Declared goods restrictions limit State sales tax on cotton fabrics; exemption claim and Article 14 challenge both fail.

Handloom exemption under Rule 3(26) failed because the claim depended on a factual finding that the cloth was handloom-woven, and the adverse finding was not shown to involve any error of law, natural justice breach, or jurisdictional defect warranting Article 226 interference. The sales tax levy on cotton fabrics was invalid to the extent it exceeded the restrictions applicable to declared goods under Article 286(3), Section 15 of the Central Sales Tax Act, 1956, and the Additional Duties of Excise (Goods of Special Importance) Act, 1957, so the assessment had to be modified by excluding the disallowed turnover. The Article 14 challenge failed because the alleged inequality arose from different statutes enacted by separate legislatures.

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Issues: (i) Whether exemption under Rule 3(26) of the Bengal Sales Tax Rules, 1941 could be claimed for handloom-woven cotton cloth despite the adverse factual finding and the availability of statutory remedies. (ii) Whether the levy of sales tax on cotton fabrics under Rule 3(28)(a) read with the Bengal Finance (Sales Tax) Act, 1941 was invalid because it conflicted with Article 286(3) of the Constitution of India and the restrictions imposed by the Central Sales Tax Act, 1956 and the Additional Duties of Excise (Goods of Special Importance) Act, 1957. (iii) Whether the levy offended Article 14 of the Constitution of India.

Issue (i): Whether exemption under Rule 3(26) of the Bengal Sales Tax Rules, 1941 could be claimed for handloom-woven cotton cloth despite the adverse factual finding and the availability of statutory remedies.

Analysis: The claim for exemption depended on a finding that the goods were actually manufactured on handloom. The Commercial Tax Officer rejected the claim on facts, and the petitioner had available appellate and revisional remedies under the taxing statute. No error of law, breach of natural justice, or lack of jurisdiction was shown to justify interference under Article 226 of the Constitution of India against that factual finding.

Conclusion: The claim for exemption under Rule 3(26) failed.

Issue (ii): Whether the levy of sales tax on cotton fabrics under Rule 3(28)(a) read with the Bengal Finance (Sales Tax) Act, 1941 was invalid because it conflicted with Article 286(3) of the Constitution of India and the restrictions imposed by the Central Sales Tax Act, 1956 and the Additional Duties of Excise (Goods of Special Importance) Act, 1957.

Analysis: Cotton fabrics were declared goods, and Parliament had imposed restrictions that limited State sales tax on such goods. By virtue of legislative incorporation, the restrictions in Section 15 of the Central Sales Tax Act, 1956 governed the State levy from 1 April 1958 under Section 7 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Since the Bengal levy exceeded the permissible limit during the relevant period, the assessment on cotton fabrics was inconsistent with the constitutional and parliamentary scheme and could not stand.

Conclusion: The levy on cotton fabrics was invalid and the assessment failed to that extent.

Issue (iii): Whether the levy of sales tax on cotton fabrics offended Article 14 of the Constitution of India.

Analysis: The alleged inequality arose from the combined operation of two different legislative enactments by two distinct Legislatures, each competent to impose its own tax and exemptions. Such a result did not amount to discrimination by a single law within the meaning of Article 14.

Conclusion: The challenge under Article 14 failed.

Final Conclusion: The petition succeeded only in respect of the assessment on cotton fabrics, while the remaining challenge was rejected; the impugned assessment was required to be modified by excluding the disallowed turnover to that extent.

Ratio Decidendi: Where Parliament has, under Article 286(3) of the Constitution of India, prescribed restrictions on the taxation of declared goods, a State sales tax levy that exceeds those restrictions is invalid for the relevant period, and the assessment must fail to that extent.

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