Exemption for cooked food served for immediate consumption upheld as a valid statutory distinction, not discriminatory.

Item 12 of the Third Schedule to the Kerala General Sales Tax Act, 1963, was analysed as an exemption that turned on the manner of sale, not on the seller's identity. The distinction drawn was between cooked food served for immediate consumption and food sold for later consumption; on that basis, the exemption was held not to create unconstitutional discrimination or infringe the right to carry on trade. The statutory limitation was also treated as part of the legislative text itself, so the objection that it went beyond section 9's prescribed conditions and restrictions was rejected. The exemption scheme was therefore sustained.

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Issues: (i) Whether item 12 of the Third Schedule to the Kerala General Sales Tax Act, 1963, created unconstitutional discrimination or infringed the right to carry on trade by exempting cooked food only when served in hotels, restaurants or similar places. (ii) Whether the restrictions implicit in item 12 were beyond the scope of section 9 of the Kerala General Sales Tax Act, 1963, on the ground that they were not conditions and restrictions prescribed by rules.

Issue (i): Whether item 12 of the Third Schedule to the Kerala General Sales Tax Act, 1963, created unconstitutional discrimination or infringed the right to carry on trade by exempting cooked food only when served in hotels, restaurants or similar places.

Analysis: The exemption under section 9 depended not on the identity of the seller but on the manner of sale. The decisive distinction was between cooked food served for immediate consumption and food sold for later consumption. The Court treated the grievance based on alleged preference to hotels and restaurants as resting on a mistaken premise, because exemption was available to any dealer who served the food in the relevant sense. The levy was also viewed as one whose incidence fell on the consumer, so the dealers' complaint under Articles 14 and 19(1)(g) was not made out. The Court further held that the legislature had chosen to exempt only cooked food sold under the specified conditions and had not adopted a policy of exempting all food preparations.

Conclusion: The challenge based on Articles 14 and 19(1)(g) failed and the exemption scheme was upheld.

Issue (ii): Whether the restrictions implicit in item 12 of the Third Schedule were beyond the scope of section 9 of the Kerala General Sales Tax Act, 1963, on the ground that they were not conditions and restrictions prescribed by rules.

Analysis: Section 9 permitted exemption subject to such restrictions and conditions as may be prescribed, but the restrictions relevant to item 12 were part of the statute itself and not merely rules framed under it. The Court held that the statutory entry could not be struck down on the basis that the conditions were outside the rule-making power, because the legislative text itself supplied the governing limitation.

Conclusion: The objection based on section 9 was rejected.

Final Conclusion: The petitions were without merit, the statutory exemption scheme was sustained, and the proceedings were dismissed.

Ratio Decidendi: An exemption clause that turns on the manner in which food is sold, and not on the seller's identity, is not discriminatory when it applies uniformly to all dealers who satisfy the statutory condition of serving the food for immediate consumption; such a statutory limitation is valid even if it does not embody a broader policy preference advanced by the challengers.

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