Reasonable classification in taxation failed where a higher sales tax rate lacked rational nexus with the Act's object.

The existence of appeal and revision remedies did not bar the High Court from examining a constitutional challenge under Article 226, because statutory authorities could not decide the validity of the taxing provision itself; the writ petition was therefore maintainable. The Court also held that the proviso to Section 3(1)(b) of the Madras General Sales Tax Act, 1939, which imposed a higher rate on sales of food and drink in hotels, boarding houses and restaurants, failed the test of reasonable classification. As the distinction lacked a real and substantial nexus with the object of taxing turnover, it offended Article 14 and was void and unenforceable, so the assessment based on it could not stand.

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Issues: (i) Whether the petition was not maintainable under Article 226 of the Constitution because statutory remedies by appeal and revision were available; (ii) whether the proviso to Section 3(1)(b) of the Madras General Sales Tax Act, 1939, which imposed a higher rate of tax on sales of food and drink in hotels, boarding houses and restaurants, offended Article 14 of the Constitution.

Issue (i): Whether the petition was not maintainable under Article 226 of the Constitution because statutory remedies by appeal and revision were available.

Analysis: The existence of an alternative statutory remedy is not an absolute bar to the exercise of jurisdiction under Article 226 of the Constitution. Where the challenge is to the constitutional validity of the taxing provision itself, the statutory authorities created by the Act cannot decide that question. In such a case, the availability of appeal and revision does not prevent the Court from examining the validity of the impugned provision at the threshold.

Conclusion: The preliminary objection failed, and the petition was maintainable.

Issue (ii): Whether the proviso to Section 3(1)(b) of the Madras General Sales Tax Act, 1939, which imposed a higher rate of tax on sales of food and drink in hotels, boarding houses and restaurants, offended Article 14 of the Constitution.

Analysis: The Court applied the doctrine of reasonable classification and the settled rule that a legislative distinction must rest on a real and substantial basis bearing a reasonable and just relation to the object of the law. The object of the Act was to levy a general tax on sales turnover. The impugned proviso singled out dealers selling food and drink in hotels, boarding houses and restaurants for a higher rate, although the situs of sale or the nature of service did not furnish a rational basis connected with the object of taxing turnover. The discrimination, therefore, lacked a reasonable nexus with the legislative purpose.

Conclusion: The proviso was held to offend Article 14 and was void and unenforceable against the petitioners.

Final Conclusion: The assessment based on the invalid proviso could not stand, and the writ petition succeeded with costs.

Ratio Decidendi: A taxing classification must have a real and substantial basis and a rational relation to the object of the tax, and a provision that arbitrarily singles out a class of dealers for a higher rate without such nexus violates the guarantee of equal protection.

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