Tax exemption classification based on distinct judicial decisions was upheld as non-arbitrary under the Bengal Finance Sales Tax regime.

Retrospective validation of sales tax under the Bengal Finance (Sales Tax) Act, 1941 was supported after the constitutional expansion of tax on sale or purchase of goods under article 366(29A). The exemption scheme distinguished between restaurants and eating houses on the one hand, and hotels and other suppliers on the other, by tying relief to different judicial decisions affecting those classes. That classification was treated as resting on an intelligible differentia and not as arbitrary discrimination, so the challenge to the differing exemption dates failed and relief against the retrospective levy was denied.

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Issues: Whether the different dates from which exemption was granted to restaurants and to other suppliers under section 26A of the Bengal Finance (Sales Tax) Act, 1941 created an unconstitutional discrimination, and whether the appellant was entitled to relief against the retrospective levy.

Analysis: After the constitutional amendment expanding the concept of tax on the sale or purchase of goods by insertion of clause (29A) in article 366, the State Legislature amended the Bengal Finance (Sales Tax) Act, 1941 to validate the levy retrospectively and to grant limited exemption from the burden of past liability. The exemption for restaurants and eating houses was linked to the date of the judgment which had directly dealt with restaurant sales, while the exemption for hotels and other suppliers was linked to the earlier judgment concerning hotel service. The classification rested on the different dates of the two decisions and on the distinct classes of assessees to whom they applied.

Conclusion: The classification was held to be valid and non-arbitrary. The challenge to the distinction between the exemption dates failed, and the appellant was not entitled to relief.

Final Conclusion: The retrospective validation of the sales tax levy was upheld, and the appeal failed on merits.

Ratio Decidendi: A legislative classification for tax exemption purposes is valid when it is based on an intelligible differentia linked to distinct judicial decisions and is not shown to be arbitrary or irrational.

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