Judgment

GROVER, J.-These appeal by special leave are from a judgment of the Rajasthan High Court holding that the assessment of sales tax on "Bardana" imported into the State in the hands of the first importer under a notification, dated August 11, 1959 issued in exercise of the power conferred by Section 4(2) of the Rajasthan Sales Tax Act, 1954, hereinafter called the "Act" was invalid and that the imposition of penalty in respect of the assessment years 1963-64 and 1964-65 was also bad and illegal.

2. The respondent is a partnership firm carrying on the business of commission agent for the sale of gunny bags manufactured from jute. The following notification was issued by the Government under Section 4(2) of the Acton August 11, 1959:

"In exercise of the powers conferred by sub-section (2) of Section, 4 of the Rajasthan Sales Tax Act, 1954 and in supersession of this department Notification No. F. 5(139) E & T/57, dated the 19th December, 1958, the State Government being of the opinion that it is expedient in the public interest to do so, hereby exempts from tax the sale of Bardana (old, new or being received as container) except on the first point at the hands of an importer in the series of sale in the State."

3. The respondent filed a petition under Article 226 of the Constitution in the High Court as the assessing authority had made an assessment in respect of the years 1963-64 and 1964-65 holding that the respondent was liable tc pay tax on the sale of gunny bags imported by it from outside Rajasthan. In addition a penalty of Rs. 25,000/- had been imposed for the first year and Rs. 17,000/- for the second year for not filing the return in time. According to the respondent the levy of sales tax on imported "Bardana" contravened the provisions of Article 301 of the Constitution and suffered from the vice of discrimination. The High Court referred to the meaning of "bardana" which is a term of Hindi language as given in Nalanda Vishal Shabad Sagar-a Hindi dictionary-and held that this term did not mean only gunny bags made of jute but it also covered all kinds of containers. Although other types of Bardana were being manufactured. The position, therefore, was that while imported Bardana had been subjected to sales tax "on the first point at the hands of the importer" no such tax had been levied on the "Bardana" old or new, produced or manufactured in Rajasthan. For this reason Article 304(a) of the Constitution could be of no avail to the State and there was a clear contravention of Article 301. This is what the High Court finally said :

"After a careful examination of the law on the subject, we are firmly of the view that the levy of sales tax on the imported Bardana on the first point as the hands of an importer in Rajasthan in the present circumstances without levy of a similar tax on Bardana produced or manufactured in Rajasthan is unconstitutional and cannot be upheld. As a necessary corollary the assessment of tax on the imported gunny bags in the hands of assessee under the notification is invalid in law."

4. Before the High Court a prayer for refund was made of the amount of the sales tax which had been realised by the Government on the imported "Bardana". Although the High Court felt that the Government-was bound to repay the amount which had been collected but it declined to gram any relief on the ground that nothing had been stated in the writ petition as to how much amount of tax had been paid by the respondent and when the same had been paid.

5. The principal contention that has been raised by the learned counsel for the State is that the notification had been validly promulgated in exercise of the power conferred under Section 4(2) of the Act. It exempted from tax the sale of "Eardana" which meant gunny bags made from jute and did not mean containers of all kinds made from wood or metal, etc. The exemption, however, contained an exception or a saving clause, namely, that it did not cover the levy of sales t