Tax exemption delegation and classification upheld; expired brick exemption could lapse, and post-expiry sales tax remained valid.

Section 5 of the Jammu and Kashmir General Sales Tax Act was upheld because delegating exemption power to the Government was treated as a normal incident of fiscal legislation and not excessive delegation or hostile discrimination. SRO No. 267 also survived article 14 scrutiny, as brick manufacturers were not shown to be similarly situated to tile manufacturers and the classification had a rational nexus to the policy of incentivising a developing industry. The levy of sales tax on bricks after 31 March 1977 was held valid because exemption was a concession that expired by its own terms, and liability revived automatically for later sales without creating retrospective taxation.

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Issues: (i) Whether section 5 of the Jammu and Kashmir General Sales Tax Act, 1962 suffered from excessive delegation or was violative of article 14 of the Constitution of India; (ii) whether SRO No. 267 was discriminatory and violative of article 14 of the Constitution of India; (iii) whether the demand notices and levy of sales tax on bricks from 1 April 1977 were illegal as retrospective taxation or because earlier exemption continued.

Issue (i): Whether section 5 of the Jammu and Kashmir General Sales Tax Act, 1962 suffered from excessive delegation or was violative of article 14 of the Constitution of India.

Analysis: The power to exempt goods from tax was treated as part of the ordinary working details of a taxing statute. In a fiscal law, the legislature may determine the charge and maximum rate while leaving to the Government the choice of goods or classes of goods to be exempted, because taxation necessarily involves classification and administrative flexibility. The exemption provision was held to stand on the same constitutional footing as the charging provision upheld earlier, and the principle accepted in analogous excise cases was applied to sustain the delegation.

Conclusion: Section 5 was held constitutionally valid and not unconstitutional for excessive delegation or violation of article 14.

Issue (ii): Whether SRO No. 267 was discriminatory and violative of article 14 of the Constitution of India.

Analysis: The Court accepted that article 14 forbids class legislation but permits reasonable classification with a nexus to the object of the law. Brick manufacturers and tile manufacturers were not held to be similarly situated, because the tile industry was treated as a developing industry requiring incentive, while the brick industry was treated as established. Reclassification was held permissible when based on changed circumstances and the burden of showing arbitrariness was not discharged.

Conclusion: SRO No. 267 was held not to offend article 14.

Issue (iii): Whether the demand notices and levy of sales tax on bricks from 1 April 1977 were illegal as retrospective taxation or because earlier exemption continued.

Analysis: Exemption was held to be a concession, not a vested right, and could lapse by its own terms without a fresh supersession. Once the earlier exemption notification expired on 31 March 1977, liability under the charging provision revived automatically for subsequent sales. Issuance of demand notices after that date did not make the levy retrospective, because the tax was on sales occurring after the exemption had ceased.

Conclusion: The levy and demand notices were held valid, and the plea of continuing exemption or retrospective taxation failed.

Final Conclusion: The writ petitions were held to be without merit, the challenge to the exemption framework failed, and the petitioners remained liable for sales tax on bricks after the expiry of the earlier exemption.

Ratio Decidendi: In a taxing statute, the Government may validly be entrusted with the power to exempt selected goods or classes of goods, and a withdrawal or non-extension of exemption is valid if the resulting classification is reasonable and bears a rational nexus to the fiscal or policy object of the exemption.

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