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TMI Blog1983 (6) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... blocks were exempted from payment of sales tax. This SRO was to take effect on 5th July, 1968, and was to remain in force till 31st March, 1977. On 15th May, 1978, the Government issued another SRO being No. 267, exempting certain goods mentioned in annexure I to it from the payment of sales tax in exercise of its aforesaid powers under section 5 of the Act. As per entry No. 12 under the same general head "CEMENT, CERAMIC AND STONE INDUSTRIES", whereas P.C.C. poles, tiles and hollow blocks were again exempted from payment of sales tax; bricks were not. By virtue of these writ petitions, the petitioners seek to challenge the constitutional validity of section 5 of the Act as well as that of SRO No. 267 as also the legality of the notices issued pursuant thereto on the grounds: firstly, that section 5 suffers from the vice of excessive delegation of powers, in that it gives uncanalised and unguided powers to the Government to select goods for exemption from payment of sales tax and is thus violative of article 14 of the Constitution of India, hereinafter to be referred to as the Constitution; secondly, that section 5 is violative of articles 19 and 301 of the Constitution as well; t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of sales tax. These sections, in so far as they are relevant for the present discussion, may be extracted as below: "4. Liability to tax under this Act.-(1) Subject to the provisions of this Act, every dealer except the one dealing exclusively in goods declared tax-free under section 5, shall pay for each year tax on his total turnover at a rate not exceeding twelve per cent of such turnover as may be determined by the Government and notified by the Government in the Government Gazette and such tax shall be charged on the sale of goods once only: ........................................................................... 5.. Exemption from taxation.-The Government may, subject to such restrictions and conditions as may be prescribed, including conditions as to licence and licence fees, by order exempt in whole or in part from payment of tax any class of dealers or any goods or class or description of goods." Constitutional validity of section 4 was challenged before a Full Bench of this Court in Writ Petitions Nos. 93 and 99 of 1972, titled Glacier Cold Storage and Ice Mills v. Assessing Authority [1974] 34 STC 426 (FB); 1974 JKLR 531 (FB), on the ground that it gave u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well-settled that in so far as fixing of the maximum limit of the rate of tax is concerned, it cannot be left to the discretion of the Government, but has to be fixed by the legislature itself. But, in so far as the persons or the goods to be taxed and the rate of tax to be charged on them is concerned, it being a matter of details depending upon the ever changing social, economic, administrative and fiscal conditions, it has to be left to the Government, which in these matters should be a better judge than the legislature. This rule must apply with equal force to the provisions regarding exemptions as well, for, whom not to tax or what not to tax, necessarily implies granting of exemption from tax. In Orient Weaving Mills (P.) Ltd. v. Union of India AIR 1963 SC 98, which is an authority direct in point, an almost identical provision had come up for their Lordships' interpretation. In that case, the constitutional validity of rule 8 of the Central Excise Rules framed by the Central Government in exercise of its rule-making power under section 37 of the Central Excises and Salt Act, 1944, had been challenged by the petitioners. By virtue of section 38 of the said Act, rules made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the well-established principle that there must be a great deal of flexibility in the incidence of taxation of a particular kind. It must vary from time to time, as also in respect of goods produced by different processes and different agencies. The same principle has been recognised in section 23 of the Sea Customs Act (8 of 1878), which has been applied to excise duty also, by virtue of section 12 of the Act. The latter section has authorised the Central Government to apply the provisions of the Sea Customs Act to excise duty imposed by the Act, with such modifications and alterations as it may consider necessary or desirable to adopt them to circumstances. It is a function of the State, in order to raise revenue for State purposes, to determine what kind of taxes shall be levied and in what manner. Its function, therefore, is to raise revenues for public purposes. The State naturally is interested in raising all the revenue necessary for public purposes, without sacrificing the legitimate interests of persons and groups, who deserve special treatment at the hands of the State for reasons, which the State may determine, entitling them to be placed in a special class........" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavit. Viewed thus, brick manufacturers and tile manufacturers cannot be said to be similarly situated. Placing the manufacturers of tiles in a separate class cannot also be said to be unreasonable, because industrialisation of the State being the declared policy of the Government, the said classification has a clear nexus with the object sought to be achieved by the impugned SRO, which has been manifestly issued in furtherance of the aforesaid policy of industrialisation. We are, therefore, clearly of the opinion that SRO No. 267 is not violative of article 14. Consequently, the third ground also fails. Reading sections 4 and 5 of the Act together, among others, two conclusions can be legitimately drawn. These are: (1) sales tax is chargeable on every article sold by a dealer, unless it has been specifically exempted from its payment by the Government in exercise of its powers under section 5; and (2) sales tax shall be charged on each article not so exempted, according to the rate fixed for it by the Government in exercise of its powers under section 4. Exemption being in the nature of a concession, its grant is entirely in the discretion of the Government and no dealer c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so far as it related to the sale of bricks. The argument was that the act of withdrawal was discriminatory and rendered the impugned notification void and illegal under article 14 of the Constitution. The settled principle is that article 14 forbids class legislation, but it does not prevent reasonable classification of persons or things for giving differential treatment. The law is also well-settled that the classification once made cannot be treated to be eternal. The State has the power to carry out reclassification of such persons or things from time to time if the changed circumstances so require. There is a presumption of constitutionality in favour of the classification or reclassification so made by virtue of any statute or any order or notification made thereunder. The burden lies on the person challenging such classification to show that being unreasonable it offends article 14 of the Constitution. The petitioners have not placed on record any material to show that the classification now made has no reasonable basis to stand upon. In fact, no factual basis has been laid by the petitioners for the claim that the reclassification is arbitrary or capricious. The petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X
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