STATE OF UTTAR PRADESH & ANR. vs M/S. LAXMI PAPER MART & ORS.

The Supreme Court held that the sales tax exemption for exercise books made from paper purchased within Uttar Pradesh, while imposing a tax on those made outside the state, violates Article 301 read with Article 304(a) of the Constitution. The Court affirmed the High Court's decision that such discrimination hampers free trade and commerce, referencing the precedent set in Firm A.T.M. Mehtab Majid & Co. v. State of Madras. Consequently, the notification imposing sales tax on imported exercise books was declared unenforceable.