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<h1>Unjust taxation distinction struck down as unconstitutional violation of Article 14</h1> The court found that the notification exempting tax for dealers but not for manufacturers under section 6-B of the Karnataka Sales Tax Act violated ... - Issues:Challenge to notification exempting tax for dealers but not manufacturers under section 6-B of the Karnataka Sales Tax Act - Violation of Article 14 of the Constitution - Validity of classification between dealers and manufacturers for taxation purposes.Analysis:The petition was filed by a manufacturer of pharmaceutical preparations challenging a notification issued by the government exempting tax for dealers but not for manufacturers under section 6-B of the Karnataka Sales Tax Act. The petitioner argued that the notification discriminates between dealers and manufacturers who are also dealers, violating Article 14 of the Constitution. The petitioner contended that the distinction made by the government is artificial and not based on any valid reason, thus rendering the notification invalid. The court referred to a previous case where a similar distinction was found to be artificial and struck down.The government argued that under section 8-A of the Act, it has the authority to grant exemptions based on various criteria such as the persons liable to pay tax, commodities, or the stage of tax collection. The government's objective was to ensure tax collection at the stage of sale by the manufacturer to reduce burdens at further stages. However, upon close examination of the notification, the court found that the exemption was not granted based on the stage of tax collection or the commodity in question. The court observed that there was no discernible distinction between a dealer who is a manufacturer and an ordinary dealer regarding tax payment under section 6-B of the Act.The court concluded that since there was no real distinction between a dealer and a manufacturer who is also a dealer, the notification excluding manufacturers or their agents from the exemption was unjustified. The court held that the notification was to be quashed to the extent it excluded manufacturers or their agents, while the rest of the notification would remain valid. Therefore, the petition was allowed, and the rule was made absolute in favor of the petitioner.
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