TaxTMI 
TaxTMI 
1994 (8) TMI 272
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....ation dated March 6, 1978 (exhibit 1). The petitioner's society was also exempted from payment of tax. This notification was superseded by another notification exhibit 3 dated August 16, 1983, wherein exemption was granted to the products processed and manufactured by the village industries in the State of Rajasthan. The petitioner has challenged the validity of the notification exhibit 3 so also the assessment orders and demand notices issued in pursuance thereof. 3.. Mr. Purohit, learned counsel for the petitioner, has contended that the impugned notification exhibit 3 dated August 16, 1983, is unconstitutional since it levies sales tax on the products of the village industries situated outside Rajasthan and imported to Rajasthan, which can only be levied if a similar tax is imposed on the products of the similar industries in Rajasthan. According to him the imposition of the tax in this manner offends article 304(a) and is also hit by article 14 of the Constitution of India being discriminatory. He has relied on State of Madhya Pradesh v. Bhailal Bhai [1964] 15 STC 450 (SC); AIR 1964 SC 1006, West Bengal Hosiery Association v. State of Bihar [1988] 71 STC 298 (SC); AIR 1988 S....
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........and hereby exempts from tax the sale or purchase of the undermentioned goods on the condition that the said goods are recorded in the registration certificate of the dealer claiming exemption as being so exempted on the recommendation of the Khadi and Village Industries Commission constituted under the Khadi and Village Industries Commission Act of 1956 (Central Act 61 of 1956), or the Rajasthan Khadi and Village Industries Board constituted under the Rajasthan Khadi and Village Industries Act, 1955 (Rajasthan Act 5 of 1955): (1) Cotton punies, sliver, raw and processed wool, knitting wool and lefa; (2) All carding, spinning, weaving, warping, sliver making and hosiery making apparatus and appliances relating to the production of khadi or hosiery goods and spare parts of such apparatus and appliances, including saranjam, ambar charkha and spare parts thereof; (3) Hand-spun and hand-woven khadi and yarns made of cotton, wool, silk or any other natural fibres of animal hair or of mixture of any two or all of them; (4) Readymade garments and other articles made of khadi including raizas, gaddas, pillows and handbags and jerseys, sweaters, socks and hand-gloves made of ....
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....dustries was withdrawn and instead of it the products processed or manufactured in the State, i.e., within the State of Rajasthan were granted exemption from payment of sales tax. 11.. It is no doubt true that article 304(a) enables the Legislature of a State to make laws imposing taxes on goods imported from other States and impose reasonable restriction on the freedom of trade, commerce or intercourse but such imposition can be made if similar goods in the State are also subjected to similar tax, so that there may not be any discrimination between the goods manufactured or produced in that State and the goods which are imported from other States, otherwise it may offend article 301. Undoubtedly, as per sub-section (2) of section 4 of the Act the State Government has vested right and power to grant or not to grant exemptions for payment of tax. 12.. In the instant case, the petitioner's society was importing match boxes from the village cottage industry outside the State and was fulfilling required conditions and levy of sales tax on such import was earlier exempted vide exhibit 1 dated March 6, 1978. By virtue of exhibit 3 the products processed or manufactured in the villa....
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....he other conditions mentioned in the notification are satisfied. Their Lordships of the Supreme Court while setting aside the judgment of the High Court observed as under: "The notification clearly lays down three conditions for the grant of exemption: one of the conditions is that the sale must be of such shoes, chappals, country shoes and footwear as are hand-made and not manufactured on power machine; the second condition is that the sale price must not exceed Rs. 12-8-0; and the third condition is that the sale must be by the manufacturer or any member of his family. The notification when it uses the expression'in case of sale' must refer to the sale which is being exempted from tax in the State; in other words, it has reference to the taxable event in the State as per Schedule 3. That notification makes it clear that the tax is a single point tax, and the taxable event is the sale by the importer or manufacturer in the State. Therefore, the expression 'in case of sale' in the exemption notification can have no reference to a sale outside the State. The High Court was in error when it said that it made no difference whether the sale was by the manufacturer within the State d....