1989 (10) TMI 225 - HC - VAT and Sales Tax

Summary

Issues:
Exemption from tax under Rajasthan Sales Tax Act - Discrimination - Interpretation of notification - Societies Registration Act vs. Co-operative Societies Act.

Analysis:
The petitioner, a registered co-operative society engaged in the manufacturing and sale of bricks and lime, challenged a notification issued by the State Government withdrawing the exemption granted to manufacturing industries of bricks and lime under the Rajasthan Sales Tax Act. The petitioner argued that its exclusion from the list of institutions exempted from tax was discriminatory and violated Article 14 of the Constitution of India. The State contended that the exemption was intended only for societies registered under the Societies Registration Act, not co-operative societies, and that this classification was reasonable and just. The State relied on its power under section 4(2) of the Rajasthan Sales Tax Act to exempt any person or class of persons from tax. The petitioner was financed by the Rajasthan Khadi and Village Industries Board, which was a key point in the case.

The court considered the history of exemptions granted to manufacturers of brick and lime, noting that the State Government had previously granted and withdrawn exemptions before reissuing an exemption through a notification dated March 8, 1988. The court observed that the petitioner was also financed by the Khadi and Village Industries Board, as confirmed in the reply filed on behalf of the Board. The State's argument that only societies registered under the Societies Registration Act were exempted due to their non-profit nature was not pleaded in their reply. The court found that the purpose of the exemption was to encourage industries financed by the Khadi and Village Industries Board, and therefore, the petitioner should also be entitled to the exemption granted in the notification.

In conclusion, the court allowed the writ petition, ruling in favor of the petitioner. The petitioner was declared entitled to the exemption granted in the notification dated March 8, 1988, and given the option to apply for a refund if any tax had been paid. No costs were awarded in the judgment.