1991 (1) TMI 420 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to Notification under Karnataka Sales Tax Act, Discrimination in levy of sales tax, Competency of Government to issue notification under section 8A of the Act, Comparison with similar cases in Supreme Court.

Analysis:
The judgment revolves around the challenge to a notification issued by the Government of Karnataka under section 8A of the Karnataka Sales Tax Act, 1957, granting tax exemption to dealers in ceramic tiles manufactured in industrially backward areas. The petitioners, who are dealers in ceramic tiles manufactured outside the State, argue that the notification creates discrimination in the levy of sales tax among dealers of the same class. The key question is whether the Government has the authority to issue such a notification under the Act. Reference is made to the Supreme Court's decision in Weston Electroniks v. State of Gujarat, where a similar notification was upheld on the grounds of incentivizing local manufacturing units.

In Bharat General and Textile Industries Ltd. v. State of Maharashtra, the Supreme Court upheld a notification granting tax exemption to new units in backward areas, emphasizing that the executive's exercise of power under the State Act is not subject to judicial interference unless arbitrary. The judgment in Video Electronics Pvt. Ltd. v. State of Punjab further supports the validity of notifications providing concessional rates for goods produced within the State, without violating constitutional provisions. The court applies the principles from these cases to conclude that the exemption granted by the Karnataka Government does not amount to discrimination in sales tax levy.

The court dismisses the writ petitions based on the precedents set by the Supreme Court in similar cases, emphasizing that the exemption for tiles manufactured in industrially backward areas does not contravene the principles of equality under the Constitution. Additionally, applications seeking to intervene or raise additional grounds are deemed unnecessary following the dismissal of the writ petitions. The petitioners are directed to pay the tax difference as per the interim orders issued during the proceedings, ultimately upholding the validity of the Government's notification and the exemption granted under it.