State-limited fiscal concessions may survive constitutional scrutiny where the classification has an intelligible basis and rational nexus.

State-limited fiscal concessions for re-rolled finished products can be sustained where the exemption is confined to goods manufactured within the State and the classification has an intelligible basis with a rational nexus to the scheme's object. A court will not rewrite a notification to extend the benefit selectively to outside-State manufacturers by severing offending words. The restriction was also treated as non-discriminatory under article 14 because the place of manufacture provided a reasonable distinction, including verification concerns and the policy choice to prefer local industrial units.

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Issues: (i) Whether the Government orders granting exemption or set-off to re-rolled finished products only when manufactured within Andhra Pradesh were invalid as offending articles 301 and 304 of the Constitution of India; (ii) Whether the same restriction amounted to hostile discrimination violating article 14 of the Constitution of India.

Issue (i): Whether the Government orders granting exemption or set-off to re-rolled finished products only when manufactured within Andhra Pradesh were invalid as offending articles 301 and 304 of the Constitution of India.

Analysis: The notification-based concession was confined to finished products manufactured within the State by re-rollers located there. The Court held that even if the restriction appeared prima facie inconsistent with the constitutional guarantees of free trade, the petitioner was not seeking invalidation of the notifications in their entirety. The relief sought was a selective extension of the benefit to outside-State manufacturers by severing the offending words, which the Court declined to do. It found that the notifications were framed as a package and that, if the concession were constitutionally impermissible, the proper consequence would be uniform treatment, not judicial rewriting of the exemption.

Conclusion: The challenge based on articles 301 and 304 did not entitle the petitioner to the relief sought.

Issue (ii): Whether the same restriction amounted to hostile discrimination violating article 14 of the Constitution of India.

Analysis: A taxation measure enjoys wide latitude in classification, and exemption or concession schemes may validly distinguish between classes so long as the classification is reasonable. The situs of manufacture within the State furnished an intelligible basis for the distinction because the State could legitimately prefer local industrial units in granting fiscal concessions and could also find it difficult to verify whether goods brought from outside were manufactured from tax-suffered raw material purchased within Andhra Pradesh. The distinction therefore had a rational nexus with the object of the notifications. The Court also noted the risk of unjust enrichment if retrospective relief were granted after the tax had potentially been collected from customers.

Conclusion: The notifications were not violative of article 14.

Final Conclusion: The writ petition failed because the impugned fiscal concessions were upheld against the constitutional challenge and no discretionary relief was warranted.

Ratio Decidendi: In fiscal exemption schemes, a State may validly restrict concession to goods manufactured within the State where the classification has an intelligible basis and a reasonable nexus with the object of the scheme, and a court will not rewrite the notification to extend the benefit selectively.

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