1961 (3) TMI 61 - SC - VAT and Sales Tax

Whether betel leaves are vegetables and are therefore exempt from taxation under the Rajasthan Sales Tax Act, 1954? Held that - Appeal dismissed. As said above betel leaves are not within the word vegetables and are therefore taxable. There is no discrimination between persons similarly placed. By making a distinction between persons selling betel leaves and those selling vegetables no infringement of Article 14 is established. As it is a valid fee it cannot be said that it is an infringement of Article 19(1)(g) of the Constitution.

Summary

Issues:
1. Challenge against sales tax assessment on betel leaves under the Rajasthan Sales Tax Act, 1954.
2. Interpretation of the term "vegetables" under the Act.
3. Validity of the notification exempting betel leaves from sales tax.
4. Allegations of contravention of Articles 14 and 19(1)(g) of the Constitution.

Analysis:
The Supreme Court addressed the challenge against sales tax assessment on betel leaves under the Rajasthan Sales Tax Act, 1954. The petitioners contended that betel leaves should be exempt from taxation as they are considered vegetables. However, the Court examined Section 4 of the Act, which outlines conditions for tax exemption, and Schedule 2, which lists items exempt from sales tax. The Court noted that the term "vegetables" in the Act refers to kitchen garden produce for table use, excluding betel leaves. In a related case, it was previously established that betel leaves do not fall under the definition of "vegetables," confirming their taxable status under the Act.

Regarding the validity of the notification exempting betel leaves from sales tax, the petitioners argued that it imposed an indirect tax without legal authority, violating Articles 14 and 19(1)(g) of the Constitution. However, the Court disagreed, citing Section 4(2) of the Act, which allows conditional exemptions with specified fees. Since betel leaves are not classified as vegetables, the exemption fee for betel leaf sellers is considered valid. The Court emphasized that no discrimination exists between betel leaf sellers and vegetable sellers, thus upholding the constitutionality of the notification.

In conclusion, the Supreme Court dismissed the petitions challenging the sales tax assessment on betel leaves, emphasizing the taxable status of betel leaves under the Act. The Court rejected claims of constitutional violations, stating that the exemption fee for betel leaf sellers is lawful and does not infringe upon Articles 14 and 19(1)(g) of the Constitution. The petitioners were ordered to bear the costs of the proceedings, with the petitions ultimately dismissed.