Taxation cannot be used as a weapon to discriminate between locally manufactured goods and similar goods imported from other states, the Supreme Court Wednesday reiterated while quashing a 2007 Rajasthan government notification granting exemption from payment of value-added tax (VAT) on sale of locally made asbestos cement sheets and bricks.

The March 9, 2007 notification by the Rajathan government exempted VAT from the sale of asbestos cement sheets and bricks manufactured within the state, provided they contained 25 per cent or more fly ash by weight. Manufacturers from outside Rajasthan challenged the notification, arguing that their products, which also used a similar amount of fly ash, were subject to VAT when sold in Rajasthan, and thus local competitors gained a significant price a

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