JUDGMENT [ENTITY], J.
1. By [CASE NUMBER], in exercise of powers under [SECTION] of the [ACT], the Government had brought about amendments to [CASE NUMBER]. For the purpose of the present original petition, as found from exhibit P4 the provisions to be considered among the changes brought as respects item No. 14 of the First Schedule is extracted hereinbelow :
"(b) against serial number 14, for the entries in columns (2), (3) and (4) the following entries shall respectively be substituted, namely :
(i) Hatcheries within State Turnover of sale of poultry and their chicks hatched and reared by them within the State and meat obtained therefrom.
(ii) Poultry farmers within the State Turnover of sale of poultry reared by them in their own farm within the State, whether hatched by them or not, and the meat obtained therefrom.
(Emphasis* supplied) Nil."
2. The relief prayed for in the original petition is to declare as unconstitutional the words and part of the notification "within the State" as underlined in the provision extracted. Exhibit P5 being notice issued for provisional taxation is also subjected to challenge.
3. Though interlocutory orders had been passed, it had been submitted that advance tax was being demanded at the check-post, and an early hearing had been prayed for. The State opposed the application for stay, and as agreed by the parties, the matter was heard on merits.
4. The petitioner has sales tax registration, both under the [ACT] and [ACT]. He has his registered place of business at Alappuzha, and claims that he is the proprietor of Malar Poultry Farm at Palladom Taluk, State of Tamil Nadu. For the month of October, 2000, he had declared a total turnover of Rs. 21,60,000 and claimed exemption thereof on the ground that the sale was of chicken reared by him in his own poultry farm in the Tamil Nadu. This was not accepted by the department, obviously on the basis of [CASE NUMBER], as the petitioner did not qualify for exemption. It is in this context that the original petition has been filed. Petitioner submits that exhibit P4, to the extent it differentiates between a person having poultry farming within the State of Kerala and a person outside the State is unconstitutional, since [SECTION] of the [ACT] stands violated thereby.
5. The offending words of the notification, alone, according to the petitioner, need to be deleted and citing precedents, it is submitted that such reliefs could be granted. The question is whether the petitioner is entitled to the reliefs prayed for in the original petition.
6. Sri [ENTITY], counsel for the petitioner, submitted that the S.R.O. issued by exhibit P4 violated the constitutional mandate. The effect of cordoning of poultry farmers in the State as an eligible group for grant of exemption from sales tax, according to the counsel, was fundamentally wrong. For the only reason that the petitioner, a citizen of India, had established a poultry farm at Palladom, it was impermissible for the State to deny him the tax benefits admissible and available to a person residing in the State of Kerala, and carrying on an identical pursuit.
7. After referring to the [ACT]al provisions, the counsel had referred to decided cases on the subject. The first decision cited was [PRECEDENT]. Relying on the decision of the Supreme Court in [PRECEDENT] the learned Judge had held that the notification issued by the Government which provided for tax benefits (turnover tax) excepting on the turnover relating to goods recovered on consignment and/or branch transfer, brought about discrimination, and it had been set aside. It had also been shown that the judgment stood upheld by the division Bench as found in the reported decision in [PRECEDENT]. Reliance was placed also on [PRECEDENT], wherein it was held :
"It means in the immediate context that States are free to encourage and promote the establishment and growth of industries within their States by all such means as they think proper but they cannot, in that process, subject the goods imported from other States to a discriminatory rate of taxation, i.e., a higher rate of sales tax vis-a-vis similar goods manufactured/produced within that State and sold within that State. Prohibition is against discriminatory taxation by the States. It matters not how this discrimination is brought about."
Reference had also been made by [PRECEDENT] where the Supreme Court had referred to a limited exception, but however pointed out with reference to a case cited that :
"It must be held that by exempting unconditionally the edible oil produced within the State of Jammu and Kashmir altogether from sales tax, even if it is for a period of ten years, while subjecting to the edible oil produced in other States to sales tax at eight per cent, the State of Jammu and Kashmir has brought about discrimination by taxation prohibited by [SECTION] of the [ACT]."
He had also referred to the relevant paragraphs of the judgment reported in [PRECEDENT]] as following :
"It is therefore now well-settled that taxing laws can be restrictions on trade, commerce and intercourse, if they hamper the flow of trade and if they are not what can be termed to be compensatory taxes or regulatory measures. Sales tax, of the kind under consideration here, cannot be said to be a measure regulating any trade or a compensatory tax levied for the use of trading facilities. Sales tax, which has the effect of discriminating between goods of one State and goods of another, may affect the free-flow of trade and it will then offend against [SECTION] and will be valid only if it comes within the terms of [SECTION]."
Reference was also made to the decision reported in [PRECEDENT].
8. Sri [ENTITY], in his impressive arguments, attempted to support exhibit P4. He had stated that exhibit P4 could be traced to powers under [SECTION] of the [ACT]. In public interest, Government had power to give exemption with regard to payment of tax or to reduce the tax rate in its discretion. He further had submitted that the [PRECEDENT] did not correctly follow the dictum laid down by the Supreme Court. He had strongly relied on the [PRECEDENT].
9. It had been held that taxes may and some times do amount to restrictions, but it is only such taxes as directly and indirectly restrict trade that would fall within the mischief of [SECTION] of the [ACT]. In the case cited, the facts were as follows. In the Uttar Pradesh there is a single point levy of sales tax. Notifications had been however issued exempting new units for different periods from payment of any sales tax. The case of the petitioners was that they did not initially feel the adverse effects, but as time passed, their business crippled, and since trade, commerce and intercourse throughout the territory of India was enjoined to be free, the notification spelt out discrimination, and thereby directly violated [SECTION] and [SECTION].
10. After a detailed examination of the case [PRECEDENT] held as following :
"Concept of economic barrier must be adopted in a dynamic sense with changing conditions. What constitutes an economic barrier at one point of time often ceases to be so at another point of time. It will be wrong to denude the people of the State of the right to grant exemptions which flow from the plenary powers of legislative heads in [SECTION] to the [ACT]. In a federal polity, all the States having powers to grant exemption to specified class for a limited period, such granting of exemption cannot be held to be contrary to the concept of economic unity. The contents of economic unity by the people of India would necessarily include the power to grant exemption or to reduce the rate of tax in special cases for achieving the industrial development or to provide tax incentives to attain economic equality in growth and development. When all the States have such provisions to exempt or reduce rates the question of economic war between the States, inter se or economic disintegration of the country as such does not arise. It is not open to any party to say that this should be done and this should not be done by either one way or the other. It cannot be disputed that it is open to the States to realise tax and thereafter remit the same or pay back to the local manufacturers in the shape of subsidies and that would neither discriminate nor be hit by [SECTION] of the [ACT]. In this case and as in all constitutional adjudications the substance of the matter has to be looked into to find out whether there is any discrimination in violation of the constitutional mandate.
It has to be reiterated that sales tax laws in all the States provide for exemption. It is well-settled that the different entries in [SECTION] deal with the fields of legislation, and these should be construed widely, liberally and harmoniously. And these entries have been construed to include ancillary or incidental power. Power to grant exemption is inherent in all taxing legislations. Economic unity is a desired goal, economic equilibrium and prosperity is also the goal. Development on parity is one of the commitments of the [ACT]. Directive principles enshrined in [SECTION] and [SECTION] must be harmonised with economic unity as well as economic development of developed and underdeveloped areas. In that light on [SECTION] of the [ACT], it is necessary that the prohibitions in [SECTION] and the scope of [SECTION] should be understood and construed. [ACT] is a living organism and the latent meaning of the expressions used can be given effect to only if a particular situation arises. It is not that with changing times the meaning changes but changing times illustrate and illuminate the meaning of the expressions used. The connotation of the expressions used takes its shape and colour in evolving dynamic situations. A backward State or a disturbed State cannot with parity engage in competition with advanced or developed States. Even within a State, there are often backward areas which can be developed only if some special incentives are granted. If the incentives in the form of subsidies or grant are given to any part or unit of a State so that it may come out of its limping or infancy to compete as equals with others, that, in our opinion, does not and cannot contravene the spirit and the letter of [SECTION] of the [ACT]. However, this is permissible only if there is a valid reason, that is to say, if there are justifiable and rational reasons for differentiation."
Though in the later case ([PRECEDENT] a division Bench of the Supreme Court observed as following :
"For the purpose of this case, it is not necessary for us to say anything about the correctness of [PRECEDENT], Suffice it to say that the limited exception carved out therein cannot be widened or expanded to cover cases of a different kind. It must be held that the total exemption granted in favour of small-scale industries in Jammu and Kashmir producing edible oil (there are no large scale industries in that State producing edible oil) is not sustainable in law."
In view of the circumstances that the Full Bench has after reference to the decided cases, struck a different note, after taking notice of the fast economic and social changes, which has all the more relevance in this Millennium, I feel, I am bound to follow the dictum in [PRECEDENT].
11. The Government Pleader had thereafter relied on the Bench decision, reported as [PRECEDENT]. It was a case where there was challenge posed against [CASE NUMBER]. The Kerala Government had made an exemption in respect of tax payable on the sale of goods of "poultry farmers in the State on the sale of chicks and chickens". Though the decision does not throw light as to whether arguments were raised relying on [SECTION] of the [ACT], the court had appreciated and upheld the differentiation between the two categories.
12. Reference was next made to the decision in Shree Digvijay Cement Co. Ltd. v. State of Rajasthan [2000] 117 STC [SECTION]5 (SC). Sri [ENTITY] pointed out that it was notification under [SECTION] of the [ACT], and it made all the difference. But the Government Pleader points out, that notification was issued by the State Government, and the key word was public interest. Exhibit P4 also has been issued in public interest. I am of the opinion that the said decision cannot abjectly be ignored as powers had been exercised by the State of Rajasthan under the [ACT]. The general principles also cannot go unnoticed. It may also be worthwhile to note that principles of [PRECEDENT] which came not under the [ACT], also has been profusely quoted with approval. The effect of the notification was not shown to have prevented or hindered the free movement of goods from one State to the other. The notification of the State of Rajasthan, though it derived jurisdiction from an Act of Parliament, nevertheless was a law enacted by the State, and it may therefore be not inappropriate to hold that the principles can be applied to the facts of the case at hand. On an earlier occasion, a notification on the issue had been quoted by the Supreme Court [See [PRECEDENT]] holding that the reduction of rate of tax of certain items at Rajasthan had immediately and directly affected sales of Gujarat. The larger Bench while deciding the case on December 17, 1999 (Shree Digvijay Cement Co. Ltd. v. State of Rajasthan [2000] 117 STC [SECTION]5), overruled the above judgment. The principle was approved that the flow of trade does not necessarily depend upon the tax alone, but depends upon a variety of factors, such as source of supply, place of consumption, existence of trade channels, rates of freight, trading facilities, and also according to me proximity, quality of goods, cost of production and the like. Whether a notification is sustainable or deserves to be declared as unconstitutional, in the aforesaid circumstances, depend on a number of factual situations. No straitjacket formula does exist.
13. Therefore, I am of the view that sufficient materials have not been brought before this Court to hold that the exemption granted in favour of the poultry farmers in Kerala by exhibit P4 interferes with the petitioners' rights under [SECTION] of the [ACT]. [SECTION] brings restrictions on taxation of "similar goods" between imported goods and goods manufactured in the State. Though it is the general item of chicken, petitioner has not been able to establish that they are similar goods. Dictionary meaning of "similar" is comparable. It cannot be taken for granted that the two goods are similar, and hence the restrictions of [SECTION] can have no application or relevance here. Nor is there violation of [SECTION] established. That they will have liability for payment of tax cannot be ipso facto lead to a presumption that there is restriction, The petitioner has not produced materials regarding the cost factor, or the economics for this Court to assess the situation. There is an overriding presumption of constitutionality for the statutory orders, and I am of the opinion that the petitioner has not been able to discharge his burden for this Court to draw a different conclusion.
14. In this context, I may also refer to a practical approach that has necessarily to be employed in the interest of the State. It is not disputed that chicken brought to the State by a dealer as at present attract sales tax. Hatcheries within the State and poultry farms within the State are exempted from taxability. It is a policy decision to exempt farmers from purview of tax. It may not be possible by any satisfactory measure to give the benefit to an outsider as well, and the genuineness of a claim of a person as to whether he is a poultry farmer or not having his farm outside the State will be difficult to be examined with any certainty. The authenticity of exhibit P1 produced by the petitioner (which does not bear even the seal of the issuing authority), is difficult to be accepted. It cannot at all be the basis for giving tax exemption, and if the claims are not genuine, acceptance thereof will be against public interest and defeat the purpose of the notification. In this case, from the averments in the original petition, the claim urged appears to be ambitious and irrational. In the area of 1,000 sq. feet, birds are claimed as being reared at numbers around almost a lakh per month. This is the height of improbability. Without in any manner decrying the enterprise of the petitioner, I feel the State cannot be blamed if they become sceptical about the credentials of such farmers. Obviously the onslaught can lead only to a presumption that even if he has farm he has procured the majority of chicken from others by way of purchase, transfer or by a like method. Though I am not delving deep to the other details, especially because as it may not be of relevance, it can however be presumed with certainty that even with the resources at the command of the State, it will near be impossible to check the factual veracity of the individual's claim that may be raised, if exemption is extended to farmer community in other States as well. The Government Pleader points out that by exhibit P2 the petitioner has registered as a dealer under the [ACT], for resale of rice, poultry feeds, live chicken and chicken meat. He had, therefore, only the intention to resell the items, he submits, and not bring them to home State after rearing the birds at Tamil Nadu. The farmers in Kerala, therefore, could be considered as a well defined class, and it is likely that in view of the notification, inter-State sales may get a boost, as hoped by the State Government.
15. It might also again be relevant that even if a declaration is made, as requested for, it will not enure to any immediate benefit to the petitioner. In an assessment, it would have to be shown that the entire item of goods brought by a person like the petitioner by inter-State transfer was reared by him in his own farm. An adjudication process can thus never be avoided. As pointed out by the Government Pleader, the notification has been intended to boost inter-State trade, as there is likelihood of a rejuvenation in transport of chicken by the incentive granted, and it does not therefore offend [SECTION] of the [ACT]. [SECTION] of course is a fetter to legislative power, and legislation brought about can be declared as unconstitutional if it is established that its existence is wholly unsupportable and underlying idea is not holy. The petitioner has not succeeded in his attempt to challenge the notification in suggesting that provisions in the notification not extending to his class a benefit as made available to a specified class is unconstitutional. I feel that the reliefs prayed for are not liable to be granted.
16. The original petition is therefore dismissed.
Order on [CASE NUMBER] in [CASE NUMBER] closed.