Handloom exemption and tax classification upheld where printed articles were treated as finished goods, not cloth.

Printed handloom saris, quilt covers and bed-covers were held outside the exemption for "cloth manufactured on handlooms" because the material had been converted into finished articles for wearing or household use, not sold as cloth. The sales tax classification challenge also failed: State and specified public bodies were treated as a distinct class linked to the objective of promoting cottage industries, and the mere existence of exemption powers did not by itself create unconstitutional discrimination. The exemption machinery was treated as severable from the charging provisions, so any defect in the exemption clauses would not have invalidated the Act as a whole.

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Issues: (i) whether printed handloom articles such as saris, quilt covers and bed-covers remained "cloth manufactured on handlooms" within the exemption notification, and (ii) whether the exclusions and exemption powers in the sales tax law created an unconstitutional discrimination under Articles 14 and 13 of the Constitution, and if so whether the impugned provisions were severable.

Issue (i): whether printed handloom articles such as saris, quilt covers and bed-covers remained "cloth manufactured on handlooms" within the exemption notification

Analysis: The exemption was confined to cloth and not to clothes or garments. The articles sold were prepared in specific forms for use as wearing apparel or household articles, and the printing and shaping of the material had altered its character from cloth to finished articles.

Conclusion: The articles were not covered by the notification and no exemption was available on that basis.

Issue (ii): whether the exclusions and exemption powers in the sales tax law created an unconstitutional discrimination under Articles 14 and 13 of the Constitution, and if so whether the impugned provisions were severable

Analysis: The State and Central Governments, and the specified institutions, were treated as a separate class because their sales activity was directed to encouraging cottage industries and was not carried on for profit. A classification founded on an intelligible differentia with a rational relation to the object of promoting cottage industries was therefore permissible. The mere existence of enabling provisions for exemption or reduction did not create actual discrimination in the absence of a notification. In any event, the statute was primarily a revenue measure, and the exemption provisions were held to be separable from the general charging scheme without affecting the validity of the rest of the enactment.

Conclusion: The challenged provisions were not unconstitutional, and even if any exemption clauses were invalid they were severable from the rest of the Act.

Final Conclusion: The petition failed because the claimed exemption did not apply and the assailed classification and exemption machinery did not invalidate the sales tax law as a whole.

Ratio Decidendi: A fiscal statute may validly create a separate class for State or public bodies engaged in non-profit activities promoting a constitutional objective, and exemption provisions in a revenue enactment are severable where the charging provision can stand independently.

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