S. R. Bommai v. Union of India, (1994) 3 SCC 1 Bench: Justice Kuldip Singh Justice P. B. Sawant Justice Katikithala Ramaswamy Justice S. C. Agarwal Justice Yogeshwar Dayal Justice B. P. Jeevan Reddy Justice S. R. Pandian Justice A. M. Ahmadi Justice J. S. Verma Facts: S. R. Bommai was the Chief Minister of Karnataka, leading a Janata Party government. On April 21, 1989, his government was dismissed by the Governor, P. Venkatasubbaiah, on grounds of losing majority due to defections. Bommai sought time to prove his majority on the Assembly floor, but the Governor refused and recommended President’s Rule under Article 356 of the Constitution. Bommai challenged this dismissal in the Supreme Court, questioning the misuse of Article 356 and the extent of judicial review over such proclamations. Issues: Is the Presidential Proclamation under Article 356 subject to judicial review? Does the President have absolute power to issue a Proclamation under Article 356(1)? Can the validity of a Proclamation be challenged after parliamentary approval? What is the role of the Governor’s report in the issuance of such a Proclamation? Can a dissolved Legislative Assembly be revived if the Proclamation is invalidated? Does the imposition of President’s Rule affect the secular fabric of the Constitution? Arguments: Petitioner (S. R. Bommai): The dismissal was arbitrary and violated democratic principles. The Governor’s refusal to allow a floor test was unjustified. Article 356 was misused for political gains, undermining federalism. Respondent (Union of India): The Governor’s decision was based on credible reports of loss of majority. The President acted within constitutional powers under Article 356. The Proclamation was approved by both Houses of Parliament, validating its legitimacy. Ratio Decidendi: Justiciability of Article 356 Proclamation: The Supreme Court held that Presidential Proclamations under Article 356 are subject to judicial review. The Court can examine if the Proclamation was based on relevant material or if it was issued malafide. Conditional Power of the President: The President’s power under Article 356 is not absolute but conditional. It must be based on objective material indicating a breakdown of constitutional machinery in the state. Parliamentary Approval and Judicial Review: Even after parliamentary approval, the validity of the Proclamation can be challenged in court. Parliamentary approval does not grant immunity from judicial scrutiny. Governor’s Report: While the Governor’s report can form the basis for the Proclamation, the absence of such a report does not preclude the President from acting under Article 356, provided there is relevant material. Revival of Legislative Assembly: If the Proclamation is declared unconstitutional, the dissolved Legislative Assembly can be revived, restoring the status quo ante. Secularism as a Basic Feature: The Court emphasized that secularism is a basic feature of the Constitution. State governments pursuing non-secular policies act contrary to constitutional mandates, making them liable to action under Article 356. Observations: The misuse of Article 356 poses a threat to federalism and democracy. The floor test is the appropriate method to determine the majority in the Assembly. The President should exercise caution and rely on objective material before invoking Article 356. Secularism is integral to the Constitution, and any deviation by state governments warrants corrective measures. Decision: The Supreme Court set strict guidelines for invoking Article 356, emphasizing its exceptional nature. The Court reinstated governments in cases where Article 356 was misused, reinforcing the importance of floor tests to ascertain majority. This landmark judgment curtailed arbitrary dismissals of state governments, strengthening federalism and the democratic framework. Important Terms: Article 356: Allows the President to impose President’s Rule in a state under certain conditions. Judicial Review: The power of courts to assess the constitutionality of legislative and executive actions. Floor Test: A procedure to determine if the incumbent government enjoys the majority support of the legislature. Secularism: The principle of separation between government institutions and religious institutions. Federalism: A system of governance where power is divided between a central authority and constituent political units.

State of Rajasthan & Ors. v. Union of India, (1977) 3 SCC 592 Bench: Chief Justice M. Hameedullah Beg Justice Y.V. Chandrachud Justice P.N. Bhagwati Justice P.K. Goswami Justice A.C. Gupta Justice N.L. Untwalia Justice Syed Murtaza Fazal Ali Facts: Following the 1977 general elections, the Janata Party emerged victorious, leading to a change in the central government. However, several states, including Rajasthan, continued to be governed by the Congress Party, which had suffered significant losses in the elections. The newly appointed Union Home Minister, Mr. Charan Singh, issued letters to the Chief Ministers of these Congress-ruled states, advising them to dissolve their respective Legislative Assemblies and seek a fresh mandate from the electorate. The rationale was that the existing state governments no longer reflected the popular will, given the recent electoral outcomes at the national level. In response, the State of Rajasthan, along with other affected states, filed suits under Article 131 of the Constitution, challenging the Union Government’s directive and seeking a declaration that the Home Minister’s advice was unconstitutional and illegal. Issues: Whether the directive issued by the Union Home Minister to dissolve the State Legislative Assemblies was constitutional. Whether the Union Government had the authority to advise or compel states to dissolve their Legislative Assemblies based on the outcomes of national elections. Whether the matter was justiciable under Article 131 of the Constitution, which grants the Supreme Court original jurisdiction in disputes between states and the Union. Arguments: Petitioners (States of Rajasthan and others): The Union Government’s directive infringed upon the autonomy of the states and violated the federal structure enshrined in the Constitution. The advice to dissolve the Assemblies was based solely on political considerations without any constitutional basis, rendering it arbitrary and unconstitutional. The existing state governments were democratically elected and enjoyed the confidence of their respective Legislative Assemblies; thus, there was no justification for their dissolution. Respondent (Union of India): The Union Government contended that the advice was merely a suggestion and did not have any binding effect on the states. The directive aimed to ensure that state governments reflected the current will of the people, especially after a significant shift in the national political landscape. The matter was not justiciable under Article 131, as there was no actual dispute involving legal rights between the states and the Union; instead, it was a political issue. Ratio Decidendi: Federal Structure and State Autonomy: The Supreme Court reaffirmed the federal nature of the Indian Constitution, emphasizing that states have autonomy within their respective domains. The Union cannot unilaterally interfere in the functioning of state governments based solely on political considerations. Justiciability under Article 131: The Court held that for a matter to be justiciable under Article 131, there must be an actual dispute involving legal rights between the states and the Union. In this case, the Home Minister’s letter was advisory and did not constitute a legal directive; therefore, there was no justiciable dispute. Scope of Article 356: While the case did not directly involve the invocation of Article 356 (President’s Rule), the Court observed that the power under Article 356 should be exercised cautiously and only when there is a failure of constitutional machinery in a state. Mere political differences or electoral outcomes at the national level do not justify the imposition of President’s Rule in a state. Decision: The Supreme Court dismissed the suits filed by the states, holding that the Union Home Minister’s letter was merely advisory and did not have any binding legal effect. Consequently, there was no cause of action that warranted judicial intervention under Article 131. The Court emphasized that the federal structure must be respected and that any advice from the Union to the states should not overstep constitutional boundaries. Important Terms: Article 131: Grants the Supreme Court original jurisdiction in disputes between the Government of India and one or more states or between states. Article 356: Empowers the President to impose President’s Rule in a state if there is a failure of constitutional machinery. Federalism: A system of governance where power is divided between a central authority and constituent political units (states), ensuring autonomy within their respective domains. Justiciability: The appropriateness of a subject matter for court review based on its legal rather than political nature. President’s Rule: The suspension of a state government and the imposition of direct central government rule in a state under Article 356. This case is a cornerstone in the evolution of Indian constitutional law, as it clarified the boundaries of executive power, the scope of judicial review, and the relationship between the Centre and the states. The ruling emphasized that while the Union Government can offer advice to states, it cannot compel actions that infringe upon state autonomy without following constitutional procedures. The judgment also underscored the importance of maintaining the federal balance and cautioned against the misuse of Article 356 for political purposes. This case set a precedent for future disputes involving Centre-State relations and reinforced the judiciary’s role in upholding the constitutional framework.

Jindal Stainless Ltd. v. State of Haryana, (2016) 11 SCC 1 Bench: A 9-Judge Constitution Bench of the Supreme Court: Justice T.S. Thakur (Chief Justice) Justice A.K. Sikri Justice S.A. Bobde Justice Shiva Kirti Singh Justice N.V. Ramana Justice R. Banumathi Justice A.M. Khanwilkar Justice D.Y. Chandrachud Justice Ashok Bhushan Facts: Jindal Stainless Ltd., a company engaged in manufacturing stainless steel, challenged the Entry Tax Act imposed by various states, particularly Haryana, arguing that it violated the constitutional right to free trade and commerce under Article 301. The company contended that the entry tax levied on goods entering the state from another state was discriminatory and hindered the free movement of goods. Haryana, along with other states, defended the tax, stating that it was a compensatory tax meant to cover the cost of road infrastructure and public services used by transporters bringing goods into the state. The matter was initially heard by a 5-Judge Bench but was later referred to a 9-Judge Constitution Bench due to its significance in interpreting the taxation powers of states under Article 304(a) and (b) of the Constitution. Issues: Whether entry tax imposed by states on goods coming from other states violates Article 301, which guarantees free trade, commerce, and intercourse throughout India. Whether states have the power under Article 304(a) to impose taxes on goods from outside the state in a manner that discriminates against such goods compared to local goods. Whether such entry tax qualifies as a compensatory tax and is thus exempt from the restrictions of Article 301. Whether previous judgments, including Automobile Transport Ltd. v. State of Rajasthan (1962), correctly interpreted the scope of compensatory taxation. Arguments: Petitioners (Jindal Stainless Ltd. and others): The entry tax violates Article 301 as it directly impedes the free flow of goods across state borders. Under Article 304(a), a state cannot impose a tax on goods coming from another state if similar goods produced within the state are not subject to the same tax, making the tax discriminatory. The tax does not qualify as a compensatory tax, as it does not provide a direct quid pro quo (equal compensation) in terms of benefits to those paying the tax. The Automobile Transport case (1962) and subsequent rulings should be reconsidered because they incorrectly expanded the scope of compensatory taxation. Respondents (State of Haryana and other States): The entry tax is justified under Article 304(b), which allows states to impose reasonable restrictions on trade and commerce in the public interest. The tax is not discriminatory under Article 304(a) because it applies uniformly to all goods entering the state, whether from another Indian state or from outside India. The funds collected from the entry tax are used for infrastructure development, road maintenance, and public services that benefit those paying the tax, making it compensatory in nature. Previous judgments supporting compensatory taxation should be upheld as they allow states to levy such taxes to recover costs incurred due to increased trade activities. Ratio Decidendi: Scope of Article 301: The Court clarified that while Article 301 guarantees free trade, commerce, and intercourse, it does not provide an absolute right and must be read with Articles 302–304, which allow Parliament and state legislatures to regulate trade in the public interest. Interpretation of Article 304(a): The Court ruled that states cannot impose entry tax in a discriminatory manner against goods from other states unless it is done for a valid reason under Article 304(b). Entry Tax and Compensatory Taxation: The Court overruled the compensatory tax doctrine laid down in earlier cases, holding that entry taxes must comply with Article 304(b) and cannot be justified merely on the grounds of compensating for infrastructure usage. Legislative Power of States: While states have the power to levy taxes under the State List, such taxation must pass the test of non-discrimination and public interest as outlined in Article 304. Observations: The concept of compensatory taxation should not be used to justify taxes that burden interstate trade without direct benefits to those paying the tax. Any tax restricting the movement of goods must be evaluated based on whether it serves a legitimate public purpose under Article 304(b). The judgment clarifies the balance of power between the Union and State legislatures in imposing trade-related taxes. A state cannot impose barriers to trade in a way that gives an unfair advantage to local goods over goods coming from other states. Decision: The Supreme Court upheld the constitutional validity of entry tax imposed by states but ruled that such taxes must comply with Article 304(b), meaning they must be non-discriminatory and justified in the public interest. It overruled the compensatory tax doctrine, stating that any tax restricting trade must meet constitutional scrutiny. The Court remanded individual cases to the respective High Courts to determine whether the entry taxes imposed by different states satisfied the requirements of Article 304(b). Important Terms: Article 301: Ensures free trade, commerce, and intercourse throughout India. Article 304(a): Prohibits states from imposing discriminatory taxes on goods coming from other states. Article 304(b): Allows states to impose reasonable restrictions on trade and commerce in the public interest, subject to Presidential approval. Entry Tax: A tax imposed by state governments on goods entering their territory from other states. Compensatory Tax: A tax imposed to cover the costs of infrastructure and services used by those paying the tax. The Court rejected this doctrine in the present case. This judgment clarified the limitations on state taxation powers in relation to interstate trade. It struck down the compensatory tax doctrine, ensuring that states cannot impose entry taxes unless they fulfill constitutional conditions. It reinforced the principles of free trade and commerce, preventing states from imposing unjustified trade barriers.

Shree Mahavir Oil Mills v. State of Jammu & Kashmir, (1996) 11 SCC 39 Bench: Justice A.M. Ahmadi Justice K. Ramaswamy Facts: The State of Jammu & Kashmir (J&K) enacted a Sales Tax Exemption Notification that provided full tax exemption to industrial units located within the state while continuing to levy tax on goods imported from outside the state. Shree Mahavir Oil Mills and other petitioners, who were manufacturers outside J&K and supplied goods to the state, challenged this policy. The petitioners argued that the tax exemption created discrimination against imported goods, violating Article 304(a) of the Constitution, which prohibits states from imposing discriminatory taxes on goods imported from other states. The State of J&K defended the exemption, arguing that the policy was meant to promote local industry and economic development, a legitimate purpose under Article 304(b) of the Constitution. The case was heard by the Supreme Court after similar cases had challenged tax exemption policies in various states, raising concerns about federalism and economic barriers between states. Issues: Whether the tax exemption granted to local industries while continuing to tax imported goods from other states violated Article 304(a) of the Constitution. Whether the exemption was justified under Article 304(b) as a reasonable restriction in the public interest. Whether the state’s policy amounted to an indirect restriction on the free flow of trade and commerce under Article 301. Arguments: Petitioners (Shree Mahavir Oil Mills & Other Non-J&K Manufacturers): The tax exemption created economic discrimination by making locally produced goods cheaper than imported goods. The exemption violated Article 304(a), which ensures that goods from other states are not subjected to discriminatory taxation. The state’s justification of promoting local industry was not sufficient to override the constitutional prohibition against discriminatory taxation. Respondents (State of J&K): The tax exemption was a policy measure to encourage industrial growth within J&K, which had economic disadvantages compared to other states. Article 304(b) allows states to impose reasonable restrictions on trade and commerce in the public interest, and the exemption was within this scope. The exemption was not a tax but a form of government incentive, and therefore, it did not violate Article 304(a). Ratio Decidendi: Violation of Article 304(a): The Court held that any tax exemption for local goods that results in discrimination against imported goods is unconstitutional. By exempting local goods from tax while continuing to tax goods from other states, J&K created an unfair advantage for local businesses, violating Article 304(a). Failure to Justify Under Article 304(b): The Court ruled that for any restriction under Article 304(b) to be valid, it must receive Presidential assent, which was not obtained in this case. Without such assent, the restriction was not legally justified. Interference with Free Trade Under Article 301: The Court noted that economic barriers between states are against the spirit of Article 301, which guarantees free trade and commerce across India. Policies that make imported goods less competitive go against this principle. Observations: The Supreme Court emphasized that federalism in India requires economic unity, and states cannot create tax policies that discriminate against goods from other states. The Court clarified that Article 304(a) is absolute, meaning that any tax policy that favors local goods over imported goods is automatically unconstitutional unless justified under Article 304(b) with Presidential approval. The ruling reinforced the principle that states must balance industrial policy with constitutional mandates on free trade. Decision: The Supreme Court struck down the tax exemption policy of the State of J&K, ruling that it violated Article 304(a) by discriminating against imported goods. The Court held that the exemption created an economic barrier between J&K and other states, which was unconstitutional. Since the state did not obtain Presidential assent, the policy was not saved under Article 304(b). The exemption was declared invalid, and the state was directed not to enforce discriminatory taxation policies against goods imported from other states. Important Terms: Article 301: Ensures freedom of trade, commerce, and intercourse throughout the territory of India. Article 304(a): Prohibits states from imposing discriminatory taxes on goods imported from other states. Article 304(b): Allows states to impose restrictions on trade and commerce for public interest only with Presidential approval. Tax Exemption: A policy that allows certain goods or industries to be free from taxation. Discriminatory Taxation: When a state taxes goods from other states differently than its own, creating an economic disadvantage. Clarified that Article 304(a) is absolute—states cannot provide tax exemptions to local industries while taxing imported goods. Reinforced the role of Presidential assent under Article 304(b) when imposing trade restrictions. Strengthened the concept of economic unity in India by ensuring that states cannot create artificial barriers to trade. Set a precedent for future cases involving state tax policies and their impact on interstate trade.

G.K. Krishnan v. State of Tamil Nadu, (1975) 1 SCC 375 Bench: Justice A.N. Ray (Chief Justice) Justice K.K. Mathew Justice A. Alagiriswami Facts: In 1972, the State of Tamil Nadu issued a notification under the Madras Motor Vehicles Taxation Act, 1931, increasing the motor vehicle tax on omnibuses (contract carriages) from Rs. 30 to Rs. 100 per seat per quarter. G.K. Krishnan and other omnibus operators challenged this hike, arguing that it was discriminatory and violated their fundamental rights under Articles 14 (right to equality), 19(1)(g) (freedom to practice any profession or to carry on any occupation, trade, or business), and 301 (freedom of trade, commerce, and intercourse) of the Indian Constitution. They contended that the increased tax was not compensatory or regulatory but rather a restriction on their trade and commerce. Issues: Whether the increased tax on contract carriages violated Article 301 by restricting the freedom of trade, commerce, and intercourse across India. Whether the tax was compensatory or regulatory in nature. Whether the tax violated Article 14 by discriminating between contract carriages and stage carriages. Whether the tax imposed an unreasonable restriction on the petitioners’ fundamental rights under Article 19(1)(g). Arguments: Petitioners (G.K. Krishnan and others): The tax increase was arbitrary and discriminatory, violating Article 14. The tax was not compensatory or regulatory but restrictive, infringing upon the freedom guaranteed under Article 301. The substantial hike imposed an unreasonable restriction on their right to carry on business, contravening Article 19(1)(g). Respondents (State of Tamil Nadu): The tax was compensatory, aimed at covering the costs of road maintenance and infrastructure used by heavy vehicles like omnibuses. The classification between contract carriages and stage carriages was reasonable, considering factors like road usage and passenger capacity. The tax did not impose unreasonable restrictions on the petitioners’ business activities. Ratio Decidendi: Compensatory Tax Doctrine: The Court held that taxes that are compensatory or regulatory do not violate Article 301. A tax is considered compensatory if the revenue collected is used to provide facilities for the taxpayers, such as road maintenance for vehicle operators. In this case, the increased tax was deemed compensatory as it aimed to cover the costs associated with road infrastructure used by omnibuses. Reasonable Classification under Article 14: The Court found that the differentiation between contract carriages and stage carriages was based on reasonable classification. Contract carriages (omnibuses) typically carried specific groups of passengers and had different operational patterns compared to stage carriages, which followed fixed routes and schedules. This justified the higher tax on contract carriages. No Unreasonable Restriction under Article 19(1)(g): The Court concluded that the tax did not impose an unreasonable restriction on the petitioners’ right to carry on their business. The tax was proportionate to the use of road infrastructure by omnibuses and was necessary to maintain and develop transportation facilities. Decision: The Supreme Court upheld the validity of the increased tax imposed by the State of Tamil Nadu on contract carriages. The Court ruled that the tax was compensatory in nature, did not violate the freedom of trade and commerce under Article 301, was based on reasonable classification under Article 14, and did not impose unreasonable restrictions on the petitioners’ rights under Article 19(1)(g). Important Terms: Contract Carriage: A vehicle hired for transporting a specific group of passengers to a designated destination without picking up or dropping off other passengers along the route. Stage Carriage: A vehicle that operates on fixed routes and schedules, picking up and dropping off passengers at predetermined stops. Compensatory Tax: A tax levied to recover the costs of facilities or services provided by the government, such as road maintenance funded by vehicle taxes. Article 301: A provision in the Indian Constitution that guarantees the freedom of trade, commerce, and intercourse throughout the territory of India. Article 14: A provision in the Indian Constitution that ensures equality before the law and equal protection of the laws within the territory of India. Article 19(1)(g): A provision in the Indian Constitution that guarantees citizens the right to practice any profession or to carry on any occupation, trade, or business. This case is significant as it clarified the application of the compensatory tax doctrine in the context of Article 301, establishing that taxes aimed at recouping the costs of facilities provided by the state do not constitute restrictions on trade and commerce. It also reinforced the principle that reasonable classification for taxation purposes does not violate the right to equality under Article 14. The Supreme Court’s decision in G.K. Krishnan v. State of Tamil Nadu affirmed the state’s authority to impose taxes that are compensatory in nature, provided they are based on reasonable classification and do not impose unreasonable restrictions on fundamental rights. This case serves as a precedent for assessing the validity of state-imposed taxes concerning the freedom of trade and

State of Kerala & Ors. vs. M/S. Mar Appraem Kuri Co. Ltd. & Anr., AIR 2012 SC 2375; (2012) 7 SCC 106 Bench: Chief Justice S.H. Kapadia Justice D.K. Jain Justice Jagdish Singh Khehar Justice Ranjana Prakash Desai Facts: The respondents, M/S. Mar Appraem Kuri Co. Ltd. and others, were engaged in the business of conducting kuries (a form of chit fund) in Kerala. They challenged the constitutional validity of certain provisions of the Kerala Chitties Act, 1975, which regulated the conduct of chitties in the state. The respondents contended that the subject of ‘chit funds’ fell under Entry 7 of List III (Concurrent List) of the Seventh Schedule of the Constitution, and since Parliament had already enacted the Chit Funds Act, 1982, the state legislation was repugnant to the central law and, therefore, void. Issues: Whether the Kerala Chitties Act, 1975, was repugnant to the Chit Funds Act, 1982, enacted by Parliament. Whether the state legislation was constitutionally valid under the relevant entries of the Seventh Schedule. Arguments: Petitioners (State of Kerala): The Kerala Chitties Act, 1975, was enacted under Entry 32 of List II (State List), which pertains to incorporation, regulation, and winding up of corporations other than those specified in List I. The subject of ‘chit funds’ falls under the state’s legislative competence, and there is no repugnancy with the central legislation. Respondents (M/S. Mar Appraem Kuri Co. Ltd. & Anr.): The subject of ‘chit funds’ falls under Entry 7 of List III (Concurrent List), and with the enactment of the Chit Funds Act, 1982, by Parliament, the state legislation becomes repugnant and void under Article 254 of the Constitution. Ratio Decidendi: The Supreme Court held that the subject matter of ‘chit funds’ falls under Entry 7 of List III (Concurrent List), which pertains to contracts, including partnership, agency, contracts of carriage, and other special forms of contracts. Therefore, both Parliament and the State Legislature have concurrent powers to legislate on this subject. However, in cases of repugnancy between a state law and a central law on a subject in the Concurrent List, the central law prevails unless the state law has received the President’s assent under Article 254(2) of the Constitution. In this case, the Kerala Chitties Act, 1975, had not received the President’s assent, and therefore, to the extent of repugnancy, the state law would be void. Decision: The Supreme Court held that the Kerala Chitties Act, 1975, was repugnant to the Chit Funds Act, 1982, enacted by Parliament, and therefore, the state legislation was void to the extent of repugnancy. The Court emphasized that in matters listed in the Concurrent List, the central legislation would prevail over state legislation in cases of conflict, unless the state law has received the President’s assent. Important Terms: Repugnancy: A situation where a state law is inconsistent with a central law on the same subject matter, leading to the central law prevailing over the state law under Article 254 of the Constitution. Concurrent List: List III of the Seventh Schedule of the Indian Constitution, which enumerates subjects on which both Parliament and State Legislatures can legislate. Article 254: A provision in the Indian Constitution that deals with inconsistencies between laws made by Parliament and laws made by State Legislatures on subjects enumerated in the Concurrent List.

Vijay Kumar Sharma & Ors. v. State of Karnataka & Ors., (1990) 2 SCC 562 Bench: Justice Ranganath Misra Justice P.B. Sawant Justice K. Ramaswamy Facts: The Karnataka Contract Carriages (Acquisition) Act, 1976 (hereinafter referred to as the ‘Karnataka Act’) was enacted by the State Legislature to acquire contract carriages and their permits, effectively nationalizing the contract carriage transport sector in the state. Sections 14 and 20 of the Karnataka Act prohibited the issuance or renewal of permits for contract carriages to private operators, reserving this right exclusively for the State Transport Undertaking (STU). Subsequently, the Central Government enacted the Motor Vehicles Act, 1988 (hereinafter referred to as the ‘MV Act’), which liberalized the grant of permits for contract carriages, allowing private operators to apply for and obtain such permits. This legislative change led to a conflict between the provisions of the Karnataka Act and the MV Act. Issues: Whether Sections 14 and 20 of the Karnataka Contract Carriages (Acquisition) Act, 1976, are repugnant to the provisions of the Motor Vehicles Act, 1988, particularly Sections 73, 74, and 80. Whether the State Legislature had the competence to enact the Karnataka Act in light of the provisions of the MV Act. Arguments: Petitioners (Vijay Kumar Sharma & Others): The petitioners argued that the Karnataka Act’s provisions, specifically Sections 14 and 20, were in direct conflict with the MV Act, 1988. They contended that while the MV Act permitted private operators to apply for and obtain contract carriage permits, the Karnataka Act prohibited such applications and grants, thereby creating a repugnancy between the state and central legislation. They further asserted that, as per Article 254(1) of the Constitution, in cases of inconsistency between central and state laws on subjects in the Concurrent List, the central law would prevail, rendering the conflicting state law provisions void. Respondents (State of Karnataka & Others): The respondents contended that the Karnataka Act was enacted under Entry 42 of the Concurrent List, dealing with the acquisition of property, while the MV Act was enacted under Entry 35, concerning mechanically propelled vehicles. They argued that since the two Acts were enacted under different entries of the Concurrent List, there was no question of repugnancy. Additionally, they maintained that the Karnataka Act had received the President’s assent, thereby protecting it under Article 254(2) of the Constitution. Decision: The Supreme Court, in a majority decision, held that Sections 14 and 20 of the Karnataka Act were repugnant to Sections 73, 74, and 80 of the MV Act, 1988. The Court observed that the MV Act aimed to liberalize the grant of permits for contract carriages, allowing private operators to apply for and obtain such permits. In contrast, the Karnataka Act restricted this right exclusively to the STU, thereby creating a direct conflict between the two legislations. The Court further noted that both Acts were enacted under the Concurrent List, and in cases of inconsistency between central and state laws on subjects in this list, the central law would prevail as per Article 254(1) of the Constitution. Although the Karnataka Act had received the President’s assent, the subsequent enactment of the MV Act, 1988, without any provision saving the Karnataka Act, implied that the central legislation would prevail over the state law. Consequently, the Court declared Sections 14 and 20 of the Karnataka Act void to the extent of their repugnancy with the MV Act, 1988, thereby allowing private operators to apply for and obtain contract carriage permits in the state. Important Terms: Doctrine of Repugnancy: A constitutional principle that addresses conflicts between central and state laws on subjects in the Concurrent List, stipulating that central laws prevail in cases of inconsistency. Concurrent List: One of the three lists in the Seventh Schedule of the Indian Constitution, enumerating subjects on which both the central and state governments can legislate. Article 254 of the Constitution: A provision that deals with inconsistencies between laws made by Parliament and laws made by state legislatures concerning subjects in the Concurrent List. Contract Carriage: A motor vehicle that carries passengers under a contract for hire or reward, either for a fixed period or journey. State Transport Undertaking (STU): A government-owned corporation or entity engaged in the business of providing road transport services. The Supreme Court’s decision in Vijay Kumar Sharma & Ors. v. State of Karnataka & Ors. underscores the supremacy of central legislation over state laws in matters listed in the Concurrent List when inconsistencies arise. The judgment clarifies that state laws conflicting with central laws on the same subject matter are rendered void to the extent of the repugnancy, thereby ensuring uniformity and coherence in the legal framework governing such matters.

Hoechst Pharmaceuticals Ltd. v. State of Bihar, (1983) 4 SCC 45 Bench: Justice Y.V. Chandrachud (Chief Justice) Justice A.C. Gupta Justice A.P. Sen Justice E.S. Venkataramiah Justice R.S. Pathak Facts: Hoechst Pharmaceuticals Ltd., a multinational pharmaceutical company, challenged the validity of the Bihar Sales Tax Act, 1976, which imposed an additional tax on the sale of drugs and medicines in Bihar. The company argued that this additional tax conflicted with The Drugs (Prices Control) Order, 1970, issued by the Union Government under the Essential Commodities Act, 1955. The Order fixed the maximum sale price of drugs, and the company contended that the imposition of an additional sales tax by the Bihar government would increase the price beyond the limit fixed by the central law. The company filed a writ petition in the Patna High Court, claiming that the Bihar Sales Tax Act, 1976, was unconstitutional because: It encroached upon a subject reserved for Parliament under the Union List. It was repugnant to the Drugs (Prices Control) Order, 1970, and hence void under Article 254 of the Constitution (which deals with repugnancy between State and Union laws). The Patna High Court dismissed the petition, upholding the validity of the Bihar Sales Tax Act, 1976. Hoechst Pharmaceuticals then appealed to the Supreme Court of India. Issues: Whether the Bihar Sales Tax Act, 1976, which imposed an additional sales tax on drugs and medicines, was constitutionally valid. Whether the Bihar Sales Tax Act was repugnant to the Drugs (Prices Control) Order, 1970, issued by the Union Government, and thus void under Article 254 of the Constitution. Whether the State Legislature had the legislative competence to enact a sales tax law affecting the sale of drugs, which were already regulated by the Essential Commodities Act, 1955 (a Union law). Arguments: Petitioners (Hoechst Pharmaceuticals Ltd.): The Bihar Sales Tax Act, 1976, effectively increased the price of medicines, which was contrary to the Drugs (Prices Control) Order, 1970, a law enacted under the Essential Commodities Act, 1955. Since the price of drugs was already controlled by the Union Government, the State Legislature had no power to impose a tax that would affect those prices. Article 254(1) states that if there is an inconsistency between a State law and a Central law, the Central law prevails, and the State law becomes void. The State law was not reserved for the President’s assent, and thus, it should be declared unconstitutional due to repugnancy with the Central law. Respondents (State of Bihar): The State Legislature was empowered to impose a sales tax under Entry 54 of the State List (which deals with “Taxes on the sale or purchase of goods other than newspapers”). The Drugs (Prices Control) Order, 1970, only regulated the pricing of drugs but did not deal with sales tax, which was a separate matter. There was no repugnancy between the two laws because they operated in different legislative fields—the Union law controlled prices, while the State law imposed a tax. Article 254(1) applies only when two laws are inconsistent with each other. In this case, the sales tax did not directly contradict the price control mechanism, and thus Article 254(1) did not apply. Ratio Decidendi (Legal Reasoning): Doctrine of Repugnancy: The Supreme Court held that Article 254 applies only when there is an actual conflict between a Union and a State law in the Concurrent List. Since sales tax falls under the State List, and price control falls under the Union List, there was no repugnancy. Legislative Competence of the State: The Bihar Legislature had full authority to impose a sales tax under Entry 54 of the State List. The fact that the tax indirectly affected drug prices did not make it unconstitutional. Separate Legislative Fields: The Court ruled that the Central Government’s power to control drug prices under the Essential Commodities Act, 1955, and the State Government’s power to impose sales tax were separate legislative fields. Effect of Taxation on Pricing: The mere fact that a State tax increased the price of a commodity did not make the tax unconstitutional unless the Central law explicitly prohibited the levy of such a tax. Observations: Doctrine of Pith and Substance: The Court reaffirmed that if a law is in pith and substance within a Legislature’s competence, it is valid even if it incidentally affects another subject. Here, the sales tax law was primarily a taxation law and only incidentally affected drug prices. Article 254 Does Not Apply to State List Laws: The Court clarified that Article 254 applies only when both the Central and State laws fall within the Concurrent List. Since the Bihar Sales Tax Act was enacted under the State List, Article 254 was not applicable. No Express Conflict: Since the Drugs (Prices Control) Order, 1970, did not explicitly prohibit the imposition of sales tax, there was no direct conflict, and both laws could coexist harmoniously. Decision: The Supreme Court upheld the validity of the Bihar Sales Tax Act, 1976, ruling that: The State Legislature was competent to enact the sales tax law. There was no repugnancy between the State and Central laws because they operated in different legislative fields. The Drugs (Prices Control) Order, 1970, did not prohibit the imposition of sales tax, so the Bihar law was not unconstitutional. The appeal was dismissed, and the Bihar Sales Tax Act remained valid and enforceable. Important Terms: Article 254 of the Constitution: Governs conflicts between State and Central laws in the Concurrent List, stating that Central law prevails in case of inconsistency. Entry 54 of the State List: Grants State Legislatures the power to levy sales tax on goods. Doctrine of Pith and Substance: A principle that determines the true nature of legislation to decide its validity, even if it incidentally affects another subject. Doctrine of Repugnancy: States that if two laws conflict, the Central law prevails and the State law becomes void under Article 254(1). Essential Commodities Act, 1955: A Union law that allows the government to regulate the supply, distribution, and pricing

Zaverbhai v. State of Bombay, AIR 1954 SC 752 Bench: Chief Justice Mehr Chand Mahajan Justice B.K. Mukherjea Justice Vivian Bose Justice N.H. Bhagwati Justice T.L. Venkatarama Aiyar Facts: The Essential Supplies (Temporary Powers) Act, 1946, was enacted by the Union Legislature to control the distribution of essential commodities. The Bombay Legislature later passed the Bombay Essential Supplies Act, 1947, which included stricter punishments for hoarding and black marketing. The petitioner, Zaverbhai, was convicted under the Bombay Act and challenged its validity, arguing that: The Union law (Essential Supplies Act, 1946) occupied the entire field of essential commodity regulation. The Bombay Act, 1947, being a State law, was repugnant to the Union law under Article 254(1) of the Constitution. Issues: Whether the Bombay Essential Supplies Act, 1947, was repugnant to the Union Essential Supplies Act, 1946. Whether the Bombay Legislature had the competence to enact a law in the same field occupied by a Union law. Arguments: Petitioner (Zaverbhai): The Bombay Act created harsher penalties than the Union Act, leading to repugnancy under Article 254(1). Since the Union had legislated on essential supplies, the Bombay Legislature had no competence to enact a conflicting law. Respondent (State of Bombay): The State had the power to impose stricter penalties as a matter of public interest. The Bombay Act did not directly contradict the Union Act but merely supplemented it. Ratio Decidendi: Doctrine of Repugnancy (Article 254(1)): The Supreme Court held that if there is an inconsistency between a Union and a State law on a Concurrent List subject, the Union law prevails. Since the Union Act already occupied the field of essential supplies, the Bombay Act was repugnant. Stricter State Penalties Invalid: Even though the Bombay Legislature tried to increase penalties, it could not do so without Presidential assent as required under Article 254(2). Supremacy of Union Law in Concurrent List Matters: The judgment reinforced that once Parliament enacts a law on a Concurrent List subject, States cannot override it unless expressly authorized. Observations: The case reaffirmed the principle that State laws cannot conflict with Union laws on Concurrent List subjects. The ruling clarified that harsher punishments imposed by a State law could still create repugnancy under Article 254(1). The Court emphasized that Article 254(2) provides a remedy—Presidential assent—for State laws seeking to override a Union law. Decision: The Supreme Court struck down the Bombay Act, holding it repugnant to the Essential Supplies Act, 1946 under Article 254(1). Important Terms: Article 254(1) (Doctrine of Repugnancy): When a State law conflicts with a Union law on a Concurrent List subject, the Union law prevails. Article 254(2) (Presidential Assent): Allows a State law to override a Union law on the same Concurrent List subject, but only with Presidential approval. Occupied Field Doctrine: If Parliament has legislated comprehensively on a subject, States cannot legislate further unless specifically allowed.