ISSUE:
Whether the imposition of a nondiscriminatory tax constitute a violation of Article 301 of the Indian Constitution?
Whether a tax of a compensating character possibly violate Article 301 of the Indian Constitution?
RULE:
Compensatory Tax Doctrine: The court applied the principle that taxes can be considered compensatory if they provide services or conveniences that facilitate trade, as established in prior rulings. The essence of a compensatory tax is that it should be commensurate with the cost of the facilities provided to traders.
Restrictions on Trade: The court reiterated that while taxes can impose restrictions on trade under Article 301, such restrictions are permissible if they comply with the provisions of Article 304, particularly regarding compensatory taxes.