Arbitrary administrative restrictions on exempt diesel supply were invalid where they narrowed a Government scheme without rational basis.

A Government scheme exempting high-speed diesel for fishermen through both Government and authorised private outlets could not be narrowed by memo or committee recommendation. Administrative restrictions that were not contemplated by the Government Orders, and that favoured Government-controlled outlets without evidence of misuse or any rational basis, were treated as arbitrary and discriminatory. The writ court could intervene because the added conditions exceeded the scheme, lacked a valid classification, and defeated the intended benefit to fishermen. The private dealers' challenge was therefore sustained and the State's appeals failed.

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Issues: (i) whether the restrictions imposed on supply of sales tax exempted diesel to authorised private outlets, by memo and committee recommendations, were arbitrary and discriminatory; (ii) whether the writ court could interfere where such restrictions were not contemplated by the Government Orders and the resulting classification lacked a valid basis.

Issue (i): whether the restrictions imposed on supply of sales tax exempted diesel to authorised private outlets, by memo and committee recommendations, were arbitrary and discriminatory.

Analysis: The Government Orders granted exemption for sale of high speed diesel oil to fishermen through Government outlets as well as authorised private outlets, without drawing any distinction in the entitlement. The committee went beyond the scope of the Government Orders and introduced restrictions that favoured Government-controlled outlets, although no misuse by private outlets was shown. A restriction that alters the scheme without support in the enabling Government Orders, and without a rational basis for different treatment, is arbitrary and discriminatory.

Conclusion: The restrictions were arbitrary and discriminatory.

Issue (ii): whether the writ court could interfere where such restrictions were not contemplated by the Government Orders and the resulting classification lacked a valid basis.

Analysis: Though policy decisions ordinarily receive limited judicial review, interference is justified where power is exercised in a colourable manner or where a classification fails the test of reasonableness. The Court found that the object of the scheme was to benefit fishermen, that the authorised private outlets were already brought within the exemption, and that the impugned restrictions defeated the scheme without any demonstrated public interest justification. The absence of any stipulation in the Government Orders also meant that the committee could not add restrictive conditions on its own.

Conclusion: The writ court was justified in interfering, and the restriction-based classification was invalid.

Final Conclusion: The common order in favour of the private dealers was affirmed, and the appeals by the State failed.

Ratio Decidendi: Where a Government scheme confers a benefit on a defined class without distinction, administrative authorities cannot, by memo or committee recommendation, impose additional restrictive conditions that are unsupported by the scheme and that result in arbitrary discrimination.

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