Tax exemption classification upheld for hosiery products; knitted garments may be excluded from exemption within statutory power.

A taxing exemption notification may validly distinguish between garments and hosiery products if the classification has a rational basis and does not create inequality within the selected class, so it is not invalid under Article 14. On a broad construction of "hosiery products," including machine-knitted apparel, banians and chaddies fell within that excluded category and were outside the exemption. The notification also remained within the State's power under section 4(2) of the Rajasthan Sales Tax Act, 1954 because it merely regulated the scope of exemption within the statutory framework. The notification was therefore upheld and the goods remained taxable under it.

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Issues: (i) whether the impugned notification excluding hosiery products from the exemption for garments was discriminatory and violative of Article 14; (ii) whether banians and chaddies fell within the expression "hosiery products" in the notification; (iii) whether the notification was beyond the power conferred by section 4(2) of the Rajasthan Sales Tax Act, 1954.

Issue (i): whether the impugned notification excluding hosiery products from the exemption for garments was discriminatory and violative of Article 14.

Analysis: A taxing law is not immune from the equality clause, but the State has wide discretion in selecting the goods it will tax or exempt. A classification is valid if it has a rational basis and there is no inequality within the selected class. The notification exempted garments generally, while excluding hosiery products and hats of all kinds, and this was a permissible classification within the exemption scheme. The challenge was directed only against the notification and not against the parent provision.

Conclusion: The notification was not violative of Article 14.

Issue (ii): whether banians and chaddies fell within the expression "hosiery products" in the notification.

Analysis: The meaning of "hosiery" was taken in its wider English sense as covering machine-knitted articles of apparel and not merely socks or stockings. The words "of all kinds" indicated a broad exclusion. On that construction, banians and chaddies, being knitted garments, were within the excluded category.

Conclusion: Banians and chaddies were hosiery products and were excluded from the exemption.

Issue (iii): whether the notification was beyond the power conferred by section 4(2) of the Rajasthan Sales Tax Act, 1954.

Analysis: Section 4(2) empowered the State Government, if satisfied that exemption was necessary or expedient in the public interest, to exempt goods or classes of goods on specified conditions and payment of a fee. The impugned notification remained within that power because it merely created a permissible classification and modified the scope of exemption without amounting to legislation.

Conclusion: The notification was within the scope of section 4(2) and was valid.

Final Conclusion: The exemption notification was upheld, the goods in question remained taxable under it, and the writ petitions were rejected, leaving the petitioners to pursue the statutory appeals.

Ratio Decidendi: A taxing exemption notification is valid under Article 14 if it makes a rational classification within the statutory power, and goods may be validly excluded from exemption by a broad and permissible description such as "hosiery products".

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