Local sales tax exemption for poultry farmers upheld where no discriminatory trade restriction was proved

A sales tax exemption confined to a defined class of poultry farmers within Kerala was examined under Articles 301 and 304(a) and (b). The challenge failed because no sufficient material showed that the exemption created a real restriction on the free flow of trade or amounted to discriminatory taxation of similar goods. The petitioner also did not establish that the goods were similar in the constitutional sense or discharge the burden of proving unconstitutionality. The local policy of encouraging poultry farming, together with practical difficulty in verifying claims by out-of-State farmers, supported the classification.

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Issues: Whether the sales tax exemption notification for poultry farmers within the State was unconstitutional for discriminating against poultry farmers outside the State and for violating Part XIII of the Constitution.

Analysis: The notification was issued in exercise of powers under section 10 of the Kerala General Sales Tax Act, 1963 and granted exemption to a defined class of poultry farmers within the State. The challenge was examined on the footing of articles 301 and 304(a), (b) of the Constitution. The Court held that no sufficient material had been placed to show that the exemption created a real restriction on the free flow of trade or amounted to discriminatory taxation against similar goods. It was also found that the petitioner had not established that the goods in question were similar in the constitutional sense, nor that the burden of proving unconstitutionality had been discharged. The policy rationale of encouraging local poultry farming and the practical difficulty of verifying claims by outside farmers were also treated as supporting the classification.

Conclusion: The notification was not held to be unconstitutional, and the challenge under Part XIII failed.

Ratio Decidendi: A tax exemption confined to a local class does not violate articles 301 and 304(a) unless it is shown to amount to discriminatory taxation of similar goods or to impose a restriction on inter-State trade; the burden of proving such unconstitutionality lies on the challenger.

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