In Brief
Pan Masala and Gutka containing tobacco were challenged on sales tax in Delhi, U.P., and Tamil Nadu. The question was whether tobacco, exempted in the Third Schedule (exemption list), remained exempt even after a notification placed 'Pan Masala and Gutka' in the First Schedule (taxable goods rate list). High Courts held the exemption was withdrawn by the later amendment. The Supreme Court held that exemptions cannot be withdrawn merely by amending rate schedules; exemption and rate schedules are distinct, and exemptions persist unless expressly amended. The Court referred conflicting precedents to the Chief Justice for clarification on how ratio decidendi should be determined in divided decisions.
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