Maharashtra Rajya Hatkagad Utpadak Sang Pune vs. Maharashtra State Khadi And Village Industries And Anr

Held

The Court noted that the Maharashtra Khadi and Village Industries Act, 1960, vests ultimate decision-making power regarding policy with the State Government. Respondent No. 1 contended that the government had not objected to its circular and that the amendment to the Sales Tax Act implicitly approved the policy. The Court found that the government is entitled to frame such policies and respondent No. 1 has the power to make regulations under the Act of 1960. The Court also observed that with the advent of Goods and Services Tax (GST), the provisions of the Sales Tax Act would no longer apply to the petitioner, and new conditions would govern taxation under GST. Therefore, the Court concluded that nothing survived in the present matter. The petition was dismissed, and the rule discharged.

Facts

The petitioner, Maharashtra Rajya Hatkagad Utpadak Sangh, an association of hand-made paper manufacturers, challenged a circular dated June 5, 2000, issued by respondent No. 1, Maharashtra State Khadi and Village Industries Board. The petitioner alleged the circular was discriminatory and violated Articles 14 and 19(1)(g) of the Constitution of India. They also sought to strike down a notification dated June 7, 2001, amending the Bombay Sales Tax Act concerning the hand-made paper industry on similar grounds. The circular restricted benefits of schemes to co-operative societies and artisans who received financial assistance from respondent No. 1 or its affiliated institutions, effectively excluding members of the petitioner association from registration and benefits. The petitioner argued there was no reasonable basis for this discrimination.

Key Issues

1. Whether the circular dated June 5, 2000, issued by respondent No. 1, Maharashtra State Khadi and Village Industries Board, is discriminatory and violates Articles 14 and 19(1)(g) of the Constitution of India, by excluding members of the petitioner association from benefits available to similarly situated village industries. 2. Whether the notification dated June 7, 2001, amending the Bombay Sales Tax Act concerning the hand-made paper industry, is unconstitutional on the same grounds. Petitioner's contentions: The circular creates discriminatory treatment by denying benefits like sales tax exemptions to members of the petitioner association, who are engaged in a similar business, without any reasonable basis. This violates their fundamental rights under Articles 14 and 19(1)(g) of the Constitution. Respondent No. 1's contentions: Respondent No. 1 has the power to make regulations. While the government is the ultimate policy-making authority, it has not objected to the circular. The amendment to the Sales Tax Act signifies government approval. Entitlement to scheme benefits is conditional and cannot be claimed solely based on engaging in similar business. The circular is not arbitrary and has a sound basis in assisting those needing help to survive and compete.