Judgment :- Indira Banerjee, J. In these writ petitions the writ petitioners, who are required, in connection with their business, to bring goods from all parts of India or abroad, into various local areas in West Bengal for sale, use or consumption therein, have challenged the validity of the West Bengal Tax on Entry of Goods into Local Areas Act, 2012 (hereinafter referred to as the ‘impugned Entry Tax Act’). As all these writ petitioners involve a common question of law, they were heard together along with similar writ applications in the Original Side and are now being disposed of by this common judgment and order. One of the Writ Petitioners is an export oriented unit, having its factory at the Falta Special Economic Zone. The object of the impugned Act, as stated in its preamble is to provide for the levy and collection of taxes on the entry of certain goods into local areas of the State of West Bengal for consumption, use or sale therein and to provide for matters connected therewith or incidental thereto for the purpose of creating a compensatory Entry Tax Fund. Some of the definitions in Section 2 of the impugned Act, relevant for the purpose of this writ application are as follows:- “Section 2(1) (g) "dealer" means a dealer under the West Bengal Value Added Tax Act, 2003, or under the West Bengal Sales Tax Act 1994, as the case may be, and includes— West Ben. Act XLIX of 1994. Some of the definitions in Section 2 of the impugned Act, relevant for the purpose of this writ application are as follows:- “Section 2(1) (g) "dealer" means a dealer under the West Bengal Value Added Tax Act, 2003, or under the West Bengal Sales Tax Act 1994, as the case may be, and includes— West Ben. Act XLIX of 1994. (i) a handling or delivery agent or an agent acting in any manner on behalf of the principal, or any other person who takes delivery or is entitled to take delivery of goods on behalf of a dealer on its entry into a local area, (ii) Where specified goods entering any local area have been dispatched to such local area by rail, road, water, air or post, and the consignee of such specified goods does not take delivery of such goods upon entry and such specified goods are sold under the provisions of any other law, the purchaser or any other person who takes livery of such goods on his behalf; Section 2(1) (h) "entry of goods", with all its grammatical variations and cognate expressions, means bringing of goods into a local area from any place outside that local area or any place outside the State or from outside India, for consumption, use or sale therein, whether by a dealer or an importer other than a dealer himself or by any other person; Section 2(1) (i) "Fund" means the West Bengal Compensatory Entry Tax Fund established under sub-section (1) of section 15; Section 2(1) (j) "goods" includes all kinds of movable property other than actionable claims, stocks, shares or securities; Section 2(1) (k) "importer' includes a person who in any capacity brings, or causes entry of, any specified goods into a local area for consumption or use therein /and a dealer; Section 2(1) (1) "import value", in respect of a consignment of specified goods upon entry of such goods in a local area by or on behalf of a dealer or an importer other than a dealer, means— (a) the price or cost at which the dealer or importer other than a dealer has purchased or procured or acquired or obtained the specified goods, as shown in the original tax invoice, invoice or bill or stock transfer advice or document of like nature; or (b) where the tax invoice, invoice or bill or stock transfer advice or document of like nature is not available or is not produced, or where the price or cost of such specified goods is not separately mentioned therein, or where the tax invoice, invoice or bill or stock transfer advice or document of like nature produced is proved to be false or the information furnished therein is found to be incorrect, the prevailing market price of such specified "goods in the local area; Section 2(1) (m) "local area" means the areas within the limits of a Municipal Corporation or any municipality or Gram Panchayat or Notified Area Council or any other local authority, by whatever name called, constituted or continued in the State of West Bengal by any law for the time being in force; Section 2(1) (o) "person" includes any company or association or body of individuals whether incorporated or not and also a Hindu undivided family, a firm, a local authority, Government of India, the Government of any State or Union Territory, a statutory body, a trust or other body corporate, a society including a co-operative society, a factor, a broker, a commission agent, a del credere agent, an auctioneer, an agent for handling or transporting of goods or handling of document of title to goods, or any other mercantile agent, by whatever name called, an educational institution, any bank, any hospital or nursing home or diagnostic centre, a joint-venture company, and a limited liability partnership or other juristic person; Section 2(1) (y) “turnover of imports”, used in relation to any registered dealer with reference to a period of time, means the aggregate of the import value of specified goods which the dealer brings or receives in any local area during the period for consumption, use or sale therein, and used in relation to an unregistered dealer or importer other than a dealer, means the import value of a consignment of specified goods brought or received in any local area for consumption, use or sale therein, whether by the dealer or the importer other than a dealer himself or by any other person;” Section 2(2) of the impugned Act interalia provides that words and expressions used but not defined in the impugned Act but defined in the West Bengal Sales Tax Act, 1994 or the West Bengal Value Added Tax, 2003 would have the same meanings as assigned to them in those Acts to the extent they are not inconsistent with the impugned Act and the Rules made thereunder. The relevant Sections of the impugned Act are set out herein below for convenience. “Section 4. Incidence and levy of tax— (1) Subject to the-provisions of this Act, there shall be levied a tax under this Act which shall be payable by a dealer or an importer other than a dealer, on the entry of all or any specified goods into a local area for consumption, use or sale therein, on his taxable turnover of imports or on the quantity or weight of any specific goods as may be notified by the State Government at such rate or rates as may be specified under sub-section (2). Explanation.— Where any specified goods are consumed, used or sold in a local area by a dealer or an importer other than a dealer, it shall be presumed, unless the contrary is proved by him, that such goods had entered into that local area for consumption, use or sale therein. (2) The State Government may, by notification, specify the rate of tax levied under this Act, which shall not exceed five per centurm when such tax is levied on taxable turnover of imports, and. different rate or rates of tax may be specified in respect of different specified goods, or for the different categories of consumption or use or sale of such specified goods, or for different local areas. (3) The State Government shall have regard to financial needs for development and facilitation of trade, commerce and industry in the local areas of the State while specifying the rate or rates of tax under subsection (2). (4) Subject to such restrictions and conditions as may be prescribed, no tax. under this Act shall be levied, and accordingly the import value of goods shall not be included in turnover of imports of a dealer or an importer other than a dealer, in respect of-(0a) entry of specified goods dispatched, at the time of entry into a local area, directly to a place for immediate export of such goods out of the territory of India within the meaning of sub-section (1) of section 5 of the Central Sales Tax Act. 1956. from such place in the same form in which such goods have been entered into the local area; 74 of 1956. 1956. from such place in the same form in which such goods have been entered into the local area; 74 of 1956. (b) entry of specified goods dispatched at the time of entry into a local area directly to a place outside the State in the same form in which such goods have been entered into the local area; and (c) such other entry of goods, either in full or in part, as may be prescribed. (5) The expression "taxable turnover of imports" as stated in subsection (1) shall mean, in respect of a dealer or an importer other than a dealer liable to pay tax on the entry of specified goods into a local area for consumption, use or sale therein, that part of his turnover of imports which remains after deducting therefrom— (a) turnover of imports relating to entry of specified goods into a local area, if it is proved to the satisfaction of the Commissioner that such goods have already been subjected to tax under this Act in the same form; (b) turnover of imports relating to entry of specified goods into a local area, if it is proved to the satisfaction of the Commissioner that such goods have been purchased in the same form against a tax invoice, or invoice, or bill issued under the West Bengal Value Added Tax Act, 2003, or the West Bengal Sales Tax Act, 1994, by a dealer registered under the West of Bengal Value Added Tax Act, 2003, or the West Bengal Sales Tax Act, 1994, as the case may be; (West Ben. Act XXXVII of 2003 West Ben. Act XLIX of 1994) (c) turnover of imports relating to entry of specified goods into a local area where it is proved to the satisfaction of the Commissioner that such goods have been transported from within West Bengal from another place of business of such dealer or importer other than a dealer; (d) such other turnover of imports, either in full or in part, as may be prescribed.” “Section 5. Power of State Government to amend Schedule – The State Government, after giving by notification not less than fourteen days’ notice of its intention so to do, may, by like notification, with prospective or retrospective effect, add to, amend, or alter any Schedule to this Act.” “Section 6. Power of State Government to amend Schedule – The State Government, after giving by notification not less than fourteen days’ notice of its intention so to do, may, by like notification, with prospective or retrospective effect, add to, amend, or alter any Schedule to this Act.” “Section 6. Power to exempt tax – (1) The State Government may, if it is necessary so to do in public interest, by notification, exempt, either in full or in part, the tax payable under this Act by any specified class of dealers or importers other than a dealer or on any class of specified goods. (2) Any exemption notified under sub-section (1) may be subject to such restrictions and conditions as may be specified in the notification. (3) The State Government may, by notification, withdraw, cancel or vary any notification issued under sub-section (1), with prospective or retrospective effect.” “Section 8. Declaration to be made by a dealer or an importer other than a dealer for entry of goods -(1) In respect of entry of any consignment of specified goods into a local area by or on behalf of a dealer or an importer other than a dealer for consumption, use or sale therein, the dealer or the importer other than a dealer shall make a declaration in such form, in such manner and containing such particulars relating to entry of such goods, as may be prescribed and such a declaration shall be carried along with the specified goods till such goods reach the destination within the local area. (2) The declaration referred to in sub-section (1) shall be produced under such circumstances, and in such manner, as may be prescribed, upon demand by the Commissioner or by such other person authorized by the Commissioner in this behalf, at any place within a local area.” “Section 9. Return and payment of tax by registered dealers – (1) Every registered dealer shall, either electronically or manually, submit a return in such form containing such particulars, to such authority, within such period, in such manner and along with such documents, as may be prescribed. Return and payment of tax by registered dealers – (1) Every registered dealer shall, either electronically or manually, submit a return in such form containing such particulars, to such authority, within such period, in such manner and along with such documents, as may be prescribed. (2) A registered dealer shall pay into the appropriate Government Treasury in the prescribed manner and within the prescribed date the full amount of tax payable by him under this Act on the basis of the return to be submitted under sub-section (1) and shall furnish along with such return satisfactory proof of the payment of such tax. (3) Where the Commissioner is satisfied that a registered dealer has defaulted in, or has attempted to evade, payment of tax under this Act, he may, for reasons to be recorded in writing, demand from such registered dealer an amount towards security for safeguarding revenue in respect of the tax payable under this Act, either for a single consignment or for tax payable for a particular period, and such security shall be adjusted against the tax payable under this Act for that consignment or that period, as the case may be.” “Section 15. Establishment of fund – (1) There shall be established for the purposes of this Act, a fund to be called the West Bengal Compensatory Entry Tax Fund. (2) The fund shall be under the control of the State Government and there shall be credited thereto - (a) any sum of money credited under section 16; (b) any sum of money credited under section 17; (c) any sum realised by the State Government in carrying out its function under this Act or in the administration of this Act; (d) any fund provided by the Central Government for the development or facilitating the trade, commerce and industry in the State as mentioned in section 18. (3) The balance to the credit of the Fund shall not lapse at the end of the financial year.” “Section 16. (3) The balance to the credit of the Fund shall not lapse at the end of the financial year.” “Section 16. Crediting of proceeds to the Fund – The proceeds of the levy under this Act shall first be credited to the Consolidated Fund of West Bengal, and the State Government may, if the State Legislature by appropriation made by law in this behalf so provides, credit such proceeds to the Fund from time to time, after deducting the expenses of collection for being utilized exclusively for the purposes of this Act.” “Section 17. Grants and loans by state Government – The State Government may, after due appropriation made by the State Legislature by law in this fore, credit in the Fund, by way of grants or loans, such sums or money as the State Government may consider necessary.” “Section 18. Utilization of proceeds of levy – (1) The proceeds of the levy under this Act, net of the cost of collection and incidental expenses, shall be utilized for the development or facilitating the trade, commerce and industry in the State which shall include the following:- (a) construction, development and maintenance of roads and bridges for linking the market and industrial areas; (b) construction, development and maintenance of transport hubs and cold storage facilities wherever possible; (c) construction, development and maintenance of linking the markets and industrial areas to railway stations, ports, waterways and airports, wherever possible; (d) construction, development and maintenance of railway over-bridges and sub-ways; (e) creating infrastructure for supply of electricity and water to industries and other commercial complexes; (f) creating, development and maintenance of other infrastructure for the furtherance of trade, commerce and industry in general; (g) providing finance, aids, grants and subsidies for creating, developing and maintaining pollution free environment in the concerned areas; (h) any other purpose connected with the development of trade, commerce and industry or for facilities relating thereto; (i) providing finance, aids, grants and subsidies to local bodies and State Government agencies for the purposes specified above. (2) The State Government shall - (a) ensure that the proceeds of tax collected under this Act, net of the cost of collection and incidental expenses, are utilized for facilitating trade, commerce and industry in the State; (b) identify the areas which require immediate development or maintenance of infrastructure and other facilities and allot proceeds of tax under this Act for the purposes specified in subsection (1); (c) ensure that the proceeds of tax collected under this Act, net of the cost of collection and incidental expenses, are not-much more than the amount actually required for development of local areas for facilitating trade, commerce and industry in the State.” “Section 19. Maintenance of accounts – The State Government shall maintain proper accounts and other records, such forms in and in such manner, as may be prescribed.” “Section 20. Administration of Fund – The State Government shall administer the Fund and take such decisions regarding investment in the development or facilitating the trade, commerce and industry in the State.” “Section 22. Power of State Government to make rules – (1) The State Government may, by notification, make rules, with prospective or retrospective effect, for carrying out the purposes of this Act. (2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the matters which under any provision of this Act are required to be prescribed, or to be provided for, by rules. (3) In making any rules under this section the State Government may direct that a breach thereof shall be punishable with fine not exceeding one thousand rupees and, when the offence is a continuing one, with a daily fine not exceeding one hundred rupees during the continuance of such offence.” Mr. Binod Poddar, Senior Advocate appearing with Mr. Sumeet Gadodia and Mr. Somak Basu, on behalf of the petitioners, in W.P. No.11407 (W) of 2012, Tata Steel Ltd. Vs. State of West Bengal, Mr. S.K. Kapur, Senior Advocate appearing on behalf of the petitioners in W.P. 464 of 2012, Bharti Airtel Vs. State of West Bengal and three other writ petitioners. Mr. J.P. Khaitan appearing on behalf of the writ petitioners in W.P. 509 of 2012, ACC Ltd. & Anr. Vs. State of West Bengal & Ors. and five other writ petitioners along with Mr. Somak Basu, Mr. Sourabh Bagaria and Ms. Sutapa Roy Chowdhury, Mr. State of West Bengal and three other writ petitioners. Mr. J.P. Khaitan appearing on behalf of the writ petitioners in W.P. 509 of 2012, ACC Ltd. & Anr. Vs. State of West Bengal & Ors. and five other writ petitioners along with Mr. Somak Basu, Mr. Sourabh Bagaria and Ms. Sutapa Roy Chowdhury, Mr. Samit Talukdar appearing on behalf of the Writ Petition in W.P. No.18582 (W) of 2012 Camco Multi Metal Ltd. & Anr. Vs. The State of West Bengal & Ors. and Mr. Mainak Bose appearing on behalf of the writ petitioner No. W.P. 562 of 2012 Godrej Consumer Products Ltd. Vs. The State of West Bengal & Ors. and six other writ petitions, strenuously argued that the impugned Entry Tax Act is violative of Article 301 read with Article 304 (a) and (b) of the Constitution of India. Mr. Poddar submitted that the impugned Entry Tax Act is violative of Article 301 of the Constitution of India, which guarantees free trade, commerce and intercourse throughout the territory of India, read with Article 304 of the Constitution of India which enables the state to impose on goods imported from other States or Union Territories, any tax to which similar goods manufactured or produced in that State are subject, so that there is no discrimination between goods so manufactured or produced in the State and those brought from outside the State and also to impose restrictions on freedom of trade or commerce in public interest. Mr. Poddar submitted and rightly that the impugned Entry Tax does not seek to impose tax to which similar goods manufactured or produced in the State of West Bengal are subject, to place goods manufactured or produced in the State at the same level with goods brought from outside the State. Mr. Poddar argued that in the absence of prior sanction of the President of India, the impugned Entry Tax Act was hit by Article 304(b) of the Constitution of India, since no Bill for enactment or amendment in law to impose restrictions on freedom of trade, commerce or intercourse with or within the State could be introduced or moved without the previous sanction of the President, if such enactment or amendment was proposed in public interest. Mr. Poddar submitted that taxing laws are not excluded from the operation of Article 301 of the Constitution of India. Mr. Mr. Poddar submitted that taxing laws are not excluded from the operation of Article 301 of the Constitution of India. Mr. Poddar submitted that a taxing law which purports to impose a tax on inter-State or interregional trade, commerce and intercourse can interfere with the right of freedom of trade, commerce and intercourse throughout the territory of India guaranteed under Article 301 of the Constitution of India. In support of his submission that taxing laws amount to restrictions on the freedom of trade, commerce and intercourse throughout the territory of India. Mr. Poddar cited the judgment of Constitutional Bench of the Supreme Court in Atia Bari Tea Company Limited Vs. State of Assam reported in AIR 1961 SC 232 . Mr. Poddar submitted that the freedom of trade, commerce and intercourse guaranteed under Article 301 is subject to the restrictions of Article 304 of the Constitution of India. Thus, notwithstanding anything in Article 301 or 303, the legislature of a State may by law impose on goods imported from other States or Union Territories, any tax to which similar goods manufactured or produced in that State are subject, so as not to discriminate between goods so imported and goods manufactured or produced within the State. The State Legislature is also empowered, notwithstanding anything in Article 301 or 303, to impose reasonable restrictions on freedom of trade, commerce or intercourse within that State as may be required in the public interest. However, reasonable restrictions, as may be required in public interest, cannot be introduced unless the Bill or amendment for the purpose is introduced or moved in the legislature with the previous sanction of the President of India. Citing the judgment of a Seven Judge Bench of the Supreme Court in Automobile Transport (Rajasthan) Limited Vs. State of Rajasthan reported in AIR 1962 SC 1402 , Mr. Poddar argued that a taxing law may not be hit by Article 301 read with Article 304 if the tax sought to be imposed is compensatory in nature. Mr. Poddar argued that the Supreme Court had judicially crafted an exception to the provisions of Article 301 in Automobile Transport (Rajasthan Limited) Vs. State of Rajasthan (Supra). The Supreme Court held that a taxing statute can be protected from the vice of unconstitutionality, if the tax is compensatory in nature. Mr. Poddar submitted that, in Bhagatram Rajiv Kumar Vs. Mr. Poddar argued that the Supreme Court had judicially crafted an exception to the provisions of Article 301 in Automobile Transport (Rajasthan Limited) Vs. State of Rajasthan (Supra). The Supreme Court held that a taxing statute can be protected from the vice of unconstitutionality, if the tax is compensatory in nature. Mr. Poddar submitted that, in Bhagatram Rajiv Kumar Vs. Commissioner of Sales Tax, Madhya Pradesh reported in (1995) Supp. 1 SCC 673 the Supreme Court held that if there was substantial or even some link between a tax imposed and the facilities intended to dealers, directly or indirectly, the levy could not be impugned as invalid. The Supreme Court reiterated this view in State of Bihar Vs. Bihar Chamber of Commerce reported in (1996) 9 SCC 136 . In the aforesaid case the Supreme Court held that “Some Connection” between the tax and the trading facilities extended to dealers directly or indirectly, would be sufficient to characterize it as compensatory tax. In Jindal Strips Ltd. (1) Vs. State of Haryana reported in (2003) 8 SCC 136 a Bench of the Supreme Court doubted the correctness of the law enunciated in Bhagatram Rajeev Kumar (supra) and Bihar Chamber of Commerce (supra) and referred to the Constitutional Bench, the specific question of whether the theory of some connection, as propounded in Bhagat Ram’s case, and applied in Bihar Chamber of Commerce case, was contrary to law and the working test laid down in the case of Automobile Transport Ltd. (supra). Mr. Poddar also cited the decision of the Constitution Bench of the Supreme Court in Jindal Stainless Ltd. (2) & Ors. Vs. State of Haryana & Ors. reported in (2006) 7 SCC 241 where the aforesaid question was answered. The Constitutional Bench of the Supreme Court disapproved the view taken in the earlier judgments of the Supreme Court in Bhagatram Rajiv Kumar (Supra) and Bihar Chamber of Commerce (Supra) and held that the working test for deciding whether a tax is compensatory or not is to enquire whether the trade is having the use of certain facilities for the better conduct of its business and paying not patently much more than what is required for providing the facilities. The Constitution Bench of the Supreme Court answered the question referred to it in the following words: “16. The Constitution Bench of the Supreme Court answered the question referred to it in the following words: “16. To sum up the pre-1995 decisions held that an exaction to reimburse/recompense the State the cost of an existing facility made available to the traders or the cost of a specific facility planned to be provided to the traders is compensatory tax and that it is implicit in such a levy that it is must, more or less, be commensurate with the cost of the service or facility. Those decisions emphasized that the imposition of tax must be with the definite purpose of meeting the expenses on account of providing or adding to the trading facilities either immediately or in future, provided the quantum of tax is based on a reasonable relation to the actual or projected expenditure on the cost of the service or facility. However, the post – 1995 decisions in Bhagatram case and in Bihar Chamber of Commerce now say that even if the purpose of imposition of the tax is not merely to confer a special advantage on the traders but to benefit the public in general including the traders, that levy can still be considered to be compensatory. According to this view, an indirect or incidental benefit to traders by reason of stepping up the developmental activities in various local areas of the State can be brought within the concept of compensatory tax, the nexus between the tax known as compensatory tax and the trading facilities not being necessarily either direct or specific.” The Supreme Court specifically overruled the theory as propounded in Bhagat Ram’s case (Supra) and in Bihar Chamber of Commerce case (Supra) that some connection would make a levy compensatory. Mr. Poddar submitted that the Constitution Bench of the Supreme Court has, in Jindal Stainless Ltd. (2) (supra) pronounced the law relating to imposition of entry tax by State Legislature and the validity of the impugned Entry Tax Act has to be adjudicated in view the law laid down by the Supreme Court in Jindal Stainless Ltd. (2) (supra). Mr. Poddar strenuously contended that the impugned Entry Tax Act is not compensatory in nature. Mr. Poddar argued that the amount of Entry Tax collected is credited to the Consolidated Fund of West Bengal under Section 16 of the Act and the same is to be appropriated by the State Legislature. Mr. Poddar strenuously contended that the impugned Entry Tax Act is not compensatory in nature. Mr. Poddar argued that the amount of Entry Tax collected is credited to the Consolidated Fund of West Bengal under Section 16 of the Act and the same is to be appropriated by the State Legislature. Thus the Act is for augmenting the general revenue and cannot be treated to be compensatory. Mr. Poddar submitted that the basic difference between a tax and a fee or a compensatory tax was, that the former was based on the concept of burden, whereas the latter was based on the concept of recompense and/or reimbursement. For a tax to be compensatory, there had to be some link between the quantum of tax and the facilities or services for which the tax was being imposed. Mr. Poddar submitted that whenever a law is impugned as violative of Article 301 of the Constitution of India, the Court has to see whether the impugned enactment facially or patently indicates quantifiable data on the basis of which the compensatory tax is sought to be levied. The Act must facially indicate the benefit which is quantifiable or measurable. It must broadly indicate the proportionality of the tax imposed, with the quantifiable benefit. Mr. Poddar further argued that Entry Tax levied in respect of a particular area is not identified for being spent in that local area itself and thus, the theory of “principle of equivalence”, “measurable/quantifiable benefit” and “direct and immediate effect” are not applicable. The Act is thus not compensatory. Mr. Poddar submitted that Section 18 of the impugned Entry Tax Act prescribes the purposes for which proceeds of levy under the impugned Entry Tax Act might be utilized. According to Mr. Poddar a perusal of the aforesaid provision would demonstrate that the State, while creating the fund and providing the purposes for which the proceeds of the fund would be spent, has completely ignored the principle of compensatory tax by way of ‘recompense and reimbursement”. Mr. Poddar argued that the creation of a fund and the purpose for which the proceeds would be utilized, could not be said to be for the benefit and/or interest of the trading people of the local area in which the Entry Tax was sought to be levied. Mr. Mr. Poddar argued that the creation of a fund and the purpose for which the proceeds would be utilized, could not be said to be for the benefit and/or interest of the trading people of the local area in which the Entry Tax was sought to be levied. Mr. Poddar argued that the construction, development and maintenance of roads, as contemplated under Section 18 of the impugned Entry Tax Act could not be treated to be compensatory in nature, so as to construe any special advantage to trade, commerce and intercourse. Mr. Poddar submitted that the State is bestowed with the responsibility of providing good roads and bridges for tax paying citizens. The providing of roads and bridges as contemplated in Section 18 of the Entry Tax Act cannot be said to be for the benefit of the trading people of the local area who are subjected to the levy. The maintenance and construction of roads and bridges are met from the general revenue of the State. Irrespective of whether the goods are transported into the State from some other State or abroad, the State has the duty to provide facilities such as roads, bridges etc., which are not enjoyed just by persons who bring the notified goods, but by the public in general. No exclusive or special advantage is provided to the trading people. Mr. Poddar next argued that the provision in Section 18(1)(i) of the Entry Tax Act for providing financial aid, grants and subsidies to local bodies and State Government agencies is totally vague and devoid of any particulars. Mr. Poddar submitted that creation development and maintenance of infrastructure for supply of electrical energy and water to industries, contemplated in Section 18(1) (c) of the Entry Tax Act is also a common burden and responsibility of a welfare State and cannot be held to be compensatory for meeting the expenses incurred for the outlay for providing any special advantage to trade, commerce and intercourse. Mr. Mr. Poddar argued that in Jindal Stainless Ltd. (2) (supra) the Constitution Bench of the Supreme Court categorically held that exaction to reimburse and/or recompense the State, the cost of an existing facility made available to the traders or the cost of a specific facility planned to be provided to the traders, would be compensatory tax and that it was implicit in such a levy that the tax must be more or less commensurate to the cost of the service or the facility. Mr. Poddar emphatically argued that the proposition of law enunciated in Bhagatram Rajiv Kumar’s case (Supra) and in State of Bihar Vs. Bihar Chamber of Commerce that indirect or incidental benefit to traders would suffice, has specifically been overruled in Jindal Stainless Steel Ltd. (supra). Mr. Poddar, thus, argued that the purpose for which the proceeds of Entry Tax was sought to be spent could not be treated as compensatory in nature. Mr. Poddar reiterated that the Entry Tax Act does not patently indicate the quantifiable data, on the basis of which Entry Tax is sought to be levied. In the circumstances, the burden was on the State, as the service/facility provider to show by placing materials before the Court, that the payment of compensatory tax is reimbursement and/or recompense for the quantifiable/measurable benefit provided or to be provided to its payers. Mr. Poddar argued that the State of West Bengal has miserably failed to discharge its burden. No data has been provided. No attempt has been made by the State to demonstrate, by placing cogent materials, or even facts and figures to show any quantifiable and measurable benefit to the trading people. Mr. Poddar argued that no attempt has been made by the State to produce data on the proposed expenditure to demonstrate that the tax levied is a measure of reimbursement/recompense for quantifiable and measurable benefits to be provided to the trading people. Mr. Poddar pointed out that there is no whisper of the proposed expenditure, in the affidavit-in-opposition filed on behalf of the State. Mr. Poddar argued that the contention of learned counsel appearing for the State, Mr. Mr. Poddar pointed out that there is no whisper of the proposed expenditure, in the affidavit-in-opposition filed on behalf of the State. Mr. Poddar argued that the contention of learned counsel appearing for the State, Mr. Avratosh Mazumdar, that it was not possible for the State to produce data, since the West Bengal Entry Tax Act, was a new enactment and no Entry Tax had been collected and the State would be able to justify the Entry Tax Act after its implementation, by showing that the State had, in fact, utilized the fund for development of trade and commerce for the benefit of others, was wholly fallacous. Mr. Poddar argued that it was not material that the Entry Tax Act was a new Act. It was open for the State to place data which could have been in the form of field project report, for levy of tax and utilization of its fund upon assessment of collection of tax. Mr. Poddar submitted that the State has not furnished particulars of even a single proposed project report or conceived idea where the amount of Entry Tax collected would be spent. The State had, thus, failed to discharge its burden as enunciated in the judgment of the Constitution Bench of the Supreme Court in Jindal Stainless Steel Ltd. (supra), as it had not placed any material before the Court to demonstrate that payment of Entry Tax was for the reimbursement/recompense for the quantifiable, measurable benefit that “provided ought to be provided” to its tax payers. Mr. Poddar strenuously contended that the Entry Tax Act not being compensatory in nature was violative of Article 301 of the Constitution of India and liable to be struck down. Admittedly the Act had not been introduced after obtaining prior approval of the President of India. In support of his submission that the impugned Entry Tax Act was not compensatory in nature, Mr. Poddar cited the following judgments:- (i) R. Gandhi Vs. State of Tamilnadu reported in (2008) 13 VST 390; (ii) Thressiamma L. Chirayil Vs. State of Kerala & Anr. Reported in (2007) 7 VST 293; (iii) ITC Limited Vs. State of Tamil Nadu & Ors. reported in (2007) 7 VST 367 (Mad); (iv) Jindal Strips Ltd. & Anr. Vs. State of Haryana & Ors. reported in (2008) 12 VST 149 ; (v) Bharat Earth Movers Ltd. Vs. State of Kerala & Anr. Reported in (2007) 7 VST 293; (iii) ITC Limited Vs. State of Tamil Nadu & Ors. reported in (2007) 7 VST 367 (Mad); (iv) Jindal Strips Ltd. & Anr. Vs. State of Haryana & Ors. reported in (2008) 12 VST 149 ; (v) Bharat Earth Movers Ltd. Vs. State of Karnataka reported in (2007) 8 VST 60 (Karn). (vi) Unreported judgment of the Jharkhand High Court in Tata Steel Limited Vs. State of Jharkhand & Ors. dated 3rd April, 2012. Mr. Poddar further argued that under Section 16 of the Entry Tax Act the proceeds of the levy under the Entry Tax Act are to be credited to the consolidated fund of the State of West Bengal. Referring to Section 16 of the Entry Tax Act, Mr. Poddar submitted that the Entry Tax credited to the consolidated fund of the State of West Bengal could only be credited to the Compensatory Entry Tax fund created under Section 16 of the Entry Tax Act, only if the State Legislature by appropriation made by law in that behalf, so provides. Mr. Poddar submitted that Article 266 of the Constitution of India provides for the Consolidated Fund of the State. Referring to Article 266, Mr. Poddar submitted that the amount collected under the following heads shall form the Consolidated Fund of the State (i) all revenue received by the State Government; (ii) all loans raised by the State Government by issue of treasury bills/loans or any other ways or means; (iii) all money received by the Government in repayment of loans. Mr. Poddar argued that the provision of Article 266 of the Constitution of India, read with Section 16 of the Entry Tax Act makes it amply clear that the proceeds under the Entry Tax Act are to be treated by the State Government as revenue received by it. This fact is sufficient to declare the levy as not compensatory in nature, as it loses the character of ‘fee’ and assumes the character of ‘tax’. Mr. Poddar submitted that the proceeds of Entry Tax could be appropriated to the West Bengal Compensatory Entry Tax Fund only if the State Legislature enacted any law for such appropriation. Under Article 199(1)(d) of the Constitution of India, any appropriation of money out of the Consolidated Fund of the State had to be done by way of Money Bill. Mr. Poddar submitted that the proceeds of Entry Tax could be appropriated to the West Bengal Compensatory Entry Tax Fund only if the State Legislature enacted any law for such appropriation. Under Article 199(1)(d) of the Constitution of India, any appropriation of money out of the Consolidated Fund of the State had to be done by way of Money Bill. Thus, the Entry Tax collected by the State is to be treated as general revenue at the hand of the State, at the first instance, and is to be credited into the State Consolidated Fund. Its utilisation would directly be dependent upon budgetary allocation to be made by the State Legislature by way of ‘Money Bill”. Mr. Poddar submitted that the State Legislature cannot be compelled to make the budgetary allocation of the proceeds of the Entry Tax for any specific purpose as the independence of the State Legislature in passing a ‘Money Bill’ cannot be restricted by virtue of any provision in the Entry Tax Act. Thus the theory of “quid pro quo” as enunciated in the judgment in Jindal Stainless Steel Ltd. (supra) for determining the levy to be compensatory in nature is completely absent. Mr. Poddar submitted that the notification issued by Government of West Bengal, Finance Department, Budget Branch, for constitution of a committee consisting of the Heads of various departments of the Government of West Bengal, inter alia provides that the provisions for the expenses from the Fund shall be made under the budgets of the respective departments as per the decision of the Committee. Mr. Poddar argued that the notification was completely contrary to Section 16 of the Entry Tax Act and also contrary to the Constitution of India, particularly Articles 266(3) and 199(1)(d) thereof. Mr. Poddar submitted that it was unimaginable how the committee comprising of secretaries of the Government of West Bengal could determine the budget provision and usurp jurisdiction of appropriation of money from the Consolidated Fund of the State which is exclusively reserved to the State Legislature. Mr. Poddar submitted that apart from Clause 5.3 two other Clauses i.e. 5.1 and 5.2 would demonstrate that the amount of Entry Tax collected under the Entry Tax Act was to be mixed with the general tax collected and forming part of the Consolidated Fund of the State. Mr. Mr. Poddar submitted that apart from Clause 5.3 two other Clauses i.e. 5.1 and 5.2 would demonstrate that the amount of Entry Tax collected under the Entry Tax Act was to be mixed with the general tax collected and forming part of the Consolidated Fund of the State. Mr. Poddar submitted that the notification further demonstrates that the Entry Tax collected is to be spent for general development and welfare activities. The Entry Tax Act read with the notification dated 24th July, 2012 cannot be said to be compensatory in nature. Mr. Poddar emphasized that compensatory tax is equivalent to fee based on the principle of ‘equivalence’. Mr. Poddar submitted that for determining whether tax was compensatory or not, the “principle of direct and immediate effect” was to be considered. The court would have to examine what were the facilities for which tax was being imposed and whether the trading people were not being made to pay patently more for the cost of the facility/service provided and/or to be provided. Mr. Poddar submitted that applying the aforesaid principle in the context of the power of the State Legislature to impose Entry Tax under Entry 52 of List II of the Seventh Schedule, it would be evident that Entry Tax levied and collected from one local area had to be spent for the benefit of the trading people of the said local area itself in order to make the levy compensatory. Mr. Poddar argued that the Government is entitled to enact a law levying Tax on entry of Goods into a local area. The power of the State Legislature to charge under Entry 52 of List II was in case of entry of goods into a local area. The court is, thus, required to examine the effect of the charging provision vis-à-vis the utilisation of Fund. Entry Tax can be treated to be compensatory only and only if the Entry Tax collected is spent only for the benefit of the trading people of the said local area. By way of illustrative example, Mr. Poddar submitted that if Entry Tax amounting to Rs.10 crore was collected from a particular local area which is the local area under the Kolkata Municipal Corporation, the amount of Rs.10 crore would have to be spent for the benefit of trading people within the area of Kolkata Municipal Corporation. However, if out of Rs. Poddar submitted that if Entry Tax amounting to Rs.10 crore was collected from a particular local area which is the local area under the Kolkata Municipal Corporation, the amount of Rs.10 crore would have to be spent for the benefit of trading people within the area of Kolkata Municipal Corporation. However, if out of Rs. 10 crore collected from the Kolkata Municipal Corporation area Rs. 5 crore was spent for providing trading facilities to the traders of other local areas the principle of equivalence and direct and immediate benefit to payers of Entry Tax of Kolkata Municipal Corporation area cannot be achieved and thus the provision cannot be termed as compensatory in nature. Mr. Poddar pointed out that it had been admitted by the State that it would be open for the State Government to spend the amount collected from one local area for another local area. Mr. Poddar finally submitted that the provisions of the Entry Tax Act also violated Article 304(A) of the Constitution of India in as much in the matter of levy of Entry Tax as the Entry Tax Act discriminates between goods brought into a local area from outside the State or outside the country and goods brought into a local area from with the State. If goods enter one local area of the State from another local area, there is no tax payable. Mr. Poddar finally argued that if goods have been subjected to tax under the West Bengal Value Added Tax Act 2003 or the Bengal Sales Tax Act, 1994, such goods, on their entry into a local area, would not be liable to Entry Tax. The Section, thus, patently discriminates between goods imported from outside the State and goods manufactured within the State. In the matter of levy of Entry Tax, for example, if any of the writ petitioners bring raw materials to West Bengal from outside the State, they will be liable to pay Entry Tax. However, if they produce the same raw materials within the State they would not be required to pay Entry Tax. Such discrimination is also patent in Sub-section (c) of Section 4 which provides that if goods are transported from one place of business of a dealer to another place of business then no Entry Tax would be payable on such transfer. According to Mr. Such discrimination is also patent in Sub-section (c) of Section 4 which provides that if goods are transported from one place of business of a dealer to another place of business then no Entry Tax would be payable on such transfer. According to Mr. Poddar, this Sub-section also patently discriminates between the imported goods from outside the State vis-à-vis goods manufactured within the State, of West Bengal. For example, in case of stock transfers from outside the State liability to pay Entry Tax would accrue but Stock transfers in case of goods manufactured in West Bengal to another place would not attract Entry Tax. In support of his submission that Entry Tax Act was discriminatory Mr. Poddar cited following judgments:- (i) ITC Limited Vs. State of Tamil Nadu & Anr. reported in (2007) 7 VST 367 (Mad.); (ii) Bharat Earth Movers Ltd. Vs. State of Karnataka & Ors. reported in (2007) 8 VST 60 (Karn.); (iii) West Bengal Hosiery Association & Ors. Vs. State of Bihar & Ors. reported in (1988) 4 SCC 134 ; (iv) Sri Mahavir Oil Mills & Ors. Vs. State of Jammu & Kashmir reported in (1996) 11 SCC 39 . Mr. Poddar finally argued that under Section 2 (h) of the Entry Tax Act, the term entry of goods has been defined. The Entry Tax Act provides for levy of tax on entry of goods from outside the country into any local area within the State of West Bengal. By providing for levy of Entry Tax on entry of goods from outside the country, the State Legislature has acted beyond its legislative competence and has transgressed the power of the Parliament. In the context of his argument, Mr. Poddar referred to Article 286 of the Constitution of India which prevents the State Legislature from imposing tax on sale or purchase of goods, when such sale or purchase takes place in course of the import of goods into or export of goods out of the territory of India. Mr. Poddar also referred to Entries 41 and 83 of List I in the Seventh Schedule in terms whereof the Union legislature is empowered to legislate in relation to trade and commerce with foreign countries, import and export across customs frontiers and definition of customs frontiers and also in connection with duties of customs including export duties. Mr. Mr. Poddar also referred to Entries 41 and 83 of List I in the Seventh Schedule in terms whereof the Union legislature is empowered to legislate in relation to trade and commerce with foreign countries, import and export across customs frontiers and definition of customs frontiers and also in connection with duties of customs including export duties. Mr. Poddar argued that it was evident from the aforesaid entries that Parliament had exclusive jurisdiction in the matter of levy of duties on the export and import and to frame laws in respect of trade and commerce with foreign countries including import and export across, customs frontiers. Mr. Poddar submitted that if an importer imported any goods from outside, the importer would required to pay import duty and again Entry Tax under the impugned Entry Tax Act, Entry Tax for delivery of such imported goods in factories, godowns etc. in the State of West Bengal. Thus, in a transaction which was in course of import the importer would have to pay Entry Tax over and above import duty. In support of his argument Entry Tax transgressed Article 286 of the Constitution of India. Mr. Poddar cited the following judgments:- (i) Re Sea Customs Act reported in (1964) 3 SCR 787; (ii) Godfrey Phillips India Ltd. Vs. State of U.P. reported in (2005) 2 SCC 515 ; Mr. Poddar submitted that, in enacting the impugned Entry Tax Act, the State Legislature had nullified the effect of the judgment dated 22nd November, 2007 of the West Bengal Taxation Tribunal in case of National Hydro Power Corporation Limited Vs. ACCT Siliguri Circle reported in 2008 (15) VST 158 (W BTT) whereby the West Bengal Taxation Tribunal had struck down the West Bengal State Taxes on Consumption or Use of Goods Act 2001. Without removing the defects pointed out by the West Bengal Taxation Tribunal, in the said Act of 2001, the legislature re-enacted the law which was not permissible. Poddar cited the judgment of Supreme Court in State of Tamil Nadu Vs. K. Shyam Sunder reported in (2011) 8 SCC 737 where the Supreme Court relying on its earlier judgments in Shri Prithvi Cotton Mills Ltd. Vs. Broach Borough Municipality reported in (1969) 2 SCC 283 ; S.R. Bhagwat Vs. State of Mysore reported in (1995) 6 SCC 16 ; Cauvery Water Disputes Tribunal reported in AIR 1992 SC 522 ; G.C. Kanungo Vs. Broach Borough Municipality reported in (1969) 2 SCC 283 ; S.R. Bhagwat Vs. State of Mysore reported in (1995) 6 SCC 16 ; Cauvery Water Disputes Tribunal reported in AIR 1992 SC 522 ; G.C. Kanungo Vs. State of Orissa reported in (1995) 5 SCC 96 ; Madan Mohan Pathak Vs. Union of India reported in (1978) 2 SCC 50 and K. Sankaran Nair Vs. Devaki Amma Malathy Amma reported in (1996) 11 SCC 428 held as follows:- “65. In view of the above, the law on the issue can be summarised to the effect that a judicial pronouncement of a competent court cannot be annulled by the legislature in exercise of its legislative powers for any reason whatsoever. The legislature, in order to revalidate the law, can reframe the conditions existing prior to the judgment on the basis of which certain statutory provisions had been declared ultra vires and unconstitutional.” Mr. S.K. Kapur, Senior Advocate appeared with Mr. Ananda Sen on behalf of the Writ Petitioners W.P. No.464 of 2012 Bharti Bharti Airtel Limited vs. State of West Bengal & Ors., W.P. No.465 of 2012 Bharti Telemedia Limited Vs. State of West Bengal and W.P. 615 of 2012 Tata Teleservices Ltd. Vs. State of West Bengal & Ors. in the Original Side adopted the arguments advanced by Mr. Poddar and also made further arguments at length. Mr. Kapur reiterated that whenever a law was impugned it was the burden of State to prove and the duty of the Court to see whether the impugned enactment “facially or patently” indicates quantifiable data on the basis of the which compensatory tax is to be levied and the Act must facially indicated the benefit which is quantifiable or measurable. In Jindal Stainless Steel Ltd. (supra) the Supreme Court held that the abovementioned principles would apply to “any legislation under challenge whether it be a taxation law or non-taxation law violating Article 301”. Mr. Kapur submitted that it was well-settled that State legislature had the power to introduce a compensatory tax because this was a judicially designed exception to the legislation normally applicable under Section 301 of the Constitution of India. However, Jindal Stainless Steel Ltd. (supra) provided that any compensatory tax would have to meet certain parameters and fulfil certain mandatory requirements. Mr. Kapur submitted that it was well-settled that State legislature had the power to introduce a compensatory tax because this was a judicially designed exception to the legislation normally applicable under Section 301 of the Constitution of India. However, Jindal Stainless Steel Ltd. (supra) provided that any compensatory tax would have to meet certain parameters and fulfil certain mandatory requirements. Briefly summarized these parameters are:- (i) the payment of compensatory tax is not for revenue but as reimbursement/re-compense for the special services/facility provided by the State; (ii) the Act must facially indicate the benefits to the payers which should be quantifiable and measurable; (iii) the Act must facially or patently indicate quantifiable data on the basis of which the compensatory taxes ought to be levied; (iv) the Act must indicate proportionality between the levied tax and the benefit; (v) if the Act does not indicate the above features facially then the burden is on the State to establish by placing full data and material before the Court that the levy of the tax is a reimbursement or recompense for the quantifiable/measurable benefit provided to is payers; (vi) the Court has to examine the pith and substance of the levy to see its effect and operation. In other words, the Court has to see, what is the scope of the operation of law; (vii) it is not enough to say that the levy can be shown to have “some connection” with the facilities provided to the payers; (viii) the rule is that “direct and immediate effect” has to be established in respect of the levy, otherwise it will fail on the question of constitutional validity. In support of his submissions Mr. Kapur cited following judgments:- (i) R. Gandhi Vs. State of Tamil Nadu reported in 13 VST 390 at pg 401; (ii) National Aluminium Co. Ltd. Vs. State of Orissa & Ors. reported in 15 VST 296; (iii) Dinesh Pouches Ltd. Vs. State of Rajasthan reported in 16 VST 387 ; (iv) Jindal Strips vs. State of Haryana reported in 12 VST 149 ; (v) Indian Oil Corporation Ltd. Vs. State of U.P. reported in 10 VST 282. Mr. Kapur reiterated the submission of Mr. Poddar that no data had been produced by the State. Mr. State of Rajasthan reported in 16 VST 387 ; (iv) Jindal Strips vs. State of Haryana reported in 12 VST 149 ; (v) Indian Oil Corporation Ltd. Vs. State of U.P. reported in 10 VST 282. Mr. Kapur reiterated the submission of Mr. Poddar that no data had been produced by the State. Mr. Kapur also argued that Section 16 provides that proceeds of the levy under the Act would firstly be credited to the Consolidated Fund of West Bengal. This means that from the beginning the entry tax proceeds will be mixed up with the other funds of the State. According to Mr. Poddar as well as Mr. Kapur this provision contravenes the settled rule that no entry tax can be levied to augment the revenue of the State. By making a provision that the tax realized under the Entry Tax Act would be credited to the Consolidated Fund of West Bengal clearly offends the rule that such a tax ought not to be levied as a means of increasing the revenue of the State. Mr. Kapur argued that there were grammatical errors in Section 17, which render it unintelligible and meaningless. If the Act contains mistakes it is not for the Court to supply the omissions. But, even leaving the unintelligible parts aside, the use of the word ‘may’ in express terms confers an option upon the State to direct that levy of Entry Tax may be credited to the compensatory fund. Mr. Kapur further submitted that the legislature had neither legislative authority nor any legislative power to reserve to itself a choice or right to elect whether it would make a credit to the fund or not. Since the fund had to be utilized only to provide a service/facility to the payers thereof, the mandate of the Act should have been that all and any realizations of Entry Tax – would all necessarily be required to be transferred to the Compensatory Fund in full. Mr. Since the fund had to be utilized only to provide a service/facility to the payers thereof, the mandate of the Act should have been that all and any realizations of Entry Tax – would all necessarily be required to be transferred to the Compensatory Fund in full. Mr. Kapur submitted that by giving an option or right to elect to the State Government whether or not to send the levy to the compensatory fund and, if so, the time, the amount or the proportion clearly demonstrates that the levy would be unrecognizably mixed up with the consolidated fund of the State and thereafter would cease to be identifiable or available or used to provide the service/facility to the payers, which is a mandatory requirement. Mr. Kapur submitted that the Act ought not to have left any choice to the Government to transfer the full amount of the levy to the compensatory fund. Rather, the Act should have facially provided/mandate and unquestionably shown that such disbursement was to be done on the face of the statute. Mr. Kapur submitted that the very terms of Section 18 of the Act make it clear that the proceeds of the levy are not intended to be used to directly provide service/facilities to the payers, which is the fundamental basis for realization of compensatory taxes. Sub-section 1 clearly indicates by use of the word ‘may’ in two places that the State has again reserved to itself alternatives or preferences to do whatever it may choose to do with the levy at its absolute discretion. Mr. Kapur emphatically argued that entry tax realized could not generally be utilized for development or facilitating trade, commerce and industry in the State. The application of funds had to be for the benefit of the payers in the local areas. Mr. Kapur finally argued that the broad objects stay out in Sub-section 9 of Section 18. There was no regard for the requirement of proportionality or quantifiable benefit to the payers. Mr. Kapur argued that the purposes mentioned in Section 18 are inextricably associated with one and another. It is noteworthy that these purposes are expressly stated to be “inclusive in nature and not exclusive”. In other words, the State might change the purposes to which the tax realized might be applied including even discarding these provisions altogether. Mr. Kapur argued that the purposes mentioned in Section 18 are inextricably associated with one and another. It is noteworthy that these purposes are expressly stated to be “inclusive in nature and not exclusive”. In other words, the State might change the purposes to which the tax realized might be applied including even discarding these provisions altogether. Referring to the West Bengal Compensatory Entry Tax Fund Rules 2012 produced at the time of hearing, Mr. Kapur submitted that it was settled law that the provisions of the parent Act must prevail and the Rules cannot supplant or replace the provisions of the Act. In any case rules only reiterated that utilization of the proceeds shall be in accordance with Section 18 which is otiose and unnecessary. Rule 4 evidences that the parameters will not be followed because it envisages that “the criteria as well as the amounts for allocation among concerned departments of the State Government” shall be determined by a Committee. Mr. Kapur further submitted that the details and what should be facially apparent from the Act is not even to be found in the purported Rules which are redundant and do not advance the State’s argument at all. Mr. J.P. Khaitan appearing on behalf of the petitioners in W.P. No.509 of 2012 ACCT Ltd. & Anr. Vs. the State of West Bengal and several other writ petitioners in the Original Side, adopted the submissions made by Mr. Poddar and Mr. Kapur, emphasized that unlike the impugned Entry Tax Act earlier entry tax laws such as Tax on Entry of Goods into Local Areas Act, 1962 and Taxes on Entry of Goods into Calcutta Metropolitant Area, 1972 were enacted after obtaining previous sanction of the President of India. Mr. Khaitan argued that the Entry Tax Act is not compliant with clause (a) of Article 304 since similar goods manufactured or produced in the State of West Bengal are not subject to Entry Tax. In terms of clause (b) of Section 4(5) of the impugned Entry Tax Act, goods purchased from a registered dealer, against a tax invoice or invoice or bill, issued under the West Bengal Value Added Tax Act, 2003, or the West Bengal Sales Tax Act, 1994, are not liable to pay Entry Tax under the impugned Entry Tax Act. Mr. In terms of clause (b) of Section 4(5) of the impugned Entry Tax Act, goods purchased from a registered dealer, against a tax invoice or invoice or bill, issued under the West Bengal Value Added Tax Act, 2003, or the West Bengal Sales Tax Act, 1994, are not liable to pay Entry Tax under the impugned Entry Tax Act. Mr. Khaitan further submitted that under the Value Added Tax Act, an importer-dealer is compulsorily liable to obtain registration and pay tax in respect of all his sales. A manufacturer/producer or a re-seller has to compulsorily obtain registration and pay tax as soon as his turnover exceeds Rs.5 lakhs, a petty amount, in the present day and age. A manufacturer/producer or re-seller also has the option to obtain voluntary registration even before he becomes liable to pay tax. Thus every dealer, unless he is a petty trader, is required to be registered under the Value Added Tax Act or the Sales Tax Act, as applicable. Mr. Khaitan submitted that the goods manufactured or produced in the State of West Bengal sold by a dealer registered under the VAT Act or the Sales Tax Act on a tax invoice or invoice or bill are not liable for entry tax upon entry into any local area, within the State of West Bengal. Mr. Khaitan submitted that in terms of clause (b) of rule 6(1) of the West Bengal Tax on Entry of Goods into Local Areas Rules 2012, hereinafter referred to as the Entry Tax Rules, goods manufactured in a local area of West Bengal, using goods on which tax is paid or payable under the Act, are not liable for tax on entry into another local area in the State. In other words, goods manufactured in the State of West Bengal using any raw material, plant, machinery, equipment, etc. on which entry tax is paid/payable are not subject to entry tax upon entry into any local area in the State. Mr. Khaitan submitted that the effect of Rule 6(1)(b) of the Entry Tax Rules is that goods manufactured or produced in the State of West Bengal are not subject to Entry Tax. Such manufactured goods would invariably be a new commercial commodity distinct and different from the imported raw material, plant, machinery, equipment, etc. on which entry tax is paid. Payment of Entry Tax on raw materials, etc. Such manufactured goods would invariably be a new commercial commodity distinct and different from the imported raw material, plant, machinery, equipment, etc. on which entry tax is paid. Payment of Entry Tax on raw materials, etc. is not payment of tax on manufactured goods. Mr. Khaitan submitted that it is thus evident that the provisions of the impugned Entry Tax Act clearly discriminate between imported goods and goods manufactured or produced in the State of West Bengal. The former are subject to tax whereas the latter are not. The provisions of the Act are not saved by clause (a) of Article 304. Mr. Khaitan further submitted that that Rule 5(u) of the West Bengal Compensatory Entry Tax Fund Rules, 2012 is ultra vires the Entry Tax Act and the constitution of India. Mr. Khaitan submitted that in terms of section 16 of the Act, the proceeds of the levy shall first be credited to the Consolidated Fund of West Bengal and the State Government may, "if the State Legislature by appropriation made by law in this behalf so provides', credit such proceeds to the West Bengal Compensatory Entry Tax Fund (“the Entry Tax Fund”) from time to time after deducting the expenses of collection, for being utilised exclusively for the purposes of the Act. Mr. Khaitan submitted that in exercise of the rule making power conferred by section 22 of the Entry Tax Act, by a Notification bearing No. 766-F.B. dated July 24, 2012, the Governor of the State made the West Bengal Compensatory Entry Tax Fund Rules, 2012 ('the Entry Tax Fund Rules"). Rule 5(1 1) provides that the total annual receipt of Entry Tax in the Consolidated Fund of the State shall be appropriated to the Entry Tax Fund in the Public Account. Mr. Khaitan submitted that Section 22 of the Entry Tax Act enables the making of rules for carrying out the purposes of the said Act. W hen the Act provides that appropriation out of the Consolidated Fund shall be made by the State Legislature by law for credit to the Entry Tax Fund, any rule made in exercise of the power under section 22 of the Act cannot provide for such appropriation. Rule 5(u) of the Entry Tax Fund Rules is ultra vires the provisions of the Entry Tax Act and also ultra vires the provisions of the Constitution. Mr. Rule 5(u) of the Entry Tax Fund Rules is ultra vires the provisions of the Entry Tax Act and also ultra vires the provisions of the Constitution. Mr. Khaitan further submitted that Chapter III of Part VI of the Constitution contains provisions relating to State Legislature. Articles 196 to 200 in the said Chapter contain provisions relating to “Legislative Procedure” and Articles 202 to 207 contain provisions relating to Procedure in Financial Matters. Mr. Khaitan submitted that Article 196 contains provisions as to introduction and passing of Bills. Article 197 provides for restriction on powers of Legislative Council as to Bills other than Money Bills. Sub-article (3) of Article 197 provides that nothing in Article 197 shall apply to a Money Bill. Article 198 provides for the special procedure in respect of Money Bills. Article 199 defines Money Bills. In terms of clause (d) of sub-article (1) of Article 199, a Bill containing only provisions dealing with the appropriation of moneys out of the Consolidated Fund of the State shall be deemed to be a Money Bill. Article 204 deals with Appropriation Bills. Sub-article (3) of Article 204 reads as follows:- "(3) Subject to the provisions of articles 205 and 206, no money shall be withdrawn from the Consolidated Fund of the State except under appropriation made by law passed in accordance with the provisions of this article." Mr. Khaitan submitted that Article 266 contains provisions in respect of Consolidated Funds and public accounts of India and of the States. Sub-article (3) of Article 266 reads as follows :- “(3) No moneys out of the Consolidated Fund of India or the Consolidated Fund of a State shall be appropriated except in accordance with law and for the purposes and in the manner provided in this Constitution.” Mr. Khaitan submitted that Article 283 is a miscellaneous financial provision and deals with custody, etc. of Consolidated Funds, Contingency Funds and moneys credited to the public accounts. Khaitan submitted that Article 283 is a miscellaneous financial provision and deals with custody, etc. of Consolidated Funds, Contingency Funds and moneys credited to the public accounts. Sub-article (2) of Article 283 reads as under: - “(2) The custody of the Consolidated Fund of the State and the Contingency Fund of a State, the payment of moneys into such Funds, the withdrawal of moneys therefrom, the custody of public moneys other than those credited to such Funds received by or on behalf of the Government of the State, their payment into the public account of the State and withdrawal of moneys from such account and all other matters connected with or ancillary to matters aforesaid shall be regulated by law made by the Legislature of the State, and, until provision in that behalf is so made, shall be regulated by rules made by the Governor of the State.” Mr. Khaitan submitted that Article 283 does not deal with appropriation of moneys out of the Consolidated Fund of the State. Detailed provisions in respect of appropriation are contained in Chapter III of Part VI of the Constitution adverted to hereinbefore. Article 283 deals with custody of the Consolidated Fund, payment of moneys into and withdrawal of moneys therefrom, which is to be regulated by law made by the State Legislature. Until the State Legislature makes such law, the Governor of the State can make rules for such regulation. Mr. Khaitan submitted that "withdrawal is not the same as 'appropriation'. It is only after appropriation by the State Legislature by law that withdrawal of money can take place. This is evident from the provisions of sub-article (3) of Article 204 extracted hereinabove. Mr. Khaitan submitted that Article 283 dealing with regulation of custody of the Consolidated Fund and payment of moneys into and withdrawal of moneys therefrom is clearly not meant to give a go by to the entire legislative procedure relating to appropriation contained in the Constitution. The Governor of the State is not empowered by Article 283 to appropriate any moneys out of the Consolidated Fund of the State by making rules. Further, the Entry Tax Fund Rules are not stated to have been made in terms of Article 283 but only in exercise of the rule making power granted by section 22 of the Act. Mr. Khaitan submitted that the act does not provide for compulsory! Further, the Entry Tax Fund Rules are not stated to have been made in terms of Article 283 but only in exercise of the rule making power granted by section 22 of the Act. Mr. Khaitan submitted that the act does not provide for compulsory! mandatory appropriation of the proceeds of the levy to the Entry Tax fund. Mr. Khaitan submitted that the scheme of the Act is that the proceeds of the levy will first be credited to the Consolidated Fund. Then the State Legislature has to appropriate moneys out of the Consolidated Fund for credit to the Entry Tax Fund and thereafter the moneys credited to the Entry Tax Fund shall be utilised for the purposes specified under section 18 of the Act. The utilisation cannot take place if the State Legislature does not appropriate by law any money for credit to the Entry Tax Fund. Whether or not the proceeds of the levy under the Act shall be credited to the Entry Tax Fund is dependent entirely on the State Legislature. The State Legislature which has made the Act, has reserved to itself the power to decide whether the proceeds of the levy under the Act or any part thereof shall be appropriated out of the Consolidated Fund for credit to the Entry Tax Fund. Mr. Khaitan submitted that Credit to the Entry Tax Fund and therefore, utilisation is entirely dependent on appropriation by law by the State Legislature. It is settled law that there is no estoppel against the Legislature. It is clear that the Act does not contain any compulsory/ mandatory provision for credit of the proceeds of the levy to the Entry Tax. Fund to ensure its utilisation for the purposes enumerated in section 18. The levy under the Act is not compensatory. Mr. Khaitan also submitted that in order to qualify as a compensatory tax, it must be shown by the State that payment of entry tax is a reimbursement/ recompense for a quantifiable/ measurable benefit provided or to be provided to its payers. The State has not furnished any data or details whatsoever. States plea is that the levy is a new imposition is no answer. The State has not even come up with any projection of any kind. Mr. Khaitan submitted that the burden of the levy falls entirely on goods imported from outside the State. The State has not furnished any data or details whatsoever. States plea is that the levy is a new imposition is no answer. The State has not even come up with any projection of any kind. Mr. Khaitan submitted that the burden of the levy falls entirely on goods imported from outside the State. Goods manufactured or produced in the State are not subject to the levy. Assuming for the sake of argument that the proceeds of the levy shall be utilised for the development or facilitating the trade, commerce and industry in the State, the entire burden thereof has to be borne by the persons who import the goods into the State of West Bengal. However, the benefit of any development or facilitation shall be enjoyed equally by manufacturers/ producers in the State who do not have to make any imports. The assumption of the State that every manufacturer/ producer in the State makes imports is unfounded. It is submitted that in the said scheme of things, where the entire burden of the levy falls upon the importers, the tax is clearly discriminatory and cannot be said to be compensatory by way of reimbursement/ recompense in so far as the importers are concerned. Mr. Khaitant submitted that the impugned levy also constitutes an unreasonable restriction on the right to carry on business guaranteed by Article 19(1)(g) of the Constitution, and is violative of the said Article. Mr. Khaitan submitted that Goods manufactured in the State are sold not only within the State but also in the other States and are also exported outside the country. Mr. Khaitan submitted that all the States do not impose entry tax. If the burden of the levy is taken into account, the cost of goods manufactured in West Bengal by using raw materials, plant, machinery, equipment, etc. imported from outside the State would obviously be higher as compared to the cost incurred by a similarly placed manufacturer/ producer in a State which does not impose any entry tax. Thus, if the manufacturer/ producer in the State of West Bengal were to pass on the burden of the levy as part of the price Of his finished goods, his goods would become costlier aid uncompetitive. Such a manufacturer/ producer faces the prospect of losing his market outside the State. Mr. Thus, if the manufacturer/ producer in the State of West Bengal were to pass on the burden of the levy as part of the price Of his finished goods, his goods would become costlier aid uncompetitive. Such a manufacturer/ producer faces the prospect of losing his market outside the State. Mr. Khaitan submitted that an importer-manufacturer in West Bengal also stands to lose his market in other States which do not impose any entry tax because buyers in such States would prefer to import their requirements from outside the country without the burden of entry tax rather than buy costlier goods manufactured/ produced in the State of West Bengal. Mr. Khaitan submitted that Similar prospect of loss of market is faced by a manufacturer/producer in the State who imports raw materials, plant, machinery equipment, etc. and exports outside the country final products manufactured by using the same. It has been the policy of the Government of India to promote exports and towards that end, provisions have been made in the tax laws and export promotion schemes have been formulated so that export goods manufactured/ produced in the country are not burdened with any tax levy. For example, advance import licences are issued so that raw materials required for export production can be imported duty free. Even indigenous raw materials can be procured duty-free. There are also special schemes granting export benefits for exports to South East Asian countries. Again, units located in Special Economic and/or Export Zones and/or 100% Export Oriented Undertakings are not liable to pay any entry tax and enjoy a distinct cost advantage. The object of all such provisions/ schemes made by the Government of India is to ensure that Indian goods are competitively priced and can stand in competition in the international market. It is submitted that the levy under the Act is entirely counterproductive since it makes the goods manufactured/ produced in the State of West Bengal by an importer-manufacturer costlier and uncompetitive. Mr. Khaitan submitted that thus, manufacturers/ producers in the State of West Bengal who import raw materials, plant, machinery, equipment, etc. from outside the State for their manufacture/ production activity face the prospect of losing their business outside the State as also in the international market and would ultimately have to shut down their manufacture/production facilities in the State. Counsel appearing for some of the other writ petitioners namely Mr. from outside the State for their manufacture/ production activity face the prospect of losing their business outside the State as also in the international market and would ultimately have to shut down their manufacture/production facilities in the State. Counsel appearing for some of the other writ petitioners namely Mr. Samit Talukdar and Mr. Moinak Bose adopted and elaborated on the submissions made by Mr. Poddar, Mr. Kapur and Mr. Khaitan, and as such their arguments are not separately recorded, to avoid repetition and prolixity. Mr. Bose cited International Tourist Corporation Vs. State of Haryana reported in (1981) 2 SCC 318 and the judgement of the Division Bench in Central Coalfields Ltd. Vs. the State of Jharkhand. Mr. Bose further argued that a fee is compensatory if that particular fee improves the flow of trade, and if so, it would be outside the purview of Article 301. Mr. Abhratosh Mazumdar appearing on behalf of the State traced the historical background leading to the incorporation of the Part XIII of the Constitution of India. Mr. Mazumdar submitted that after India achieved freedom in 1947, and before the Constitution was adopted, the process of merger and integration of the Indian States with the rest of the country had been accomplished, so that when the Constitution was first passed the territory of India consisted of ‘Part A’ States, which broadly stated, represented the provinces in British India, and ‘Part B’ States which were made up of Indian States. Mr. Mazumdar submitted that there were trade barriers raised by the Indian States in exercise of their legislative powers and the Constitution makers had to make provisions with regard to those trade barriers as well. The evolution of a federal structure or a quasi-federal structure necessitated distribution of powers and basic part of our Constitution relates to that distribution with the three legislative lists in the Seventh Schedule as noticed in Automobile Transport (Rajasthan) Ltd. Vs. State of Rajasthan reported in (1963) 1 SCR 491 . The object of Part XIII was to maintain the economic unity of the nation. Part XIII of the Constitution, which contains the provisions relating to trade, commerce and intercourse within the territory of India. State of Rajasthan reported in (1963) 1 SCR 491 . The object of Part XIII was to maintain the economic unity of the nation. Part XIII of the Constitution, which contains the provisions relating to trade, commerce and intercourse within the territory of India. Article 301 of the Constitution guarantees the freedom of trade, commerce and intercourse embodies the Constitutional philosophy that the economic unity of the country will provide the main sustaining force for the stability and progress of the political and cultural unity of the country. As observed by the Supreme Court in Atiabari (supra) the makers of the Constitution had the occasion to consider the plinth and amplitude of Section 297 of the Government of India Act, 1935, which read as follows:- “297.(1) No Provincial Legislature or Government shall – (a) by virtue of the entry in the Provincial Legislative List relating to trade and commerce within the Province, or the entry in that List relating to the production, supply, and distribution of commodities, have power to pass any law or take any executive action prohibiting or restricting the entry into, or export from the Province of goods of any class or description; or (b) by virtue of anything in this Act have power to impose any tax, cess, toll, or due which, as between goods manufactured or produced in the Province and similar goods not so manufactured or produced, discriminates in favour of the former, or which, in the case of goods manufactured or produced outside the Province, discriminates between goods manufactured or produced in one locality and similar goods manufactured or produced in another locality. (2) Any law passed in contravention of this section shall, to the extent of the contravention, be invalid.” Mr. Mazumdar pointed out that the founding fathers of the Constitution while incorporating commerce clause in Part XIII of the Constitution were also inspired by commerce clause contained in Section 92 of the Australian Constitution, which reads thus:- “On the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.” In this historical milieu the makers of the Constitution having regard to the economic unity and stability of the nation incorporated Part XIII in the Constitution. Mr. Mazumdar referred to Articles 301, 302, 303 and 304 of the Constitution of India. Mr. Mazumdar referred to Articles 301, 302, 303 and 304 of the Constitution of India. In Atiabari (supra) the constitutionality of the Assam Taxation (on Goods Carried by Roads or Indian Watherways) Act, (Assam Act 13 of 1954) was the subject matter of challenge. The purpose of the Act was to levy taxes on certain goods carried by road or inland waterways in the State of Assam including goods in transit. The Supreme Court, inter alia held that the content of freedom provided by Article 301 is larger than the freedom contemplated by Section 297 of the Constitution Act of 1935. If the transport or the movement of goods is taxed solely on the basis that the goods are thus carried or transported that directly affects the freedom of trade as contemplated by Article 301. The Supreme Court held in Atiabari (supra) that taxing laws are not excluded from the operation of Article 301, which means that tax laws can and do amount to restrictions freedom from which is guaranteed to trade under Part XIII of the Constitution of India. The Supreme Court, however, clarified that only taxes which directly and immediately restricted trade would fall within the purview of Article 301. The Constitution Bench of the Supreme Court followed the ratio laid down by Privy Council in Commonwealth of Australia Vs. Bank of New South Wales wherein it was held in the context of Section 92 of the Australian Constitution that regulation of trade, commerce and intercourse among the State is compatible with its absolute freedom, and that Section 92 is violated only when a legislative or executive act operates to restrict such trade, commerce and intercourse directly and immediately as distinct from creating some indirect or consequential impediment which may fairly be regarded as remote. Mr. Mazumdar submitted that in Cole v Whitfield (“Tasmanian Lobster case”) [1988] HCA 18; (1988) 165 CLR 360; (1988) 78 ALR 42; (1988) 62 ALJR 303, the Full Bench of the High Court of Australia revisited the law laid down in Commonwealth of Australia –v-Bank of New South Wales (Banking case), which propounded the theory of direct and immediate restriction on trade and commerce and formed the sheet anchor of the judgment in Atiabari (supra) and held that the doctrine of “direct and immediate effect” is highly artificial. It appears that the judgment in Atiabari (supra) has been referred for reconstruction to a Larger Bench. However, no decision has yet been taken by the Larger Bench. The law laid down in Atiabari (supra) is binding on this Court and this Court cannot take any contrary view only because a foreign judgment relied upon in Atiabari (supra) has been reversed. Mr. Mazumdar argued that the ration laid down in Atiabari (supra) was revisited by Seven Judges Constitution Bench in Automobile Transport (supra). The Constitution Bench judicially evolved the concept of compensatory and/or regulatory taxes as exception to Article 301. Mr. Mazumdar submitted that the ratio laid down in Automobile Transport (supra) can be culled out as follows:-“ (a) The conception of freedom of trade, commerce and intercourse in a community regulated by law presupposes some degree of restriction upon the individual, that freedom must necessarily be delimited by considerations of social orderliness. (b) The collection of a toll or a tax for the use of a road or for the use of a bridge or for the use of aerodrome is no barrier or burden or deterrent to traders who, in their absence, may have to take a longer or less convenient or more expensive route. Such compensatory taxes are no hindrance to anybody’s freedom so long as they remain reasonable. (c) For the tax to become a prohibited tax it has to be a direct tax the effect of which is to hinder the movement part of trade. So long as a tax remains compensatory or regulatory it cannot operate as hindrance. (d) Regulatory measures which do not impede the freedom of trade, commerce and intercourse and compensatory taxes for the use of trading facilities are not hit by the freedom declared by Article 301. They are excluded from the purview of the provisions of Part XIII of the Constitution for the simple reason that they do not hamper trade, commerce and intercourse but rather facilitate them. (e) Regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by Article 301 and such measures need not comply with the requirements of the proviso to Article 304(b) of the Constitution. (e) Regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by Article 301 and such measures need not comply with the requirements of the proviso to Article 304(b) of the Constitution. (f) The taxes are compensatory taxes which instead of hindering trade, commerce and intercourse facilitate them by providing roads and maintaining the roads in a good state of repairs. Whether a tax is compensatory or not cannot be made to depend on the preamble of the statute imposing it. it would not be right to say that a tax is not compensatory because the precise or specific amount collected is not actually used in providing any facilities. (g) A working test for deciding whether a tax is compensatory or not is to enquire whether the trades people are having the use of certain facilities for the better conduct of their business and paying not patently much more than what is required for providing the facilities. It would be impossible to judge the compensatory nature of a tax by a meticulous test, and in the nature of things that cannot be done. (h) Creation of separate fund would not be necessary. The Constitution Bench held that- “Nor do we think that it will make any difference that the money collected from the tax is not put into a separate fund so long as facilities for the trades people who pay the tax are provided and the expenses incurred in providing them are borne by the State out of whatever source it may be.” The issue of compensatory tax is a judicially crafted exception to Article 301 came up for consideration before the Hon’ble Supreme Court in the matter of Jindal Strips Vs. State of Haryana reported in (2003) 8 SCC 60 (Jindal 1). The Supreme Court referred the matter to a Constitution Bench with the following observations:- “Since the concept of compensatory tax has been judicially evolved as any exception to the provisions of Article 301 and as the parameters of this judicial concept are blurred particularly by reason of the decisions in Bhagat Ram (supra) and Bihar Chamber of Commerce (supra), we are of the view that the interpretation of Article 301 vis-à-vis compensatory tax should be authoritatively laid down with certitude by the Constitution Bench under Article 145.” In Jindal Stainless Vs. State of Haryana reported in (2006) 7 SCC 241 (Jindal) the Supreme Court enunciated the following judicial principles with regard to the interpretation of Article 301 vis-à-vis the concept of compensatory tax:- “(i) Taxing laws are not excluded from the operation of Article 301, which means tax laws do amount to restriction as held in Atiabari (supra). It has to be examined whether such tax laws directly and immediately restricts trade and commerce. (paragraphs 6 & 47). (ii) Compensatory taxes constitute an exception to Article 301. It is a judicially evolved concept in Automobile Transport case as a part of regulatory charge. (paragraphs 31). (iii) Whenever any law is impugned as violative of Article 301, the Courts will have to examine the effect of the operation of the impugned law on the inter-State and the intra-State movement of goods, which movement constitutes an integral part of trade. (paragraphs 47). (iv) For a tax to be compensatory, there must be some link between the quantum of tax and the facility/services. (paragraphs 42). (v) In the context of Article 301, therefore, compensatory tax is a compulsory contribution levied broadly in proportion to the special benefits derived to defray the costs of regulation or to meet the outlay incurred for some special advantage to trade, commerce and intercourse. (paragraphs 43). (vi) Such compensatory tax may incidentally bring in net revenue to the government but that circumstance is not an essential ingredient of compensatory tax. (paragraphs 43). (vii) The act, impugned as being violative of Article 301 of the Constitution of India, must facially indicate the benefit which is quantifiable or measurable. It must broadly indicate proportionality to the quantifiable benefit. (paragraphs 46). (viii) If the provisions are ambiguous or even if the Act does not indicate facially the quantifiable benefit, the burden will be on the State as a service/facility provider to show by placing the material before the Court, that the payment of compensatory tax is a reimbursement/recompense for the quantifiable/measurable benefit provided or to be provided to its payer. (paragraphs 46). (ix) The working test for deciding whether a tax is compensatory or not is to enquire whether the trades people are having the use of certain facilities for the better conduct of their business and paying not patently much more than what is required for providing the facilities as held by the Constitution Bench in Automobile Transport case. (paragraphs 49). (ix) The working test for deciding whether a tax is compensatory or not is to enquire whether the trades people are having the use of certain facilities for the better conduct of their business and paying not patently much more than what is required for providing the facilities as held by the Constitution Bench in Automobile Transport case. (paragraphs 49). (x) The doctrine of ‘direct and immediate effect’ of a law on trade and commerce under Article 301 as propounded in Atiabari (supra) and the working test enunciated in Automobile Transport (supra) for deciding whether a tax is compensatory or not vide paragraph 19 of the Report (AIR), would continue to apply and the test of ‘some connection’ indicated in paragraph 8 (of SCC) of the judgment in Bhagatram Rajeevkumar (surpa) and followed in State of Bihar v. Bihar Chamber of Commerce (supra) was in the opinion of the Constitution Bench not good law. (paragraphs 53). (xi) The constitutional validity of various local enactments, which were the subject matters of pending appeals, special leave petitions and writ petitions, were directed to be disposed of in the light of this judgement. (paragraphs 53).” Mr. Mazumdar appearing on behalf of the State submitted that there could be no doubt that Article 301 guaranteed free trade, commerce and intercourse throughout the territory of India. Mr. Mazumdar also agreed that the question of whether a tax on movement of goods would amount to restriction of free trade, commerce and intercourse guaranteed by Article 301 is no longer open in view of the judgements of the Supreme Court in Atia Bari Tea Company Limited Vs. State of Assam (supra), Automobile Transport (Rajasthan) Limited Vs. State of Rajasthan (supra), Jindal Stainless Steel Ltd. (supra) and numerous other judgements of the Supreme Court and different High Courts many of which have been cited on behalf of the respective writ petitions. Mr. Mazumdar could not dispute that a tax of any kind that related to movement of goods from one part of the territory of India to another would amount to a restriction on the right to free trade, commerce and intercourse throughout the territory of India guaranteed by Article 301. Mr. Mazumdar, however, argued that the tax imposed by the impugned Entry Tax Act being a compensatory tax, it was outside the purview of Article 301 of the Constitution of India. Mr. Mr. Mazumdar, however, argued that the tax imposed by the impugned Entry Tax Act being a compensatory tax, it was outside the purview of Article 301 of the Constitution of India. Mr. Mazumdar emphatically argued that the proposition that a compensatory tax would not impede free flow of trade, commerce and intercourse and would not offend Article 301 of the Constitution of India, as evolved in Automobile Transport (Rajasthan) Ltd. and confirmed in Jindal Stainless Steel Ltd. (supra) was well established. There was, thus, no requirement for prior Presidential sanction before passing of the impugned Entry Tax Act. Mr. Mazumdar argued that impugned Entry Tax Act itself provides for creation of a compensatory Entry Tax Fund for deposit and utilization of the proceeds of Entry Tax realized under the impugned Entry Tax Act for facilitating trade and commerce. Mr. Mazumdar referred to the various Sub-sections of Section 18 where the purposes for which the proceeds of Entry Tax are to be utilized have been enumerated. Mr. Mazumdar emphatically argued that the services and/or facilitate set forth in Section 18 of the impugned Entry Tax Act facilitate trade and commerce. The purposes stipulated are only illustrative and not exhaustive. Mr. Mazumdar argued that the purposes specified in Section 18 of the impugned Entry Tax Act are intrinsically linked with the development of trade and commerce. The residuary purpose in Section 18(1)(h) has to be read in the light of the other specific purposes, by applying the principle of an ejusdemgeneris. Mr. Mazumdar argued that Sections 9 and 20 of the impugned Entry Tax Act read with the West Bengal Compensatory Entry Tax Fund Rules, 2012, hereinafter referred to as the ‘Compensatory Fund Rules’, notified on 24th July, 2012 vests the Accountant General of West Bengal with the authority to manage the Compensatory Fund. Mr. Mazumdar submitted that the proceeds of the levy of Entry Tax under the impugned Entry Tax Act are wholly to be utilized for the purposes of adumbrated in Section 18 of the impugned Entry Tax Act. Thus, the impugned Entry Tax Act satisfies the working test of a compensatory tax as enunciated in Automobile Transport (Rajasthan) Limited (Supra). Mr. Mazumdar pointed out that in Jindal Stainless Steel Ltd. 2 (supra) the Constitutional Bench decided the questions of law referred to it. Thus, the impugned Entry Tax Act satisfies the working test of a compensatory tax as enunciated in Automobile Transport (Rajasthan) Limited (Supra). Mr. Mazumdar pointed out that in Jindal Stainless Steel Ltd. 2 (supra) the Constitutional Bench decided the questions of law referred to it. The various pending appeals were, however directed to be remanded to the respective High Courts for hearing and adjudication in the light of the principles enunciated in Jindal Stainless Ltd. 2 (supra) by an order reported in 2006 (7) SCC 271 . Mr. Mazumdar pointed out that pursuant to the directions of the Supreme Court in Jindal (3) various appeals pending in the Supreme Court were remanded to the High Courts for adjudication in the light of the law as enunciated in Jindal Stainless Steel Ltd. (Supra). Unlike in the instant case, where the impugned Entry Tax Act specifies the purposes for which the proceeds of the levy of entry tax might be utilized the encasements which were struck down as ultra vires could not show that the proceeds would be utilized for facilitating trade development. After the judgment of the Supreme Court in Jindal Stainless Steel Ltd. (Supra) the various states enacted statues, enacted validation Act and effected amendments to existing Acts to bring similar compliance with the law as enunciated in Jindal Stainless Steel Ltd. (Supra). Most of these Enactments /Validation Acts/Amendments have been upheld by different High Courts. Mr. Mazumdar submitted that no data was required to be submitted in the instant case since, the impugned Entry Tax is facially and patently compensatory as earlier argued. In terms of the judgement of the Supreme Court in Jindal (3) only those states in which the impugned enactments were in operation for more than one financial year were required to furnish data. The impugned Entry Tax being in a nascent stage it was not possible to furnish data until and unless the tax was realized. Referring to Automobile Transport (Rajasthan) Limited (supra) Mr. Mazumdar submitted that it was immaterial that the proceeds of the tax would be deposed in the Consolidated Fund of the State. In Automobile Transport (Rajasthan) Limited (supra) the Supreme Court, in fact, held that the creation of separate fund was not necessary and deposit of proceeds in the Consolidated Fund would not vitiate the levy. Mr. Mazumdar submitted that the levy was not discriminatory. Mr. In Automobile Transport (Rajasthan) Limited (supra) the Supreme Court, in fact, held that the creation of separate fund was not necessary and deposit of proceeds in the Consolidated Fund would not vitiate the levy. Mr. Mazumdar submitted that the levy was not discriminatory. Mr. Mazumdar further argued that the impugned Entry Tax Act provides for uniform, non-discriminatory rate of taxation in respect of all goods brought from outside the State and goods manufactured/produced locally and therefor in compliance with Article 304(a) of the Constitution of India. In support of his submission Mr. Mazumdar cited the following judgments:- (i) State of Madras Vs. Nataraja Mudaliar reported in AIR 1969 SC 147 ; (ii) Rattan Lal & Co. Vs. Assessing Authority, Patiala reported in AIR 1970 SC 1742 ; (iii) M/s Associated Tanners. Vizianagaram, Andhra Pradesh Vs. Commercial Tax Officer, Vizianagaram, Andhra Pradesh And Ors. reported in (1986) 2 SCC 479 ; The aforesaid judgments cited by Mr. Mazumdar are not, however, relevant since those judgments pertain to sales tax and other taxes which do not directly affect movement of goods and, therefore, did not hit Article 301 of the Constitution of India. It is immaterial that the rate of tax which is 1%, is reasonable, as submitted by Mr. Mazumdar. It is also immaterial that the goods are subjected to Entry Tax only once and that finished products cannot be subjected to Entry Tax if Entry Tax has been paid on raw materials. Mr. Mazumdar finally argued that Article 286 is not applicable to the impugned tax on entry of goods into local Areas for consumption or use therein under Entry 52, List II of the Seventh Schedule. Only the power to tax, sales are subject to the restrictions of Article 286. Imposition of Entry Tax under the impugned Act does not tantamount to tax on sale. Mr. Mazumdar submitted once the goods are cleared from warehouse the importation is complete. Applying the principles of law enunciated by the Supreme Court in Automobile Transport (Rajasthan) Ltd. (supra) as reiterated in Jindal Stainless Steel Ltd. (supra). Distinguishing the judgments of the various High Court in R. Gandhi Vs. State of Tamilnadu (supra); Thressiamma L. Chirayil Vs. State of Kerala & Anr. (supra); ITC Limited Vs. State of Tamil Nadu & Ors. (supra); Jindal Strips Ltd. & Anr. Vs. State of Haryana & Ors. (supra); Bharat Earth Movers Ltd. Vs. Distinguishing the judgments of the various High Court in R. Gandhi Vs. State of Tamilnadu (supra); Thressiamma L. Chirayil Vs. State of Kerala & Anr. (supra); ITC Limited Vs. State of Tamil Nadu & Ors. (supra); Jindal Strips Ltd. & Anr. Vs. State of Haryana & Ors. (supra); Bharat Earth Movers Ltd. Vs. State of Karnataka (supra); Tata Steel Limited Vs. State of Jharkhand & Ors. (supra); National Aluminium Co. Ltd. Vs. State of Orissa & Ors. (supra); Dinesh Pouches Ltd. Vs. State of Rajasthan (supra); Indian Oil Corporation Ltd. Vs. State of U.P. (supra); cited by Mr. Poddar and Mr. Kapur, Mr. Mazumdar argued that the enactments impugned in the aforesaid cases, did not facially indicate that the tax imposed was ‘compensatory’, as in the case of the impugned Entry Tax Act. Unlike the impugned Entry, the enactments impugned in those cases did not spell out the purposes for which the proceeds of the levy could be utilized. Mr. Mazumdar argued that the trend of the decisions of the various High Courts, after pronouncement of the judgment in Jindal Stainless Ltd. (supra) show that existing enactments for imposition of taxes on movement of goods, which did not facially indicate the corresponding advantages to the taxpayers, as a class, were mostly set aside but post Jindal Stainless Ltd. (2) enactments and/or amendments where the purposes for which the proceeds of the levy could be utilized were mostly upheld. Mr. Mazumdar submitted that the impugned Entry Tax Act provided for the imposition of a levy which is compensatory, to be used for purposes specified therein, by creation of a compensatory Entry Tax Fund, which would facilitate trade and commerce in the State. In support of his submission that the impugned Entry Tax Act should be construed as compensatory, Mr. Mazumdar cited the following judgments. 10 VST 140; Godfrey Philips India Ltd. Vs. State of Madhya Pradesh & Ors. reported in (2008) 17 VST 467 (M.P.), 21 VST 76; Steel Authority of India Ltd. Vs. The State of Chhattisgarh reported in 45 VST 483; Municipal Academy of Higher Education Vs. State of Karnataka reported in (2008) 13 VST 377 (Karnataka); 48 VST 28. The parliament and the State Legislatures derive their power to legislate from inter alia the provisions of Part XI of the Constitution of India, and in particular Article 246 contained in the said part, which provides as follows:-“246. State of Karnataka reported in (2008) 13 VST 377 (Karnataka); 48 VST 28. The parliament and the State Legislatures derive their power to legislate from inter alia the provisions of Part XI of the Constitution of India, and in particular Article 246 contained in the said part, which provides as follows:-“246. Subject-matter of laws made by Parliament and by the Legislatures of States. – (1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the “Union List”). (2) Notwithstanding anything in clause (3), Parliament and, subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the “Concurrent List”). (3) Subject to clause (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the ‘State List’). (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included [in a State] notwithstanding that such matter is a matter enumerated in the State List.” Article 246 demarcates the legislative fields of Parliament and the Legislatures of States. While the Parliament has exclusive power to make laws in respect of any of the matters enumerated in List I of the Seventh Schedule of the Constitution, the State Legislatures have exclusive power to make laws in respect of any of the matters enumerated in List II of the Seventh Schedule. In respect of matters enumerated in List III of the Seventh Schedule, which is the Concurrent List, both Parliament and the Legislatures of States have power to legislate. Entry 52 of List II in the Seventh Schedule empowers the State Legislature to enact laws with regard to taxes on entry of goods into a local area for consumption, use or sale therein. The power to enact a law imposing a tax on the entry of goods into local areas, for consumption or for sale or for use in those areas, can only be exercised by the State Legislature. The power to enact a law imposing a tax on the entry of goods into local areas, for consumption or for sale or for use in those areas, can only be exercised by the State Legislature. The power of Parliament and Legislatures to enact laws is subject to the other provisions of the Constitution of India including in particular Chapter III of the Constitution of India relating to fundamental rights and Part XIII of the Constitution of India which guarantees freedom of trade, commerce and intercourse anywhere within the territory of India. Articles 286(1) and (2) of the Constitution provide as follows:- “286. Restrictions as to imposition of tax on the sale or purchase of goods.- (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place- (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. (2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). Parliament alone has the power to enact laws in respect of trade and commerce with foreign countries, Inter-State trade and commerce and duties of customs on import and export. The relevant entries in this regard are Entries 41, 42 and 83 of List I. Entry 41 of List I relates to “trade and commerce with foreign countries; import and export across customs frontiers; definition of customs frontiers”. Entry 42 of List I relates to Inter-State trade and Commerce” and Entry 83 of List I relates to “duties of customs including export duties”. Article 286(1)(b) of the Constitution clearly provides that no law of a State shall impose or authorise the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place outside the State, or in the course of import of goods into or export of goods out of the territory of India.” There can, therefore, be no doubt that no State tax can be imposed on ‘sale’ or ‘purchase’ of goods, where sale or purchase takes place in course of import of goods into or export of goods out of India. However, the question is whether the impugned Entry Tax Act in so far as the same purports to impose a tax on entry of goods imported from abroad into local areas, for consumption use or sale therein is violative of Article 286(1)(b) of the Constitution of India as emphatically argued by Mr. Kapur. ‘Tax on the sale or purchase of goods’ has been defined in Article 366 (29-A) of the Constitution of India, set out herein below:- “366(29A) Tax on the sale or purchase of goods” includes- (a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in the some other form) involved in the execution of a works contract; (c) a tax on the delivery of goods on hire-purchase or any system of payment by instalments; (d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made;” The definition of ‘tax on the sale or purchase of goods’ in Article 366(29A) of the Constitution is indeed extremely wide, as argued by Mr. Kapur, but in my view, not wide enough to include tax on entry of goods into a local area, which is covered by Entry 52 of List II. In Godfrey Phillips India Ltd. (supra), cited by Mr. Kapur, the Constitution Bench of the Supreme Court held:- 67. Kapur, but in my view, not wide enough to include tax on entry of goods into a local area, which is covered by Entry 52 of List II. In Godfrey Phillips India Ltd. (supra), cited by Mr. Kapur, the Constitution Bench of the Supreme Court held:- 67. However, while widening the scope of Entry 54 of List II, the powers of the States to levy such tax are subjected to a corresponding restriction as a consequence of the constitutional curbs imposed on sales tax under Article 286 read with Sections 14 and 15 of the Central Sales Tax Act, 1956 and the ADE Act, 1957. The tax leviable by virtue of sub-clause (a) of clause (29-A) of Article 366 of the Constitution thus becomes subject to the same discipline to .which any levy under Entry 54 of the State List is made subject to under the Constitution. The Position is the same when we look at Article 286 of the Constitution. If any declared goods which are referred to in Section 14 of the Central Sales Tax Act, 1956 are involved in such transfer, supply or delivery, which is referred to in clause (29-A) of Article 366, the sales tax law of a State which provides for levy of sales tax thereon will have to comply with the restrictions mentioned in Section 15 of the Central Sales Tax Act, 1956. 68. No State can therefore by describing an item as a luxury, seek to levy tax on its supply. It cannot be disputed that as far as U.P. and A.P. are concerned, were it not for their interpretation of Entry 62 of List II, the tax would be referable only to Entry 54 List II. If Entry 62 List II does not allow the taxation of goods, the levy would not be constitutionally sustainable. 69. In our opinion, to read Entry 62 List II as including articles of luxury cannot allow all these constitutional restrictions to be bypassed allowing States to levy tax on the supply of goods by describing them as luxury goods. As has been rightly contended by Mr Parasaran appearing for the Union of India, the supply of luxury is nothing but the supply of goods since the goods themselves constitute the luxury” “93. As has been rightly contended by Mr Parasaran appearing for the Union of India, the supply of luxury is nothing but the supply of goods since the goods themselves constitute the luxury” “93. Given the language of Entry 62 and the legislative history we hold that Entry 62 of the List II does not permit the levy of tax on goods or articles. In our judgment, the word “luxuries” in the entry refers to activities of indulgence, enjoyment or pleasure. Inasmuch as none of the impugned statues seek to tax any activity and admittedly seek to tax goods described as luxury goods, they must be and are declared to be legislatively incompetent.” In Godfrey Phillips India Ltd. (supra) the Constitution Bench of the Supreme Court was not concerned with imposition of any tax on entry of goods into local areas, in exercise of legislative power under Entry 52 of List II but with legislative power under Entries 54 and 62 of List II of the Seventh Schedule to the constitution, which respectively dealt with taxes on sale and purchase of goods and taxes on luxuries including entertainment amusement etc. The Supreme Court found that the word ‘luxuries’ in Entry 62 of List II referred to activities of indulgence, enjoyment or pleasure, and did not permit levy of tax on goods or articles by describing the same as luxury goods, as had been done by the State of Uttar Pradesh. The tax on luxury articles was held to be referable to Entry 54 of List II, which empowered the State to enact law on sale of goods subject to the provisions of Entry 92A of List I of the Seventh Schedule, and thus violative of Article 286(a)(b) of the Constitution. In Godfrey Phillips India Ltd. (supra), the Supreme Court held that “taxing entries must be construed with clarity and precision so as to maintain exclusivity, and a construction of a taxation entry which may lead to overlapping must be eschewed”. Thus, where an entry describes the object of a tax, “all taxable funds pertaining to the object are within that field of legislation unless the fund is specifically provided for elsewhere under a different head”. Mr. Avrotosh Mazumdar appearing on behalf of the State cited the judgment of the Supreme Court in J.V. Gokal & Co. Pvt. Ltd. Vs. Thus, where an entry describes the object of a tax, “all taxable funds pertaining to the object are within that field of legislation unless the fund is specifically provided for elsewhere under a different head”. Mr. Avrotosh Mazumdar appearing on behalf of the State cited the judgment of the Supreme Court in J.V. Gokal & Co. Pvt. Ltd. Vs. Assistant Collector of Sales Tax (Inspection), reported in (1960) 11 STC 186 (SC) where the Supreme Court held :- “What does the phrase “in the course of the import of the goods into the territory of India” convey? The crucial words of the phrase are “import” and “in the course of”. To import goods into the territory of India Therefore means to bring into the territory of India goods from abroad. The words ‘course’ means “progress from one point to point”. The course of import, therefore, starts from one point and ends at another. It starts when the goods cross the customs barrier in a foreign country and ends when they cross the customs barrier in the importing Country.” In Kiran Spinning Mills Vs. Collector of Customs reported in 1999 (113) ELT 753 (SC) cited by Mr. Mazumdar the Supreme Court held:- “Attractive, as the argument is, we are afraid that we do not find any merit in the same. It has now been held by this court in Hyderabad Industries Ltd. and Anr. v. Union of India and Others [ 1999 (108) E.L.T. 321 (SC) = JT 1999 (4) SC 95] that for the purpose of levy of additional duty Section 3 of the Tariff Act is a charging section. Section 3 sub-section 96) makes the provision of the Customs Act applicable. This would bring into play the provisions of Section 15 of the Customs Act which, inter alia, provides that the rate of duty which will be payable would be on the day when the goods are removed from the bonded warehouse. That apart, this Court has held in Sea Customs Act, SCR at p. 803 that in the case of duty of customs the taxable event is the import of goods within the customs barriers. In other words, the taxable event occurs when the customs barriers is crossed. That apart, this Court has held in Sea Customs Act, SCR at p. 803 that in the case of duty of customs the taxable event is the import of goods within the customs barriers. In other words, the taxable event occurs when the customs barriers is crossed. In the case of goods which are in the warehouse the customs barriers would be crossed when they are sought to be taken out of the customs and brought to the mass of goods in the country….” Mr. Mazumdar referred to recent judgment of the Division Bench of Orissa High Court in the case of Tata Steel Ltd. [W.P.(C) 15519 of 2010] reported in 58 VST 484 heard along with various other writ petitions. The question in issue in the aforesaid writ applications was, whether Entry Tax under the Orissa Entry Tax Act, 1999 could be levied on goods imported by the petitioners from outside the country. The High Court held that the enactment of law, in exercise of the power of the State Legislature under Entry 52 of the List II of the Seventh Schedule for imposition of entry tax on goods purchased from outside the country, would not violate Article 286 of the Constitution. The Orissa High Court distinguishing the judgment of the Supreme Court in Godfrey Phillips India Ltd. Vs. State of Uttar Pradesh (supra) held that in case of entry tax the taxable event was entry of goods into the local area whereas in case of customs duty the taxable event was on import of the goods into territory of India. In Primus Imaging Pvt. Ltd. Vs. State of Assam cited by Mr. Mazumdar reported in (2007) 9 VST 528 the Gauhati High Court held:- “From a reading of Article 286 of the Constitution, it becomes clear that this article does not permit States to levy tax on the sale or purchase of goods, which takes place in the course of import into, or export out of the territory of India. The restriction, imposed on the State, is, thus, in respect of levy of tax on the sale or purchase of goods, which takes place in the course of import into, or export out of, the territory of India. The restriction, imposed on the State, is, thus, in respect of levy of tax on the sale or purchase of goods, which takes place in the course of import into, or export out of, the territory of India. The power to levy sales tax is derived from entry 54 of List II of the Seventh Schedule to the Constitution of India; whereas the power to levy entry tax is derived by entry 52 of the List II of the Seventh Schedule to the Constitution. Under entry 54, the point of levy is purchase or sale, but under entry 52, the point of levy is the point of entry into a local area. Therefore, taxable event under the Entry Tax Act is entry of specific goods into a local area for consumption, use or sale therein. Viewed thus, it is clear that levy of tax on sale or purchase, on the one hand, and the levy of tax on entry of goods into a local area, on the other, are covered by different entries in the Constitution and the incidence of taxation in both the cases is different. The restriction, imposed by article 286(1)(b) of the Constitution, is in respect of the levy of tax on sale or purchase of goods and not as regards entry of the goods into a local area for consumption, use or sale therein and, hence, the contention of the petitioners that levy of entry tax on goods imported from outside the State is hit by article 286(1)(b) of the Constitution of India has no force and is misconceived……” In Gulabdas Jagannath Vs. The State of Rajasthan reported in AIR 1995 Rajasthan 225 cited by Mr. Mazumdar the imposition of Octroi Duty levied under Entry 52 of List II of the Seventh Schedule to the Constitution on goods imported from outside the country, was held to be valid. In William Fernandez Vs. State of Kerala reported in (1999) 115 STC 591 (Ker) cited by Mr. Kapur the Kerala High Court found that the impugned Act did not impose any tax on goods imported from outside the country. The High Court, thus, held that the limitations in Article 286 had not been surmounted and as such the Act was inapplicable to the appellants, who had imported vehicles from abroad. Kapur the Kerala High Court found that the impugned Act did not impose any tax on goods imported from outside the country. The High Court, thus, held that the limitations in Article 286 had not been surmounted and as such the Act was inapplicable to the appellants, who had imported vehicles from abroad. The judgment has no relevance to the issue of whether imposition of a tax on entry of imported goods into a local area for consumption use, or sale therein, contravenes Article 286 of the Constitution. Entry 52 of List II relating to taxes on the entry of goods into a local area for consumption, use or sale therein, is distinct from Entry 26 of the said list relating to trade and commerce within the State, subject to Entry 33 of List III, Entry 27 relating to production, supply and distribution of goods and Entry 54 relating to sale and purchase of goods. Tax on entry of goods into local areas for consumption use or sale therein, imposed in exercise of legislative power under Entry 52 of List II, is distinct from tax on trade and commerce with foreign countries, import and export across customs frontiers, inter-state trade and commerce, taxes on sale or purchase goods or taxes on consignment of goods etc in course of inter-state trade or commerce and sale or purchase of newspapers etc. covered by Entries 41, 42, 92, 92A, 92B of List I of the Seventh Schedule to the Constitution of India. While import takes place as soon as the goods cross into the Indian customs territory, in case of Entry Tax, the taxable event is the entry into the local area after coming out of the customs area. Tax on entry of goods cannot be equated to tax on sale or purchase and is, therefore, not hit by Article 286(1)(b) of the Constitution. Articles 301, 302, 303 and 304 of the Constitution of India, relevant in the context of the challenge to the impugned Entry Tax Act, are set out hereinbelow for convenience:- “301. Freedom of trade, commerce and intercourse. – Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free. 302. Articles 301, 302, 303 and 304 of the Constitution of India, relevant in the context of the challenge to the impugned Entry Tax Act, are set out hereinbelow for convenience:- “301. Freedom of trade, commerce and intercourse. – Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free. 302. Power of Parliament to impose restrictions on trade, commerce and intercourse.-Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. 303. Restrictions on the legislative powers of the Union and of the States with regard to trade and commerce.- (1) Notwithstanding anything in article 302, neither Parliament nor the Legislature of a State shall have power 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. (2) Nothing in clause (1) shall prevent Parliament from making any law giving, or authorising 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 scarcity of goods in any part of the territory of India. 304. 304. Restrictions on trade, commerce and intercourse among States.- Notwithstanding anything in article 301, the Legislature of a State may by law- (a) impose on goods imported from other States [or the Union territories] any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (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: Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.” Article 301 in Part XIII of the Constitution guarantees free trade, commerce and intercourse, throughout the territory of India, subject, however, to the other provisions of Part XIII of the Constitution. The Constitution makers have, in their wisdom, made the absolute freedom of trade, commerce and intercourse throughout the territory of India, guaranteed under Article 301, subject only to the other provisions of Part XIII, that is, subject to Articles 302 to 307 of the Constitution, but not any other provision of the Constitution of India. Article 302 enables the Parliament to impose by law, such restrictions on the freedom of trade commerce or intercourse between one state and another, or within any part of the territory of India, as may be required in public interest. Thus, Parliament might enact law imposing such restrictions on the freedom of trade, commerce or intercourse between one State and another, or within any part of the territory of India, as may be required in public interest. However, the power under Article 302 of the Constitution to impose restrictions is conditional, the condition precedent for exercise of such power being the requirement to impose the restrictions, in public interest and this power can only be exercised by Parliament and not the State Legislatures. The power of Parliament under Article 302, to impose by law, restrictions on free trade, commerce and intercourse in public interest, is subject to the other provisions of the Constitution including in particular Article 303 thereof. The power of Parliament under Article 302, to impose by law, restrictions on free trade, commerce and intercourse in public interest, is subject to the other provisions of the Constitution including in particular Article 303 thereof. Article 303 of the Constitution imposes a complete embargo on the enactment of any law, either by the Parliament or by any State Legislature, that either gives, or authorizes the giving of any preference to one State over another, or makes or authorizes 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. Any law which either gives or allows preference to or discrimination against a State in matters relating to trade, commerce and intercourse is liable to be struck down as violative of Article 303 of the Constitution. However, in exceptional circumstances, for the sole purpose of preventing the scarcity of goods in any part of the territory of India, Parliament might by law give preference to or authorize discrimination against any State, provided the law declares that such preference and/or discrimination is necessary for dealing with a situation, arising from the scarcity of goods in some part of India. The impugned Entry Tax Act has also been attacked as violative of Article 303 and 304(a) of the Constitution of India, on the ground of discrimination between States and discrimination between goods which enter into a local area from another area within the State and those which enter the local area from outside the State which are liable to tax. In ITC Limited Vs. State of Tamil Nadu & Ors (supra) the Division Bench of Madras High Court found that the impugned legislation was discriminatory, since Entry Tax was only levied on goods imported into the State of Tamil Nadu from outside the State, for consumption, use or sale within the State. The Division Bench found that goods which were produced or obtained within the State did not attract any Entry Tax at all, on their entry into a local area within the State. The Division Bench, thus, held that the impugned legislation was violative of Article 303(1) of the Constitution of India in that it discriminated against States and/or gave preference to the State of Tamil Nadu. In Bharat Earth Movers Ltd. Vs. The Division Bench, thus, held that the impugned legislation was violative of Article 303(1) of the Constitution of India in that it discriminated against States and/or gave preference to the State of Tamil Nadu. In Bharat Earth Movers Ltd. Vs. State of Karnataka (supra) the validity of the Karnataka Special Tax on Entry of Certain Goods Act, 2004 was challenged before the Karanataka High Court. The Karnataka High Court observed: -“……We also notice, the State is also discriminating between traders who bring goods from outside the State or country to a local area as defined under section 2(1)(h) read with section 2(1)(d) and person who brings goods from an area within the State to a local area in the State. Facts would indicate that on the introduction of entry tax, manufacturers have opted to purchase raw materials from within the State because they are less costlier since the levy of entry tax has definitely created a tax barrier affecting the free-flow of trade, commerce and intercourse, such a tax violates article 301 of the Constitution and therefore liable to be declared as unconstitutional. The apex court in Vijayalashmi Rice Mill’s case [2006] 147 STC 609; [2006] 6 SCC 763 held that even in the case of imposing cess for providing facilities like roads, bridges and storage facilities in rural areas, there must be a broad correlation between the fee being realised and the services rendered, even for traders who do their business in the State of Andhra Pradesh. Entry tax in Kerala, it may be noticed, is being collected only from persons who bring goods from outside the State while persons within the State are not burdened with the levy which is discriminatory and violative of article 14 of the Constitution of India. The decision in Rajan’s case [2003] 133 STC 598 (Ker); [1995] 2 KLT 369, in our view, is contrary to the principle laid down by the apex court in Jindal’s case [2006] 145 STC 544 (SC); [2006] 7 SCC 241 and Vijayalashmi Rice Mill’s case [2006] 147 STC 609; [2006] 6 SCC 763 and is no longer good law.” In West Bengal Hosiery Association & Ors. Vs. State of Bihar & Ors. reported in (1988) 4 SCC 134 , cited by Mr. Vs. State of Bihar & Ors. reported in (1988) 4 SCC 134 , cited by Mr. Poddar, the Supreme Court held that Notification No.SO934 dated 1st August, 1984 exempting hosiery industries in Bihar from the levy of sales tax was discriminatory and violative of Article 301 read with Article 304(a) of the Constitution of India. In Sri Mahavir Oil Mills & Ors. Vs. State of Jammu & Kashmir reported in (1996) 11 SCC 39 , cited by Mr. Poddar, the Supreme Court held that the power of the States to levy sales tax on goods imported from other States/union territories cannot be exercised to effect discrimination between imported goods and similar goods manufactured or produced locally. Article 303 provides that neither the Parliament nor the Legislature of a State shall have the power 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 State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. Entry Tax is not levied under any entry relating to trade or commerce in any of the List in the Seventh Schedule. There is a distinct entry relating to Entry Tax i.e. Entry 52 of List II as observed hereinabove. The judgments of the Supreme Court in West Bengal Hosiery Association & Ors. Vs. State of Bihar & Ors. (supra) and Sri Mahavir Oil Mills & Ors. Vs. State of Jammu & Kashmir (supra) relate to entries regarding sale or purchase and/or trade or commerce. Article 304(a) enables the legislature of a State to impose on goods imported from other State or Union Territories, any tax to which similar goods manufactured or produced in that State are subject, so that there is no discrimination between goods so manufactured or produced in the State and those brought from outside the State. Article 304(a) enables the legislature of a State to impose on goods imported from other State or Union Territories, any tax to which similar goods manufactured or produced in that State are subject, so that there is no discrimination between goods so manufactured or produced in the State and those brought from outside the State. The condition precedent for exercise of power by the State Legislature, to enact a law under Article 304(a) of the Constitution of India is (i) similar goods manufactured or produced in the State should be subject to tax; (ii) there should be no such tax and/or tax at lower rate on the goods in the State/Union territory from which the goods are imported; and (iii) the object of the imposition should be to prevent discrimination between imported goods and similar goods manufactured or produced within the State. To cite an example, if the Excise Duty on wines liqueurs and other alcoholic beverages is lower in the neighbouring State of Sikkim, than in the State of West Bengal, or if there is no excise duty at all in Sikkim on wines, liqueurs and other alcoholic beverages, it would be permissible for the West Bengal State Legislature to impose a tax that covers the difference in the excise duty, in exercise of power under Article 304(a) of the Constitution, to prevent discrimination in the State of West Bengal between wines liqueurs and other alcoholic beverages produced in West Bengal and those of similar quality imported from Sikkim, which would sell cheaper and thus affect adversely the market for locally produced wines, liqueurs and other alcoholic beverages. The object of the Entry Tax Act, as stated in its preamble is to provide for levy and collection of taxes on the entry of certain goods into a local area of the State of West Bengal, for consumption use or sale therein and to provide for matters connected therewith, or incidental thereto, for the purpose of creating a Compensatory Entry Tax Fund. From the preamble to the impugned Entry Tax Act, as well as its recital, which is almost a verbatim reproduction of the preamble, it is patently clear that the Entry Tax Act has not been enacted in exercise of power under Article 304(a) of the Constitution. From the preamble to the impugned Entry Tax Act, as well as its recital, which is almost a verbatim reproduction of the preamble, it is patently clear that the Entry Tax Act has not been enacted in exercise of power under Article 304(a) of the Constitution. This is also evident from the other provisions of the impugned Entry Tax Act, apart from its preamble and recital, particularly, the charging Section, that is, Section 4, in terms whereof a uniform tax is leviable on goods entering into local areas, irrespective of the State or Union Territory from which the goods originate, and irrespective of the prevalent duties and taxes on similar goods at the place from which the goods originate. Section 4(2) of the impugned Entry Tax Act empowers the State Government, by notification, to specify the rate of tax to be levied under the impugned Entry Tax Act, which is not to exceed 5% when such tax is levied on the taxable turnover of imports, and different rate or rates of tax may be specified, in respect of different specified goods, or for the different categories of consumption or use or sale of such specified goods, or for different local areas. The State Government is not authorized to fix different rates depending on the place of origin of the goods, taking into account the prevalent rates of various applicable taxes in that place. The impugned Entry Tax Act is not protected by Article 304(a) of the Constitution. Under Article 304(b), a State Legislature may impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State, as may be required in public interest. However, no Bill or amendment to impose restrictions on the freedom of trade, commerce or intercourse, with or within the State, is to be introduced or moved in the Legislature of a State, without the previous sanction of the President of India, even though the same may be in public interest. In this case admittedly the Bill was introduced without the previous sanction of the President of India. It is true, that a Five Judge Bench of the Supreme Court has referred the issue of whether Article 304(a) and 304(b) of the Constitution are conjunctive or disjunctive, to a larger Bench, as pointed out by Mr. Mazumdar. In this case admittedly the Bill was introduced without the previous sanction of the President of India. It is true, that a Five Judge Bench of the Supreme Court has referred the issue of whether Article 304(a) and 304(b) of the Constitution are conjunctive or disjunctive, to a larger Bench, as pointed out by Mr. Mazumdar. However, there is no order of the Supreme Court, of stay of proceedings, in which the aforesaid issue may be of relevance. There is no authoritative pronouncement of the larger Bench of the Supreme Court, on the issue of whether Clause (a) and Clause (b) of the impugned Entry Tax Act are disjunctive or conjunctive. Having regard to the language and tenor of the proviso to Article 301(b), which provides that no Bill or amendment for the purposes of Clause (b) shall be introduced or moved in the Legislature of a State, without previous sanction of the President, this Court is of the view that clauses (a) and (b) of Article 304 of the Constitution, are to be construed as disjunctive. Had Clauses (a) and (b) of Article 304 been intended to be conjunctive, legislation in relation to the purposes of Clause (b) alone, would not have been subject to the specific restriction of previous sanction of the President. The Constitution makers have, in their wisdom, consciously not included Clause (a) in the proviso. It is well settled that the word ‘and’ may be construed disjunctively and read as ‘or’ to carry out the intention of the Legislature, as held by the Supreme Court in S. Krishnan Vs. State of Madras reported in AIR 1951 SC 301 and in Ishwar Singh Bindra Vs. The State of Uttar Pradesh reported in AIR 1968 SC 1450 , and certainly, when there is compelling reason to do so. None of the counsel appearing on behalf of the writ petitioners have seriously argued that Clauses (a) and (b) of Article 304 are conjunctive and not disjunctive. If this Court were to take a contrary view, any statute enacted in public interest, imposing the most reasonable restrictions on free movement of trade and commerce, with the previous sanction of the President, would be exposed to attack on the ground of non-conformity with Article 304(a). In this case too, this Court has found that the impugned Entry Tax Act is not in furtherance of Article 304(b). In this case too, this Court has found that the impugned Entry Tax Act is not in furtherance of Article 304(b). In Atiabari Tea Company Ltd. Vs. State of Assam reported in AIR 1961 SC 232 the majority of the Constitution Bench of the Supreme Court held as follows:- “50. …On a careful examination of the relevant provision of Part XIII as a whole as well as the principle of economic unity which it is intended to safeguard by making the said provisions the conclusion appears to us to be inevitable that the content of freedom provided for by Art. 301 was larger than the freedom contemplated by S.297 of the Constitution Act of 1935, and whatever else it may or may not include, it certainly includes movement of trade which is of the very essence of all trade and is its integral part. If the transport or the movement of goods is taxed solely on the basis that the goods are thus carried or transported that, in our opinion, directly affects the freedom of trade as contemplated by Art. 301. If the movement, transport or the carrying of goods is allowed to be impeded, obstructed or hampered by taxation without satisfying the requirements of Part XIII the freedom of trade on which so much emphasis is laid by Art. 301 would turn to be illusory. W hen Art. 301 provides that trade shall be free throughout the territory of India primarily it is the movement part of the trade that it has in mind and the movement or the transport part of trade must be free subject of course to the limitations and exceptions provided by the other Articles of Part XIII….” “54. …We are dealing in the present case with an Act passed by the State Legislature which imposes a restriction in the form of taxation on the carriage or movement of goods, and we hold that such a restriction can be imposed by the State Legislature only if the relevant Act is passed in the manner prescribed by Art. 304(b).” As per the law pronounced by the Supreme Court in Atiabari Tea Company Ltd. (supra), a tax which affects movement of goods from one part of the territory of India, to another, directly affects free trade, commerce and intercourse, throughout the territory of India, guaranteed by Article 301 of the Constitution of India. Under Entry 52 of List II, the State Legislature has the exclusive legislative competence to enact law imposing taxes on the entry of goods into local areas, for consumption, use or sale therein. A tax on entry of goods into a local area, however, restricts free trade, commerce and intercourse, even though the same may be in public interest. Thus, a State law imposing tax on entry of goods into local areas, can only be enacted by the State Legislature, in compliance with the requirement of the proviso to Article 304(b) of the Constitution, of previous sanction of the President of India, unless such tax falls within the judicially evolved exception of ‘compensatory tax’ enunciated in Automobile Transport (Rajasthan) Ltd. (supra) and reiterated and explained in Jindal Stainless Ltd. (2) (supra). In Automobile Transport (Rajasthan) Ltd. (supra) a Seven Judge Constitution Bench of the Supreme Court decided the question of validity of the Rajasthan Motor Vehicles Taxation Act, 1951, Section 4 whereof provided as follows:- “4. Imposition of tax. – (I) Save as otherwise provided by this Act or by rules made thereunder or by any other law for the time being in force, no motor vehicle shall be used in any public place or kept for use in Rajasthan unless the owner thereof has paid in respect of it, a tax at the appropriate rate specified in the Schedules to this Act within the time allowed by Section 5 and, save as hereinafter specified, such tax shall be payable annually notwithstanding that the motor vehicle may from time to time cease to be used.” The question before the Supreme Court was, whether Section 4 constituted a direct and immediate restriction on the movement of trade and commerce with and within the State of Rajasthan. The Supreme Court held:- “…The interpretation which was accepted by the majority in the Atiabari Tea Co. case, (1961) 1 SCR 809 ; ( AIR 1961 SC 232 ) is correct, but subject to this clarification. Regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by Art. 301 and such measures need not comply with the requirements of the proviso to Art. 304(b) of the Constitution.” “…Whether a tax is compensatory or not cannot be made to depend on the preamble of the statute imposing it. Nor do we think that it would be right to say that a tax is not compensatory because the precise or specific amount collected is not actually used in providing any facilities. It is obvious that if the preamble decided the matter then the mercantile community would be helpless and it would be the easiest thing for the Legislature to defeat the freedom assured by Art 301 by stating in the preamble that it is meant to provide facilities to the tradesmen. Likewise actual user would often be unknown to tradesmen and such user may at some time be compensatory and at others not so. It seems to us that a working test for deciding whether a tax is compensatory or not is to enquire whether the trades people are having the use of certain facilities for the better conduct of their business and paying not patently much more than what is required for providing the facilities. It would be impossible to judge the compensatory nature of a tax by a meticulous test and in the nature of things that cannot be done.” The parameters laid down in Automobile Transport (Rajasthan) Ltd. (supra) for determining whether any tax was compensatory or not, were broadened in Bhagatram Rajiv Kumar (supra) where the Supreme Court held that if there was substantial or even some link between tax and the facilities extended to dealers directly or indirectly, the levy could not be impugned as invalid. In State of Bihar Vs. Bihar Chamber of Commerce (supra), the Supreme Court followed its earlier judgment in Bhagatram Rajiv Kumar (supra) and reiterated that some connection between the tax and the trading facilities extended to dealers directly or indirectly, would be sufficient to characterize the tax as a compensatory tax. However, as observed above, in Jindal Strips Ltd. (1) (supra) a two judge Bench of the Supreme Court doubted the correctness of the proposition of some connection laid down in Bhagatram Rajiv Kumar (supra) and State of Bihar Vs. Bihar Chamber of Commerce (supra) and referred to a Constitutional Bench the question of whether the theory of ‘some connection’ enunciated in the aforesaid judgments was correct or not. The judgments in Bhagatram Rajiv Kumar (supra) and State of Bihar Vs. Bihar Chamber of Commerce (supra) and referred to a Constitutional Bench the question of whether the theory of ‘some connection’ enunciated in the aforesaid judgments was correct or not. The judgments in Bhagatram Rajiv Kumar (supra) and State of Bihar Vs. Bihar Chamber of Commerce (supra) were overruled by the Five Judge Constitution Bench in Jindal Stainless Ltd. (2) (supra), to the extent those judgments propounded the proposition that some connection between the tax and the trading facilities, whether direct or indirect would be sufficient to characterize the tax as compensatory. In Jindal Stainless Ltd. (2) (supra), the Five Judge Constitution Bench inter alia, held : “34. Article 301 is binding upon the Union Legislature and the Legislature, but Parliament can get rid of the limitation imposed by Article 301 by enacting a law under Article 302. Similarly, a law made by the State Legislature in compliance with the conditions imposed by Article 304 shall not be hit by Article 301. Article 301 thus provides for freedom of inter-State as well as intra-State trade and commerce subject to other provisions of Part XIII….” “38. In the generic sense, tax, toll, subsidies, etc. are manifestations of the exercise of the taxing power. The primary purpose of a taxing statute is the collection of revenue. On the other hand, regulation extends to administrative acts which produces regulative effects on trade and commerce. The difficulty arises because taxation is also used as a measure of regulation. There is a working test to decide whether the law impugned is the result of the exercise of regulatory power or whether it is the product of the exercise of the taxing power. If the impugned law seeks to control the conditions under which an activity like trade is to take place then such law is regulatory. Payment for regulation is different from payment for revenue. If the impugned taxing or non-taxing law chooses an activity, say, movement of trade and commerce as the criterion of its operation and if the effect of the operation of such a law is to impede the activity, then the law is a restriction under Article 301. However, if the law enacted is to enforce discipline or conduct under which the trade has to perform or if the payment is for regulation of conditions or incidents of trade or manufacture then the levy is regulatory. However, if the law enacted is to enforce discipline or conduct under which the trade has to perform or if the payment is for regulation of conditions or incidents of trade or manufacture then the levy is regulatory. This is the way of reconciling the concept of compensatory tax with the scheme of Articles 301, 302 and 304. For example, for installation of pipeline carrying gas from Gujarat to Rajasthan, which passes through M.P., a fee charged to provide security to the pipeline will come in the category of manifestation of regulatory power. However, a tax levied on sale or purchase of gas which flows from that very pipe is a manifestation of exercise of the taxing power. This example indicates the difference between taxing and regulatory. powers (see Essays in Taxation by Seligman).” “41. On the other hand, a fee is based on the "principle of equivalence". This principle is the converse of the "principle of ability" to pay. In the case of a fee or compensatory tax, the "principle of equivalence" applies. The basis of a fee or a compensatory tax is the same. The main basis of a fee or a compensatory tax is the quantifiable and measurable benefit. In the case of a tax, even if there is any benefit, the same is incidental to the government action and even if such benefit results from the government action, the same is not measurable. Under the principle of equivalence, as applicable to a fee or a compensatory tax, there is an indication of a quantifiable data, namely, a. benefit which is measurable.” “42. ….In the principle of equivalence, which is the foundation of a compensatory tax as well as a fee, the value of the questionable benefit is represented by the costs incurred in procuring the facilities/services which costs in turn become the basis of reimbursement/recompense for the provider of the services/facilities. Compensatory tax is based on the principle of “pay for the value”….From the point of view of the Government, a compensatory tax is a charge for offering trading facilities.……..Compensatory taxes, like fees, are always proportional to benefits. They are based on the principle of equivalence. ……… For a tax to be compensatory, there must be some link between the quantum of tax and the facility/services. They are based on the principle of equivalence. ……… For a tax to be compensatory, there must be some link between the quantum of tax and the facility/services. Every benefit is measured in terms of cost which has to be reimbursed by compensatory tax or in the form of compensatory tax. In other words, compensatory tax is a recompense/reimbursement.” “43. In the context of Article 301, therefore, compensatory tax is a compulsory contribution levied broadly in proportion to the special benefits derived to defray the cost of regulation or to meet the outlay incurred for some special advantage to trade, commerce, and intercourse. It may incidentally bring in net revenue to the Government but that circumstance is not an essential ingredient of compensatory tax.” “46. ……whenever a law is impugned as violative of Article 301 of the Constitution, the Court has to see whether the impugned enactment facially or patently indicates quantifiable data on the basis of which the compensatory tax is sought to be levied. The Act must facially indicate the benefit which is quantifiable or measurable. It must broadly indicate proportionality to the quantifiable benefit. if the provisions are ambiguous' or 'even if the Act does not indicate facially the quantifiable benefit, the burden will be on the State as a service/facility provider to show by placing the material before the Court, that the payment of compensatory tax is a reimbursement/recompense for the quantifiable/measurable benefit provided or to be provided to its payer(s)” After the judgment of the Constitution Bench was pronounced in Jindal Stainless Ltd. (2) (supra) the pending appeals were listed before a two judge Bench of the Supreme Court for adjudication in the light of the law as enunciated by the Constitution Bench. In Jindal Stainles Ltd. (3) Vs. The State of Haryana reported in (2006) 7 SCC 271 . The Supreme Court found that data had not been placed before the High Courts to determine whether the impugned levies were ‘compensatory’ as per the requirements laid down in Jindal Stainless Ltd. (2) (supra), and accordingly remitted the respective writ petitions to the concerned High Courts for adjudication. The parties were permitted to bring relevant facts on record in the writ petition in the High Court. In Jaiprakash Associates Limited Vs. State of Madhya Pradesh & Ors. reported in (2009) 7 Supreme Court Cases 339 Dr. The parties were permitted to bring relevant facts on record in the writ petition in the High Court. In Jaiprakash Associates Limited Vs. State of Madhya Pradesh & Ors. reported in (2009) 7 Supreme Court Cases 339 Dr. Arijit Pasayat and S.H. Kapadia, JJ., considering the importance of the issues relating to Article 301 and 304 and Part XIII of the Constitution, referred the following questions to a larger bench in terms of Article 345(3) of the Constitution:- “(1) Whether the State enactments relating to levy of entry tax have to be tested with reference to both clauses (a) and (b) of Article 304 of the Constitution for determining their validity and whether clause (a) of Article 304 is conjunctive with or separate from clause (b) of Article 304? (2) Whether imposition of entry tax levied in terms of Entry 52 List 11 of the Schedule VII is violative of Article 301 of the Constitution? If the answer is in the affirmative whether such levy can be protected if entry tax is compensatory in character and if the answer to the aforesaid question is in the affirmative what are the yardsticks to be applied to determine the compensatory character of the entry tax? …………. (8) Whether the non-discriminatory indirect State tax which is capable of being passed on and has been passed on by traders to the consumers infringes Article 301 of the Constitution? …………. (10) Whether a levy under Entry 52 List II, even if held to be in the nature of a compensatory levy, must, on the principle of equivalence demonstrate that the value of the quantifiable benefit is represented by the costs incurred in procuring the facility/services (which costs in turn become the basis of reimbursement/recompense for the provider of the services/facilities) to be provided in the "local area" concerned and Whether the entire State or a part thereof can be comprehended as local area for the purpose of entry tax? In Jindal Stainless Ltd. and Anr. (4) Vs. In Jindal Stainless Ltd. and Anr. (4) Vs. State of Haryana reported in (2010) 4 SCC 595 , the States whose Entry Tax Laws had been challenged, contended that the tests propounded in Atia Bari Tea Company Limited (supra) and Automobile Transport (Rajasthan) Limited (supra) had failed to strike a balance between the freedom of trade and commerce under Article 301 of the Constitution of India, and the authority of the States to levy taxes under Article 245 and 246 of the Constitution, read with the appropriate legislative entries in the Seventh Schedule to the Constitution of India. The States sought reconsideration of the decisions of the Supreme Court in Atia Bari Tea Company Limited (supra) and Automobile Transport (Rajasthan) Limited (supra) by a larger bench. The Supreme Court was of the view that certain aspects which needed the consideration of a larger Bench of the Supreme Court were interplay and interrelationship between Article 304(a) and 304(b); the significance of the non-obstante clause in Article 304; the balancing of freedom of trade and commerce under Article 301 vis a vis the authority of the State Legislature to levy taxes under Article 245 and 246 of the Constitution of India, read with the appropriate legislative entries in the Seventh Schedule, particularly in the context of movement of trade and commerce. The Five Judge Bench directed that the batch of cases be placed before the Chief Justice of India for constituting a larger bench for reconsideration of the judgments of the Supreme Court in Atia Bari Tea Company Limited (supra) and Automobile Transport (Rajasthan) Limited (supra). The questions referred to the larger bench of the Supreme Court are yet to be answered. Even though there is no authoritative decision of the Supreme Court directly dealing with the issue of applicability of Articles 301 and 304 of the Constitution of India to a State law imposing a reasonable Entry Tax in exercise of its legislative power under Entry 52 of List II of the Seventh Schedule to the Constitution, the law laid down inter alia in Atiabari Tea Company Ltd. (supra), Automobile Trnasport (Rajasthan) Ltd. (supra) and Jindal Stainless Ltd. (2) (supra) relating to taxes which affect movement of goods still prevail. The validity of the impugned Entry Tax Act, therefore, has to be decided on the basis of the law pronounced by the Supreme Court in Jindal Stainless Steel Ltd. (supra), and the other important judgments of the Supreme Court, including the judgment of the Supreme Court in Atia Bari Tea Company Limited (supra) and Automobile Transport (Rajasthan) Limited (supra). Mr. Avrotosh Mazudar submitted that the writ petitions were sketchily drafted. In the absence of detailed pleadings, the writ petitions were liable to be dismissed, since presumption is in favour of the constitutionality of a Statute and the burden is on those questioning the Act, to show that the Act is ultra vires and invalid. In support of his aforesaid submission, Mr. Mazumdar cited R. Samthil Babu Vs. State of Tamilnadu reported (2009) 2 SCC 309, where the Constitutional validity of the Tamilnadu Motor Vehicles Taxation (Amendment) Act, 1998, increasing the rate of tax in respect of contract carriage from Rs.1,500/- per seat per quarter to Rs.2,000/- per seat per quarter and later to Rs.3,000/- per seat per quarter, was under challenge. In R. Samthil Babu Vs. State of Tamilnadu (supra) the challenge rested on the ground that tax had been imposed indiscriminately, to cross subsidise stage carriage, and uneven burden had been placed on the owners of contract carriage, which had no nexus with the services or amenities provided. The levy was impugned as discriminatory and violative of Article 14 of the Constitution of India. The Supreme Court held that in a matter of that nature, quantifiable data formed the basis of the challenge, as otherwise, the challenge to the impugned levy, on the ground of irrationality of the levy, could not be decided. The Supreme Court found that the appellants had not been able to discharge the initial burden, as the writ petitions were sketchy and lacking in material particulars and accordingly, allowed the writ petitions to be withdrawn, with liberty to file a proper writ petition, if so advised. Where the challenge to an action is required to be adjudicated on the basis of factual data the burden would be on those attacking the action to disclose sufficient facts to substantiate their case. Where the challenge to an action is required to be adjudicated on the basis of factual data the burden would be on those attacking the action to disclose sufficient facts to substantiate their case. For example, where an action is challenged as violative of Article 19(1)(g) of the Constitution of India, the burden would be on the writ petitioner to establish that the Act would constitute an infringement on the fundamental right guaranteed under Article 19(1)(g) of the Constitution of India. Similarly, when an action is challenged as discriminatory, a case of discrimination will have to be made out. However, when a statute is challenged on the ground of lack of legislative competence or on the ground of an apparent infringement of a constitutional provision, as in this case, factual details may not be necessary. A tax on movement of goods, having judicially been construed as a restriction on the right to free trade, commerce and intercourse, if any Statute imposing such tax is challenged on the ground of non-compliance of the requisites of Section 304(b), the State would have to disclose data to establish that the tax was compensatory and hence beyond the net of Articles 301 to 304 of the Constitution of India. The State would have to disclose quantifiable data, to establish that the tax sought to be raised is more or less commensurate with the benefits provided and/or to be provided to the tax payers as a class. In Saghir Ahmad Vs. The State of U.P. reported in AIR 1954 SC 728 the Supreme Court observed that, when an enactment, on the face of it was found to violate a fundamental right guaranteed under Article 19(1)(g), it must be held to be invalid, unless those who support the legislation can bring it within the purview of the exception laid down in Clause (6) of Article 19. In Khyerbari Tea Company Vs. State of Assam reported in AIR 1964 SC 925 , the Supreme Court relying on Saghir Ahmad (supra), held that once infringement of a fundamental right under Article 19(1) was proved, the State would have to justify its case under Clause (6) which is in the nature of an exception to the main provisions contained in Article 19(1). The position with regard to the onus would be the same in dealing with law passed under Article 304(b). The position with regard to the onus would be the same in dealing with law passed under Article 304(b). The Supreme Court observed that in the case of such a law, the position is somewhat stronger in favour of the citizen, because the very fact that a law is passed under Article 304(b) means that it purports to restrict the freedom of trade. That being so, the Supreme Court was of the view that as soon as it was shown that the Act invaded the right of freedom of trade, it would be necessary to enquire whether the State had proved that the restrictions imposed by it by way of taxation were reasonable and in the public interest within the meaning of Article 304(b). As submitted by Mr. Khaitan, the entire burden of the levy under the impugned Entry Tax Act, has to be borne by persons, who import goods including raw materials into the State. May be, the cost of goods manufactured in West Bengal, using raw materials imported from other States or from abroad, would be higher in comparison to the costs of similar goods manufacture in a State, which does not impose any Entry Tax, and thereby adversely affect sales of such goods, as argued by Mr. Khaitan. Some of the writ petitioners might also rightly be aggrieved by imposition of the levy, only on goods imported from outside the State, since the benefit of the development, if any, would be enjoyed equally by manufacturers/producers in the State who do not have to make any imports. However, hardship, inconvenience or irrationality are no grounds to sustain a challenge to a Statute enacted by legislature, in exercise of power conferred by the Constitution, unless the Statute infringes some provision of the Constitution itself. In Khyerbari Tea Company (supra) the Supreme Court has said that a principle which has to be borne in mind, in examining the constitutionality of a statute is, that it must be assumed that the legislature understands and appreciates the needs of the people, and the laws it enacts are directed to problems which are made manifest by experience, and that the elected representatives assembled in a legislature enact laws which they consider to be reasonable for the purpose for which they are enacted. As pointed out by Mr. As pointed out by Mr. Khaitan, earlier Entry Tax Laws enacted in the State of West Bengal, such as Tax on Entry of Goods into Local Areas Act, 1962 and Tax on Entry of Goods into Calcutta Metropolitan Area Act, 1972 were enacted with the previous sanction of the President of India. The West Bengal State Taxes on Consumption or Use of Goods Act, 2001, which had not been enacted with previous sanction of the President of India, had been struck down by the West Bengal Taxation Tribunal in the case of National Hydro Power Corporation Limited Vs. ACTT Siliguri reported in 2008 (15) VST 158 . It is immaterial that the State Legislature might have earlier, in exercise of legislative power conferred under Entry 52 of List II of the Seventh Schedule to the Constitution, enacted law with the previous sanction of the President of India, in conformity with Article 304(b) of the Constitution of India. There can be no estoppel against exercise of legislative power conferred by the Constitution. The West Bengal Legislature has legislative power to enact law imposing Entry Tax. A Compensatory Entry Tax does not infringe Article 301 and is, therefore, not vitiated or invalidated for want of the previous sanction of the President of India, in view of the law laid down by the Supreme Court in Automobile Transport (Rajasthan) Limited (supra), and reiterated in Jindal Stainless Ltd. (2) (supra). To the proposition of law propounded in the judgments of the Supreme Court in State of Tamil Nadu Vs. K. Shyam Sunder (supra), Shri Prithvi Cotton Mills Ltd. (supra), S.R. Bhagwat Vs. State of Mysore (supra), Cauvery Water Disputes Tribunal (supra), G.C. Kanungo Vs. State of Orissa (supra), Madan Mohan Pathak Vs. Union of India (supra), K. Sankaran Nair Vs. Devaki Amma Malathy Amma (supra) cited by Mr. Poddar, that the effect of a judicial pronouncement of a competent Court cannot be nullified by the legislature in exercise of its legislative powers, for any reason whatsoever, is unexceptionable. The Legislature can, however, validate any law, that has been declared ultra vires, by re-framing it, removing the infirmities, which led to the law being declared ultra vires. In enacting the impugned Entry Tax Act, the West Bengal State Legislature has not nullified any judicial pronouncement. The Legislature can, however, validate any law, that has been declared ultra vires, by re-framing it, removing the infirmities, which led to the law being declared ultra vires. In enacting the impugned Entry Tax Act, the West Bengal State Legislature has not nullified any judicial pronouncement. The State Legislature has not merely re-enacted a new law retaining unaltered the provisions of the Act of 2001, which had been struck down by the West Bengal Taxation Tribunal. An attempt has been made by the State Legislature to reframe the law and cure the defects in the Act of 2001, that existed prior to the judgment of the West Bengal Taxation Tribunal in National Hydro Power Corporation Limited (supra) that rendered the Act of 2001 unconstitutional. As observed above, the object of the impugned Entry Tax Act, as declared in its preamble, is to set up a Compensatory Entry Tax Fund. The recital of the impugned Entry Tax Act also states that the levy and collection of Taxes on entry of certain goods, for consumption, use or sale in the local area and matters connected therewith and incidental thereto, is for the purpose of creating a Compensatory Entry Tax Fund. Section 4(3) casts an obligation on the State Government to specify the rates of tax under Sub-section (2) of Section 4, having regard to the financial needs for development and facilitation of trade, commerce and industry in the local areas of the State. Section 15 provides for establishment of the West Bengal Compensatory Entry Tax Fund. Section 16 provides for the manner in which the proceeds of Entry Tax are first to be credited to the West Bengal State Consolidated Fund, and thereafter, by appropriation, if law enacted by the State Legislature so provides, be credited to the Compensatory Entry Tax Fund, after deduction of expenses. Section 18 restricts the purposes for which the proceeds of the levy under the impugned Entry Tax Act might be utilised. The question is whether the impugned Entry Tax Act as enacted is in effect and substance a compensatory tax, applying the tests laid down in Jindal Stainless Ltd. (2) (supra). Section 18 restricts the purposes for which the proceeds of the levy under the impugned Entry Tax Act might be utilised. The question is whether the impugned Entry Tax Act as enacted is in effect and substance a compensatory tax, applying the tests laid down in Jindal Stainless Ltd. (2) (supra). In view of the law laid down by the Constitution Bench of the Supreme Court in Jindal Stainless Ltd. (2) (supra), whenever a law is impugned as violative of Article 301, in that it restricts free movement of goods, by imposing a tax on entry of goods into any particular area or areas, the Court would have to examine whether the law complies with the requisites of Article 304, and if not, whether the tax is a compensatory tax. Since the concept of compensatory has judicially been evolved, in deciding whether a tax is compensatory, the Court would have to carefully apply the tests laid down in Jindal Stainless Ltd. (2) (supra) and satisfy itself that facially and patently, there is sufficient indication in the impugned enactment, of the quantifiable and measurable benefit provided and/or to be provided in lieu of the levy, to the class of persons on whom the levy is imposed, and that the amount expected to be raised by imposition is more or less equivalent to the value of the quantifiable measurable benefit. As held in Jindal Stainless Ltd. (supra), for a tax to be compensatory there must be a link between the quantum of tax and the cost of the facility and/or facilities for which the tax is imposed, which must be indicated in the enactment impugned. If the impugned enactment does not facially disclose sufficient data to establish the proportionality of the levy to the quantifiable benefit, or if the provisions are ambiguous or vague, it would still be open to the State, as service provider, to show, by placing materials before the Court, that payment of compensatory tax is a recompense and/or reimbursement for the specific, tangible, measurable, quantifiable benefits provided or to be provided to its payers. In Kamaljeet Singh & Ors. Vs. Municipal Board Pilkhwa and Ors. In Kamaljeet Singh & Ors. Vs. Municipal Board Pilkhwa and Ors. reported in (1986) 4 SCC 174 , the validity of imposition of a toll tax imposed by the Municipal Board Pilkhwa, on vehicles and other conveyances, animals and laden collies entering the Pilkhwa Municipal area, under Section 128(1)(viii) of the U.P. Municipalities Act, 1916, upheld by the High Court was questioned before the Supreme Court. The Supreme Court held:- “……The High Court has upheld the levy of the toll tax relying upon the decision of this Court in Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan as being compensatory in nature. In Automobile Transport case, the majority held that regulatory measures imposing compensatory taxes for the use of trading facilities do not hamper trade, commerce or intercourse, but rather facilitate them and therefore are not hit by freedom of trade and commerce guaranteed by Article 301 of the Constitution. The toll tax in question however cannot be treated to be a compensatory tax for the use of trading facilities. The Municipal Board provides no facilities whatever to the owners of vehicles like stage carriages making use of National Highway No. 24. The township of Pilkhwa is off the national highway and is quite at some distance. It is connected by a road and a part of the national highway has been included within the municipal limits. Merely because stage carriage operators like the appellant play their stage carriages on permits issued on the inter-statal route Delhi-Garhmukteshwar which falls on the national highway and stop their buses for the facility of passengers going to and coming from Pilkhwa, or that the Municipal Board has set out two electric poles at the toll barriers for facility of collection of the toll tax, does not justify the imposition of a toll tax. Usually, the consideration for a toll is some amenity, service, benefit or advantage which the person entitled to the toll undertakes to provide for the public in general, or the persons liable to pay the toll. The national highway is being maintained by the government and the approach road built by the Public Works Department. There is a nallah constructed by the Municipal Board for flow of the sewage water from the town of Pilkhwa, but that does not entitle the Board to levy a toll tax on stage carriage operators like the appellants as a compensatory tax. There is a nallah constructed by the Municipal Board for flow of the sewage water from the town of Pilkhwa, but that does not entitle the Board to levy a toll tax on stage carriage operators like the appellants as a compensatory tax. Even assuming that the Municipal Board has to incur expenditure on maintenance of the connecting road and the nallah, but they are facilities provided for the residents of the town for which it recovers various taxes. Furthermore, maintenance of roads, bridges etc. are statutory duties of the Municipal Board under Section 7 of the Act. The levy of the toll tax by the Municipal Board must therefore be struck down as ultra vires.” In R. Gandhi Vs. State of Tamil Nadu & Ors. (supra) cited by Mr. Poddar the constitutional validity of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990, was under challenge mainly on the ground of infringement of Articles 301 and 304 of the Constitution. The question before the Division Bench was, whether the levy of Entry Tax under the said Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 could be justified as a compensatory tax. The aforesaid question was answered in the negative. The Division Bench held that there was no connection or nexus between the collection of Entry Tax, and its utilization for the benefit of traders/manufacturers from whom such tax was collected and consequently the levy of Entry Tax was unauthorized and violative of Article 301 of the Constitution. The Division Bench observed as follows:- “The essence of compensatory tax is that the services rendered or facilities provided should be more or less commensurate with the tax levied. Services provided will have a direct co-relation with the trade. The main basis of compensatory tax is the quantifiable and measurable benefit represented by the cost incurred in procuring the facilities/services. The cost in turn becomes the basis of reimbursement/recompense for provider of services/facilities. As held in Jindal’s case [2006] 145 STC 544 (SC); [2006] 7 SCC 241, the compensatory tax is a charge for offering trade facilities and they are based on the principle of equivalence. Applying the above test, we are of the opinion that maintaining of roads, providing bridges, etc., cannot be said to be compensatory in nature so as to constitute special advantage to trade, commerce and intercourse. Applying the above test, we are of the opinion that maintaining of roads, providing bridges, etc., cannot be said to be compensatory in nature so as to constitute special advantage to trade, commerce and intercourse. Even otherwise, a welfare State is bestowed with the responsibilities of providing good roads and bridges for the benefit of the tax-paying citizens and hence to contend that the impugned levy is being raised only for the said purpose is not justified. Maintenance of roads, bridges, etc., are generally met from the general funds or revenue. Whether goods are transported into the State from outside the State or abroad, the State has got a duty to provide facilities like roads, bridges, etc., which are being enjoyed not only by the persons who bring the goods notified for levy of entry tax, but also by others.” In Thressiamma L. Chirayil Vs. State of Kerala & Anr. (supra) cited by Mr. Poddar, a Division Bench of Kerala High Court considered the Constitutional Validity of Kerala Tax on Entry of Goods into Local Areas Act, 1994. Applying the principle of equivalence laid down by the Supreme Court in Jindal Stainless Steel Ltd. (supra), the Division Bench found that there was no connection or nexus with the collection of Entry Tax under the Kerala Entry Tax Act, 1990 and its utilization for the benefit of traders/manufacturers from whom such tax was collected and consequently the levy of Entry Tax was unauthorized and violative of Article 301 of the Constitution of India. The Division Bench held:- “…If the provision of the Act does not indicate facially the quantifiable benefit, burden is on the State as a service/facility provider to show by placing the materials before the court that the payment of compensatory tax is a reimbursement/recompense for the quantifiable/measurable benefit provided or to be provided to the payer. We have already found that the compensatory character of tax is not self-evident from the Kerala Entry Tax Act….” “…….Essence of compensatory tax is that the services rendered or facilities provided should be more or less commensurate with the tax levied. Services provided will have a direct co-relation with the trade. The main basis of a compensatory tax is the quantifiable and measurable benefit, represented by the costs incurred in procuring the facility/service. The cost, in turn, became the basis of reimbursement/recompense for the provider of services/facilities. Services provided will have a direct co-relation with the trade. The main basis of a compensatory tax is the quantifiable and measurable benefit, represented by the costs incurred in procuring the facility/service. The cost, in turn, became the basis of reimbursement/recompense for the provider of services/facilities. From the point of view of Government, as stated by the apex court in Jindal Stainless Ltd.’s case [2006] 145 STC 544 (SC); [2006] 7 SCC 241, a compensatory tax is a charge for offering trading facilities and they are based on the principles of equivalence. Applying the above test, it cannot be said that maintaining of roads, providing bridges, etc., is compensatory in nature so as to meet the outlay incurred for some special advantage to trade, commerce and intercourse. Providing the above facilities and its use may incidentally bring in net revenue to the Government, but that circumstance is not an essential ingredient of compensatory tax……” “…... Some indirect connection or some connection, more or less commensurate, etc., are not the tests, but the direct and immediate effect is the test. Maintaining of roads, bridges, etc., and promotion of SSI units, etc., are generally met from the general funds or revenue. Whether goods are transported into the State from outside the State or abroad the State has got a duty to provide those facilities, like roads, bridges, etc., which is being enjoyed not only by persons who bring goods notified for levy of entry tax but also others….” In ITC Limited Vs. State of Tamil Nadu & Ors (supra) cited by Mr. Poddar a Division Bench of Madras High held that the Tamil Nadu Tax of Goods into Local Areas Act, 2001 did not satisfy the test laid down for compensatory tax, inter alia observing that the pleadings filed on behalf of the State merely gave statistics with regard to total costs of building roads and bridges and on maintenance of roads that had been incurred by the State from year to year. The Madras High Court was of the view that irrespective of whether any goods were transported into the State from other States, or abroad, the State had a duty to provide facilities such as roads and bridges and in any case there were taxes for maintenance of roads, realized from owners of motor vehicles, on the basis of the laden weight of the vehicles, which had not been disclosed by the State in its affidavit. In West Bengal too, there are taxes levied on motor vehicles, on the basis of laden weight, which are utilized to meet inter alia the costs of construction and maintenance of roads. In Jindal Strips Limited & Anr. Vs. State of Haryana & Ors. reported in [2008] 12 VST 149 (P&H) (supra) cited by Mr. Poddar, the Division Bench of the Punjab and Haryana High Court held that the impugned levy under the Haryana Local Area Development Act (13 of 2000) as amended by the Haryana Local Area Development Tax (Amendment) Ordinance (1 of 2007), was not compensatory, tested in the light of the judgement of the Supreme Court in Jindal Stainless Ltd. (supra) as the levy was not to meet the cost of any specific facilities for trade, commerce and intercourse already provided or planned to be provided and therefore, hit by Article 301 of the Constitution. The Court held that the impugned levy was meant to be for assistance to local areas for their development generally and the amendment by the Haryana Local Area Development Tax (Amendment) Ordinance, 2007 only brought about a superficial change in the language while retaining the basic character of the levy as a source for general development. In Bharat Earth Movers Ltd. Vs. State of Karnataka (supra) cited by Mr. Poddar, D.V. Shylendra Kumar, J., held that the Karnataka Special Tax on Entry of Certain Goods Act, 2004 was not a compensatory levy as the State had not been able to demonstrate any exclusive or special service provided to the class of taxpayers who bore the tax under the Karnataka Special Tax on Entry of Certain Goods Act, 2004. Poddar, D.V. Shylendra Kumar, J., held that the Karnataka Special Tax on Entry of Certain Goods Act, 2004 was not a compensatory levy as the State had not been able to demonstrate any exclusive or special service provided to the class of taxpayers who bore the tax under the Karnataka Special Tax on Entry of Certain Goods Act, 2004. The Court also held that imposition of tax only in respect of the goods brought into a local area by an importer from outside the State and not on other persons who brought similar goods to the same local area from other parts of the State was discriminatory and violative of Article 304(A) of the Constitution. The Court also observed as follows:- “The concept of a compensatory tax being outside the purview of Part XIII itself as propounded in the case of Automobile Transport (Rajasthan) Ltd. AIR 1962 SC 1406 and as explained in Jindal Stainless Ltd.’s case [2006] 145 STC 544, is that a levy which is exclusively for meeting a special service or benefit to the taxpayer is not even in the nature of a tax or a general levy and is more akin to the taxpayer receiving the service from the State and paying for it. Such is not the situation in the present cases and under the enactment under challenge.” In National Aluminum Company Limited & Ors. Vs. State of Orissa & Ors. reported in [2008] 15 VST 296 (Orissa) cited by Mr. Kapur the Constitutional vires of the Orissa Entry Tax Act 1999 was challenged as violative of Article 301 and 304 of the Constitution of India and also on the ground that the State Legislature lacked legislative competence to enact the said Act. The Division Bench of Orissa High Court found that the levy under the impugned enactment was not compensatory, since the revenue received by way of Entry Tax was deposited in the Consolidated Fund of the State, and expenditure therefrom, incurred for development work was not specifically identifiable. The Court held that tax to meet expenditure in general, for infrastructure development, for the welfare of the general public, could not be considered compensatory tax. In Dinesh Pouches Ltd. Vs. State of Rajasthan (supra) cited by Mr. The Court held that tax to meet expenditure in general, for infrastructure development, for the welfare of the general public, could not be considered compensatory tax. In Dinesh Pouches Ltd. Vs. State of Rajasthan (supra) cited by Mr. Kapur a Division Bench of Rajasthan High Court held that the Rajasthan Tax on Entry of Goods into Local Areas Act, 1999 was ultra vires Article 301 of the Constitution of India, observing that the said Act “has not been imposed for providing specific benefits/facilities to trade or commerce in quantifiable measure”. The Division Bench of Rajasthan High Court further held:- “….When admittedly in the present case requirement of article 304(b) before enacting a law falling within the domain of article 301 has not been followed, the impugned Act must be held to be ultra vires to Chapter XIII of the Constitution in consonance with Atibari’s case AIR 1961 SC 232 .” In Indian Oil Cooperation Limited Vs. State of Uttar Pradesh and Ors. cited by Mr. Kapur, a Division Bench of Allahabad High Court found that tax imposed by the Uttar Pradesh Tax on Entry of Goods Act, 2000 was not compensatory tax, there being no evidence and/or material on record giving required data/statistics with regard to the amount of tax calculated or the expenditure on providing facilities. In the instant case too neither the impugned Entry Tax Act nor the Affidavit-in-Opposition of the State gives any indication of the amount expected to be collected, the amount expected to be expended on providing facilities or the specific facilities to be provided. In Central Coalfields Vs. State of Jharkhand reported in (2007) 6 VST 614 (Jharkh) cited by Mr. Mainak Bose a Division Bench of Jharkhand High Court held “…the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale thereof Act, 1993, as adopted by the State of Jharkhand and amended vide Jharkhand Tax on Entry of Goods into Local Areas for Consumption, Use or Sale thereof (Amendment) Ordinance, 2001” was ultra vires Articles 301 and 304 of the Constitution. In Indian Oil Corporation Limited Vs. State of Assam reported in (2009) 21 VST 76, cited by Mr. Mazumdar, the validity of the Assam Entry Tax Act 2008 and the Rules framed thereunder, along with the provisions of the Entry Tax (Amendment) Act, 2008, were in question. In Indian Oil Corporation Limited Vs. State of Assam reported in (2009) 21 VST 76, cited by Mr. Mazumdar, the validity of the Assam Entry Tax Act 2008 and the Rules framed thereunder, along with the provisions of the Entry Tax (Amendment) Act, 2008, were in question. The Division Bench of Assam High Court, on considering the relevant provisions of the Act, the rules and in particular the affidavits filed on behalf of the State of Assam, found that the tax sought to be imposed was compensatory in nature. A perusal of the judgment reveals that quantifiable data had been produced to satisfy the Court that the levy was in fact compensatory. The Assam High Court noted that part of the tax was spent for providing security to the pipelines of ONGC, which were used by the writ petitioners to import oil into the State of Assam. The Tax was thus in the nature of quid pro quo for utilisation of pile lines. The Assam High Court observed:- “Additionally, the provisions of section 10(2) which impose an embargo of use of any amount of entry tax collected for any other purpose; the transfer of the amount collected under the Act of 2001 to the special fund; the provisions of rule 11 providing for deposit of the amount of entry tax collected under an exclusive head of account, are sufficient facial indications that the levy under the Act is intended to provide certain identifiable benefits to trade. The provision in the Budget of 2008-09 for credit of Rs. 250 crores to the special fund created, the funds earmarked for infrastructure development and provisions for amenities to different departments and the constitution of a committee to examine the developmental schemes and to sanction and allocate funds, which materials have been placed in the affidavit dated August 8, 2008, are further pointers that should enable the levy to partake of the character of being compensatory in nature. While it is correct that the development of infrastructure and provision of amenities may also benefit persons other than the prayers of entry tax, the said fact, by itself, will not affect the compensatory nature of the levy, inasmuch as, it is not a requirement, such a situation being impossible, that the levy of entry tax should bring benefit only to those from whom the tax is collected.” In Indian Oil Corporation Limited and Anr. Vs. Vs. State of Bihar and Ors. reported in (2007) 10 VST 140 (Patna) the Division Bench of Patna High held that the Bihar Tax on Entry of Goods into Local Areas for Consumption or Sale Therein Act (16 of 1993) initially had the previous sanction of the President. Subsequent amendments were, however, bad for want of previous sanction of the President, and violative of Article 301 of the Constitution of India. After the amendment of the Act in 2006, the tax impugned assumed the nature of compensatory tax, and therefore did not violate Article 301. The writ petitions pertaining to the period from 2001- to 2006 were held fit to be allowed. In Manipal Academy of Higher Education, Monipali Vs. State of Karnataka & Ors. reported in (2008) 13 VST 377 (Karnataka) cited by Mr. Mazumdar the Division Bench of Karnataka High Court was satisfied that collection of Entry Tax was a compensatory tax which had been diverted to Urban Local Bodies to provide various services and infrastructural facilities to the trader community to carry on their business activities. In Godfrey Phillips India Ltd. Vs. State of Madhya Pradesh & Ors. reported in (2008) 17 VST 467 (MP) cited by Mr. Mazumdar, a Division Bench of Madhya Pradesh High Court upheld the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 inter alia holding that levy under the said Act was compensatory in nature. Mr. Mazumdar submitted that the trend of the decisions of different High Courts rendered after the judgment of the Constitution Bench of the Supreme Court in Jindal Stainless Ltd. (2) (supra) show that statutes enacted after the said judgment, declaring that the taxes imposed were compensatory, for benefits to traders as specified in those Acts, were upheld. However, Statutes enacted before pronouncement of the aforesaid judgment which did not indicate that the taxes levied by the Statues were compensatory, were struck down as ultra vires the Constitution. It however appears that in the cases of those Statutes which were upheld, the High Courts not only considered the provisions of the Statutes, but also data and other materials disclosed in the affidavits and were satisfied that the levies against those statutes were to provide specific, measurable benefits to the class of tax payers, on the principle of approximate equivalence. The question of validity of the Jharkhand Entry Tax on Consumption or Use of Goods Act, 2011, the provisions of which are almost identical to the impugned Entry Tax Act, was considered by a Division Bench of the Jharkhand High Court in W.P. 5696 of 2011 Tatal Steel Ltd. Vs. State of Jharkhand & Ors. along with a batch of other writ petitions. By a judgment and order pronounced on 3rd April, 2012, the Division Bench of Jharkhand High Court held that Section 3 of the impugned Act of Jharkhand, that is, the charging section, was ultra vires the Constitution of India and consequently none of the provisions of the impugned Act could be enforced. The Court held “the State further failed to discharge its burden by placing material or even calculation or data before this Court that payment of compensatory tax is reimbursement for the quantifiable or measurable benefits provided or to be provided to its tax payers. The creation of the fund under clause (a) to (d) of section 4(3) in the name of the Jharkhand State Trade Development fund and utilization of the tax amount for the purposes as given in clauses (a) to (d) under sub-section (3) of section 4 do not indicate and prove reimbursement/recompense of the tax amount to the tax payers. The purposes shown in clauses (a) to (d) of sub-section (3) of section 4 of the Act of 2011 are general nature and not specific benefits to the tax payers.” Whether a tax is a compensatory tax or not, would not just depend on the statement of objects and reasons for the enactment of the statute imposing the tax, the preamble to that statute, any recital in the statute declaring the tax to be compensatory, or any provisions stating the purposes for which the proceeds of the tax could be used. If a specious declaration and some vague ambiguous illustrative provisions, setting forth the purposes of the levy, could in themselves make the levy compensatory, the easiest thing for all State Legislatures to do, to get rid of the hurdle of Articles 301 and 304 of the Constitution, would be to make such a declaration in the Statute, and incorporate some apparently beneficial purposes of a general nature. After all the revenue earned by the State from various taxing Statutes is also spent, to a large extent on general development and welfare activities. A tax can be said to be compensatory, only if the impugned enactment under which the tax is imposed, facially and patently indicates that the tax is a recompense for specific, tangible and measurable benefits for the tax payers as a class, for facilitating trade, commerce and intercourse. The impugned enactment would facially have to indicate that the benefit, which was quantifiable or measurable, was also more or less commensurate with the levy. In case the Act impugned does not disclose the corresponding measurable or quantifiable benefits and other relevant data, or if the provisions of the Act impugned are ambiguous, vague or too wide, it would still be open to the State to disclose particulars of completed projects, projects in progress and projects in contemplation, approximate/estimated costs thereof, project reports and plans and estimates of the amount proposed to be realized from the levy impugned, to show a discernible link between the levy and the corresponding benefits. An estimate of costs of proposed projects to facilitate trade and commerce, or of taxes expected to be realized, can never be exact. Realization of taxes, which varies according to the volume of trade and commerce, could well be in excess of target, in case of unexpected increase in the volume of trade and commerce. Similarly, for compelling reasons, projects may be abandoned, inordinately delayed or modified. The actual costs of projects may be lower than the estimated costs. Even otherwise, the actual expenditure may be lesser for various reasons, leaving some part of the tax collected, unutilized. Thus, an impugned enactment would not be vitiated only because it might bring in some revenue, in the sense that the unutilized amount of the levy would be utilized for other general purposes. Nor would a Statute be vitiated because the specific facilities provided by the State to the class of taxpayers, may also be enjoyed by some others, who do not have to pay the tax. Nor would a Statute be vitiated because the specific facilities provided by the State to the class of taxpayers, may also be enjoyed by some others, who do not have to pay the tax. If a tax is compensatory, applying the parameters laid down in Jindal Stainless (2) (Supra), that tax would not cease to be compensatory only because the proceeds of the tax might have to first be credited to the Consolidated Fund of West Bengal and thereby get mixed up with the revenue realized by the State. As rightly pointed out by Mr. Mazumdar, in Automobile Transport (Rajasthan) Limited (supra) the Supreme Court clearly held that it would not make any difference if money collected from the tax was not put into a separate fund, so long as the tax was for specific facilities for the trade people who paid the tax and the expenses for providing those facilities were borne by the State. However, in this case, the Entry Tax lying to the Consolidated Fund of West Bengal under Section 16 might, by appropriation, be credited to the Compensatory Entry Tax Fund, from time to time, only if the State Legislature, by law made in this behalf, so provides, for being utilized exclusively for the purposes of the impugned Entry Tax Act. The utilization of the proceeds of the Entry Tax Act is, thus, subject to enactment of law by the State Legislature. As argued by Mr. Poddar, under Article 199(1)(d) of the Constitution of India, any appropriation of money out of the Consolidated Fund of the State, has to be done by way of a ‘Money Bill’. The Entry Tax collected by the State may thus be treated as part of general revenue, its utilization being directly dependent upon budgetary allocation to be made by the State Legislature by way of ‘Money Bill’. Even, assuming, that in passing the ‘Money Bill’ the State Legislature would be bound by the provisions of the impugned Entry Tax Act and would make appropriate budgetary provision, the withdral of the money credited to the Compensatory Entry Tax Fund would depend on enactment of law, in view of the express provision of Section 16 of the impugned Entry Tax Act. There is, thus, no guarantee that the proceeds of the Entry Tax would actually be utilized for the purposes specified in Section 18 of the said Act. There is, thus, no guarantee that the proceeds of the Entry Tax would actually be utilized for the purposes specified in Section 18 of the said Act. While these writ petitions were being heard, the Government of West Bengal, Finance Department, Budget Branch issued Notification No.766 FB dated Kolkata, the 24th July, 2012 framing West Bengal Compensatory Entry Tax Fund Rules, 2012. The notification dated 24th July, 2012 issued by the Government of West Bengal Finance Department, Budget Branch is in itself contrary to Section 16 of the impugned Entry Tax Act and apparently inconsistent with the Constitution of India particularly Article 266(3) and Article 199(1)(d), as argued by Mr. Poddar and Mr. Khaitan. The Rules framed in exercise of power conferred by Statute cannot be contrary to the provisions of the Statute. A committee comprising of secretaries of different departments of West Bengal, cannot determine budget provisions and assume the power exclusively reserved to the State Legislature of appropriation of money from the Consolidated Fund of the State. Furthermore, compensatory tax being equivalent to a fee, based on the principle of ‘quid pro quo’ and/or equivalence, to qualify as a compensatory tax, the Entry Tax collected from one local area must be identified to be spent in that local area and in no other area. In Automobile Transport (Rajasthan) Limited (supra) the Supreme Court was concerned with a tax on motor vehicles and not a tax on entry of goods into local areas for consumption, use or sale therein. In Jindal Stainless Ltd. (2) (supra) also the question of whether tax for entry of goods into a local area for consumption, use or sale therein, could be utilized for the development of another local area was not considered. Utilization of Entry Tax collected from a local area for consumption, use or sale of goods in that local area, for development of trade facilities in the rest of the State, would denude the tax of its compensatory character. The theory of direct and immediate effect and the principle of equivalence can only be achieved if the amount of Entry Tax collected from one local area is spent for the benefit of the trading people of that local area, or atleast proportionally allocated between that local area and those other local areas, which the goods subject to levy might enter, for further consumption, use or sale. Significantly, in course of arguments learned counsel appearing for the State did not dispute that it was open to the State to spend the amount collected from one local area in another local area. This is also apparent from the provisions of the impugned Entry Tax Act. As noted above, the object of the impugned Entry Tax Act is to provide for the levy and collection of taxes on the entry of certain goods into a local area in the State of West Bengal, for consumption use or sale therein, and matters connected therewith, for the purpose of creating a Compensatory Entry Tax Fund. The impugned Entry Tax Act facially provides for a levy for the purpose of creating a compensatory Entry Tax Fund. It also facially indicates some of the purposes for which the proceeds of the Entry Tax collected may be utilized, that is, the purposes enumerated under Section 18 most of which, if read and understood as per their plain meaning pertain to general development of the State, and are within the ambit of the general duties of the State to all its tax payers. In examining the constitutional validity of the provisions of a statute, the presumption is on its constitutionality and the onus is on those who challenge the vires of the statute to show that there has been transgression of constitutional principles. Of course, once a case of transgression of constitutional principles is made out and a levy on entry of goods into any particular area is shown to impede free trade, commerce and intercourse throughout the territory of India, the onus would shift on the State to show that the levy is in the nature of reimbursement and/or recompense for benefits provided or to be provided to the tax payer. It is also well settled that the Court adjudicating a challenge to the validity of the provisions of a statute may, if possible, interpret the provisions of the statute in a manner that saves those provisions from constitutional invalidity. Needless to state, that in doing so, the Court must be very cautious so that it does not embark upon the legislative functions of enacting or reenacting the law. Needless to state, that in doing so, the Court must be very cautious so that it does not embark upon the legislative functions of enacting or reenacting the law. However, before reading words into a statute or omitting from the statute words thought to be surplus, the question which the Court should ask itself is, what could be the intention the legislature and what would the legislature have done, had its attention been drawn to the confusion caused by the omission or the surplusage. Thus, a provision conferring very wide and expansive powers on an authority can be read down and construed in conformity with the legislative intent that the power should be exercised within constitutional limitations. As held by the Supreme Court in Arun Kumar Vs. Union of India reported in (2006) 286 ITR 89 (SC) where a statute is silent or is inarticulate, the Court would attempt to transmute the inarticulation and adopt a construction which would lean towards its constitutionality, without departing from the material of which the law is woven. Where the plain interpretation of a statutory provision gives a manifestly absurd and unjust result, which could never have been intended by the legislature, the Court may even, ‘do some violence’ to the language used by the legislature to achieve the obvious intention of the legislature and save the constitutionality of the statute and render the same workable. This proposition finds support from the judgments of the Supreme Court inter alia in Bhudan Singh Vs. Nabi Bux reported in [1969] 2 SCC 481; K.P. Varghese Vs. ITO reported in [1981] 131 ITR 597 (SC); C.W.S. (India) Ltd. Vs. CIT reported in [1994] 208 ITR 649 (SC) and Calcutta Gujarati Education Society Vs. Calcutta Municipal Corporation reported in [2003] 10 SCC 533. In Narang Overseas Pvt. Ltd. Vs. ITAT reported in [2007] 295 ITR 22 (Bom) the Division Bench of Bombay High Court referred to the observation of the Supreme Court in CIT Vs. CIT reported in [1994] 208 ITR 649 (SC) and Calcutta Gujarati Education Society Vs. Calcutta Municipal Corporation reported in [2003] 10 SCC 533. In Narang Overseas Pvt. Ltd. Vs. ITAT reported in [2007] 295 ITR 22 (Bom) the Division Bench of Bombay High Court referred to the observation of the Supreme Court in CIT Vs. J.H. Gotla reported in [1985] 156 ITR 323 (SC) that: “Though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such a construction should be preferred to the literal construction.” The impugned Entry Tax Act appears to be a hastily drafted enactment, fraught with errors, passed in haste, in abdication of essential legislative duties and functions, without sufficient deliberation or discussion, with a view to augment revenue, for general development of the State. There are, as pointed out by Mr. Kapur, glaring errors in various provisions of the impugned Entry Tax Act, which render the said provisions unintelligible, particularly Sections 16 and 18(1)(c). However, it is well settled that grammatical errors, inadvertent omissions and the like are no grounds to strike down a statute that is otherwise comprehensible and workable. It is also difficult to accept Mr. Kapur’s submission that if the Act contains defects, which render a provision meaningless, the Court cannot cure the same. It is true that the Courts should not ordinarily transgress into the legislative sphere of enactment, reenactment and amendment. This court may, however, interpret a statutory provision in a manner, that renders the provision workable and constitutional. Section 16 as enacted reads as follows:- “Section 16. Crediting of proceeds to the Fund – The proceeds of the levy under this Act shall first be credited to the Consolidated Fund of West Bengal, and the State Government may, if the State Legislature by appropriation made by law in this behalf so provides, credit such proceeds to the Fund from time to time, after deducting the expenses of collection for being utilized exclusively for the purposes of this Act.” Section 16, as it stands is unintelligible. This Court, therefore, construes Section 16 to read “the proceeds of the levy shall first be deposited to the Consolidated Fund of West Bengal and the State Government may, by appropriation, if the State Legislature, by law in this behalf so provides, credit such proceeds to the Fund from time to time, after deducting the expenses of collection, for being utilized exclusively for the purposes of this act” Section 16 as construed above, read with Sections 15 and Section 18(1) of the impugned Entry Tax Act, casts a mandatory statutory duty and/or obligation on the State Government to appropriate and credit the proceeds to the Compensatory Entry Tax Fund, provided the State Legislature, by law, provides for such appropriation. The use of the word ‘may’ in Section 16 of the impugned Entry Tax Act, would make no difference. In ordinary parlance, ‘may’ implies discretion. Normally the world ‘may’ is used when a provision is meant to be directory where a statutory provision confers power, coupled with performances of a public duty, as in this case, may would mean ‘must’ as held by the Supreme Court in Delhi Administration Vs. I.K. Nanjia reported in (1980) 1 SCC 258 . Going by the plain ordinary meaning of Section 18 and the Sub-sections thereunder, many of the benefits contemplated therein might, as observed above, be part of the general obligations of the State to its tax payers and the people of the State, for example, construction of roads and bridges for linking markets, construction of railway over-bridges and subways, supply of electricity and water and maintaining pollution free environment. Furthermore, having regard to the obligation cast by Section 18(1) to utilize the proceeds of the levy for development of or facilitating trade including the purposes specified in Sub-clause (a) to (i), this court may construe the various sub paragraphs, particularly sub paragraphs (a), (c), (f) in harmony with the statutory obligation to utilize the proceeds of the tax to develop and facilitate trade and commerce. The State has a general duty to construct roads and bridges for all its citizens, and utilization of the proceeds of the levy to construct and maintaining roads and bridges throughout the State, irrespective of the trading activities would render the levy a tax to collect revenue. This court may thus construe ‘roads and bridges’ in Section 18(1)(a), to read special roads and bridges for carriage of goods. This court may thus construe ‘roads and bridges’ in Section 18(1)(a), to read special roads and bridges for carriage of goods. Similarly “construction development and maintenance of linking the market areas” in sub-clause ‘c’ would make no sense unless the Court reads the word 'roads’ or may be ‘roads and bridges’ as in Clause (c) into Subsection (b), and construe ‘roads and bridges’ in the manner indicated above. Utilization of the proceeds of Entry Tax under the impugned Entry Tax Act for the purpose specified in Sub-clause (g) of creating, developing and maintaining pollution free atmosphere in the concerned areas has remote connection, if not, no connection with developing and facilitating trade and commerce, even though the same might improve the quality of life for citizens. Taxes utilized for keeping the environment free of pollution, would not qualify as a compensatory Tax. Be it mentioned that individual industries are responsible for ensuring that they conform to the environmental norms. Similarly vehicles including those which carry goods, are required to comply with pollution norms. The cost of railway over bridges and/or subways are substantially borne by the Railways and as argued by Mr. Poddar the purpose specified in Sub-clause (1) of providing financial aid grants and subsidies to local bodies and government agencies is totally vague and devoid of material particulars. In view of the law laid down by the Supreme Court in Atiabari Tea Company Ltd. (supra), the impugned Entry Tax must be held to restrict the right to free trade, commerce and intercourse, throughout the territory of India, even though the restriction is reasonable and in public interest. There can be no doubt that the State Legislature has exclusive power to enact legislation imposing a tax on the entry of goods into a local area, for consumption use or sale therein by virtue of Entry 52 of List II of the Seventh Schedule to the Constitution of India. However, this power is subject to the limitations imposed by the Constitution itself, particularly Part XIII thereof. However, this power is subject to the limitations imposed by the Constitution itself, particularly Part XIII thereof. The imposition of a compensatory tax, being a judicially devised exception to the restrictions of Articles 301 and 303 of the Constitution of India, the tests judicially enunciated in Jindal Stainless Ltd. (2) (supra) to examine whether the impugned tax on movement of goods from one area to another is, in effect and substance, a compensatory tax, must strictly be applied before the validity of an enactment imposing the impugned tax can be upheld, notwithstanding non-compliance of the requisites of Article 304(b) of the Constitution of India. A taxing Statute generates revenue for various developmental and welfare activities. The expenditure inter alia for facilities of roads, bridges, public transport, pollution control, sanitation, health care, medical treatment, water supply etc. provided by the State, is met from the revenue generated by taxing Statutes. What distinguishes a compensatory tax is that a compensatory tax is imposed for a specific purpose or a few specific identifiable purposes, to pay for expenses in connection with specific projects, whether completed, in progress or in contemplation, which provide specific, tangible, measurable benefits to the tax payers as a class and is based on the ‘principle of equivalence’ and/or ‘quid pro quo’ and/or ‘pay for value’. A tax on the other hand generates revenue, but not necessarily for any specific identifiable purpose. To clear the test of compensatory tax, the onus lies on the State to show the exact purpose or purposes for which the levy is imposed, which should be identifiable, measurable, directly beneficial to the tax payers as a class, who in the instant case, would primarily be the traders and manufacturers of the local area, who import goods from outside the State and/or outside the country. The State has failed to disclose details of projects in contemplation, projects in progress and/or completed projects, providing facilities to the trading community, which the levy would pay for, and show that the expected proceeds of such levy are more or less equivalent to the estimated expenditure on such projects. To qualify as a compensatory tax, the Statute imposing the tax must facially indicate that the tax is a recompense for identifiable, measurable benefits to the class of tax payers as a whole on the principle of equivalence. To qualify as a compensatory tax, the Statute imposing the tax must facially indicate that the tax is a recompense for identifiable, measurable benefits to the class of tax payers as a whole on the principle of equivalence. If the statute does not contain particulars of the corresponding benefits in return for the tax, details may be disclosed by affidavit. It is reiterated that a compensatory tax would not cease to be a compensatory tax, only because of some excess collection, which may have to be diverted towards the revenue of the State. However, imposition of the tax would necessarily have to be preceded by the exercise of ascertaining the approximate financial requirements for specific and/or earmarked projects and balancing the same with the targeted tax receipts. The State should be able to justify the basis on which the rate of tax has been determined. The previous sanction of the President of India not having been obtained, before enactment of the impugned Entry Tax Act, this court is constrained to hold that the impugned Entry Tax Act is ultra vires Section 304(b) of the Constitution of India. The writ petitions are disposed of accordingly. This Court cannot, but record its appreciation, for the immense assistance rendered to this Court, by the respective counsel appearing for the parties and in particular Mr. Avrotosh Mazumdar for the State and Mr. Poddar, Mr. Kapur and Mr. Khaitain for the writ petitioners, by their tireless and commendable hard work.