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PETITIONER: JAIPUR HOSIERY MILLS (P) LTD., JAIPUR

       Vs.

RESPONDENT: THE STATE OF RAJASTHAN & OTHERS.

DATE OF JUDGMENT: 27/04/1970

BENCH: GROVER, A.N. BENCH: GROVER, A.N. SHAH, J.C. HEGDE, K.S.

CITATION:  1971 AIR 1330            1971 SCR  396  CITATOR INFO :  R          1976 SC 670  (24)  RF         1986 SC1085  (14)  R          1990 SC1637  (21)

ACT: Constitution of India, 1950, Art. 14-Rajasthan Sales Tax Act 1950  s.  4(2)-Exemption  granted by  notification  to  some garments-Not extended to hosiery, articles-If violates  Art. 14.

HEADNOTE: On January 31, 1958, a notification was issued by the  State Government  under  s. 4(2) of the Rajasthan Sales  Tax  Act, 1950,  exempting from tax the sale of any garment the  value of which did not exceed Rs. 4. In a writ petition filed by a manufacturer of vests and underwears, (hosiery articles  the High  Court  held  that  the  notification  covered  hosiery articles  also.   On March 26, 1962,  the  State  Government issued  another  notification  under  s.  4(2)  of  the  Act exempting  from  tax the sale of any garment  the  value  of which  did not exceed Rs. 4 but the exemption was  not  made ,applicable  to  ’hosiery products and hats of  all  kinds’. The  appellants  who  were  doing  business  in  vests   and underwears  of knitted fabric challenged in  writ  petitions the notifications on the ground that it violated Art. 14  of the  Constitution.  The High Court dismissed  the  petitions and held vests and underwears came under ’hosiery product’. In appeal to this Court, HELD  : (1) A taxing status can be challenged on the  ground of  infringement  of  Art. 14,  but  since  the  Legislature possesses  a large freedom of classification in  matters  of taxation,  it  can  exercise wide  discretion  in  selecting persons  or objects which will be taxed, and, a  statute  is not  open to attack on the there ground that it  taxes  some persons  or objects and not others.  It must be  shown  that within   the  range  of  its  selection  the  law   operates unequally.   Therefore,  it is not for the Court  to  decide whether  the  policy of exempting articles made  from  woven cloth was justified or that hosiery articles should also  be given the same exemption. [397 G-H; 398 A] (2)  The  High Court ought not to have gone into the  matter

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whether vests and underwears are hosiery products as it  was for  the  assessing  authorities to decide,  in  each  case, whether the taxed goods were hosiery products.[1398 F-G]

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos. 77 to  84 of 1967. Appeals from the judgment and order, dated November 22, 1966 of  the Rajasthan High Court in li.  B. Civil Writs Nos.  81 and 590 of 1965 and 9, 201, 217, 511, 512 and 513 of 1966. H.   R..Gokhale,  Bishamber  Lal  and N. K.  Puri,  for  the appellants. A.K. Sen and K. B. Mehta, for the respondents. The Judgment of the Court was delivered by Grover.  J These eight appeals by certificate arise out of a common judgment of the Rajasthan High Court dismissing the 397 petitions  under Art. 226 of the Constitution filed  by  the appellants. The appellants carry on the business, interalia, of manufac- ture  and  sale  of  vests  and  underwears  (Baniyans   and Chaddies)  out of knitted fabric.  A On January 31, 1958  a. notification  was  issued by the State Government  under  s. 4(2) of the Rajasthan Sales Tax Act 1950, hereinafter called the  "Act",  exempting  from tax the  sale  of  any  garment whether  prepared within or imported from outside  Rajasthan the value. of which did not exceed Rs. 4/- in single  piece. In spite of the. aforesaid notification the authorities  did not  exempt from payment of sales tax the sale of vests  and underwears  the  value of which did not exceed  Rs.  4/-  in single piece.  The notification was interpreted to mean that the  goods manufactured by the appellants were not  garments within  its meaning.  M/s Pareek Hosiery  Products,  Jaipur, took the matter to the High Court by way of a writ  petition under Art. 226 of the Constitution which was allowed and  it was  held that the vests and underwears were covered by  the said notification, On March 26, 1962 the State of  Rajasthan issued another notification in exercise of the powers  under s.  4(2)  of the Act by which the sale of  garments  whether prepared  within  or imported, from  outside  Rajasthan  the value of which did not exceed Rs. 41- in a single piece were exempted  from  payment  of sales  tax  but  this  exemption excluded  "hosiery  products  and hats of  all  kinds."  The appellants  were subjected to sales tax in respect of  sales of vests and underwears of knitted fabric for the periods of assessment  ranging  between April 1, 1961  to  October  31, 1965.  Penalties were also levied on them.  It was in  these circumstances  that the appellants filed writ  petitions  in the High Court. The principal attack on the impugned notification was  based on  Art.  14 of the Constitution.  It was urged  before  the High Court as it has been contended before us that there was no  rational basis’ for classification between  garments  as such  and knitted garments like Baniyans and  Chaddies.   In the  affidavit  which was filed by the State no  reason  was given why particular kind of garments were exempted  whereas others  of  the  same value were not given  the  benefit  of exemption.,  It  is  well settled  that  although  a  taxing statute can be challenged on ,Idle ,,-round of  infringement of  Art. 14 but in deciding whether the law  challenged  its discriminatory it has to be borne in mind that in matters of taxation the legislature possesses the large freedom in  the matter  of  classification.   Thus wide  discretion  can  be

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exercised  in  selecting persons or objects  which  will  be taxed  and  the statute is not open to attack  on  the  mere ground that it taxes some persons or objects and not others. It is only when within the range of its 398 selection the law operates unequally and cannot be justified on the basis of a valid classification that there would be a violation ,of Art. 14. Section  4(2)  of  the Act provides that  no  tax  shall  be payable  ,on  the sale or purchase of any  of  the  exempted goods  if  the  ,conditions specified in  column  3  of  the schedule  are satisfied.  Where the State Government  is  of opinion  that  it is necessary or ,expedient in  the  public interest  so to do, it may by notification ,exempt from  tax the sale or purchase of any goods or class of ,goods or  any person  or  class of persons on such conditions as may  be specified.    The  impugned  notification  was   issued   in accordance with this section.  It is for the State to decide which  granting the exemption by means of a notification  as to  the  class of goods which should be exempted  in  public interest.   As  rightly pointed out by the High  Court  the notification  makes  a classification  between  garments  in general  the  value of which does not ,exceed Rs. 4/-  in  a single   piece  and  hosiery  products   including   hosiery garments.  Hosiery products generally are knitted  articles. They  are different from woven articles.  It is not for  the court  to ,decide whether the policy of  exempting  articles made  from  woven cloth  was  justified  or  that  hosiery articles  should have been given the exemption in  the  same way  as  other  garments.  It is entirely  ’for  the  taxing authorities to take a decision as to the goods which Will be subjected to taxation and those which would be exempted from it.  As no other discriminatory treatment has been suggested ,on  behalf  of the appellants we must hold  in  concurrence with  the view  of  the  High  Court  that  the   impugned notification is not hit by Art. 14 of the Constitution; It  has  been pointed out that the High Court  proceeded  to ,decide  whether the Baniyans and Chaddies were included  in the  ’term "hosiery products’.  Such a decision  should  not have been given by the High Court but should have been  left to  the assessing authorities dealing with  each  individual case.  In our judgment the High Court ought not to have gone into that matter as it was for the assessing authorities  to decide  in  each  case  whether the  goods  which  had  been subjected   to  tax  were  hosiery  products,   With   these observations   the   appeals  are  dismissed  but   in   the circumstances there will be no order as to costs. V.P.S.                           Appeals dismissed. 399