R.R. Yadav, J.

1. The petitioners, by filing the present writ petition, assail the constitutional validity of the Rajasthan Tax on Entry of Goods into Local Areas Act, 1999 (hereinafter referred as "Act No. 13 of 1999" See [2000] 120 STC Statutes 1), together with notification dated October 15, 1999 and circular dated October 23, 1999, on the ground, inter alia, that tax levied under the aforesaid Act No. 13 of 1999 ; notification dated October 15, 1999 and circular dated October 23, 1999 impose restrictions on the freedom of trade, commerce and intercourse, guaranteed by Article 401 of the Constitution of India and that as Act No. 13 of 1999 is not law passed after obtaining the previous sanction and thereafter assent of the President of India, within the meaning of Article 404(b), read with Article 255 of the Constitution, hence, tax levied upon them is invalid. It is prayed that it may be declared that the petitioner No. 1 is not required to take dealership licence and also not required to pay any entry tax on the import of cigarettes, within the local area of the State of Rajasthan.

2. We consider it expedient to narrate in brief the material facts, which have given rise to filing of the present petition, before itemising the contentious posers springing from the competing submissions advanced by the learned counsel for the parties.

3. It is averred in the writ petition that the petitioner No. 1 is a company registered under the provisions of the Companies Act, 1956, having its registered office at Chakla, Andheri East, Mumbai, carrying on business, Inter alia, of manufacture, distribution and sale of cigarettes. The said petitioner has several branches, offices all over India, stocking points in the State of Rajasthan, including Jaipur and wholesale dealers in the State of Rajasthan to whom the said petitioner, from time to time, sends consignments of cigarettes for delivery, distribution in the State of Rajasthan and also to other adjoining States. The said consignments are despatched by way of stock transfer from the companys stocking points/clearing and forwarding agents and sometime also, by way of inter-State sale. It is averred that the petitioner No. 2 is a shareholder in the petitioner No. 1 and thus possesses a substantial interest in the affairs of the petitioner No. 1.

4. It is averred that in exercise of powers conferred under Section 3 of Act No. 13 of 1999, the State Government has issued notification dated October 15, 1999, annexure 2 to the writ petition, whereby, it has notified the rates of tax on lottery tickets, foreign liquor, opium (other than lanced poppy head), sugar, tobacco and all kinds of textiles. Although, under the aforesaid notification, annexure 2 to the writ petition, tax has been levied on tobacco only and not on its products, which is explicit from reading of the language of the notification itself, yet, the Commissioner of Commercial Taxes, Rajasthan, Jaipur, has issued a circular on October 23, 1999, annexure 3 to the writ petition, whereby, it is clarified that tobacco mentioned in the notification referred to above shall mean all types of tobacco and its products, namely, tobacco, cigar, cigarettes, bidi, chewing tobacco, cigarillos and tobacco used in hukka, chilam, zarda, soti, kheni, kimam, naswar, etc.

5. In pith and substance, it is averred in the present writ petition by the petitioners that levy of tax on cigarettes under Act 13 of 1999 has direct and close nexus with manufacture and production of cigarettes and, it is thus a colourable piece of legislation, attracting infringement of freedom of trade and commerce, conferred under Article 401 and its enactment is not saved under Article 404(b) of the Constitution.

6. It is also averred in writ petition that the entire legislative history of tobacco taxation establishes that it has been over-taxed by the States, therefore, a scheme was arrived at between the Centre and the States, whereby, States surrendered their right to levy various taxes on tobacco, by whatever name called. It is borne out by reference to the report of the Taxation Enquiry Commission, which was appointed by the Ministry of Finance, Government of India, in April, 1953, under the Chairmanship of Dr. John Mathai, for the purposes of examining, inter alia, the incidence of suitability of the Central, State and local taxation, with a view to recommending modifications, which were required in systems of taxation. In pursuance of the above recommendations of the Commission, in the meeting of the National Development Council, held in December, 1956, it was agreed unanimously that sales tax levied in States, on mill-made textiles, tobacco, including manufactured tobacco and sugar, should be replaced by a surcharge on the Central excise duties on these articles with the income derived therefrom being distributed among the States on the basis of consumption. In implementation of the aforesaid agreement between the States and the Centre and the recommendations of the Second Finance Commission, the Additional Duties of Excise (Goods of Special Importance) Act, 1957, was enacted on December 24, 1957.

7. It is further averred in the writ petition by the petitioners that the tax imposed pursuant to entry No, 52 of List II of the Seventh Schedule to the Constitution, is popularly known as octroi. According to the averments made in the writ petition, an essential feature of octroi is that it is a tax on the entry of goods into a definite local area and the goods must enter for the purpose of consumption, use or sale therein. The entry tax referred to under the said entry No. 52 of State List of the Seventh Schedule is levied by a local authority, and the State Legislature cannot be allowed by enacting Act No. 13 of 1999 to empower State Government to arrogate the power to levy and collect the entry tax into the local areas.

8. The respondents have filed joint return of the instant petition. It is averred by the respondents, State of Rajasthan and the Commissioner of Commercial Taxes Department, Government of Rajasthan, Jaipur, that the averments made in the writ petition regarding challenge to the constitutional vires of Act No. 13 of 1999 ; the notification dated October 15, 1999 and the circular dated October 23, 1999, annexures 1, 2 and 3, are based on misconception of law and facts. It is denied in the reply filed by the respondents that the entry tax impedes free-flow of trade, commerce and intercourse. It is averred in the reply filed by them that there is no violation of Article 401 of the Constitution, as the levying of the entry tax in the present case, is compensatory in nature, therefore, no previous sanction or assent of the President, is required within the meaning of Article 404(b) of the Constitution. It is averred in the. return filed by the respondents that the Commissioner is empowered to issue such circulars under Section 45, read with Section 93 of the Rajasthan Sales Tax Act, 1994, as the provisions of Rajasthan Sales Tax Act, regarding procedure, are applicable to Act No. 13 of 1999. It is further averred that even if the circular of the Commissioner is ignored, the word "tobacco" will carry the same meaning, as is assigned to it under the provisions of the Rajasthan Sales Tax Act, and it will be for the assessing officer to determine the correct meaning of the word "tobacco" in the light of the material placed before him. In this regard, reference has been made to Section 4(2) of the Rajasthan Sales Tax Act, 1954, notification dated August 12, 1980 issued thereunder, Section 2(c) of Act 58 of 1957 and item No. 4 of the First Schedule to the Central Excises and Salt Act, 1944.

9. It is averred in the reply by the respondents that the power to levy entry tax is not taken away by any agreement between the State of Rajasthan and the Government of India. In any view of the matter, the agreement relates to the non-levy of sales tax and does not deal with levy of entry tax on tobacco. The respondents are not levying sales tax on tobacco, but had levied entry tax. It is denied that entry tax can be levied only by local authorities.

10. It is averred in the return filed by the respondents that in State of Rajasthan, levy of octroi has already been abolished which occasioned financial crunch, and compelled the State Legislature, to pass Act No. 13 of 1999, to compensate the loss suffered by State Government, authorising it under Section 3 of the said Act, to collect tax on entry of any goods brought into a local area, for consumption, use or sale therein.

11. It is averred in the reply filed by the respondents that the State Government has to provide substantial funds to the local authorities, to discharge their statutory obligations, therefore, levy of entry tax is clearly compensatory in nature. The flow of funds from the State Government to local bodies, in lieu of octroi, during 1998-99 (August, 1998 to March, 1999), was Rs. 194 crores and during 1999-2000 (April, 1999 to December, 1999) was Rs. 240 crores.

12. It is averred by the respondents that the rates, which have been fixed by State Government under the notification dated October 15, 1999, annexure 2 to the writ petition, are reasonable and these rates are well within the outer-limit of ten per cent of the value of the goods, fixed by State Legislature, under Act No. 13 of 1999.

13. The petitioners have filed rejoinder, denying the averments made in the reply filed by the respondents Nos. 1 and 2 and raised additional pleas to the effect that entire Rajasthan is not covered under local areas. It is averred in the rejoinder filed by the petitioners that the concept of compensatory tax presupposes service more or less commensurate with the tax levied.

14. We have heard the learned counsel for the parties, at length, and perused the materials available on record.

15. At the first instance, it is urged before us by the learned counsel for the petitioners that imposition of entry tax on entry of goods into local areas of the State of Rajasthan, for consumption, use or sale therein, pursuant to Act No. 13 of 1999, by the State Legislature, for augmenting revenue of State, cannot be justified under entry No. 52 of State List of Seventh Schedule to the Constitution of India. It is urged before us that under entry No. 52 of the State List of the Seventh Schedule to the Constitution, either in the name of octroi or entry tax can be levied, only by administrative bodies, like municipalities or panchayats, when goods enter into their local territories, although, enabling legislation can be enacted by the State Legislature. The State Legislature cannot arrogate its legislative power to authorise State Government, to levy and collect entry tax into the local areas, in the garb of entry No. 52 of the State List of the Seventh Schedule. It is urged before us by the learned counsel for the petitioners with emphasis that collection of entry tax by the State, for augmenting its revenue, creates an unreasonable restriction on the freedom of trade and business. This cannot be justified under entry No. 52 of the State List of the Seventh Schedule and, as such, the entire Act No. 13 of 1999 and the rules framed thereunder, are ultra vires to the mandatory provisions, enshrined under Articles 301 and 304 of the Constitution of India. In support of his aforesaid contention, the learned counsel for the petitioners, placed reliance on decisions rendered by the Supreme Court, in the cases of Atiabari Tea Co. Ltd. v. State of Assam reported in : AIR 1961 SC 232 , Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan reported in : AIR 1962 SC 1406 , Kalyani Stores v. State of Orissa reported in : AIR 1966 SC 1686 , G.K. Krishnan v. State of Tamil Nadu reported in : AIR 1975 SC 583 and Western Electronics v. State of Gujarat reported in [1988] 70 STC 52 ; AIR 1988 SC 2038.

16. The aforesaid contention, raised by the learned counsel for the petitioners, was opposed by the learned Advocate-General, with equal vehemence. It is urged before us by the learned Advocate-General that if the aforesaid argument of the learned counsel for the appellants, is accepted, then, entry No. 52 of the State List of the Seventh Schedule to the Constitution, would be rendered otiose, which is impermissible under the constitutional philosophy. It is submitted by the learned Advocate-General that Act No. 13 of 1999 is within the legislative competence of State Legislature. The tax levied on the entry of goods into local area, for consumption, use or sale therein, is compensatory and regulatory in nature. The apex Court, in the case of State of Bihar v. Bihar Chamber of Commerce reported in [1996] 103 STC 1 ; : (1996) 9 SCC 136 after placing reliance on the decision, rendered by a Constitutional Bench of the apex Court, constituted by the then honourable seven Judges of the Supreme Court, in the case of Automobile Transport (Rajasthan) Ltd. : AIR 1962 SC 1406 , has upheld the validity of the entry tax imposed by State Government of Bihar, holding that entry tax, enacted by State Legislature of Bihar is within its legislative power of entry No. 52, which provides taxes on entry of goods into local area for consumption, use or sale therein neither offends Article 401 nor Article 404(b) of the Constitution.

17. We consider it profitable to notice the salient features of Act No. 13 of 1999, before discussing the aforesaid rival contentions raised at the Bar, whether the said enactment passed by State Legislature offends Article 401 and Article 404(b) of the Constitution, or it is compensatory and regulatory in nature, therefore it does not infringe the constitutional guarantee enshrined under Part XIII of the Constitution, relating to freedom of trade, commerce and intercourse, within the territory of India.

18. The preamble and title of Act No. 13 of 1999 demonstrate purpose, for which the Act is enacted. The said Act provides for the levy and collection on entry of goods into local areas of the State of Rajasthan, for consumption, use or sale therein and matters incidental thereto. Section 2 of Act No. 13 of 1999, provides definitions of certain expressions used in the Act, unless the context otherwise requires. Section 2(c) defines "business"; Section 2(e) defines "dealer" ; Section 2(f) defines "goods" ; Section 2(h) defines "import", whereas Section 2(j) defines "local area", which means the area within the limits of a panchayat, established under the Rajasthan Panchayati Raj Act, 1994 or a municipality established under the Rajasthan Municipalities Act, 1959 or a notified area committee or a cantonment board, constituted or established under any law for the time being in force. Sub-section (2) of Section 2 provides that words and expressions used but not defined in the Act shall have the meanings assigned to them under the Rajasthan Sales Tax Act, 1994. Section 3 is charging section, which provides that there shall be levied, collected and paid to the State Government a tax on entry of any goods brought into a local area, for consumption, use or sale therein, with effect from such date and at such rates, not exceeding ten per cent of the value of the goods, as may be specified by the State Government, by notification in the official gazette. Section 3 further provides that different dates and different rates may be specified in respect of different goods or different classes of goods or different local areas. Section 4 of the Act envisages incidence of tax, whereas, Section 5 creates bar against collection of tax, when not payable ; Section 7 deals with payment and disbursement of amounts wrongly collected by dealer as tax, whereas, Section 8 provides grant of set off ; Section 9 provides exemption from tax ; Section 10 provides bar to certain proceedings ; Section 11 mandates registration of dealers ; and Section 12 provides detailed procedure for filing returns by every registered dealer and procedure for assessment by the assessing authority. Sections 23, 24, 25, 26 and 27 of Act No. 13 of 1999 provide for statutory appeals and revisions by any person, objecting to an order affecting him under the said Act. Thus, Act No. 13 of 1999 is a self-contained Act, empowering the State Government, under Section 43 of the said Act, to make rules by notification in Official Gazette, to carry out different purposes of the Act, whereas, Section 44 empowers the State Government, to remove difficulties, if any, arises in giving effect to the provisions of the aforesaid Act, by notification in the official gazette and make such provisions as appears to it to be necessary or expedient for removing the difficulty.

19. For complete and effective adjudication of the controversy raised by the learned counsel for the parties mentioned hereinabove, after referring to the features of Act No. 13 of 1999, we consider it appropriate to discuss the proposition of law propounded by honourable Supreme Court, on the subject.

20. The aforesaid question argued before us, came up for consideration before a constitutional Bench of Supreme Court, in the year 1961, in the case of Atiabari Tea Co. Ltd. : AIR 1961 SC 232 , wherein, it is ruled that although, power of levying tax is essential for the very existence of the Government, its exercise must inevitably be controlled by the constitutional provisions made in that behalf. It cannot be said that the power of taxation per se is outside the purview of any constitutional limitations, envisaged in Part XIII to the Constitution. It is held in the case of Atiabari Tea Co. Ltd. : AIR 1961 SC 232 , that power of Parliament and Legislature of States, to make laws including laws imposing taxes, is subject to the provisions of the Constitution and that must bring in the application of the provisions of Part XIII. In case of Atiabari Tea Co. Ltd. : AIR 1961 SC 232 , it was ruled by majority view that Article 401, read with its proper context and subject to the limitations prescribed by the other relevant articles in Part XIII, must be regarded as imposing a constitutional limitation on the legislative power of Parliament and the Legislature of the States. Wherever it is held that Article 401 applies the legislative competence of the Legislature in question will have to be judged in the light of the relevant articles of Part XIII. In determining the limits of the width and amplitude of the freedom guaranteed by Article 401, a rational and workable test to apply would be : Does the impugned restriction operate directly or immediately on trade or its movement It is held in the case of Atiabari Tea Co. Ltd. : AIR 1961 SC 232 , that when it is said that the freedom of the movement of trade cannot be subject to any restrictions in the form of taxes imposed on the carriage of goods or their movement, all that is meant is that the said restrictions can be imposed by the State Legislatures only after satisfying the requirements of Article 404(b).

21. The intricate constitutional question canvassed at the Bar in the present case, before us, was raised before the Supreme Court, in the case of Automobile Transport (Rajasthan) Ltd. : AIR 1962 SC 1406 , wherein, the majority view of 4 to 3, after taking into account ratio of majority view rendered by the then honourable five Judges of Supreme Court in Constitutional Bench case of Atiabari Tea Co. Ltd. : AIR 1961 SC 232 , substantially agreed with the proposition of law propounded in the case of Atiabari Tea Co. Ltd. : AIR 1961 SC 232 , with the following clarification in paragraph 17 of the majority view judgment, which reads thus :

"We have, therefore, come to the conclusion that neither the widest interpretation nor the narrow interpretations canvassed before us are acceptable. The interpretation which was accepted by the majority in the Atiabari Tea Co. case : AIR 1961 SC 232 ,[1961] 1 SCR 809 , is correct but subject to this clarification. Regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by Article 401 and such measures need not comply with the requirements of the proviso to Article 404(b) of the Constitution."

22. The aforesaid decisions rendered by apex Court, in the cases of Atiabari Tea Co. Ltd. : AIR 1961 SC 232 and Automobile Transport (Rajasthan) Ltd. : AIR 1962 SC 1406 , came up for consideration before a Constitutional Bench of honourable five Judges of the Supreme Court, in the case of Khyerbari Tea Co. Ltd. v. State of Assam reported in : AIR 1964 SC 925 , wherein, the majority view ruled in paragraph 14, which reads thus :

"It would immediately be noticed that though the majority view in the Automobile Transport (Rajasthan) Ltd. case : AIR 1962 SC 1406 , [1963] 1 SCR 491 substantially agreed with the majority decision in the case of Atiabari Tea Co. : AIR 1961 SC 232 ,[1961] 1 SCR 809 there would be a clear difference between the said two views in relation to the scope and effect of the provisions of Article 404(b). According to the majority view in the case of Atiabari Tea Co. Ltd. : AIR 1961 SC 232 ,[1961] 1 SCR 809 if an Act is passed under Article 404(b) and its validity is impeached, then, the State may seek to justify the Act on the ground that the restrictions imposed by it are reasonable and in the public interest, and in doing so, it may for instance, rely on the fact that the taxes levied by the impugned Act are compensatory in character. On the other hand, according to the majority decision in the Automobile Transport (Rajasthan) Ltd. case : AIR 1962 SC 1406 ,[1963] 1 SCR 491 compensatory taxation would be outside Article 401 and cannot, therefore, fall under Article 404(b)..........."

23. The question argued before us came up for consideration before the Supreme Court, in the case of Kalyani Stores : AIR 1966 SC 1686 before a Constitutional Bench of Supreme Court, wherein, the majority view struck down a notification of 1961 imposing additional duty on existing law, on the ground that the notification infringed the guarantee of freedom under Article 401 of the Constitution of India and can be saved only if it fell within the exceptions contained in Articles 302, 303 and 304 of the Constitution. It was found by their Lordships of the Supreme Court, in the case of Kalyani Stores : AIR 1966 SC 1686 upon which, the learned counsel for the petitioners has given emphasis during the course of his arguments, ruled that as no foreign liquor was manufactured or produced in the State, power to legislate given by Article 404, was not available. The notification of March, 1961 was held not to affect the validity of earlier notification of 1937, which was held to remain operative in view of Article 405 to the Constitution of India. It is pertinent to observe that the decisions rendered in the cases of Atiabari Tea Co. Ltd. : AIR 1961 SC 232 and Automobile Transport (Rajasthan) Ltd. : AIR 1962 SC 1406 on the subject, were not brought to the notice of their Lordships, in the case of Kalyani Stores : AIR 1966 SC 1686 .

24. The aforesaid question for consideration before us, again came up for consideration in the case of State of Kerala v. A.B. Abdul Kadir reported in : AIR 1970 SC 1912 , wherein, the High Court of Kerala, placing reliance on the case of Kalyani Stores : AIR 1966 SC 1686 , struck down the Kerala Luxury Tax on Tobacco (Validation) Act (Act No. 9 of 1964), and in special appeal, their Lordships of the Supreme Court set aside the judgment of the Kerala High Court, dated October 3, 1966 and allowed the appeal, remanding the case to the Kerala High Court, to consider it afresh, whether the provisions of the Kerala Luxury Tax on Tobacco (Validation) Act (Act No. 9 of 1964) and the notification dated January 25, 1951 issued under the Cochin Tobacco Act, constitutes such restrictions or impedimenta as directly and immediately hamper free-flow of trade, commerce and intercourse and, therefore, fall within the prohibition imposed under Article 401 of the Constitution. It is held that unless the High Court first comes to the finding on the available material whether or not there is infringement of the guarantee under Article 401 of the Constitution, the further question as to whether statute is saved under Article 404(b), does not arise and the principle laid down by this Court, in the case of Kalyani Stores : AIR 1966 SC 1686 , cannot be invoked.

25. In the case of A.B. Abdul Kadir : AIR 1970 SC 1912 , their Lordships of the Supreme Court in paragraph 9, ruled that in the case of Kalyani Stores : AIR 1966 SC 1686 , the Supreme Court did not intend to lay down the proposition that imposition of duty or tax in every case would be tantamount per se to an infringement of Article 401. It is further observed by their Lordships of the Supreme Court, in the case of A.B. Abdul Kadir : AIR 1970 SC 1912 , that it is well-established by numerous authorities of this Court that only such restrictions or impediments which directly or immediately impede the free-flow of trade, commerce and intercourse fall within the prohibition imposed by Article 401. A tax may in certain cases, directly and immediately, restrict or hamper the flow of trade, but every imposition of tax does not do so, therefore, every case must be judged on its own facts and in its own setting of time and circumstances.

26. The question canvassed before us, came up for consideration, before the Supreme Court, in the case of G.K. Krishnan : AIR 1975 SC 583 , challenging the validity of the Madras Motor Vehicles Taxation Act (3 of 1931) imposing enhanced tax on contract carriages by G.O. Ms. No. 2044, dated January 20, 1971 the validity of which was challenged as colourable exercise of power alleging infringement of Article 401, freedom of trade and non-compliance of the provisions of Article 404(b) of the Constitution. Aggrieved against the aforesaid enactment of State Legislature and the Government order issued by State Government, some of the persons affected, filed writ petitions before the Supreme Court and some of them, who had already filed writ petitions before the Madras High Court, filed special appeals before the apex Court. After detailed discussion about the ratio dicidendi laid down in the case of Atiabari Tea Co. Ltd. : AIR 1961 SC 232 and the ratio dicidendi in the case of Automobile Transport (Rajasthan) Ltd. : AIR 1962 SC 1406 , the validity of the aforesaid enactment and the G.O. Ms. No. 2044 dated January 20, 1971, was upheld. The writ petitions and the special appeals filed by the aggrieved persons, were dismissed. We consider it appropriate to quote herein the decision rendered in the ease of G.K. Krishnan : AIR 1975 SC 583 , which reads thus :

"In view of the grave impact of this judgment, when appeals from Rajasthan High Court came up for consideration in Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan : AIR 1962 SC 1406 ,[1963] 1 SCR 491 (hereinafter referred to as the "Automobile case"), a larger Bench was constituted and that Bench considered the question once again. The appellants in that case impugned the Rajasthan Motor Vehicles Taxation Act, 1951, inter alia, as violating Article 401. The High Court dismissed the petitions and this Court, by a majority of 4 to 3 held that the Act was valid and dismissed the appeals. The case practically overruled the decision in Atiabari case [1961] 1 SCR 809 ; : AIR 1961 SC 232 , insofar as it held that if a State Legislature wanted to impose tax to raise moneys necessary in order to maintain roads, that could only be done after obtaining the sanction of the President as provided in Article 404(b). In Khyerbari Tea Co. Ltd. v. State of Assam : AIR 1964 SC 925 ,[1964] 5 SCR 975 it was said that the decision in Atiabari case : AIR 1961 SC 232 ,[1961] 1 SCR 809 was affirmed in Automobile case : AIR 1962 SC 1406 ,[1963] 1 SCR 491 with a clarification that regulatory measures or measures imposing compensatory tax do not come within the purview of restrictions contemplated in Article 401 and that such measures need not comply with the requirement of the provisions of Article 404(b). In whatever way one may choose to put it, the effect of the majority decision in the Automobile case : AIR 1962 SC 1406 ,[1963] 1 SCR 491 is that a compensatory tax is not a restriction upon the movement part of trade and commerce."

27. The aforesaid question came up for consideration before honourable Supreme Court, in the case of State of Karnataka v. Hansa Corporation reported in : AIR 1981 SC 463 , wherein, after surveying all the judgments on the subject, the constitutional validity of the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act (27 of 1979), pari materia to Act No. 13 of 1999 on hand, which was impeached before the Karnataka High Court, on the same ground as challenged and urged before us, was struck down by the High Court, but in appeal, the Supreme Court set aside the order passed by the Karnataka High Court and the writ petition filed by the respondent, in the Karnataka High Court, was dismissed with costs. The constitutional validity of Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act and the notification issued thereunder were upheld and the special appeal was allowed holding that it is compensatory in nature, therefore, its constitutional validity cannot be assailed either under Article 401 or for non-compliance of Article 404(b) of the Constitution of India.

28. The learned counsel for the petitioners strongly placed reliance on the decision rendered by apex Court in the case of Western Electronics [1988] 70 STC 52 ; AIR 1988 SC 2038, wherein, the constitutional validity of Gujarat Sales Tax Act (1 of 1970), was challenged on the ground of infringement of Article 401 of the Constitution and non-compliance of the provisions envisaged under Part XIII of the Constitution. It was held that it is apparent from Article 404(a) of the Constitution that while a State Legislature may enact a law imposing a tax on goods imported from other States as is levied on similar goods manufactured in that State, the imposition must not be such as to discriminate between goods so imported and goods so manufactured in the State. It is observed in the case of Western Electronics that the discrimination effected by applying different rates of sales tax between electronic goods imported into the State of Gujarat and goods manufactured within the State is liable to be struck down. It is observed that imposition of tax leading to discrimination, State cannot be permitted to draw support from the object of granting incentive to local manufacturers or from Article 49(b) or 39(e) of the Constitution. With the aforesaid discussion, the writ petition was allowed and the notifications dated July 23, 1981 and March 29, 1986, prescribing a lower rate of tax for local manufacturers in respect of television sets and other electronic goods were quashed. It is pertinent to observe that the ratio decidendi of the decision rendered by the apex Court, in the case of Western Electronics [1988] 70 STC 52 ; AIR 1988 SC 2038, is distinguishable to the facts and circumstances of the present case, inasmuch as, it is averred in the writ petition on hand that cigarettes are not manufactured in the State of Rajasthan, therefore, question of discrimination of tax between cigarettes imported into the State of Rajasthan and cigarettes manufactured within the State of Rajasthan does not arise.

29. In case of Maharaja Tourist Service v. State of Gujarat reported in : AIR 1991 SC 1650 , the imposition of tax or additional tax levied under Bombay, Punjab and Rajasthan Motor Vehicles Taxation Acts were challenged before the Supreme Court. The question before honourable Supreme Court was whether these taxing enactments passed by State Legislatures of Punjab, Bombay and Rajasthan, are either compensatory or regulatory and are, therefore, not violative of Articles 19(1)(g) and 301 of the Constitution. It is held in the case of Maharaja Tourist Service : AIR 1991 SC 1650 that the law is settled that to uphold levy of a tax of this type, what is necessary is existence of a nexus between the subject and the object of the levy and it is not necessary to show that the whole or a substantial part of the tax collected is utilised. Under the taxing provisions of the Punjab Motor Vehicles Taxation Act, 1924 and in other States, were found to be similar taxing legislations by respective State Legislatures wherein statutory outer limit in each Act was provided and the actual amount was left to be determined by the State Government by notification. It was held by Supreme Court in case of Maharaja Tourist Service : AIR 1991 SC 1650 , that once it is found that the tax is either compensatory or regulatory then, it is to be left by courts for State Government, to determine the rate at which within the upper limit fixed by law the demand of tax has to be made.

30. In the case of Bhagatram Rajeev Kumar v. Commissioner of Sales Tax Madhya Pradesh reported in , wherein M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976, which provides tax on entry of goods, was challenged. The enactment was held to be compensatory and not open to challenge on ground of violation of Article 401. It is observed in the aforesaid case that since tax is payable by every dealer liable to tax under the Sales Tax Act and under Sales Tax Act registration is provided, whose turnover is Rs. 1,000 per year, the apprehension that it may exclude some dealers, is only hypothetical and not well-founded. In the aforesaid case, it is further held that since entry tax is compensatory in nature, therefore, even if some link is there between the tax and the facility extended directly or indirectly, such levy of tax is not open to challenge under Article 401 of the Constitution.

31. In the case of State of Bihar v. Bihar Chamber of Commerce reported in : (1996) 9 SCC 136,[1996] 103 STC 1 (SC) challenging Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 (16 of 1993), wherein, Act 16 of 1993 was declared to be compensatory in nature, as entire State was found to be divided into local areas and State Government as well as local authorities were found providing several trading facilities to promote trade and commerce within the State. In the aforesaid case, it was found that there being some connection between the tax and the facilities provided, it is not violative of Article 401 of the Constitution of India. It is emphatically ruled that tax which is regulatory or compensatory in nature, is not hit by Article 401 of the Constitution. It is observed that for establishing the compensatory nature of tax, it is enough if some connection, direct or indirect, is shown to exist between the tax and the trading facilities provided by the State or the local authorities. An enactment, enacting entry tax on goods brought into a local area, by State Legislature, in exercise of its legislative power under entry No. 52 of the State List, read with Article 246 of the Constitution of India, are within the exclusive legislative competence of the Legislature of State and such enactment does not directly or immediately restrict the flow of trade and commerce, therefore, does not offend Article 401 of the Constitution. In the aforesaid case, it was explained on behalf of State of Bihar that in view of the sudden loss of revenue from the cess upon minerals as a result of the judgment of the Supreme Court in India Cement Ltd. : (1990) 1 SCC 12 ; AIR 1990 SC 85 and other judgments of the Patna High Court, following it, public interest required the State to find alternative sources of revenue to keep its various welfare programmes and other governmental functions going and that the impugned tax was conceived as one of the alternate sources.

32. The aforesaid discussions of honourable Supreme Court decisions from 1961 to 1996, bring us to the conclusion that if an enactment of taxation by State Legislature is found to be compensatory or regulatory, then, the provisions enshrined under Part XIII of the Constitution, are not attracted and such taxation laws enacted by State Legislature, pertaining to any entry of State List of the Seventh Schedule, cannot be challenged on the ground that such enactment infringes freedom of trade under Article 401 of the Constitution. From the decisions rendered by the apex Court, mentioned hereinabove, it is easily deducible that if an enactment is found to be compensatory or regulatory, then, such taxation enactment is saved from the applicability of Article 404(b) of the Constitution. It is also to be noticed that conceptualisation of upholding constitutional validity of compensatory and regulatory taxation enactments to show service and facilities to promote trade and commerce as a condition precedent is undergoing evolutionary process.

33. The aforesaid discussions further bring us to the consideration as to whether Act No. 13 of 1999, enacted by State Legislature, relating to entry No. 52 of the State List of the Seventh Schedule, is compensatory and regulatory in nature, therefore, it does not constitute such restriction or impediment as directly and immediately hamper free-flow of trade, commerce and intercourse and, therefore, it does not fall within the prohibition imposed under Article 401 and it is saved from the applicability of Article 404(b) of the Constitution. In the present case, it is to be examined by this Court whether State Legislature has exclusive legislative power to enact Act No. 13 of 1999 lest entry No. 52 of State List of Seventh Schedule would be rendered otiose.

34. Thus, now we are called upon to record findings on the aforesaid issues, on the basis of materials available on record. In this case, we are to decide at the outset whether or not Act No. 13 of 1999 infringes Article 401 of the Constitution ; secondly, as to whether Act No. 13 of 1999 is saved from Article 404(b) ; and thirdly, as to whether the said enactment is compensatory and regulatory in nature and falls within the ambit of entry No. 52 of State List of Seventh Schedule to the Constitution.

35. Indisputably, octroi is abolished in State of Rajasthan. Due to abolition of octroi, the local bodies, i.e., panchayats, established under the Rajasthan Panchayati Raj Act, 1994, municipalities, established under the Rajasthan Municipalities Act, 1959 and notified area committees and cantonment boards suffered a financial dent, on account of abolition of octroi cannot be ruled out. In our considered opinion, after abolition of obnoxious features of octroi, a very modest impost is levied in the State of Rajasthan by enacting Act No. 13 of 1999. The State Legislature, in exercise of its legislative power, under Clause (3) of Article 246 of the Constitution, which provides that subject to Clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereunder, with respect to any of the matter enumerated in List II of the Seventh Schedule. In the present case, the State Legislature has exclusive power to legislate upon entry No. 52 of List II of the Seventh Schedule, which provides making of laws on tax as on entry of goods into a local area, for consumption, use or sale therein. The State Legislature has enacted Act No. 13 of 1999, empowering State Government in charging Section 3 of the said Act, to impose a very modest levy of the entry tax on goods brought into local areas, not exceeding ten per cent of the value of goods, for compensating the loss suffered by the abolition of octroi. The State Government by issuing notification on October 15, 1999, annexure 2 to the writ petition under Section 3 of Act No. 13 of 1999 has imposed entry tax on tobacco only 1.5 per cent on the value of goods brought into local area is well within outer limit of ten per cent of the value of goods contemplated under Section 3 of the said Act. Entry tax on tobacco at the rate of 1.5 per cent of the value of goods cannot be said to be unreasonable or excessive by any stretch of imagination. In our view, it is certainly a levy in public interest which is held to be fair and reasonable. Any enactment enacted by State Legislature in exercise of its legislative power under Clause (3) of Article 246 of the Constitution relating to entry No. 52 of the State List of the Seventh Schedule neither required Presidential sanction, before introducing the Bill under Article 404(b) nor it required assent of the President. We have no hesitation to hold that Act No. 13 of 1999 does not infringe freedom of trade enshrined under Article 401 of the Constitution, In our opinion if the argument of learned counsel for the petitioners is accepted to the effect that Act No. 13 of 1999 is violative of Articles 301 and 304(b) of the Constitution, then, it would render otiose Clause (3) of Article 246 of the Constitution and entry 52 in State List of the Seventh Schedule to the Constitution which is not acceptable to us being contrary to federal structure of our Constitution.

36. It is true that in the past, there was some controversy to the effect, whether taxation enactments fall within the inhibition of Part XIII of the Constitution, but this controversy is no more res Integra and it has been resolved by a majority of 4 to 3, in the case of Automobile Transport (Rajasthan) Ltd. : AIR 1962 SC 1406 . In the case of Automobile Transport (Rajasthan) Ltd. : AIR 1962 SC 1406 the taxation enactment passed by the State Legislature of Rajasthan, was impugned before this Court, on the ground, inter alia, that it offended Article 401 of the Constitution. This Court dismissed the petition, and the apex Court, by majority view, held that the Act was valid and dismissed the appeals. In the case of Khyerbari Tea Co. Ltd. : AIR 1964 SC 925 , it was ruled by the Supreme Court that the decision in the case of Atiabari Tea Co. Ltd. : AIR 1961 SC 232 , was affirmed in the case of Automobile Transport (Rajasthan) Ltd. : AIR 1962 SC 1406 , with a clarification that regulatory measures imposing compensatory tax do not come within the purview of restrictions, contemplated in Article 401 of the Constitution and such compensatory enactments are immuned to comply with the requirement of the provisions of Article 404(b) of the Constitution.

37. Indisputably, impugned Act No. 13 of 1999 falls within the legislative competence of State Legislature, as it is enacted under entry 52 of the State List of the Seventh Schedule, read with Article 246 of the Constitution, wherein, State Legislature is empowered to enact a law to levy tax on the entry of goods into a local area for consumption, use or sale therein, It is true that the Act No. 13 of 1999 enacted by State Legislature, in common parlance, is known as octroi. Octroi was leviable in the past by municipalities, under the power delegated to it under the Rajasthan Municipalities Act, 1959. It is a matter of common knowledge, and this Court takes judicial notice of the fact that on the resentment of the business community, the State of Rajasthan abolished the octroi in the past, which by corollary of reason caused financial crunch to the State of Rajasthan, in granting aid to panchayats, established under the Panchayati Raj Act, 1994 ; municipalities, established under the Rajasthan Municipalities Act, 1959 ; notified area committees and a cantonment boards, to up-keep the roads, road-lights, water-supply, its cleanliness and other welfare programmes. To meet the financial crunch and to promote its various other welfare schemes within the territory of State of Rajasthan, the State Government took policy decision of compensating its loss of revenue, to bridge its gap in its annual budget, which is disclosed in the counter-affidavit filed on behalf of the State of Rajasthan. By impugned legislation, the State is empowered to augment its source of revenue, It is borne out from perusal of counter-affidavit filed by respondents that after abolition of octroi in State of Rajasthan, the State Government has to provide substantial funds to the local areas authorities to discharge their statutory obligations and, therefore, the levy of entry tax is clearly compensatory and regulatory in nature. It is revealed from the averments made in the counter-affidavit filed by respondents that the flow of funds from the State Government, to local bodies, in lieu of octroi during 1998-1999 (August, 1998 to March, 1999) was Rs. 194 crores, whereas during 1999-2000 (April, 1999 to December, 1999) was increased to Rs. 240 crores.

38. Indisputably, Act No. 13 of 1999, levying tax on the entry of goods into local areas, defined under Section 2(j) of the said Act, has all the characteristics of octroi, but for the manner of levy and the method of its collection from a dealer liable to pay tax, the State Legislature has enacted a fair procedure of assessment, and thereafter, making provisions for appeals and revisions against assessment, under Sections 23, 24, 25, 26 and 27, and provisions for rectification of mistakes under Section 28 of the said Act. These fair regulatory measures meticulously intended by State legislation in Act No. 13 of 1999 to remove the obnoxious feature of arbitrary recovery of octroi from business community. The charging Section 3 of Act No. 13 of 1999, authorises the State Government, to levy tax on the entry of any goods, brought into a local area, for consumption, use or sale therein, with effect from such date and at such rates, not exceeding ten per cent value of the goods, as may be specified by the State Government by notification in Official Gazette. The taxable purchase value of the goods, is defined under Section 2(r) of the said Act. In our considered opinion, Act No. 13 of 1999 has been enacted to levy a reasonable tax on entry of goods into a local area, in public interest and its constitutional vires cannot be challenged, on the ground of either violation of Article 401 or on the ground of non-compliance of Article 404(b) of the Constitution of India.

39. It is next contended by the learned counsel for the petitioners that the very idea of compensatory tax, is service, more or less, commensurate with the tax levied, which is lacking in the impugned Act No. 13 of 1999, notification dated October 15, 1999 and clarificatory notification dated December 30, 1999 therefore, it is liable to be struck down on this ground alone. The aforesaid argument of the learned counsel for the petitioners, is not acceptable to us. We are of the view that neither Act No. 13 of 1999 nor the aforesaid two notifications required to provide facilities to promote trade of cigarettes in State of Rajasthan more or less commensurate with the entry tax levied on its entry into local areas of State, but it would be sufficient if there is substantial or even some link between the tax and the facility extended to such dealers of cigarettes directly or indirectly. The levy by State Government by notification dated October 15, 1999, annexure 2 to the writ petition and clarificatory notification dated December 30, 1999, annexure R/1 to the reply cannot be impeached as invalid. The stand of the State that the revenue earned is being paid over to the local bodies to compensate them for the loss caused due to abolition of octroi makes the impost compensatory in nature. It goes without saying that augmentation of local bodies finance in State of Rajasthan would enable them to provide municipal services more efficiently, which would help and ease free-flow of trade and commerce, because of which, the impost has to be regarded as compensatory in nature. We are fortified in taking the aforesaid view from the decisions rendered by the Supreme Court, in the cases of Bhagatram Rajeev Kumar , Hansa Corporation : AIR 1981 SC 463 and Bihar Chamber of Commerce [1996] : (1996) 9 SCC 136.103 STC 1 (SC)

40. It is held that the local area defined under Section 2(j) of Act No. 13 of 1999 covers the entire State of Rajasthan and distinction between the State and the local areas practically disappears. Interests of the State of Rajasthan and the interests of the local authorities are, in essence, not different but the same to promote facilities to the trade including laying and maintaining roads, water ways, cleanliness of roads, lights and markets, etc. In our humble opinion for upholding the Constitutional validity of Act No. 13 of 1999 and for the purposes of establishing the compensatory character of tax impost by State Government by notification dated October 15, 1999, annexure 2 to the writ petition and clarificatory notification dated December 30, 1999, annexure R/1 to the reply, it is not necessary to establish that every rupee collected on account of the entry tax should be shown to be spent on providing the trading facilities. If some connection is established between the tax and the trading facilities provided, it is sufficient. It is further held that connection can be a direct one or an indirect one. By corollary of reason, this Court takes judicial notice of the fact that every State including State of Rajasthan does provide facilities to the trade by laying and maintaining of roads, water ways, cleanliness of roads, lights, markets and other welfare programmes. To our minds the vires of Act No 13 of 1999 and notification dated October 15, 1999, annexure 2 to the writ petition and clarificatory notification dated December 30, 1999, annexure R/1 to the reply, are to be tested with circumspection keeping in view that power of State to levy taxes for the purpose of governance and for carrying out its welfare schemes in the welfare State is an essential attribute of paramount consideration.

41. We are satisfied for the detailed reasons given hereinabove that the State has succeeded to establish that Act No. 13 of 1999, is compensatory and regulatory in nature and entry tax impost on cigarettes brought into local areas of Rajasthan for consumption, use or sale therein by State Government by notification dated October 15, 1999, annexure 2 to the writ petition and clarificatory notification dated December 30, 1999, annexure R/1 to the reply, is imposed in lieu of octroi. The aforesaid findings are sufficient to negative the pleas of petitioners to the constitutional validity of Act No. 13 of 1999 on the ground of violation of Articles 301 and 304(b) of the Constitution. The notification dated October 15, 1999, annexure 2 to the writ petition and clarificatory notification dated December 30, 1999, annexure R/1 to the reply published in Rajasthan Raj Patra, Part 4 (ga) on January 6, 2000 is declared to be legal and valid imposing 1.5 per cent value of tobacco which includes any form of tobacco whether cured or uncured and whether manufactured or not and includes the leaf, stalks and stems of tobacco plant is well within the statutory upper limit of ten per cent. Cigarettes are included within the definition of tobacco in notification dated December 30, 1999 published in Official Gazette on January 6, 2000. It is held that once it is found that the tax levied is compensatory and regulatory, then, it is to be left to State Government to determine the rate at which within upper limit fixed under Section 3 of Act No. 13 of 1999 the demand of entry tax is to be made.

42. Here, in the present petition, controversy is confined to the rate of tax 1,5 per cent on the value of goods levied on tobacco and on its product. The aforesaid levy of tax is assailed before us by the learned counsel for the petitioners that legislative history of tobacco taxation establishes that tobacco is being overtaxed by the State. Therefore, a scheme was arrived at between the Centre and the States whereby the States surrendered their right to levy various taxes on tobacco. The learned counsel for the petitioners invited our attention to the report of the Taxation Enquiry Commission which was approved by Ministry of Finance. On the recommendation of the Second Finance Commission the Additional Duties of Excise (Goods of Special Importance) Act, 1957, was enacted by Parliament, wherein, it is provided that in the event of a State levying a tax on sale or the purchase of tobacco, it shall lose its proportionate share of revenue from additional excise duty levied and collected by the Centre.

43. The aforesaid argument of the learned counsel for the petitioners, is opposed by learned Advocate-General on the ground that items mentioned in notification dated October 15, 1999 and clarificatory notification dated December 30, 1999, annexure R/1 to the reply, are not subject to sales tax and as such no surcharge could be levied on these items. It is reiterated by the learned Advocate-General that entry tax on tobacco and on its products is being levied in lieu of octroi which had been abolished in State of Rajasthan.

44. We consider it expedient to mention here that the aforesaid argument which is being raised before us, was raised before honourable Supreme Court in the case of Bihar Chamber of Commerce : (1996) 9 SCC 136, [1996] 103 STC 1 which was negatived by their Lordships, holding the validity of Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 (hereinafter referred as Act No. 16 of 1993). The provisions of Act No. 16 of 1993, are pari materia to the provisions of Act No. 13 of 1999. Suffice it to say in this regard that validity of Act No. 13 of 1999 cannot he questioned before us on the ground of enactment of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 enacted by Parliament within the meaning of Clause (3) of article 246 read with entry 52 of the State List of the Seventh Schedule, over which State Legislature has exclusive power to legislate upon. Looking into federal structure of our Constitution, the argument raised by the learned counsel for petitioners does not require to be pursued further and it is hereby repelled.

45. The second limb of the aforesaid argument of the learned counsel for the petitioners, is that in common parlance, tobacco and tobacco products are two different things. Tobacco is different from cigarettes in common parlance. It is submitted by the learned counsel for the petitioners that the entry in the notification, annexure 2 to the writ petition, is tobacco and not all kinds of tobacco products, as has been notified in the case of textiles. The expression "tobacco" cannot be allowed to be either explained or defined by executive fiat of respondent No. 2, Commissioner of Commercial Taxes Department, Rajasthan, by issuing circular dated October 23, 1999, annexure 3 to the writ petition.

46. The learned Advocate-General, appearing on behalf of the respondents, refuting the aforesaid argument submitted before us that under Sub-section (2) of Section 2 of Act No. 13 of 1999, it is provided that the words and expressions used but not defined in this Act, shall have the meanings assigned to them under the Rajasthan Sales Tax Act, 1994 (Act No. 22 of 1995). It is urged by the learned Advocate-General that in the notification dated August 12, 1980, issued under Section 4(2) of the Rajasthan Sales Tax Act, 1954 (Rajasthan Act No. 29 of 1954), which is valid under the Rajasthan Sales Tax Act, 1994, tobacco has been defined as per the definition contained in the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Central Act 58 of 1957). He invited our attention towards annexure R/2, annexed to the reply to the writ petition, a copy of Notification dated August 12, 1980. In Act No. 58 of 1957, tobacco has been defined under Section 2(c) which reads thus :

"(c) The words and expressions sugar, tobacco, cotton fabrics silk fabrics, wollen fabrics and man-made fabrics shall have the meanings respectively assigned to them in items Nos. 1, 4, 19, 20, 21 and 22 of the First Schedule to the Central Excises and Salt Act 1944."

It is further submitted by the learned Advocate-General that tobacco has been defined in Central Excises and Salt Act, 1944, in First Schedule, at item No. 4, which reads thus :

" Tobacco means any form of tobacco whether cured or uncured and whether manufactured or not, and includes the leaf, stalks and stems of the tobacco plant, but does not include any part of a tobacco plant while still attached to the earth,"

It is urged by the learned Advocate-General that in view of the definition of tobacco, as has been assigned to it under the Rajasthan Sales Tax Act, cigarette is exempt from sales tax, in view of the notification dated August 12, 1980, issued under Section 4(2) of the Rajasthan Sales Tax Act, 1954, which has been adopted under the Rajasthan Sales Tax Act, 1994. Therefore, according to the learned Advocate-General, the notification dated October 15, 1999, carries the same meaning as has been assigned to it under the Rajasthan Sales Tax Act, 1994.

47. Be that as it may, a close scrutiny of Act No. 13 of 1999 reveals that it is self-contained Act and the State Government is mandated under Sub-section (1) of Section 3 of the said Act by State Legislature, to specify any goods upon which entry tax is to be levied, collected and paid to it on entry of such goods brought into a local area for consumption, use or sale therein, from such date and from such rate, not exceeding ten per cent of the value of such goods by a notification in Official Gazette. It is to be noticed that under Section 44 of the said Act, the State Government is again mandated that if any difficulty arises in giving effect to the provisions of the Act, the State Government may, by notification in Official Gazette, make such provisions as appears to it to be necessary or expedient for removing the difficulties. The power under Section 44 of the aforesaid Act is to be exercised by State Government within three years from the commencement of the Act. In our considered opinion if Act No. 13 of 1999 prescribed a specific mode to be followed by State Government by notification in Official Gazette, then, clarificatory circular dated October 23, 1999, annexure 3 to the writ petition, issued by the Commissioner of Commercial Taxes respondent No. 2 clarifying tobacco to include its all kinds of products against the notification dated October 15, 1999 wherein tobacco has been specified one of the goods by State Government in exercise of its power under Sub-section (1) of Section 3 of the Act No. 13 of 1999 is ultra vires to the statutory provisions of Sub-section (1) of Section 3 and Section 44 of the said Act mentioned hereinabove. We have reason to believe that the State Government realised its mistake and subsequently issued clarificatory notification on December 30, 1999 clarifying its earlier notification dated October 15, 1999, defining tobacco to include any form of tobacco, whether cured or uncured and whether manufactured or not and includes the leaf, stalks and stems of tobacco plant but does not include any part of a tobacco plant while still attached to the earth, published on January 6, 2000 in Rajasthan Raj Patra, part 4(ga).

48. Coming to the next intricate question of law involved in the present case whether entry tax on cigarettes leviable on the petitioners is recoverable from them from the date of notification dated October 15, 1999, or from the date of clarificatory notification dated December 30, 1999, or from the date when subsequent clarificatory notification was published in Official Gazette on January 6, 2000, or when it became available to the public at large. What is true import of publication in Official Gazette

49. The aforesaid question came up for consideration before honourable Supreme Court, in case of Harla v. State of Rajasthan reported in : AIR 1951 SC 467 , wherein, question arisen for consideration before apex Court was whether the mere passing of resolution, without promulgation or publication in the Official Gazette or other means as known to the public, was sufficient to make it law. In case of Harla : AIR 1951 SC 467 , Supreme Court referred to the rule in this regard, prevailing in England that Acts of Parliament became law from the day on which they received the Royal assent but Royal proclamations only when actually published in Official Gazette. The ratio of decision rendered in the case of Johnson v. Sargant & Sons reported in (1918) 1 KB 101 was approved by the Supreme Court, in the case of Harla : AIR 1951 SC 467 .

50. In the case of I.T.C. Bhadrachalam Paper Boards v. Mandal Revenue Officer, A.P. reported in : (1996) 6 SCC 634 ,[1998] 110 STC 590 (SC) apex Court after surveying its earlier decisions in the case of Pankaj Jain Agencies v. Union of India reported in : (1994) 5 SCC 198 , Sammbhu Nath Jha v. Kedar Prasad Sinha reported in : (1972) 1 SCC 573 and B.K. Srinivasan v. State of Karnataka reported in : (1987) 1 SCC 658 , held that when enactment provides publication in Official Gazette, then, publication is not dispensable.

51. In the case of Collector of Central Excise v. New Tobacco Co. reported in : (1998) 8 SCC 250,[1998] 109 STC 376 again, Supreme Court after surveying its previous decisions on the subject held that availability of publication could not be equated with mere printing of notification. It is ruled in the aforesaid case of New Tobacco Co. : (1998) 8 SCC 250, [1998] 109 STC 376 (SC) that if publication is through a Official Gazette then, mere printing of it in the Gazette would not be enough. Unless the Gazette containing the notification is made available to the public, the notification cannot be said to have been duly published.

52. In our considered opinion, Act No. 13 of 1999 is a self-contained Act and under the definition of Sub-section (2) of Section 2, the words and expressions used but not defined in this Act, shall have the meanings assigned to them under the Rajasthan Sales Tax Act, 1994. In view of the clear provision under Sub-section (2) of the definition clause, this Court cannot travel beyond the scope of Sub-section (2) of Section 2, which mandates that if the words and expressions are used but not defined in the said Act, shall have the meanings as assigned to them under the Rajasthan Sales Tax Act, 1994. It goes without saying that the expression "tobacco" has not been defined under the Rajasthan Sales Tax Act, 1994, therefore, it is far-fetched to approve the argument advanced by the learned Advocate-General, to adopt the definition of "tobacco", given in the notification dated August 12, 1980, issued under Sub-section (2) of Section 4 of the Rajasthan Sales Tax Act, 1954, which is alleged to have been followed in the Rajasthan Sales Tax Act, 1994.

53. For proper interpretation of Sub-section (2) of Section 2 of Act No. 13 of 1999, we have to look into the provisions made under Sub-section (1) of Section 3, together with the provisions made under Section 44 of the said Act. In our humble opinion, if Act No. 13 of 1999 has provided specific procedure to make goods taxable by the State Government, on entry of any goods, brought into local area, for consumption, use or sale, therein, then, percentage of the value of the goods and specification of goods by the State Government, has to be performed religiously by notification in Official Gazette and not otherwise. The charging Sub-section (1) of Section 3 of Act No. 13 of 1999 never permits respondent No. 2, to issue circular, explaining notification dated October 15, 1999, issued by the State Government. In fact, it can be clarified by a subsequent notification, issued by the State Government on December 30, 1999, annexure R-1 to the reply published in Official Gazette on January 6, 2000, in exercise of its powers under Sub-section (1) of Section 3 read with Section 44, which reads thus :

"44. Power to remove difficulties.--If any difficulty arises in giving effect to the provisions of this Act, the State Government may by notification in the Official Gazette, make such provisions as appear to it to be necessary or expedient for removing the difficulties :

Provided that no action under this section shall be taken after a period of three years has elapsed after the commencement of this Act."

54. In the present case, neither the petitioners have averred in their writ petition nor in their rejoinder affidavit that notification dated October 15, 1999 and clarificatory notification dated December 30, 1999 were not published and these two notifications were not available to them after its publication in Official Gazette. In view of the facts mentioned hereinabove, this Court raises presumption under Section 114(e) of the Evidence Act, which provides that judicial and official acts are regularly performed. In the circumstances of present case, it is held that principle of natural justice requires that before the entry tax on cigarettes brought into local area for consumption, use or sale therein is made operative against the petitioners on the basis of notification dated October 15, 1999, annexure 2 to the writ petition and clarificatory notification dated December 30, 1999 published in Official Gazette on January 6, 2000, annexure R-1 to the reply, tax levied qua the petitioners under Act No. 13 of 1999, is made recoverable from them from the next date of publication of clarificatory notification on January 6, 2000, i.e., with effect from January 7, 2000.

55. There is yet another reason to arrive at the aforesaid conclusion. The expression "notification in Official Gazette", used under Act No. 13 of 1999, means its publication within the meaning of the Rajasthan Gazette (Rajpatra) Act, 1956. It is to be noticed that to facilitate the interpretation of laws enacted by State Legislature, Rajasthan General Clauses Act, 1955 has been enacted, wherein, under Section 25, publication of orders, notification, etc., in Rajasthan Gazette, is to be deemed to be due publication. In a democratic country like ours, mere publication is not sufficient, unless, it is made available to the public at large. Looking to the decision rendered in the case of New Tobacco Co. : (1998) 8 SCC 250,[1998] 109 STC 376 (SC) it is held that after publication of the notification dated December 30, 1999, which is found to be published on January 6, 2000, shall be deemed to be available to public at large including the petitioners at least on January 7, 2000. It is to be imbibed that in legal terminology, day includes night, therefore, the publication of notification in Official Gazette, on January 6, 2000, can be extended up to 12 midnight. In such a situation, by necessary implication, it can be presumed that the clarificatory notification published on January 6, 2000, was made available for general public on January 7, 2000. Hence, January 7, 2000 is to be taken to be the day on which the aforesaid notification partakes the shape of law. It is well to remember in this regard that if two inferences are possible from the date of publication of notification on January 6, 2000, then, the inference which is in favour of subject, is to be preferred.

As a result of the aforementioned discussion, the constitutional validity of Act No. 13 of 1999, is hereby upheld. The notification dated October 15, 1999, annexure 2 to the writ petition and clarificatory notification dated December 30, 1999, annexure R/1, to the reply filed by respondents published in Official Gazette on January 6, 2000 in the Rajasthan Rajpatra, are hereby declared legal and valid and the circular dated October 23, 1999, annexure 3 to the writ petition, is declared per se illegal and is hereby quashed, with a direction to the respondents, making entry tax on cigarettes qua petitioners recoverable, with effect from January 7, 2000.

The writ petition is finally disposed of on merits, accordingly. In the peculiar facts and circumstances of the case both the parties are left to bear their own costs.