M/S. Jindal Stainless Ltd. & Anr vs State Of Haryana And Ors

The Supreme Court, in a Constitution Bench, addressed the concept of 'Compensatory Tax' under Article 301 of the Constitution of India, 1950. The Court overruled the tests established in Bhagatram Rajeevkumar v. Commissioner of Sales Tax, M.P. and Bihar Chambers of Commerce, stating that the previous tests for determining compensatory taxes were not good law. The Court reaffirmed the applicability of the 'direct and immediate effect' doctrine and the working test from prior judgments, thereby clarifying the constitutional validity of local enactments related to tax matters.