Discriminatory taxation on imported second-hand clothes was struck down for lacking any rational basis.

Entry 71 of Schedule B of S.R.O. No. 80 dated 12 March 1982 was held discriminatory because it exempted locally purchased second-hand clothes while taxing identical goods imported from outside the State. The State failed to justify the classification or show any rational nexus between the differential treatment and the object of the levy. The Court applied the constitutional prohibition against discriminatory taxation and the free-trade guarantee, holding that imported goods could not be placed at a disadvantage compared with similar local goods. The entry was declared unconstitutional and void to that extent, and the assessment based on it was set aside.

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Issues: Whether entry 71 of Schedule B of S.R.O. No. 80 dated 12 March 1982, which exempted locally purchased second-hand clothes but subjected second-hand clothes imported from outside the State to tax, was discriminatory and unconstitutional.

Analysis: The impugned entry created a clear distinction between locally purchased second-hand clothes and identical goods imported from outside the State. The State did not justify the classification or show any nexus between the discrimination and the object sought to be achieved. A tax measure cannot place imported goods at a disadvantage vis-a -vis similar locally available goods, as such differential treatment offends the constitutional guarantee of free trade and the prohibition against discriminatory taxation. In the absence of a rational basis for the classification, the levy could not be sustained as reasonable under the constitutional scheme.

Conclusion: Entry 71 of Schedule B of S.R.O. No. 80 dated 12 March 1982 was held unconstitutional and void insofar as it discriminated between second-hand clothes imported from outside the State and those purchased locally. The assessment founded on that entry was set aside.

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