Taxing tapioca: exemption withdrawal upheld where no direct trade obstruction or proven hostile discrimination was shown.

An amendment withdrawing tapioca from the exempted schedule and placing it in the taxable schedule was examined under Articles 301 and 14. The Court held that Article 301 is infringed only where the tax measure directly and immediately impedes the movement of trade; a higher tax burden or reduced trade volume alone is insufficient. On the record, no such direct interference was shown, so the challenge failed. The Court also held that the shift of tapioca into the taxable category was a fiscal policy choice and did not, by itself, amount to hostile discrimination. The amendment was therefore upheld and the writ proceedings were dismissed.

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Issues: (i) Whether the amendment removing tapioca from the exempted Third Schedule and bringing it into the taxable First Schedule violated Article 301 of the Constitution of India. (ii) Whether the same amendment was discriminatory and violated Article 14 of the Constitution of India.

Issue (i): Whether the amendment removing tapioca from the exempted Third Schedule and bringing it into the taxable First Schedule violated Article 301 of the Constitution of India.

Analysis: The challenge under Article 301 required proof that the impugned legislation directly and immediately affected the movement part of trade. The Court held that a mere increase in tax burden or an asserted fall in trade volume was insufficient unless supported by material showing direct interference with the flow of trade. On the record placed, there was no adequate evidence that the amendment had directly and immediately impeded movement of tapioca goods. The Court therefore found no infringement of the freedom of trade, commerce and intercourse protected by Article 301.

Conclusion: The amendment did not violate Article 301 and the challenge on that ground failed, against the assessee.

Issue (ii): Whether the same amendment was discriminatory and violated Article 14 of the Constitution of India.

Analysis: The Court treated the withdrawal of exemption for tapioca as a fiscal policy choice within the Government's revenue-raising powers. The mere fact that tapioca had earlier been included in the exempted category and was later shifted to the taxable schedule did not by itself establish hostile discrimination. No constitutional infirmity was shown in the different treatment of tapioca as a taxable commodity.

Conclusion: The amendment did not violate Article 14 and the challenge on that ground failed, against the assessee.

Final Conclusion: The statutory amendment bringing tapioca within the taxable schedule was upheld, and the writ appeals and writ petitions were dismissed.

Ratio Decidendi: A taxing provision offends Article 301 only when it directly and immediately affects the movement of trade; absent such effect, and absent proven discrimination, the withdrawal of exemption and levy of tax on a commodity is constitutionally valid.

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