Conditional sales tax exemption for footwear priced at a threshold was not a general turnover-tax exemption; retrospective amendment upheld.

Turnover tax treatment of footwear sold at Rs. 15 or less per pair was examined under the Bengal Finance (Sales Tax) Act and Rules. The text states that rule 3(97) was a sales tax exemption of a conditional kind tied to price, not a general exemption for turnover-tax purposes under section 6B(2)(e), and that rule 3(2A) did not extend deduction or exemption to such sales under section 6B(2)(g). It also notes that the retrospective deletion of section 6B(2)(e) by the 1987 amendment was treated as clarificatory and valid. Constitutional objections under articles 301, 304(b), and 19(1)(g) were rejected because a tax or withdrawal of exemption was not, by itself, a direct trade barrier or confiscatory burden.

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Issues: (i) whether turnover tax was deductible or exemptible in respect of sales of footwear priced at Rs. 15 or less per pair under rule 3(2A) read with section 6B(2)(g) of the Bengal Finance (Sales Tax) Act, 1941; (ii) whether sales of footwear priced at Rs. 15 or less per pair under rule 3(97) of the Bengal Sales Tax Rules, 1941 were generally exempt so as to fall within section 6B(2)(e), and whether the retrospective deletion of section 6B(2)(e) by the West Bengal Taxation Laws (Amendment) Act, 1987 was valid; (iii) whether the 1987 amendment offended article 301 and article 304(b) of the Constitution of India; and (iv) whether the 1987 amendment was confiscatory or violated article 19(1)(g) of the Constitution of India.

Issue (i): whether turnover tax was deductible or exemptible in respect of sales of footwear priced at Rs. 15 or less per pair under rule 3(2A) read with section 6B(2)(g) of the Bengal Finance (Sales Tax) Act, 1941

Analysis: Rule 3(97) was held to be a rule framed under section 5(2)(a)(vi) for sales tax purposes and not under section 6B(2)(g). Rule 3(2A) was identified as the rule actually framed for clause (g), but it did not prescribe footwear sold at a price not exceeding Rs. 15 per pair. The provision therefore did not extend any deduction or exemption in respect of such sales for turnover tax computation.

Conclusion: The claim to deduction or exemption under section 6B(2)(g) failed and was against the assessee.

Issue (ii): whether sales of footwear priced at Rs. 15 or less per pair under rule 3(97) of the Bengal Sales Tax Rules, 1941 were generally exempt so as to fall within section 6B(2)(e), and whether the retrospective deletion of section 6B(2)(e) by the West Bengal Taxation Laws (Amendment) Act, 1987 was valid

Analysis: The exemption under rule 3(97) was treated as a conditional exemption because it operated only when the sale price did not exceed Rs. 15 per pair, and not as a general unconditional exemption. On that footing, it was not covered by section 6B(2)(e). The retrospective omission of section 6B(2)(e) was held to be clarificatory and valid, following the same principle earlier applied to a similar rule, and the absence of transfer of rule 3(97) to Schedule I supported that conclusion.

Conclusion: Rule 3(97) was not a general exemption and the retrospective deletion of section 6B(2)(e) was valid, against the assessee.

Issue (iii): whether the 1987 amendment offended article 301 and article 304(b) of the Constitution of India

Analysis: The governing principle applied was that only a direct and immediate restriction on the free flow of trade and commerce falls within article 301. A mere tax, including an enhanced tax rate or withdrawal of exemption, does not by itself amount to such a restriction. The amendment was not shown to create any trade barrier or direct impediment to movement of goods.

Conclusion: The challenge under article 301 and article 304(b) failed and was against the assessee.

Issue (iv): whether the 1987 amendment was confiscatory or violated article 19(1)(g) of the Constitution of India

Analysis: The applicable principle was that rate fixation and tax burden lie primarily within legislative judgment, and a tax does not become confiscatory merely because it affects profitability. Since the assessee was not compelled to sell footwear at the specified price and no direct restriction on the freedom to carry on business was established, the amendment was not treated as confiscatory or as infringing the right under article 19(1)(g).

Conclusion: The challenge under article 19(1)(g) failed and was against the assessee.

Final Conclusion: The impugned turnover tax liability on sales of footwear priced at Rs. 15 or less per pair was sustained, and the constitutional and statutory challenges to the amended turnover tax regime were rejected.

Ratio Decidendi: A conditional exemption confined by a price threshold is not a general exemption for turnover-tax purposes, and a retrospective amendment removing such a deduction is valid when it merely clarifies the legislative position; further, a tax or enhanced tax liability is not unconstitutional unless it amounts to a direct and immediate restriction on trade or a confiscatory burden.

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