District-wise sales tax exemption classification upheld where differential concession had an intelligible basis and policy nexus.

A sales tax exemption notification under the Madhya Pradesh General Sales Tax Act was challenged as ultra vires and discriminatory because it granted a longer concession to food processing units in advanced districts than to similar units in backward districts. The classification was upheld because the scheme turned on district location, not on the nature of the industry alone, and the State was entitled to frame tax concessions on that policy basis. The differential treatment had an intelligible basis and a rational nexus with the concession policy, so the challenge based on hostile discrimination failed and the notification remained valid.

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Issues: Whether the amended sales tax notification was ultra vires and discriminatory in granting a longer exemption period to food processing units in advanced districts while denying the same benefit to similar units in backward districts.

Analysis: The exemption scheme under section 12 of the Madhya Pradesh General Sales Tax Act, 1958 classified districts into advanced and backward categories and fixed different periods of tax concession on that basis. The challenged amendment extended a longer benefit to industries located in advanced districts as a policy measure. A unit in a backward district could not claim parity merely because it carried on the same activity, since the statutory classification turned on district location and not on the nature of the industry alone. The differentiation was therefore founded on an intelligible basis and did not amount to hostile or invidious discrimination.

Conclusion: The notification was held to be valid and not ultra vires, and the challenge on the ground of discrimination failed.

Ratio Decidendi: Differential tax exemption based on a rational district-wise classification does not offend equality when the classification has an intelligible differentia and a nexus with the policy underlying the concession.

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