Challenge to Consti. validity of Sec.116 & 117 of Finance Act,2000. failed, SC

1. In Present case writ petitions have been filed challenging the constitutional validity of Sections 116 and 117 of the Finance Act 2000 and Section 158 of the Finance Act, 2003 by which the decision of this Court in Laghu Udyog Bharati & Anr. Vs. Union of India & Ors. (1999) 6 SCC 418, striking down Rules 2(1)(d), (xii) and (xvii) of the Service Tax Rules, 1994 (as amended in 1997) was sought to be overcome.

SC held as under:

2. Decisions of this Court on the matter have permitted the legislatures to exercise an extremely wide discretion in classifying items for tax purposes, so long as it refrains from clear and hostile Gujarat Ambuja Cements Ltd.& Discrimination against particular persons or classes."

3. In the case before us the discrimination is not, even according to the writ petitioners, by reason of the subject matter of tax. It is also not the writ petitioners' case that within the separate classes of services covered by the different clauses in Section 65(41), there is any discrimination or that the law operates unequally within the classes.

4. According to them the discrimination lies in the method of collection of the tax followed. But as we have said this is not of the essence of the tax and the mere difference in the machinery provisions between the different classes of service cannot found a challenge of discrimination.

5. If the legislature thinks that it will facilitate the collection of the tax due from such specified traders on a rationally discernible basis, there is nothing in the said legislative measure to offend Article 14 of the Constitution.

6. It is therefore outside the judicial ken to determine whether the Parliament should have specified a common mode for recovery of the tax as a convenient administrative measure in respect of a particular class. That is ultimately a question of policy which must be left to legislative wisdom. This challenge also accordingly fails.