ISSUE:
Whether the Assam Taxation (on Goods Carried by Roads or Inland Waterways) Act, 1954 (the Act) infringes the provisions of Part XIII of the Constitution, particularly Article 301?
Whether it could be safeguarded by bringing it under the purview of Article 304 (b)?
RULE:
Doctrine of Freedom of Trade: The principle asserts that trade, commerce, and intercourse should be free across states without undue restrictions. The court analyzed whether the tax imposed by the Assam Act constituted an impediment to this freedom, as it affected the transportation of tea out of Assam.
Ultra Vires Doctrine: This principle was invoked to argue that the Assam Act exceeded the legislative powers conferred upon the state. The court assessed whether the Act conflicted with existing central laws governing tea production and distribution, thereby rendering it invalid.
Discriminatory Taxation: The court needed to determine if the tax unfairly favored local producers over those from other regions, thus constituting a violation of equitable treatment under law.
Public Interest Justification: The principle that taxation should serve public purposes was central to evaluating the legitimacy of the tax. The court considered if the tax could be justified as necessary for public welfare or if it primarily hindered free trade.
An Act is illegal if it violates the freedoms guaranteed by the Indian Constitution, such as the Assam (On the Goods Transported by Roads or Waterways) Tax Act, 1954.