FIRM A. T. B. MEHTABMAJID AND CO. vs STATE OF MADRAS AND ANOTHER

The Supreme Court ruled that the higher sales tax on tanned hides and skins imported from outside the State, compared to those tanned and sold within the State, violates Article 304(a) of the Constitution, as it constitutes discriminatory taxation affecting the free flow of trade. The Court clarified that sales tax can be a restriction on trade if it hampers commerce and is not compensatory. The impugned rule, being part of the Madras General Sales Tax Act, was upheld as a valid legislative measure under Section 19 of the Act.