MESSRS MOHANLAL HARGOVIND DAS,BIDI MERCHANTS, JABALPUR (M. vs THE STATE OF MADHYA PRADESH & ANOTHER.

The Supreme Court ruled that the State of Madhya Pradesh lacked the authority to impose a purchase tax on the petitioners, who are bidi merchants importing tobacco from Bombay, as such transactions constituted inter-State trade under Article 286(2) of the Constitution. The Court emphasized that the real nature of the transactions, involving the movement of goods across state borders, must be considered rather than the formal registration of dealers. Consequently, the imposition of tax was declared unconstitutional, affirming the protection of inter-State commerce.