Fiscal classification under separate incentive regimes upheld; court refused to compel amendment of delegated legislation to extend benefits.

Notifications amending Rule 31AA and the related sales tax entry were upheld against an Article 14 challenge because exemption and deferment under the Package Scheme of Incentives were materially different regimes with separate conditions. Rule 31AA governed computation under the exemption scheme, while Rule 31B applied to a distinct deferment framework; the differential treatment of DEPB-linked benefits therefore had a rational basis and a nexus with the policy objective. The court also held that it could not grant mandamus to require amendment of delegated legislation so as to extend the benefit to another class of industrial units. The writ petition was dismissed.

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Issues: Whether the notifications amending Rule 31AA and the relevant sales tax entry were discriminatory or ultra vires Article 14 for not extending the same benefit to industrial units opting for tax deferment under Rule 31B, and whether a writ could be issued directing amendment of the rule.

Analysis: The exemption and deferment modes under the Package Scheme of Incentives were held to be distinct and governed by separate conditions. Rule 31AA dealt with computation of benefits under the exemption regime, while Rule 31B provided a separate framework for deferment of tax. The DEPB incentive was treated differently in the two regimes because the underlying classes were not similarly situated. In taxation matters, wider latitude is available to the State in making classifications, and the Court found that the distinction had a rational basis and a nexus with the policy objective. The Court also held that it could not issue a writ of mandamus compelling the State to amend delegated legislation in the manner sought.

Conclusion: The challenge under Article 14 failed, and no direction to amend Rule 31B could be granted.

Final Conclusion: The impugned notifications were upheld, and the writ petition was dismissed.

Ratio Decidendi: A fiscal classification is valid where the grouped classes are governed by materially different incentive regimes and the distinction has a rational nexus with the object of the legislation; a court will not compel the State to amend delegated legislation to extend a benefit to a separate class.

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