Fiscal exemption can be revised for policy reasons if the classification has a rational nexus and is not arbitrary.

The writ petitions were not barred by res judicata because the earlier decision involved different parties and did not consider the same points now raised. The impugned excise notifications withdrawing concessional duty for matches packed in cardboard boxes with printed labels were also upheld: the State was entitled to revise a fiscal exemption to serve a new policy objective, including favouring labour-intensive production and discouraging labour-saving mechanical processes. The classification retained a rational nexus with that objective and was not arbitrary or violative of Article 14. The revised concession scheme therefore stood sustained.

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Issues: (i) Whether the writ petitions were barred by res judicata in view of the earlier decision upholding similar notifications; (ii) Whether the impugned excise notifications withdrawing concessional duty for matches packed in cardboard boxes with printed labels were arbitrary or violative of Article 14.

Issue (i): Whether the writ petitions were barred by res judicata in view of the earlier decision upholding similar notifications.

Analysis: The earlier decision had been rendered in a different batch in which the present petitioners were not parties, and the points now urged were not the same as those considered earlier. The separation of these writ petitions from the earlier batch also indicated that they were intended to be examined independently. The general principle of res judicata in writ proceedings applies where the same parties seek to reagitate the same question, but that was not the situation here.

Conclusion: The writ petitions were not barred by res judicata.

Issue (ii): Whether the impugned excise notifications withdrawing concessional duty for matches packed in cardboard boxes with printed labels were arbitrary or violative of Article 14.

Analysis: The notifications were issued under the power to grant and amend excise exemptions. The Government had first allowed concession to encourage use of cardboard in place of veneer, but later revised the policy to favour labour-intensive production and to deny the concession where mechanical processes for label affixation resulted in displacement of labour. The Court held that the State could legitimately shift policy in light of economic considerations and competing constitutional objectives, including conservation of timber as well as securing employment. The classification retained a rational basis and had a nexus with the revised object of discouraging labour-saving devices.

Conclusion: The impugned notifications were not arbitrary and did not infringe Article 14.

Final Conclusion: The notifications were upheld and the challenge to the revised excise concession scheme failed.

Ratio Decidendi: A fiscal exemption may be validly modified or withdrawn to further a different legitimate policy objective, and a classification for exemption purposes is sustainable if it has a rational nexus with that objective and is not arbitrary.

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