1997 (7) TMI 625 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the petitioners are entitled to the same exemption from sales tax as granted to Khadi Ashram, Panipat and its units.
2. Whether the classification made by the respondents in granting exemption to Khadi Ashram, Panipat based on turnover was valid and not discriminatory.

Analysis:
1. The petitioners, registered as societies, sought a writ of mandamus for sales tax exemption under the Haryana General Sales Tax Act, 1973, similar to that granted to Khadi Ashram, Panipat and its units from December 30, 1987, to September 14, 1992. The petitioners operate on a "no profit no loss" basis, implementing the khadi and village industries program. The State Government had granted exemption to Khadi Ashram, Panipat, without any turnover limit, promoting cottage industries. The petitioners claimed discrimination and entitlement to the same benefit. The respondents argued that the exemption to Khadi Ashram was lawful due to its unique characteristics and turnover differences.

2. The respondents contended that Khadi Ashram, Panipat, operated on a "no profit no loss" basis, unlike the profit-earning petitioners, justifying the differential treatment based on turnover. They cited a Supreme Court judgment supporting the classification based on turnover for levy of tax. The Supreme Court had upheld the classification as non-discriminatory and valid. The Court noted that the classification was justified due to turnover disparities and unique features of Khadi Ashram, Panipat, warranting total exemption from sales tax. The petitioners relied on a previous judgment where similar exemption was granted to a society based on parity with other societies.

In conclusion, the Court, following the precedent set by the Supreme Court, found no merit in the petition and dismissed it, upholding the validity of the exemption granted to Khadi Ashram, Panipat, and its units.