Rational classification in fiscal exemption upheld where manufacturers were excluded from retrospective purchase-tax relief on rubber cess.

Rubber cess under section 12 of the Rubber Act was treated as a duty of excise linked to production, and the Government's exemption notification was framed to relieve only dealers other than manufacturers and planters from retrospective purchase-tax hardship. The classification was held rational because manufacturers formed a distinct class, and the exemption was confined to those who had not earlier been treated as liable on the cess element. A manufacturer could not claim the benefit merely because its manufacturing unit was outside Kerala, and the exclusion of manufacturers from the exemption was not discriminatory.

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Issues: Whether a manufacturer purchasing rubber in Kerala could claim exemption under the notification meant for dealers other than manufacturers and planters, and whether the exclusion of manufacturers from that exemption was discriminatory.

Analysis: Rubber cess under section 12 of the Rubber Act is a duty of excise whose incidence is relatable to the production of rubber, though collection may occur later. In the light of the Supreme Court's holding that such cess forms part of the purchase turnover, the Government issued the notification to relieve only dealers other than manufacturers and planters from the hardship of retrospective levy. The classification between manufacturers and non-manufacturing dealers was held to be rational because manufacturers constituted a distinct class, and the exemption was intended only for those who had not earlier been treated as liable to purchase tax on the cess element. The appellant, being a manufacturer, could not claim the benefit merely because its manufacturing unit was outside the State.

Conclusion: The exclusion of manufacturers from the exemption was not discriminatory, and the appellant was not entitled to the benefit of the notification.

Final Conclusion: The challenge to the denial of exemption failed, and the levy was sustained.

Ratio Decidendi: A fiscal exemption granted to relieve retrospective hardship may validly distinguish between manufacturers and non-manufacturing dealers when the two are different classes and the exemption is confined to the class for which the relief was intended.

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