Fiscal exemption power upheld for auction tea sales; altered tax incidence and withdrawal of set-off were not arbitrary.

Section 9(3) of the Assam General Sales Tax Act, 1993 authorised the State Government to notify exemption or reduction in tax on specified goods or classes of transactions, and the notification on tea sold through brokers at auction fell within that power because it merely adjusted the incidence and manner of tax burden without exceeding the statutory scheme. The article also notes that fiscal classification and exemption policy may differentiate between classes, and the withdrawal of the earlier set-off did not by itself establish arbitrariness under Article 14 where the State relied on a rational policy basis and no legal infirmity in classification was shown. The notification was therefore treated as a valid exercise of the enabling power and not unconstitutional.

---

---

Issues: (i) Whether section 9(3) of the Assam General Sales Tax Act, 1993 empowered the State Government to issue the impugned notification granting exemption or reduction in rate in respect of tea sold through brokers at auction; (ii) Whether the impugned notification violated Article 14 of the Constitution of India.

Issue (i): Whether section 9(3) of the Assam General Sales Tax Act, 1993 empowered the State Government to issue the impugned notification granting exemption or reduction in rate in respect of tea sold through brokers at auction.

Analysis: Section 9(3) authorised the State Government, by notification, to make exemption or reduction in rate in respect of tax payable under the Act on sale or purchase of specified classes of goods, including at specified points of sale or for specified classes of persons. The impugned notification operated by reducing the incidence of tax on tea sold in auction and by prescribing the manner in which the tax was to be borne by the broker. The provision was therefore within the statutory power to grant exemption or reduction in rate, and did not exceed the legislative scheme merely because the tax incidence was placed on brokers.

Conclusion: The notification was within the scope of section 9(3) and was not without authority of law.

Issue (ii): Whether the impugned notification violated Article 14 of the Constitution of India.

Analysis: The Court accepted that fiscal statutes may differentiate between classes and that exemption provisions are matters of policy. It noted that the earlier set-off available under the repealed regime was not continued under the Assam General Sales Tax Act, 1993, and the State had furnished policy reasons for declining the exemption or set-off, including the treatment of auction price as part of the purchase price and the decision not to extend relief to middlemen. In the absence of arbitrariness or a legal infirmity in the classification, the absence of the earlier set-off could not by itself establish a violation of Article 14.

Conclusion: The notification did not offend Article 14.

Final Conclusion: The impugned notification was upheld as a valid exercise of the State's power to grant exemption or reduction in tax, and the writ petitions failed.

Ratio Decidendi: A fiscal notification issued under a statutory power to grant exemption or reduction in rate will not be invalid merely because it alters the incidence of tax or withdraws an earlier set-off, so long as the measure remains within the enabling provision and is supported by a rational policy basis.

---