STATE OF M.P. vs BHARAT HEAVY ELECTRICALS

The Supreme Court examined the validity of Section 7(5) of the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976, which imposes a penalty of ten times the entry tax for registered dealers failing to report local goods sold to other dealers. The Court held that the penalty is confiscatory and violates Articles 14 and 19 of the Constitution, thus affirming the Madhya Pradesh High Court's decision to strike down the provision. The ruling establishes that excessive penalties can be deemed unconstitutional if they infringe on fundamental rights.