1988 (7) TMI 391 - HC - VAT and Sales Tax

Summary

Issues:
1. Violation of article 14 of the Constitution of India by the notification discriminating between the petitioner and small-scale industries.
2. Violation of articles 301, 303, and 304 of the Constitution of India by the exemption granted under the notification affecting the market of the petitioner's products.

Detailed Analysis:
1. The petitioner, a footwear manufacturer, challenged a notification issued by the State of Rajasthan that modified an earlier exemption for all kinds of footwear to only those manufactured by small-scale industries up to the value of Rs. 20. The petitioner contended that this differentiation was arbitrary and violated article 14 of the Constitution of India. The court disagreed, stating that small-scale industries can be classified separately for tax relief purposes to help them compete with larger manufacturers like the petitioner. The court noted that the cost of production for small-scale industries is higher due to lower production levels, justifying the separate classification for tax benefits.

2. The petitioner further argued that the modified notification violated articles 301, 303, and 304 of the Constitution of India by limiting the market for their products in Rajasthan and benefiting only manufacturers in the state. The petitioner claimed that the exemption unfairly favored local manufacturers. However, the court found this argument unsubstantiated, stating that the exemption was not restricted to manufacturers in Rajasthan but applied to small-scale industries nationwide. The court distinguished this case from previous judgments where relief was limited to manufacturers within a specific state. As no other contentions were raised, the court dismissed the writ petition, upholding the validity of the notification and the exemption for small-scale footwear manufacturers up to Rs. 20.

In conclusion, the High Court of Rajasthan dismissed the writ petition challenging the modified notification that limited the exemption for footwear manufacturers, ruling in favor of the State's classification of small-scale industries for tax relief and rejecting the petitioner's claims of constitutional violations.