TaxTMI 
TaxTMI 
1974 (1) TMI 30
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....have been subjected by the impugned notification to excise duty at the same onerous rate as has been applied to larger producers, wilfully indifferent to a historically well-recognised classification between the smaller and the larger group of match manufacturers, and the injury sustained flows from this failure to classify and deal differentially with sets of producers who are unequal in their economic capabilities in the matter of production and marketing - a sort of traumatic equality. In brief, equal treatment of unequal groups may spell invisible yet substantial discrimination with consequences of unconstitutionality. That dis-similar things should not be treated similarly in the name of equal justice is of Aristotelian vintage and has been, by implication, enshrined in our Constitution. 3. The facts which unfold the case of the appellants may now be set out. The match industry in India has grown over the decades and Shivakashi occupies an important place in the production geography of matches. From the point of view of manufacturing techniques, the safety match industry in our country comprises two distinct categories the mechanised sector occupied by a few big whales and ....
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.... levied for the four classes of units, namely, `A', `B', `C' and `D'. Based on these recommendations, the slab system of excise duty was abandoned by Government and the category-wise rate was adopted. The impact on production of the differential duty scheme was a process of splintering of the `B' group to inhale the advantages offered to the `C' group resulting in a reduction in total production, thanks to the thinning tendency in the `B' group, indeed, the fiscal misdirection, by showing concessional rates to the `C' category as against `B' category, generated pseude — `C' category producers from out of the erstwhile `B' category, so that the bona fide small scale manufacturers falling in the `C' category were flooded out. Moreover, the genuine `C' category manufacturers were exploited by the middlemen who snapped up the margin of tax concession for themselves, defeating the object of the concessional duty for the small producer. This dilemma induced government to revise its fiscal thinking and led to the impugned notification which withdrew the tax concession to the `C' category and equated it with the `B' category. 6. Section 3 of the Central Excises and Salt Act, 1944 empo....
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....t that in the past among the non-mechanised manufacturers of matches a further classification based on viability had been made. It is also true that the financial resources, the capacity to command a market on their own without depending on intermediaries etc. marked off the `B'category from the `C' category. But then experience gathered subsequently disclosed certain evils which the state took note of and endeavoured to set right. Ultimately, the present notification was issued obliterating the distinction which gave a concessional edge to the `C' group over the `B' group. 10. The learned counsel for the appellants persuasively pleaded that this unsocialistic step has left the small producers like his clients in the cold and virtually compelled them to retire from the industry. May be, there is force in this grievance. Instead of protecting the tiny manufacturer from the injurious intermediary and inhibiting the larger producer from resorting to the device of self-division and other make-believe tactics, the State has resorted to a policy of equal levy from both which, according to the counsel, hits the poor and helps the better-off. This is a criticism of legislative judgment,....
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....evenue or other objects. Every differentiation is not a discrimination. But classification can be sustained only if it is founded on pertinent and real differences as distinguished from irrelevant and artificial ones. The constitutional standard by which the sufficiency of the differentia which form a valid basis for classification may be measured, has been repeatedly stated by the courts. If it rests on a difference which bears a fair and just relation to the object for which it is proposed, it is constitutional. To put it differently, the means must have nexus with the ends. Even so, a large latitude is allowed to the State for classification upon a reasonable basis and what is reasonable is a question of practical details and a variety of factors which the court will be reluctant and perhaps ill-equipped to investigate. In this imperfect world perfection even in grouping is an ambition, hardly ever accomplished. In the context, we have to remember the relationship between the legislative and judicial departments of Government in the determination of the validity of classification. Of course, in the last analysis courts possess the power to pronounce on the constitutionality of t....
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....ich is visibly linked to productive process, has been adopted in the broad classification of power users and manual manufacturers. It is irrational to castigate this basis as unreal. Indeed, the soundness of this distinction is not denied. The challenge is founded on the failure to mini-classify between large and small sections of manual match manufacturers. But ours is not to reason why, that being a policy decision of Government dependent on pragmatic wisdom plying on imponderable forces at work. Our jurisdiction halts where the constitutional touchstone of a rational differentia having a just relation to the legislative end to revenue raising is satisfied. Gratuitous judicial advice on the socialistic direction of fiscal policy is de trop. We desist from that enterprise and leave the petitioners and men of his ilk to seek other democratic remedies in that behalf, it being beyond our area normally to demolish the tax structure because micro-classification among a large group has not been done by the State. Absolute justice to every producer is a self-defeating adventure for any administration and general direction, not minute classification, is all that can be attempted. For thes....