GUJARAT CARBON LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) BY these original petitions as amended, the petitioners seek to quash the notifications, exhibits P1 to P3 in O. P. Nos. 3301 and 3302 of 1984 and exhibits P1 and P3 in O. P. No. 4273 of 1984 issued by the Government under the Kerala General Sales Tax Act, 1963. The petitioners are manufacturers of carbon black. Their manufacturing units are located outside Kerala. The 4th respondent in O. P. Nos. 3301 and 3302 of 1984 is a company having its factory at Ambalamukal, a place within the State. It had started manufacturing carbon black from January, 1984 onwards.

(2.) AS per exhibit P1 notification produced in O. P. Nos. 3301 and 3302 of 1984, the six items mentioned therein, manufactured within the State and sold for use in the manufacture of tyre within the State, were exempted from liability to sales tax. Carbon black is item 2 in that notification. AS per exhibit P2 notification dated 28th February, 1984, sale of carbon black manufactured within the State is exempted from sales tax for a period of three years from the date of the notification. Exhibit P3 notification was issued by the Government shortly after these original petitions were filed. It exempts tax payable under the Act on the sale of carbon black manufactured by any newly established manufacturing concern which was commenced commercial production on or after the 1st January, 1984 of the first three years commencing from the date of production. The original petitions were amended seeking relief to quash also exhibit P3.

(3.) EXHIBIT P3 is in supersession of exhibit P2 and exhibit P2 is no longer in force. Since the benefit of exhibit P3 is available to all manufacturers of carbon black, both within the outside the State if they have started production on or after 1st January, 1984, we fail to see how the exemption from taxation granted to all such manufacturers can be said to be in violation of articles 301 and 304 (a ). The submission of behalf of the petitioners is that exhibit P3 is designed to benefit the 4th respondent and it is a colourable exercise of power vested in the Government under section 10 of the Kerala General Sales Tax Act. The argument is based on the averment that the 4th respondent is the only manufacturer of carbon black within the State. In paragraph 7 of the common counter-affidavit filed on behalf of respondents 1 to 3 in O. P. Nos. 3301 and 3302 of 1984, it is stated that there are other concerns in India which had started production of carbon black after 1st January, 1984, such as M/s. Ralson Carbon Black (Pvt.) Ltd. , Ludhiyana in Punjab, etc. In the counter-affidavit filed by the 4th respondent in O. P. No. 3302 of 1984, it is stated that the 4th respondent is not the only company that had started production of carbon black after 1st January, 1984. It is averred that M/s. Ralson Carbon Black (Pvt.) Ltd. , Ludhiyana, had started production of carbon black from August, 1984 onwards. It is also averred that letters of intent have been issued to M/s. Uttar Pradesh Industrial Development Corporation and to M/s. J. K. Industrials for installing plants for the production of carbon black in U. P. and Tamil Nadu respectively. The benefit of exemption from sales tax under exhibit P3 notification is only for a period of three years with effect from the date on which the industrial unit had started production of carbon black. Such notifications are intended to afford some protection to infant industries and manufacturing units against competition from established manufacturers whose products are well-known in the market. Since the benefit of exhibit P3 is not confined to manufacturers within the State and is available to all manufacturers both within and outside the State for the period mentioned in the notification, it cannot be said that the notification is in any way violative of article 301 or 304 (a) of the Constitution. The submission that exhibit P3 is a colourable exercise of power by the government vested in it under section 10 of the Act with a view to benefit the 4th respondent, is also not made out in the case for the reason that the benefit of exemption is available also to other manufacturing units who had started production of carbon black in areas outside the State after 1st January, 1984. The benefit of exhibit P3 is only for a limited period of three years and is available to the 4th respondent until January, 1987 only. We do not see any discrimination in favour of the 4th respondent, a manufacturer of carbon black within the State, as against other manufacturers who had started production of a carbon black after 1st January, 1984. We do not see any substance in the challenge against exhibit P3. Since exhibit P3 supersedes exhibit P2 and exhibit P3. Since exhibit P3 supersedes exhibit P2 and exhibit P2 is no longer in force, the challenge against exhibit P2 should also fail.