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TMI Blog1997 (11) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... coats and garments prepared out of pure silk cloth but including umbrella cloth covers and pillow covers except when made out of pure silk cloth, shall be two paise in a rupee". The tax authority assessed the turnover relating to quilt or razai at the higher rate of 8 per cent on the view that the aforesaid notification did not comprehend the quilts or razais. The question was eventually resolved by a Division Bench of this Court in Sales Tax Reference No. 1 of 1986 dated January 8, 1991 by which it was held that the quilt or razai is a ready-made sewn garment and, therefore, "would clearly fall under the notification aforesaid and qualify for concessional rate of tax under the notification". 2. Subsequently, on March 24, 1992 an amendment was issued in order to take away quilts or razais from the concessional rate of tax of 2 per cent. By inserting the amendment at the appropriate place, the notification reads: "the rate of tax on ready-made sewn garments (excluding quilt) made out of handloom or mill-made cloth excluding fur coats and garments prepared out of pure silk cloth but including umbrella cloth covers and pillow covers except when made out of pure silk cloth shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an article of clothing and clothing includes, inter alia, blankets and quilt being a kind of blanket with different kind of manufacturing process involved, it answers the description of a garment. This issue was concluded, as already stated supra, by the judgment of the Division Bench of this Court in Sales Tax Reference No. 1 of 1986. The question for our consideration is not whether quilt is a ready-made garment, but whether there could be sub-classification among the ready-made garments for the purpose of subjecting the same to different rates of taxation. In other words, whether quilt could be treated as a separate item of taxation different from the other ready-made sewn-garments. 8.. Article 14 of our Constitution incorporates the English concept of equality before law and the American concept of equal protection of laws. In many a public law adjudication the root argument centres round article 14; its horizons are ever expanding and the last word is yet to be said. The 14th Amendment of the American Constitution incorporating the equal protection clause was explained by Justice Field of the American Supreme Court. It implies not only that every individual shall have ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objective. The State Legislatures are presumed to have acted within their constitutional power despite the fact that, in practice, their laws result in some inequality. A statutory discrimination will not be set aside if any state of facts reasonably may be conceived to justify it." 12.. Following that dictum, Justice Stewart in San Antonio's case (1973) 411 US 1 in a separate but concurring judgment opined that unless a conclusion is "wholly arbitrary or capricious" it would not be struck down as violative of the equal protection clause: "Unlike other provisions of the Constitution, the equal protection clause confer; no substantive rights and creates no substantive liberties. The function of the equal protection clause, rather, is simply to measure the validity of classifications created by State laws. There is hardly a law on the books that does not affect some people differently from others." (36 L Ed 16 at page 58). 13.. The legal position in India is no different from the United States in regard to the taxation power. If a tax law promotes a State purpose which is Handbook of American Constitutional Law by Henry Rottschaefer, 1939 Edn., page 669. not legitimate, it a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscretion to pick and choose different varieties of garments for subjecting them to different rates of taxation. The principle of equal protection of laws only enjoins that like should be treated alike. If among the categories of goods answering the description of quilt had the Government introduced different rates of taxation, it would have attracted the vice of article 14. But that is not the case here. Quilt has distinct characteristics, different from other garments like trousers, shirts, coats, etc. It is costlier compared to other varieties of ready-made garments. Its manufacturing process compared to other varieties of ready-made garments. Its manufacturing process as well as the nature of its user are distinct and different as compared to other varieties of ready-made garments. In the circumstances interference by this Court with the impugned notification would amount to denying the State its legitimate power to select different items for different rates of taxation. Article 14 is not intended to bring about uniformity in matters of taxation despite the fact that in judging the constitutionality of tax laws, its application is not excluded. 18.. Depending upon the user, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Sita Ram Bishambhar Dayal v. State of U.P. [1972] 29 STC 206 at 208; AIR 1972 SC 1168 at 1169: "Though a tax is levied primarily for the purpose of gathering revenue, in selecting the objects to be taxed and in determining the rate of tax, various economic and social aspects such as the availability of the goods, administrative convenience, the extent of evasion, the impact of tax levied on the various sections of the society, etc., have to be considered. .........the power to tax must be a flexible power. It must be capable of being modulated to meet the exigencies of the situation." 22.. In Hira Lal Rattan Lal v. Sales Tax Officer, Section M, Kanpur [1973] 31 STC 178 (SC); AIR 1973 SC 1034, the question for consideration was whether a law enacted by the U.P. Legislature to tax cereals and pulses as a separate item of foodgrains quite independent of the unprocessed and unsplit foodgrains, was in breach of article 14 of the Constitution? The contention based on impermissible classification was rejected by the Supreme Court: "The power of the Legislature to specify the nature of the goods, the sale or purchase of which, it will bring to tax is very wide................. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities to take a decision as to the goods which will be subjected to taxation and those which would be exempted from it." 26.. Tested iq the light of the ratio decidendi of the precedents adverted to supra, in our considered opinion, the conclusion is inescapable that the impugned notification does not suffer from the vice of arbitrary classification forbidden by article 14 of the Constitution. In order to pass muster as constitutionally permissible classification under article 14, the essential pre-requisites are: (1) there should be intelligible differentia between the objects grouped together from those left out for differential treatment, and (2) there should be nexus between the classification and the object sought to be achieved. Quilt is a garment used in winter for protection from the cold. It consists of two layers of cloth and cotton inserted between the two and firmly stitched. It is ordinarily of the size of a blanket and used for covering the body from the severity of the weather in winter. Although it may be called a garment with reference to dictionary meaning as was held by this Court in Sales Tax Reference No. 1 of 1986, in many respects it differs from other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Tamil Nadu [1989] 73 STC 346 (SC); (1989) 2 SCC 285 subjecting arishtams and asavas which contain high percentage of alcohol at the rate of 30 per cent while bringing to tax other medicinal preparations at the lower rate of 7 per cent, was held to be discriminatory. The only ground on which the higher rate of tax was imposed in respect of the two ayurveda preparations in question was that "they contained a high percentage of alcohol and could be used as ordinary alcoholic beverages". This reason was held to be not a justifiable one in the face of the finding that those subjected to higher rate of tax and the others to lower rate of tax belong to the same category and if two commodities belong to the same category, there must be a rational basis for discriminating the one from the other for the purpose of imposition of tax. 30.. Whether the husk of soyabean was covered by the notification dated April 7, 1967 issued by the Madhya Pradesh Government under which sales of husk of all grains, cereals, pulses and rice was exempted, was the question that arose for consideration in General Foods Private Limited v. Commissioner of Sales Tax, Bhopal [1987] 66 STC 271 (MP). As the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of cotton seeds since cotton as declared goods, already suffered tax at the purchase point. The Supreme Court observed very realistically: "It is true that cotton in its unginned state contains cotton seeds. But it is by a manufacturing process that the cotton and the seeds are separated and it is not correct to say that the seeds so separated is cotton itself or part of the cotton. They are two distinct commercial goods though before the manufacturing process the seeds might have been a part of the cotton itself. There is hence no warrant for the contention that cotton seed is not different from cotton." 34.. Another three-Judge Bench of the Supreme Court in Babu Ram Jagdish Kumar and Co. v. State of Punjab [1979] 44 STC 159; AIR 1979 SC 1475, interpreting the earlier precedent in Ganesh Trading Co., Karnal v. State of Haryana [1973] 32 STC 623 (SC); AIR 1974 SC 1362 ruled that paddy and rice are different taxable commodities and they are not one and the same even though rice was produced out of paddy, the latter after de-husking would lose its identity as paddy. 35.. Examined in the light of these two rulings what emerges is that the article quilt which the petitioners are ..... 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