The state tax does not violate Article 301: SC
The Supreme Court has ruled that the levy of a tax on carriage of goods by road by the Himachal Pradesh government was not violative of the constitutional provision (Article 301) of free trade and commerce between states.
It set aside the high court judgment which held that the levy was unconstitutional and restored the state Taxation (On Certain Goods Carried by Road) Act 1991.
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The state government argued that the roads and brid-ges were the lifeline of a hilly state like Himachal Pradesh. Every year the government had to devote sizeable chunk of its budget exclusively to the construction, repair and upkeep of the roads and bridges. Therefore, it had to impose the tax on the goods carried through the roads.
The transporters argued that the government had failed to prove that the levy was compensatory or regulatory and the assent of the President was not obtained for the law.
The high court had stated that the levy was not compensatory because it sought to recover only part of the expenses incurred in the construction and maintenance of the roads and bridges.
The Supreme Court jud-ges, Justice MB Shah and Justice Arun Kumar, disagreed with this view.
They said: