Holding

Section 178 does not violate Article 301 and, even if it did, is saved by Article 302, so the terminal tax is constitutionally valid.

Summary

Amrit Banaspati Co. Ltd., a vanaspati manufacturer in Uttar Pradesh, transports its products into Delhi where the Delhi Municipal Corporation Act, 1957 imposes a terminal tax under Section 178 on all goods brought from outside the Union Territory. The company challenged the tax as a direct and immediate restriction on inter‑state trade violating Article 301 of the Constitution and as discriminatory against goods manufactured outside Delhi. The High Court dismissed the writ petition and the company appealed to the Supreme Court. The Court held that the pleadings were not specific enough to show a violation of Article 301 and that, even if the tax impeded trade, it is saved by Article 302 as a restriction in the public interest. Consequently, the tax was upheld and the appeal dismissed.

Issues considered

Whether Section 178 of the Delhi Municipal Corporation Act, 1957 directly and immediately impedes inter‑state movement of goods, thereby violating Article 301 of the Constitution.
Whether the classification under Section 178 is discriminatory between goods manufactured inside and outside Delhi.
If a violation of Article 301 is found, whether the restriction is saved by Article 302 as a measure in the public interest.

Legislation cited

Constitution of Indias. Article 301, s. Article 302
Delhi Municipal Corporation Act, 1957s. 178

Subjects

Constitutional lawArticle 301Article 302Freedom of tradeDiscriminationTax lawTerminal taxDelhi Municipal Corporation ActPublic interestBurden of proof

Judgment

AMRIT BANASPATI CO. LTD. A
v.
UNION OF INDIA AND ORS.

FEBRUARY 10, 1995

[J.S. VERMA, C.J. AND K.S. PARIPOORNAN, J.] B

Constitution of India, 1950 :
)(

Delhi Municipal Corporation Act, 1957-Section 178-Tenninal
Tax-Imposition on-Goods brought into Union Territory from outside- C
Held: neither violative of Article 301 nor was discriminatory and even if it
did, it was saved by Article 302 of the Constitution.

The appellant company carried on the business of manufacturing of
and dealing in Vanaspati and its products. The products were carried by
rail and/or by road into the Union Territory. The respondent realised D
terminal tax from the appellant OD Vanaspati products carried by railway
and/or road into the Union Territory. The appellant filed a writ petition
before the High Court challenging the said realisation of terminal tax
which was dismissed. Aggrieved by the judgment of the High Court, the
appellant preferred the present appeal. E
On behalf of the appellant it was contended that Section 178 of the
Delhi Municipal Corporation Act, 1957 discriminated between goods
manufactured within the Union Territory and the goods manufactured
outside the said territory; that the goods manufactured outside the ter-
ritory alone. were liable to terminal tax under the Act; that this was an F
impediment on the movement of goods from the State into the Union
Territory; and that Section 178 of the Act violated Article 301 of the
Constitution of India.

On behalf of the respondent it was contended that the appellant was G
not placed in a position of great disadvantage as compared to other
manufacturers of Vanaspati in the Union Territory· as there were no
proper pleadings and proof or particulars on that sco~ and that Section
178 of the .Act was saved by Article 302 of the Constitution. of India.

Dismissi~ the appeal, this Court H
25
J •
I

26 SUPREME COURT REPORTS (1995) 2 S.C.R. .

A HELD : 1. It is settled law that the allegations regarding the violation
of constitutional povision should be specific, clear and unambiguous and
should give relevant particulars, and the burden is on the person who
impeaches the law as violative of constitutional guarantee to show that the
particular provision is infirm for all or any of the reasons stated by him.
(31-G]
B
Gauri Shankar and Ors. v. Union of India & Ors. etc., (1994) 6 SCC
349, referred to.

2. The entire pleadings were scanned in this case. There is no
sufficient or specific or definite pleadings with particulars, to state that
C Section 178 of the Delhi Municipal Corporation Act violates Art 301 of the
Constitution or is discriminatory. Moreover, on facts the presumptions
which are applicable in the instant case have not been rebutted. (32-D]

V.S. Rice and Oil Mills v. State ofAndhra Pradesh etc., AIR (1964) SC
D 1781 and R.K Garg v. Union of India and Ors., AIR (1981) SC 2138,
followed.

G.K Krishnan etc. v. State of Tamil Nadu and anr. etc., AIR (1975)
SC 583, referred to.

E 2.1. Proceeding on the basis that Section 178 of the Delhi Municipal
Corporation Act, 1957 directly and immediately impedes the movement of
the goods (Vanaspati) from the State into the Union Territory it is clear
that the statutory provision aforesaid is saved by Article 302 of the
Constitution of India. It is true that a tax may in certain cases, directly )-
and immediately impede the movement or now of trade, but the imposition
F of a tax does not do so in every case. It depends upon the context and
circumstances. (33-B]

State of Madras v. N.K Nataraja Mudaliar, AIR (1969) SC 147,
followed.

G 2.2. In the instant case the impugned tax law is enacted by Parlia-
ment. There is a presumption that the imposition of the tax is in public
interest. That has not been offset by any contra material. In the cir-
cumstances imposition of terminal tax only on goods manufactured out-
side the Union Territory is neither discriminatory nor violative of Ar'lide
H 302 of the Constitution of India. (33-D]
AMRITBANASPATI CO. LTD. v. U.0.1. [PARIPOORNAN,J.] 27

R.R. Garg v. Union of India and Ors., AIR (1981) SC 2138, followed. · A

G.K Krishnan v. State of Tamil Nadu, AIR (1975) SC 583, referred
to.

3. It is only when the intra-state or inter-state movement of the
persons or goods are impeded directly and immediately as distinct from B
creating some indirect or inconsequential impediment, by any legislative
or executive action, infringement of the freedom envisaged by Article 301
can arise. Without anything more, a tax law, per se, may not impair the
said freedom. At the same time, it should be stated that a. fiscal measure
is not outside the purview of Article 301 of the Constitution. (32-F-G]
c
Atiabari Tea Co. Ltd. v. The State of Assam and Anr., AIR (1961) SC
232; Automobile Transport Ltd. etc. v. State of Rajasthan and Ors., AIR
(1962) SC 1406; Andhra Sugars Ltd. and Anr. v. State of Andhra Pradesh
and Ors., AIR (1968) SC 599; State of Madras v. N.K Nataraja Mudaliar,
AIR (1969) SC 147 and Mis Video Electronics Pvt. Ltd. v. State of Punjab D
and anr., AIR (1990) SC 820, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 448 of
1973.

From the Judgment and Order dated 15.9.72 of the Delhi High Court E
in C.W.P. No. 144 of 1972.

S. Ganesh, Ms. Poonam Madan and U .K. Khaitan for the Appellant.

N.N. Goswam~ P. Parmeshwaran and Hemant Sharma for the
Respondents. . F
R.K. Maheshwari and Vineet Maheshwari for the M.C.D.

The Judgment of the Court was delivered by

PARIPOORNAN, J. The appellant, petitioner in Civil Writ Petition
No. 144of1972, High Court of Delhi, has filed this appeal, on a certificate G
granted by the High Court under Article 133(1) (a), (b) & (c) of the
Constitution of India, against the Judgment of the High Court dated
15.9.1972. The appellant - company has its registered office at Ghaziabad
fu. the State of Uttar Pradesh. It carries on the business of manufacturing.
and dealing in Vanaspati and its products. It has a factory at Ghaziabad. H
/
28 SUPREME COURT REPORTS [1995) 2 S.C.R.

A The products are carried on by railway and/or by roa.d into the Union
Territory of Delhi. The Delhi MW:ricipal Corporation Act, 1957 (Act 66 of
1957), hereinafter referred to as 'the Act', was enacted by Parliament and
it came into force on 28.10.1957. Section 178 of the said Act provides for
the levy of terminal tax at the rates specified in the Tenth Schedule to the
Act on all goods carried by. railway or road into the Union Territory of
B Delhi from any place outside Delhi. Under the said provision, the Delhi
terminal tax agency realised a swn of Rs. 2,95,396.01 for the years 1969,
1970 & 1971 as terminal tax from the petitioner on vanaspati products 'f,,
carried by railway and/or road into the Union Territory of Delhi. Alleging
that section 178 of the Act directly and immediately impedes the movement
C of goods from one place to another, restricts trade, commerce and inter-
course and also discriminates between goods manufactured within the
Union Territory of Delhi and the goods manufactured outside the said
. r.
territory, the appellant - company prayed for a declaration that section 178
of the Act is ultravires and is violative of Article 301 of the Constitution. of
D India, and for the issuance of a writ of prohibition or direction directing
the respondents to forebear from realising any terminal tax from the
petitioner, and for a refund of the aforesaid sum of Rs. 2,95,396.01 realised
by the respondents as terminal tax from the petitioner. The petitioner
stated that the terminal tax chargeable under Section 178 was not referable
to any service rendered or to be rendered by any railway or road transport
E and was not protected by Articles 302, 303 and 304 of the Constitution of
India. It is alleged that the petitioner wrote letters on 18.11.1971 and
20.12.1971, requesting the respondents the Union of India and others, to
refrain from levying and/or collecting any terminal tax under Section 178.
Since. there was no response, the appellant was constrained to file the writ
F petition and seek appropriate reliefs. \

2. A Division Bench of the Delhi High Court by Judgment dated
15.9.1972, held that the levy of tax under section 178 of the Act is a direct
and immediate restriction on trade and offends Article 301 of the Constitu-
tion of India. It forther held that the levy is neither regulatory nor com-
G pensatory. The Division Bench also held that the said provision is saved by
Article 302 of the Constitution of India. Though the scope of Articles 303
.and 305 was also discussed, the Court did not consider it necessary to
express any fuial view on the various pleasnised in that behalf. The Court
held that though section l78 of the Act c&ntiavened Article 301, it is ~aved
H; by Article 302 an~ the writ petition was dismissed. It is from the aforesaid
AMRITBANASPATICO.LTD.v. U.O.I.[PARIPOORNAN,J.) 29

Judgment dated 15.9.1972, the petitioner has filed this Civil Appeal by A
certificate granted by the High Court.

3. We heard counsel for the appellant Sri S. Genesh and also counsel
for the respondents Sri N.N. Goswami. Counsel for the appellant referred
to the averments in paragraphs 3 and 7 of the writ petition and the reply
thereto by the respondents in paragraph 8 of its counter, and contended B
that Section 178 of the Act discriminates between goods manufactured
within the Union Territory of Delhi and the goods manufactured outside
the said territory. The goods manufactured outside the said territory alone
has to pay the terminal tax under the Act. This, according to counsel for
)( the appellant, is an impediment on the movement of goods from the State C
of Haryana into the Union Territory of Delhi and discrimination is writ
lar.ge in the aforesaid provision. On the other hand, counsel for the
respondent vehemently contended that apart from a vague and general plea
y that the appellant i~ placed in a position of great disadvantage as compared
to other manufacturers of vanaspati in Delhi, there is no proper pleadings
and proof or particulars on the score. It was also submitted that even on D
the hypothesis that section 178 of the Act contravenes Articles 301 of the
Constitution, it is saved. by Article 302 and there is no infirmity as alleged.

4. It is only appropriate to quote Section 178 of the Act which is as
follows: E
"178. Terminal tax on goods carried by railway or road. (1) On and
from the date of the establishment of the Corporation under
section 3, there shall be levied on all goods carried by railway or
road into the Union Territory of Delhi from any place outside
thereof, a terminal tax at the rates specified in the Tenth Schedule. F
(2) The Central Government may, by notification in the Official
Gazette, vary from time to time, the rates specified in that
Schedule, in relation to any goods or classes of goods so, however,
that where the rates are increased, the increased rate shall not be G
. more than treble the rates so specified.

(3) The Central Government may by like notification declare that
with effect from such date as may be specified in the notification,
the terminal tax levied in refation to any goods or class of goods
shall, for reasons specified in the notifiaction, ceas~ to be levied." H
30 SUPREME COURT REPORTS [1995) 2 S.C.R.

A The said legislation is one enacted by Parliament. Articles 301 and 302 of
the Constitution of India may also be quoted :

"301. Subject to the other provision~ of this part, trade, commerce
and intercourse throughout the territory of India shall be free."

B "302. Parliament may by law impose such restrictions on the
freedom of trade, commerce or intercourse between one State and
another or within any part of the territory of India as may be
required in the public interest."

5. We may usefully refer to some basic principles to be borne in mind
C before evaluating the plea that section 178 of the Act violates Article 301
of the Constitution of India and is also discriminatory. A Constitution
Bench of this Court in V.S. Rice and Oil Mills and others v. State of Andhra
Pradesh etc., AIR (1964) SC 1781, at p. 1788 stated thus :

"This Court has repeatedly pointed out that when a citizen wants
D
to challenge the validity of any statute on the ground that it
contravenes Art. 14, specific, clear and unambiguous allegations
must be made in that behalf and it must be shown that the impugned
statute is based on discrimination and that such discrimination is
not referable to any classification which is rational and which has
E nexus with the object intended to be achieved by the said statute."

Again in G.K. Krishnan etc. v. State of Tamil Nadu Qnd anr. etc., AIR.
(1975) SC 583, at p. 592 in paragraph 36, this Court observed:

".....A person who challenges a classification as unreasonable has
F the burden of proving it. There is always a presumption that a
classification is· valid, especially in a taxing statute. The ancient
proposition that a person who challenges the reasonableness of a
classification, and therfore, the constitutionality of the law making
the classification, has to prove it by relevant materials, has been
G reiterated by this Court recently."

Still later a Constitution Bench of this Court in R.K Garg v. Union
of India and Ors., AIR (1981) SC 2138, at pp. 2146 & 2147, in paragraph
7 & 8, stated the law as follows :

H "Now while considering the constitutional validity of a statute said
AMRITBANASPATICO.LID.v. U.0.1.[PARIPOORNAN,J.] 31

to be violative of Article 14; it is necessary to bear in mirid certain A
well established principles which have been evolved by the Courts
as rules of guidance in discharge of its constitutional function of
judicial review. The first rule is that there is always a presumption
in favour of the constitutionality of a statute and the burden is upon
him who attacks it to show that there has been a clear transgression
B
of the constitutional principles. This rule is based on the assump-
tion, judicially recognised and accepted, that the legislature under-
stands and correctly appreciates the needs of its own people, its
laws are directed to problems mades manifest by experience and
its discrimination are based on adequate grounds. The presump-
tion of constitutionality is indeed so strong that in order to sustain C
it, the Court may take into consideration matters of common
knowledge, matters of common report, the history of the times and
may assume every state of facts which can be conceived existing
-y
at the time of legislation."

"Another rule of equal importance is that laws relating to economic
D
activities should be viewed with greater latitude than laws touching
civil rights such as freedom of speech, religion etc. It has been said
by no less a person than Holmes, J ., that the legislature should be
allowed some play in the joints, because it has to deal with complex
problems which do not admit of solution through any doctrinaire E
or straight jacket formula and this is particularly true in case of
legislation dealing with economic matters, where, having regard to
the nature of the problems required to be dealt with, greater play
in the joints has to be allowed to the legislature. The Court should
feel more inclined to give judicial deference to legislative judgment p
in the field of economic regulation that in other areas where
fundamental human rights are involved....... "

6. It is settled law that the allegations regarding the violation of
constitutional provision should be specific, clear and unambiguous and G
should give relevant particulars, and the burden is on the person who
impeaches the law as. violative of constitutional guarantee to show that the
particular provision is infirm for all or any of the reasons stated by him. In
y
the recent decision of this Court Gauri Shankar and ors. v. Union of India
and Ors. etc., [1994) 6 SCC 349, to which both of us were parties, it was
reiterated that - · H
'
~l
/
32 SUPREME COURT REPORTS [1995] 2 S.C.R.

A (a} there is always a presumption in favour of the constitutionality
of an enactment and the burden is upon him who attacks it to
show that there has been fl clear transgression of the constitu-
tional principles;

(b) it must be presumed that the Legislature understands and cor-
B rectly appreciates the need of its own people, that its laws are
directed to problems made manifest by experience and that its
discriminations are based on adequate grounds;

(c) in order to sustain the pr~sumption of constitutionality the Court
may take into consideration matters of common knowledge,
c matters of common report, the history of the times and may
assume every state of facts which can be conceived existing at
the time of legislation.

7. We scanned the entire pleadings in this case. Tested in the light
D of the above principles, we are of opinion that there .is no sufficient or
specific or definite pleadings with particulars, to state that section 178 of
the Act violates Art. 301 of the Constitution or is discriminatory. Moreover,
on facts, the presumptions which are applicable in the instant case as stated
above, have not been rebutted. On this short ground, the writ petition filed
E in the High Court by the appellant should fail.

8. The scope and content of Article 301 of the Constitution of India
bas been laid .down in innumerable decisions of this Court beginning from
. Atiabari Tea Co. Ltd. v. The State of Assam & A.nr., AIR (1961) SC 232 =
· . [1961) 1 SCR 809. Suffice it to say that it is only when the intra-State or
p inter·State movement of the persons or goods are impeded directly and
immediately as distinct from creating some indirect or inconsequential
impediment, by any legislative or executive action, infringement .of the
freedom envisaged by Article 301 can arise. Without anything more, a tax
law, per .se, may not impair the said freedom. At the same time, it should
be stated that a fiscal measure is not outside the purview of Article 301 of
G the Constitution. It is unnecessary to refer to all the decisions on the point. ....')-.-
We shall only refer to a few important decisions of this Court on this aspect
- Automobile Transport Ltd. etc. v. State of Rajasthan & Ors., AIR (1962)
SC 1406; Andhra Sugars Ltd. & A.nr. v. State of Andhra Pradesh and Ors.,
AIR (1968) SC 599 and State of Madras v. N.K. Nataraja Mudaliar, AIR.
H (1969) SC- 147 and a recent decision which has surveyed the entire Case ·
r.._
\

AMRIT BANASPATI CO. LID. v. U.0.1. [PARIPOORNAN, J.) 33

law on the subject - M/s. Video Electronics Pvt. Ltd. v. State of Punjab cl A
Anr., AIR (1990) SC 820.

9. Even proceeding on the basis that section 178 of the Act directly
and immediately impedes the movement of the goods (vanaspati) from the
State of Haryana into the Union Territory of Delhi, we are of the view that
the statutory provision aforesaid is saved by Article 302 of the Constitution B
of India. It is true that a tax may in certain cases, directly and immediately
impede the movement or flow of trade, but the imposition of a t~ does
not do so in every case. It depends upon the context and circumstances.
Shah, J., on behalf of the Constitution Bench, in the State of Madras v. N.K
Nataraja Mudaliar, AIR (1969) SC 147, at p.155, stated thus: C
"There is also no doubt that exercise of the power to tax may
normally be preswned to be in the public interest."
--r- In this ease the impugned tax law is enacted by Parliament. There is
a presumption that the imposition of the tax is in public interest. That has D
not been offset by any contra material. So viewed, section 178 of the Act
is saved by Art. 302 of the Constitution otlndia. It was so held by the High
Court and we concur with the said View. In this connection it is only
appropriate to quote what Mathew, J. Qbserved on behalf of the bench in
G.K Krishniln v. State of Tamil Nadu, AIR (1975) SC 583, in paragraph E
39:

"39. Judicial deference to legislature in instances of economic
regulation is sometimes explained by the argument that rationality
of a classification may depend upon 1ocal conditions' about which
local legislative or administrative body would be better informed p
than a court. CofiS:Cquently, lacking the capacity to infonn itself
fully about the peculiarities of a p~ticular local situation, a court
should hesitate to dub the legislative classification i"ational (see
Cannichael v. Southern Coal & Coak Co., [1936] 301 US 495) Tax
Laws, for example, may respond closely to local needs and court's
familiarity with these .needs is likely to be limited. Therefore, the G
Court must be aware of its own remoteness and lack of familiarity
with the local problems. Classification is dependent on peculiar
needs and specific difficulties of the community. The needs and
the difficulties of a community are constituted out of facts and
information beyond the easy ken of the court." ff
~1
/
34 SUPREME COURT REPORTS (1995] 2 s:c.R.

A The above perspective has been restated by the· Constitution Bench
in R.K Garg v. C!nio11. of India and Ors., AIR (1981) SC 2138, at page 2147,
paragraph 8, which we have adverted to, the earlier portion of this Judg-
ment.

10. There is no merit in this appeal. It is dismissed. There shall be
B no order as to costs.
'
v.s.s. Appeal dismissed.