. By Order and in the name of Governor of Madhya Pradesh. S. N. Sharma, Dy. Secy." By this notification, the dealers who deals in the inter-State sale or commerce of the cement from his place of business in the Madhya Pradesh, shall be liable to pay a low rate of tax, i.e., 8 per cent of his turnover of such sales. Then this notification (annexure P-2) was amended by another notification dated 30th March, 1994 (annexure P-3) and the period was extended up to 31st March, 1995. Then again, this notification dated 30th March, 1994, was amended by notification dated 20th June, 1995 (annexure P-3A) and the rate of tax was reduced to 6 per cent and the period was extended up to 31st March, 1998. It is pointed out that the normal rates of sales tax in the State of M.P. was 15 per cent during 1993 and it was reduced to 8 per cent and during 1995, it was 12 per cent and then it was reduced to 6 per cent. It is these three notifications which have been challenged by the petitioners on the ground that it is violative of article 301 of the Constitution of India as it impedes a free-flow of trade in the country and creates a discriminatory situation for other dealers in the State. 6. It is these three notifications which have been challenged by the petitioners on the ground that it is violative of article 301 of the Constitution of India as it impedes a free-flow of trade in the country and creates a discriminatory situation for other dealers in the State. 6. It is pointed out that on account of this reduction, the average flow of despatches from other States to Gujarat has tremendously increased and this has seriously prejudiced to the right of the traders of the Gujarat State and such action of State of Madhya Pradesh is violative of article 19(1)(g) of the Constitution of India and Part III of the Constitution. It is also pointed out that such issue has been decided by their Lordships of the honourable Supreme Court in the case of Indian Cement Ltd. [1998] 69 STC 305; AIR 1988 SC 567 and recently, their Lordships of the honourable Supreme Court have again reiterated the same position in the case of Shri Digvijay Cement Co. v. State of Rajasthan [1997] 106 STC 11; (1997) 3 Scale 150 . 7. A return was filed by the State and contested the matter. Additional return was also filed by the respondent-State in W.P. No. 554 of 1994 and in that, they have submitted that the local rate of tax under the Gujarat local Sales Tax Act is 16 per cent whereas all the other neighbouring States like Bihar, Orissa, Rajasthan, M.P., Maharashtra, Andhra Pradesh, Uttar Pradesh and West Bengal, etc., have prescribed a much lesser rate of tax which averages from 10 per cent to 12 per cent. It is also pointed out that if the petitioner is put to any disadvantage because of this rate of tax in Gujarat then his grievance lies with the State of Gujarat and the grievance against the State of M.P. cannot be made. A comparative chart has also been given that as compared to Gujarat, the normal rate of sales tax in the State of M.P. is low and that will be apparent from the following chart given in the additional return, which reads as under : --------------------------------------------------------------------- S. No. Type of sale Rate of tax Remarks ------------------------ Gujarat M.P. ----------------------------------------------------------------- 1. Local sale within 16 per cent 12 per cent Not the State. (as on date Challenged 10 per cent) 2. Local sale within 16 per cent 12 per cent Not the State. (as on date Challenged 10 per cent) 2. Inter-State sale 4 per cent 4 per cent Not to registered Challenged dealers or Government department [section 8(1), CST Act] 3. Rate of tax under ... 8 per cent Now section 8(5) of (as on date Challenged CST Act. 6 per cent as per the notification under the commercial Tax Act, 1994, dated June 20, 1995). ----------------------------------------------------------------- It is also pointed out by the respondents that only 5 per cent of inter-State sale is made to unregistered dealers whereas remaining 95 per cent of sale is made to registered dealers and the Government organisations/departments and for which the rate of tax for sale to registered dealers and the Government departments is less and uniform throughout the country, i.e., 4 per cent. It is also pointed out by the respondents that the State of M.P. is a backward State with limited resources. The State of M.P. depends largely on such a limited resources like lime deposits and it has to augment its revenue by utilising the natural resources. In order to exploit the natural resources, the answering-respondent has given incentive to the principal manufacturers which has attracted number of cement plants in the State. As a result of these incentive, the State of M.P. has become a large manufacturer of cement in the country because of vast deposits of lime-stone. It is also pointed out that in order to increase the export these notifications have been issued so as to augment the revenue of the State. It is further pointed out that the State of Gujarat is one of the most industrialised State other State like the State of M.P., cannot compete with them, therefore, the State of M.P. has to augment its revenue by exploiting all the natural resources like lime-stone, coal, forest produce, etc. This is all being done with a view to alleviate the economy of the State so as to compete with the advanced State like State Gujarat. In this background, it is submitted that this notification has been issued with a public interest for achieving the economic advancement in furtherance of articles 38 and 301 of the Constitution of India. 8. We have heard the learned counsel for the parties and perused the records. In this background, it is submitted that this notification has been issued with a public interest for achieving the economic advancement in furtherance of articles 38 and 301 of the Constitution of India. 8. We have heard the learned counsel for the parties and perused the records. It is true that so far as the industrialisation of the State of M.P. and the State of Gujarat is concerned, the State of M.P. is comparatively backward; therefore, they are striving to attain economic advancement, but nonetheless, it cannot ignore the mandate of the law and the Constitution. Article 301 lays down that there should be a free-flow of trade and there should not be any impediment in the free-flow of trade across the country. So far as the economic backwardness of the State is concerned, there is no two opinion in the matter; but still the State has to augment its revenue resources within the frame work of the Constitution and the law laid down by the honourable Supreme Court. However, such economic measures undertaken by the State has not found favour with their Lordships of the honourable Supreme Court right from the earlier decision given in the case of Indian Cement Ltd. [1988] 69 STC 305; AIR 1988 SC 567 , where similar arguments was negatived by their Lordships of the honourable Supreme Court and it was observed : "There can be no dispute that taxation is a deterrent against free-flow. As a result of favourable or unfavourable treatment by way of taxation, the course of flow of trade gets regulated either adversely or favourably. If the scheme which Part XIII guarantees has to be preserved in national interest, it is necessary that the provisions in the article must be strictly complied with. ......The reasonable restrictions contemplated in Part XIII have to be backed by law and not by executive action provided the same are within the limitations prescribed under the scheme of Part XIII. .......Variation of the rate of inter-State sales tax does affect free trade and commerce and creates a local preference which is contrary to the scheme of Part XIII of the Constitution. The notification extends the benefit even to unregistered dealers. .......Variation of the rate of inter-State sales tax does affect free trade and commerce and creates a local preference which is contrary to the scheme of Part XIII of the Constitution. The notification extends the benefit even to unregistered dealers. Both the notifications of the Andhra Pradesh Government are, therefore, not sustainable." It seems that despite this decision, the State of Rajasthan still issued a notification by which certain benefits were sought to be given to the industrialists of Rajasthan State by giving certain benefits to the traders in the inter-State sale. This again came to be challenged before the honourable Supreme Court in the case of Shri Digvijay Cement Co. v. State of Rajasthan [1997] 106 STC 11 and their Lordships have recently struck down such notifications and it was observed : "19. We have, therefore, to examine the validity of the impugned notifications in the context of this settled legal position. As already pointed out above the only reason or justification given by the State of Rajasthan for making differentiation between the rate of tax on intra-State sales and inter-State sales of cement was that the said reduction was likely to lead and had led to increase in sales of cement and increase in revenue earnings. So the question considered is whether those considerations alone can be regarded as sufficient to make the impugned notifications immune from the challenge of hostile discrimination. In the case of Indian Cement Ltd. [1988] 69 STC 305; AIR 1988 SC 567 ; (1988) 1 SCC 743 this Court has held that the plea that reduction in the rate of sales tax is beneficial to the State revenue cannot be regarded as sufficient justification for making the discrimination and it would not amount to a reasonable restriction contemplated by article 304. 20. In the case of Indian Cement Ltd. [1988] 69 STC 305 : AIR 1988 SC 567 ; (1988) 1 SCC 743 this Court also held that reduction in the rate of tax in order to protect the local manufacturers cannot be regarded as a justification permitted by Part XIII of the Constitution. 20. In the case of Indian Cement Ltd. [1988] 69 STC 305 : AIR 1988 SC 567 ; (1988) 1 SCC 743 this Court also held that reduction in the rate of tax in order to protect the local manufacturers cannot be regarded as a justification permitted by Part XIII of the Constitution. So also in Western Electroniks v. State of Gujarat [1988] 70 STC 52; (1988) 2 SCC 568 , this Court has held that reduction in the case of goods manufactured locally in order to provide an incentive for encouraging local manufacturing units cannot be sustained if it adversely affects the free-flow of inter-State trade and commerce. We are also of the view that the justification advanced by the State of Rajasthan that as a result of the impugned notifications the State revenue had increased and thus they were beneficial to the State revenue, is not valid as the said notifications had the effect of creating a preference to cement manufactured and sold in Rajasthan and disadvantage for the sale of cement manufactured and sold in Gujarat and thus had the direct and immediate adverse effect on the free-flow of trade. The said notifications, by dispensing with the requirement of furnishing declaration in C form, had the effect of facilitating evasion of payment of tax and were, therefore, also violative of the scheme of the constitutional provisions contained in Chapter XIII. A 5-Judge Bench of this Court in Firm A. T. B. Mehtab Majid & Co. v. State Madras [1963] 14 STC 355; [1963] Supp 2 SCR 435 has also held that sales tax, which has the effect of discriminating between goods of one State and goods of another, may affect the free-flow of trade and would be violative of article 301." Therefore, all the arguments which the learned counsel for the State have raised to justify the State action were considered by their Lordships of the honourable Supreme Court in the above decision and negatived. However, our attention was invited to the decision of the honourable Supreme Court in the case of Video Electronics Pvt. Ltd. v. State of Punjab [1990] 77 STC 82 (SC); (1990) 3 SCC 87 . The said decision was also considered by the Lordships of the honourable Supreme Court in Digvijay Cement Co. However, our attention was invited to the decision of the honourable Supreme Court in the case of Video Electronics Pvt. Ltd. v. State of Punjab [1990] 77 STC 82 (SC); (1990) 3 SCC 87 . The said decision was also considered by the Lordships of the honourable Supreme Court in Digvijay Cement Co. [1997] 106 STC 11; (1997) 3 scale 150 in para 19 and their Lordships after examining that case also reiterated the law laid down in the case of Indian Cement Ltd. [1988] 69 STC 305 (SC); AIR 1988 SC 567 . In view of the recent decision of the honourable Supreme Court in Digvijay Cement Co. [1997] 106 STC 11; (1997) 3 Scale 150 , there leaves hardly any room for us except to quash the notifications. 9. In the result, we allow all the aforesaid three petitions and quash the notification dated July 3, 1993 (annexure P-2), and amended notifications dated March 30, 1994 and June 20, 1995 (annexures P-3 and P-3A). No order as to costs. The amount of security, if any, shall be refunded to the petitioners. Petitions allowed.