Tax exemption classification upheld where differential treatment was found permissible and not arbitrary under Article 14.

A State sales tax exemption limited to Khadi Ashram, Panipat and its decentralised units was upheld against an Article 14 challenge. The classification between that entity and other co-operative societies was treated as permissible in a taxing statute, since distinctions based on turnover and other relevant features are not arbitrary unless palpably unreasonable. Earlier relief in a separate writ petition did not assist the petitioners because it rested on the State's own stand in that matter. The petitioners were therefore denied the unrestricted exemption claimed, and the notification remained valid.

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Issues: Whether the State's notification granting total sales tax exemption to Khadi Ashram, Panipat and its decentralised units, while denying the same unrestricted exemption to the petitioner-societies, was discriminatory and violative of Article 14 of the Constitution of India.

Analysis: The issue had already been examined in the Supreme Court in relation to the same notification. The classification between Khadi Ashram, Panipat and its units on the one hand, and other co-operative societies on the other, was held not to be discriminatory. In a taxing statute, classification based on turnover and other distinguishing features is permissible, and interference is warranted only where the classification is palpably arbitrary. The Court also noted that the earlier relief granted in another writ petition rested on the State's own stand in that case and did not assist the petitioners here.

Conclusion: The challenge to the notification failed. The exemption limited to Khadi Ashram, Panipat and its units was upheld as valid, and the petitioners were not entitled to the same benefit.

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