DWARKA PRASAD, J. - (1.) THE only question which has been canvassed by the learned counsel for the petitioner in this writ petition is that the provisions of section 5cc of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as "the Act") is violative of the guarantee of equality of law enshrined in article 14 of the Constitution. Learned counsel argued that at least that part of section 5cc, by which the provisions of said section has been made applicable to the industries commissioned on or after 1st day of March, 1970 must be struck down as there is no rational principle for classifying industries on the baais of their being commissioned on or after March 1, 1970. In other words, the fixation of March 1, 1970 as the starting point of the benefit envisaged under the provisions of section 5cc is alleged to be arbitrary and as such discriminatory and violative of the provisions of article 14 of the Constitution. Section 5cc was inserted in the Rajasthan Sales Tax Act by section 4 of the Amending Act No. 5 of 1970, which came into force with effect from April 20, 1970. Section 5cc, as it was enacted by Act No. 5 of 1970 reads as under : " 5cc. Remission of tax on raw material for specified period.- (1) Notwithstanding anything contained in section 5 or 5a, but subject to such restrictions and conditions as may be prescribed, no tax shall be payable by a registered dealer who commissions any notified industry within the State on or after the first day of March, 1970, but before the 31st day of March, 1974, on sale to or purchase by him of any raw material up to 31st March, 1979 for the manufacture of goods for sale within the State or in the course of inter-State trade or commerce or in the course of export out of the territory of India. (2) Whether any raw material purchased by a registered dealer under sub-section (1) is utilised by him for any purpose other than a purpose specified therein, such dealer shall be liable to pay as penalty, such amount, not less than the amount of tax on the sale of such raw material at the full rate applicable thereto under section 5, but not exceeding 1 1/2 times the amount of tax at such full rate, as the assessing authority may determine, having regard to the circumstances in which such use was made. Explanation.- For the purpose of this section 'notified industry' means an industry by the State Government in this behalf. "
(2.) IN pursuance of the explanation to section 5cc, the State Government issued a notification on July 1, 1970 stating that all industries with new units shall be treated as notified industries for the purpose of section 5cc. It may be pointed out here that section 5c, which was introduced by the Amending Act No. 13 of 1963, with effect from March 2, 1963 provides that tax payable on the sale to or purchase by a registered dealer, of any raw material for manufacture in the State of goods other than exempted goods for sale within the state or in the course of inter-State trade or commerce, shall be charged at a concessional rate of 1 per cent. of sale or purchase price of such raw material. Section 5cc was subsequently introduced and in the case of new units of industrial establishments set up on or after 1st March, 1970 exemption was allowed from payment of sales tax or purchase tax on the sale or purchase of such raw material, even in respect of the concessional rate of 1 per cent. which was chargeable under the proviso to sub-section (1) of section 5c. The concessional provisions of section 5cc were further extended to new industries set up after 31st March, 1974 and before 31st March 1979. The concession was made to be effective for a period of five years from the date of commissioning of notified industry. The petitioner set up the case that the partnership concern M/s. Ratan Rice and Flour Mills, Sri Vijayanagar was earlier running a small-scale industry of processing rice and grinding flour. Then in the year 1972 it started a new industry for manufacture of till oil and that both the units set up by the petitioner, namely, the rice mill as well as the oil expeller, were entitled to the benefit of the provisions of section 5cc of the Act that the fixation of 1st March, 1970 as the date of commencement for conferring the benefit of the provisions of section 5cc was arbitrary and without any rational basis. The Assistant Sales Tax Officer, Raisinghnagar, found that the petitioner-company set up a rice mill in the year 1967 and in July, 1968 the petitioner-firm also set up an oil expeller. Thus, although the petitioner-firm was registered with the Registrar of Firms on March 16, 1972 yet both the units set up by the petitioner, namely, the rice mill as well as the oil expeller were old units, which had already been in existence prior to the coming into force of section 5cc and much before the stipulated date, i. e. , March 1, 1970. The State Government in its reply explained that section 5cc was introduced in order to encourage the setting up of new industries in the State of Rajasthan and as such exemption was given even in respect of the concessional rate of 1 per cent. to all persons setting up new industries. It was argued by Mr. Bhandari on behalf of the State Government that the provisions of section 5cc were neither arbitrary nor ultra vires but they have reasonable nexus to the object sought to be achieved. On the other hand Mr. Shrimalee, appearing for the petitioner, submits that the provisions of section 5cc are per se discriminatory because a distinction is sought to be made between old and new industries and the benefit of the provisions of section 5cc has been bestowed to industries commissioned after March 1, 1970 but the same was denied to industries which may even have been commissioned a day before. Thus, according to the learned counsel, there was no rational object behind fixing March 1, 1970 as the date with reference to which industrial units would be allowed benefit of the provisions of section 5cc. The explanation of the State for fixing March 1, 1970 as the date with reference to which the benefit of the provisions of section 5cc was made available is that the State of Rajasthan formulated in the month of March, 1970 a legislative policy of providing an incentive to persons setting up new industrial units in the State and then a Bill to that effect was introduced in the State Legislative Assembly, which after being passed by the Legislative Assembly became law on April 20, 1970. Thus, according to the Stage the benefit of the provisions of sections 5cc were made applicable to new industrial units set up after March 1, 1970 because at that time the State Government formulated the legislative intent to encourage the entrepreneurs for the establishment of new industries units. Although section 5cc speaks of notified industries, yet the notification, which was issued by the State Government on July 5, 1970 in pursuance of the explanation to section 5cc made it clear that all new industrial units would be treated as notified industries for the purposes of section 5cc. Thus, the benefit of remission of tax on purchase of raw materials was made available to all new industrial units commissioned on or after March 1, 1970.
(3.) LEARNED counsel for the petitioner relied upon the decisions of their Lordships of the Supreme Court in D. R. Nim v. Union of India AIR 1967 SC 1301, Union of India v. Parameswaran Match Works AIR 1974 SC 2349 and Jaila Singh v. State of Rajasthan AIR 1975 SC 1436, as also in D. S. Nakara v. Union of India AIR 1983 SC 130, in support of his contention that a person cannot be deprived of the benefit applicable to industries merely because of the fixation of an arbitrary date in section 5cc, based on wholly irrelevant consideration. According to the learned counsel no discrimination can be made between industries already established in the State of Rajasthan before March 1, 1970 and new industries established thereafter March 1, 1970 and it was argued that the date of commission of an industry and no nexus to the object sought to be achieved by the provision. In Nim's case AIR 1967 SC 1301 no justification offered on behalf of the Union of India for fixing May 19, 1951 as the date from which the officers of the State Police force were to count their seniority. Their Lordships of the Supreme Court observed as under in the aforesaid case : " It would be noticed that the date, May 19, 1951, to begin with, had nothing to do with the finalisation of the Gradation List of the Indian Police Services because it was a date which had reference to the finalisation of the Gradation List for the I. A. S. Further this date does not seem to have much relevance to the question of avoiding the anomalous position mentioned in para 9 of the affidavit, reproduced above. This date was apparently chosen for the I. A. S. because on this date the Gradation List for all the earlier persons recruited to the Service had been finalised and issued in a somewhat stable stage. But why should this date be applied to the Indian Police Service has not been adequately explained. Mr. B. R. L. Iyengar, the learned counsel for the appellant, strongly urged that selection of May 19, 1951, as a crucial date for classifying people is arbitrary and irrational. We agree with him in this respect. " In Parameswaran Match Work's case AIR 1974 SC 2349, their Lordships held that benefit of the concessional rate of excise duty was made available to the manufacturer of matches on the condition that he should give a declaration that the total clearance from his factory would not exceed 75 million matches during a financial year. The notification was amended subsequently to give benefit of the concessional rate of duty to bona fide small manufacturers whose total clearance was not estimated to be in excess of 75 million matches during a financial year. Their Lordships upheld the classification on the ground that the concessional rate of duty was intended to be given to small bona fide units which were already in the field when the amending notification was issued and that the concessional rate of duty was not intended to be applied so as to benefit the large units, which may be split up into smaller units merely in order to earn the concession. On the question of fixation of the date as the basis of classification, their Lordships observed as under : " The choice of a date as a basis for classification cannot always be dubbed as arbitrary even if no particular reason is forthcoming for the choice unless it is shown to be capricious or whimsical in the circumstances. When it is seen that a line or a point there must be and there is no mathematical or logical way of fixing it precisely, the decision of the Legislature or its delegate must be accepted unless it can be said that it is very wide of any reasonable mark. " In Jaila Singh's case AIR 1975 SC 1436, their Lordships of the Supreme Court struck down the classification of tenants, for the purpose of allotment of land, as pre-1955 and post-1955 in the Rules made under the Rajasthan Colonisation Act, 1954 as discriminatory. It was observed by their Lordships in that case that pre-1955 and post-1955 tenants stood on the same footing and they did not constitute different classes and as such the division of tenants into two categories was made on wholly irrelevant considerations. It was held in that case that from the point of view of allotment of land, no difference could be made on the ground that the tenant was in occupation of such land for either 16 years or 18 years or 20 years. Thus, the classification of tenants for the purpose of allotment of land, with reference to October 15, 1955 was considered to be both arbitrary as also discriminatory on the ground that such a classification was not related to the object sought to be achieved. ;