Sales tax exemption for in-State poultry farmers upheld as a valid economic measure, not unconstitutional discrimination.

A sales tax exemption notification limited to poultry farmers within Kerala was upheld against constitutional challenge. The Court held that Article 301 does not confer an absolute freedom of trade and must operate within the wider constitutional scheme permitting lawful regulatory and restrictive measures. It further held that a State may grant an exemption or subsidy to a class of dealers or a specific area in the interest of economic development without violating Articles 14 or 304(a) merely because the benefit is not extended uniformly to all persons or locations. The challenge under Article 19(1)(g) was also rejected, and the notification was not unconstitutional.

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Issues: Whether the sales tax exemption notification restricting the benefit to poultry farmers within the State of Kerala was unconstitutional as violating Articles 14, 19(1)(g), 301 and 304(a) of the Constitution of India.

Analysis: The exemption was issued in exercise of the State's power under section 10 of the Kerala General Sales Tax Act, 1963. The challenge was that limiting the concession to poultry farmers within the State and denying it to those having poultry farms outside the State resulted in hostile discrimination and burdened inter-State trade. The Court held that freedom of trade under Article 301 is not absolute and remains subject to the other constitutional provisions permitting lawful regulatory and restrictive measures. It further held that Article 304 must be read with the broader constitutional scheme, and that State action granting an exemption or subsidy to a class of dealers or an area in the interest of economic development is not unconstitutional merely because it is not extended uniformly to all persons everywhere. The contention based on Article 19(1)(g) was also rejected.

Conclusion: The notification was not unconstitutional, and the challenge under Articles 14, 19(1)(g), 301 and 304(a) failed.

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