Discriminatory tax exemption carve-out for imported bardana was struck down for unequal treatment within the same goods class.

A sales tax exemption notification for bardana was upheld in principle, but the carve-out taxing the first sale by an importer was discriminatory because it imposed a different burden within the same class of goods without a reasonable basis. Bardana was construed broadly to include gunny bags, boxes and other packing material, and the unequal treatment of imported bardana rendered the exception unconstitutional. The exception was severable from the main exemption, so only the discriminatory part failed. The assessment made under that exception was therefore invalid, while the challenge to the levy otherwise did not succeed; refund issues were left to be worked out on proof of payment.

---

---

Issues: Whether the notification exempting bardana from sales tax but saving tax at the first point in the hands of an importer was discriminatory and unconstitutional, and whether the assessment of tax under that notification was valid.

Analysis: The notification issued under Section 4(2) of the Rajasthan Sales Tax Act, 1954 exempted bardana generally but carved out an exception for the first sale by an importer. The term bardana was construed broadly to include not only gunny bags but also other containers such as boxes and packing material. Since the exception operated only against imported gunny bags while other kinds of bardana produced in the State were not subjected to the same tax burden, the classification lacked a reasonable basis and introduced discrimination. The exception was also severable from the main exemption.

Conclusion: The discriminatory exception was unconstitutional and the assessment made under it was invalid; the challenge to the levy failed.

Final Conclusion: The appeals were dismissed, the High Court's invalidation of the tax levy on imported bardana was affirmed, and the question of refund was left to be worked out before the High Court on proof of payment.

Ratio Decidendi: A tax exemption notification that creates an unequal burden within the same class of goods, without a reasonable basis for differentiation, is invalid to the extent of the discriminatory exception.

---