Category: Financial Federalism

ISSUE:

Is the application of an entrance tax on goods imported from outside the local area constitutes a violation of Article 301 of the Constitution of India?

Whether the power to tax infringes upon the sovereignty of States and affects the federal structure of governance?

RULE:

The court applied principles regarding freedom of trade, commerce, and intercourse as enshrined in Article 301, emphasizing that such freedom is subject to reasonable restrictions in public interest as outlined in Articles 302 and 304.

The court examined the nature of taxes, distinguishing between those that directly impede trade versus those that are compensatory or regulatory in nature.

The compensatory tax theory was scrutinized, with the court concluding that it is difficult to apply in practice, especially when determining if taxes collected are used for the intended public services.

ISSUE:

Whether the imposition of Entry Tax by the State of Haryana on goods imported into a local area violates Article 301 and 304 of the Constitution of India?

RULE:

Entry tax must not impede the free flow of trade and commerce guaranteed under Article 301.

The tax imposed must have a reasonable nexus with the services provided by the state.

It should not result in double taxation or undue burden on trade.

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.

ISSUE:

Whether undertrial prisoners (UTPs) languishing in jails for periods exceeding half of the maximum sentence for their alleged offense have an automatic right to bail.

Whether Section 436A of the Code of Criminal Procedure should be implemented to address the issue of undertrials in Indian prisons?

RULE:

Principle of Fair Trial: The court emphasized the necessity of ensuring that all individuals, particularly under-trial prisoners, are afforded a fair trial. By facilitating timely hearings and reviews of detention, the court sought to uphold the rights of these individuals and prevent indefinite detention without trial.

Right to Liberty: The court recognised the right to liberty as a fundamental right. By mandating the release of under-trial prisoners who have completed the stipulated period of detention, the court aimed to prevent unjust and prolonged incarceration, particularly for individuals who may have already served a significant portion of their potential sentence.

Legislative Intent: The court interpreted the legislative provisions concerning under-trial detention, particularly emphasizing the need for effective implementation of laws designed to protect the rights of such prisoners. The court acted on the intent of the law to avoid excessive detention and to ensure that the rights of under-trial prisoners are respected.