What happens when a certain tax is discriminatory but has no impact on tradeis

What happens when a certain tax is discriminatory but

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- What happens when a certain tax is discriminatory but has no impact on trade/is not a trade impediment? - Whether Entry Taxes are per se valid? - What is freedom under 301? ‘ 115. If there is a constitutional distinction between tax and a fee, the theoretical underpinnings of compensatory taxes are fundamentally questioned. 116. Entry tax as problematic was under consideration in Jindal (2006). Two ways of looking at it: - Entry tax without justifying compensatory nature are hit by 301, but the State’s argued that they do not discriminate and hence saved by 304. - There is no 301 challenge only against entry tax because once competency has been established, there is no question of a Part XIII challenge. C ONSTITUTIONAL L AW II | 21 F EBRUARY 2017 117. Bhagat Ram and Bihar Chamber of Commerce were overruled by Jindal Stripes (2006) . The two decision held that all taxes would inevitably be compensatory since all taxes have a public nature interest associated with them. Hence, this was their interpretation of compensatory tax from Automobile. Jindal revolved on questions of when a tax was regulatory or compensatory, is there a constitutional distinction between fee and a tax. 118. Post Automobile because compensatory taxes becomes outside the purview of Article 301, it renders the question of discriminatory taxation under 304(a) automatically answered without even going into the question.
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119. Kalyani Stores v. State of Orissa (1966): Entry 51, levy of disproportionately high tax on foreign imported liquor by State of Orissa. 120. In light of Article 304(a) having the discriminatory test as a ground for striking down a tax statute, there is no question of the Court going into reviewing if a tax has an impediment on trade and commerce, because such a reading would mean conjunctively reading (a) & (b), a position not constitutionally viable. There is no reconciling of discriminatory tax under 304(a) and compensatory tax under 301 because these are two competing theories, and the former is a better reading of the Constitution. 121. The 2016 Jindal case does not speak about any specific tax (Entry or others) but rather a harmonious constitutional interpretation. By overruling all previous cases, the court has removed all examples of the SC declaring what is discriminatory and what isn’t, implying that new jurisprudence of the SC on what is discriminatory tax by applying Jindal is awaited. 122. Automobile resonated with the States because even when taxes where discriminatory, the State’s could argue that the taxes are compensatory. This theory came from the idea of the State’s power to legislate and tax. 123. The Jindal 2016 decision by doing away with the idea of compensatory tax in its entirety has created an absurd situation wherein there is virtually no test to gauge if a certain non-taxation based legislative/executive decision by a State would qualify as a trade barrier or not and most importantly how to gauge its implications under Article 304(b). Will compensation (even after doing away with the idea) still be used to measure if the seemingly inappropriate trade barrier is justified on public grounds, that it is compensating?
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