Geographical tax differentiation under Article 14 requires rational basis and proper evidence before constitutional challenge can be decided.

A geographical distinction in tax burdens arising from the continuation of pre-reorganisation law is not unconstitutional merely because it operates only in one region. The differential levy may survive Article 14 if it rests on a reasonable classification based on historical necessity or administrative expediency and has a rational relation to the statutory object. The Court also stressed that a constitutional challenge of this kind cannot be properly resolved without adequate pleadings and evidence on the comparative tax burden and the basis for the differentiation. On the record before it, the matter required remand for fresh factual enquiry.

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Issues: (i) Whether the continuance of the Bhopal agricultural income-tax in part of the reorganised State of Madhya Pradesh, while no similar levy operated in the rest of the State, violated Article 14 of the Constitution; (ii) whether the writ petition could be finally decided without proper pleadings and evidence on the rational basis, if any, for the continued differential tax burden.

Issue (i): Whether the continuance of the Bhopal agricultural income-tax in part of the reorganised State of Madhya Pradesh, while no similar levy operated in the rest of the State, violated Article 14 of the Constitution.

Analysis: A differential tax burden after reorganisation is not, by itself, unconstitutional. Unequal operation of laws may be sustained where it rests on a reasonable geographical classification founded on historical necessity or administrative expediency and bears a rational relation to the object of the statute. The mere fact that the law remained operative only in the former Bhopal area did not automatically establish hostile discrimination. The real enquiry was whether, at the relevant time, the continued levy still had a rational basis in the overall pattern of taxation and land revenue burdens in the different regions of the State.

Conclusion: The continuance of the levy was not shown on the existing record to be unconstitutional under Article 14.

Issue (ii): Whether the writ petition could be finally decided without proper pleadings and evidence on the rational basis, if any, for the continued differential tax burden.

Analysis: The pleadings were inadequate and neither side placed the necessary material before the High Court. The assessee had not furnished particulars sufficient to establish hostile discrimination, while the State had not produced evidence to justify the continuance of the tax as part of a rational tax structure. The Court held that, in a matter of this kind, the constitutional challenge could not be disposed of satisfactorily without a proper factual enquiry into the incidence of the total tax burden across the regions of the reorganised State.

Conclusion: The matter required remand for fresh pleadings and evidence.

Final Conclusion: The appeal succeeded, the High Court's order was set aside, and the case was sent back for retrial so that the constitutional challenge could be adjudicated on a proper factual foundation.

Ratio Decidendi: A geographical differentiation in taxation caused by the continuation of pre-reorganisation laws is permissible only so long as it retains a rational basis and bears a reasonable relation to the object of the law; a claim under Article 14 requires proper pleadings and evidence showing unjustified discrimination among similarly situated persons.

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