Selective tax concession for co-operative society upheld where uniform tax rate caused no Article 304(a) discrimination.

A selective tax concession for a co-operative society under the Kerala General Sales Tax Act was examined against Articles 301 and 304(a) of the Constitution. The general tax rate for locally manufactured goods and goods imported from other States was uniform, so no discriminatory differential rate existed to support a challenge under Article 304(a). The exemption was limited to sales to members of the society and was treated as a public-interest concession rather than a constitutionally impermissible restraint on inter-State trade. The notification was therefore valid and did not offend Article 304(a).

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Issues: Whether the exemption notification issued under section 10 of the Kerala General Sales Tax Act, 1963 granting tax concession to specified co-operative societies offended article 304(a) of the Constitution of India or impeded the freedom of trade and commerce under article 301 of the Constitution of India.

Analysis: The general rate of tax applicable to locally manufactured goods and goods imported from other States was the same, and there was no differential tax rate that could sustain a claim of discrimination. The concession operated only as an exemption in favour of a co-operative society and was confined to sales to its members. On that basis, the grant of concession was regarded as being in public interest and not as a constitutionally impermissible restriction on inter-State trade.

Conclusion: The exemption notification did not offend article 304(a) of the Constitution of India and was valid.

Ratio Decidendi: Where the general tax rate is uniform for local and imported goods, a selective exemption or concession granted in public interest to a co-operative society does not, by itself, violate article 304(a) of the Constitution of India.

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