Article 14 equality review invalidates higher sales tax on hotel food and drink sales for arbitrary classification.

The Mysore HC held that the proviso to section 3(1)(b) of the Mysore Sales Tax Act, which imposed a higher sales tax on food and drink sold in hotels, boarding houses, restaurants and canteens, offended Article 14 because the classification lacked a rational basis and no just relation to the object of the tax. The supposed commercial advantage of sales within hotel premises was found too uncertain to support the heavier burden. The levy was therefore invalid and unenforceable, and liability, if any, could arise only under section 3(1)(b) without the impugned proviso.

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Issues: Whether the proviso to section 3(1)(b) of the Mysore Sales Tax Act, which imposed a higher rate of sales tax on sales of food and drink in hotels, boarding houses, restaurants and canteens, was repugnant to Article 14 of the Constitution of India.

Analysis: A taxing provision must satisfy the constitutional requirement of equality and cannot rest on an arbitrary classification. The differentiation between sales of the same articles inside hotels and sales outside them was held to lack a rational basis and a just relation to the object of levying tax on sales. The supposed advantage from sales within hotel premises was found to be uncertain and not a reliable foundation for the heavier burden imposed by the proviso. The restriction in section 11 regarding collection of tax was not treated as the basis of the levy, and the levy was to be made under section 3.

Conclusion: The proviso to section 3(1)(b) was invalid and unenforceable as offending Article 14, and the petitioners were liable, if at all, only under section 3(1)(b) without the impugned proviso.

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