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Issues: (i) Whether the amendment to Schedule A by adding the words "manufactured or produced in India" was within the delegated power conferred by section 5(2) of the Bombay Sales Tax Act, 1959. (ii) Whether the classification between fabrics manufactured or produced in India and fabrics imported from abroad was discriminatory or otherwise unconstitutional.
Issue (i): Whether the amendment to Schedule A by adding the words "manufactured or produced in India" was within the delegated power conferred by section 5(2) of the Bombay Sales Tax Act, 1959.
Analysis: Section 5(2) expressly empowered the State Government to add to or enlarge an entry in Schedule A, and also to relax or omit any condition or exception specified therein. The amendment did not travel beyond that power; it merely restricted the exemption by introducing a condition to an existing entry. The delegation therefore authorised the notification and the amendment could not be described as ultra vires or arbitrary.
Conclusion: The amendment was within the delegated power and was valid.
Issue (ii): Whether the classification between fabrics manufactured or produced in India and fabrics imported from abroad was discriminatory or otherwise unconstitutional.
Analysis: The Court applied the settled equality test requiring an intelligible differentia and a rational nexus with the object of the legislation. The Sales Tax Act was treated as a fiscal measure intended to raise revenue, not as a consumer-protection statute. The distinction based on the source of the goods was held to be intelligible, since imported goods and domestically produced goods formed different classes for the purpose of exemption. The State's decision to withdraw the exemption for imported fabrics was found to bear a rational relation to the legislative object and to be supported by the policy rationale reflected in the Finance Minister's speech. The challenge under Articles 14, 301, 303 and 304 failed.
Conclusion: The classification was held to be reasonable and not discriminatory.
Final Conclusion: The writ petition failed because the impugned notification was sustained both as a valid exercise of delegated power and as a constitutionally permissible fiscal classification.
Ratio Decidendi: Where a fiscal statute authorises the delegate to add to or enlarge an exemption entry, the delegate may impose a limiting condition on that exemption, and a distinction based on the source of goods will be valid if it satisfies intelligible differentia and rational nexus with the object of the tax measure.
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