BHOPAL SUGAR INDUSTRIES LTD. v. STATE OF MADHYA PRADESH & ORS.
Citation: [1979] 2 S.C.R. 605; 1978 INSC 251
Court: Supreme Court of India
Bench: P.N. SHINGAL , D.A. DESAI
Judgment date:
Case summary
1978 INSC 251. Supreme Court of India judgment dated 1978-12-05. BHOPAL SUGAR INDUSTRIES LTD. v. STATE OF MADHYA PRADESH & ORS. Read the judgment and case...
Judgment text
606 SUPREME COURT REPORTS [1979] 2 s. c. R. BHOPAL SUGAR INDUSTRIES LTD. v. STATE OF MADHYA PRADESH & ORS. December 5, 1978 [P. N. SHJNGHAL AND D. A. DESAI, JJ. ] Madhya Pradesh Sugarcane (ReRulation of Supply and Purchase) Act, 1958, s, 23 and s. 23(1), constitutionality, "alt area", whether synonymous to "local area" in Entry 52, List JI of the Seventh Schedule, Constitution of lndia-s. 23 (2) and Rule 60, M. P. S. (Regulation of Supply and Purcha. ~e) Rules, 1959, wh~ ther require formal assessment order prior to collection of cess. Sugarcane cess (Validation) Act, 1961, Constitutionality, whether purports to Validate Invalid State Statutes. ' :. - T'he appellant company cultivates sugarcane and manufactures sugar in its factory, by crushing the sugar cultivated by it and purchased from other. cultivators. The State Government enacted the M. P. Sugarcane (R. S. P. ) Act, 1958 which came into force on July 1, 1959. The State Government issued a notification under s.
23 of the Act imposing a ccss of 12 paise per maun the computation of the income of the assessee, the determination of tax payable by him, and the procedure- for collecting or recovering the tax. In a case where there is a dispute about the identity of the assessee, the order of assessment serves the purpose of establishing that identity and naming the person from whon1 the tax is to be recovered. The responsibility of the Collector for purposes of assessing and collecting the tax under s. 60 of the Rules, is to see that the full amount of the cess has been credited to the treasury by the occupier of the fac-torv. If he finds that this is not so. it is his duty to call upon the occupier by ,.. a ~ritten notice to deposit the amount due from him \vithin the period specified in the notice. [611E-H, 612A] C! V! L APPELLATE JURISDICTION : Civil Appeal No. 1293 of 1969. Appeal from the Judgment and Order dated the 25th April, 1968 of the Madhya Pradesh High Court in Misc. Petition No.
404/64. S. T. Desai, J. B. Dadachanji K. . T. John, Mrs. A. K. Varma for the Appellant. II S . K. Gambldr for Respondents I, 2 and 4. F. C. Agarwala and R. N. Sachthey for Respondent No. 3. BHOPAL SUGAR LTD. V. M. P. STATE (Shingha/, /. ) 6 07 The Judgment o( the Court was delivered by SHINGHAL J. Thi. s appeal by a certificate issued by the Madhya Pradesh High Court is directed against its judgment dated April 25, 1968. The appellant is a company which cultivates sugarcane and manufactures sugar in its factory in Sehore, Madhya Pradesh, by crushing the sugarcane cultivated by it and purchased from other cultivators . • The St:rle Legislature enacted the Madhya Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1958, hereinafter referred. to as the State Act, which came into force on July 1,, 1959.
The State Government issued a notification on November 28, 1959, which appear-ed in the State Gaze,tte dated December 4, 1959, under section 23 of the State Act imposing a o~ss of 12 paise per maurnJ on the entry of sugarcane during a crushing season in the area comprised within "such of the factories in which the total quantity of cane entering for consumption, use or sale to the factory during such season exceeded 10 lakh maunds". The appellants challenged the validity of the imposition, and the High Court, on August 31, 1961, held that the notification was illegal as the imposition of the levy was with reference to particular premises. A similar view was taken in regard to the Acts i11 some other States and Par:iament thereupon enacted the Sugarcane Cess (Validation) Act, 1961, hereinafter referred io as the Validation Act, which came into force on D~cember 26, 1961. Sectiun 3 of the Validation Act was taken to validate the imposition and collection of the cess under the State Act.
The Manager of the appellant company received an intimation from the Additional Collector of Sehope dated April 13/15, 1964, stating that a sum of Rs. 5,49,262. 92 was due from it on account of cess for the period "1959-60 to December 25, 1961" and asking for a bank guarantee for payment of lhe balance. The appellant wrote back saying that the amount of the cane ce" worked out to Rs. 5,44,835. 69 and not Rs. 5,49,262. 92, and that as the collector had not assessed the amount of the cess in accordance with the rules, it was not payable by the appellant. As the Collector ignored the objection of tfoo appellant, a demand notice wa, served upon it under section 146 of the Madhya Pradesh Land Revenue Code 1959, asking it to deposit Rs. 5,49,262. 92 by August 1, 1964.
Once again the appellant d•enied its liability, but as that was not acceptable to the Collector, the appellant filed a writ petition in the High Court stating that the Collector's demand on account of the cess was illegal as the Validation Act was ultra-vires the Constitution. The State of Madhya Pradesh traversed the claim in the writ petition. The High Court upheld the imposition of the cess but reduced it to Rs. 5,44,835. 69, by its impugned judgment dated May 25, 1968, and that is why the Company has come up in appeal to this Court. It has ],ecn argued by Mr. Desai on behalf of the appellant that section 23 of the State Act was not ultra-vires the Constitution and there could be no question of validating a valid Act. According to him, the State Act fell within the scope of Entry 52 of List U of the Sewnth Schedule of the Constituticm and was valid, and Parliament could not legis;ate in respect of that occupied field and pass the Validation Act.
These arguments have been based on the main contention that the expression "an area" in Sub-secticm (1) of section 23 of the State Act roally means "a local area" within the meaning of the afore-said Entry 52 and no other area. Sub-section (1) of section 23 of the State Act reads as ! ollows,- "23. Levy of cess on cane. -(1) The State Government may, by notification, impose a cess not exceeding 25 paise a mannd, on the entry of cane into an area, specified in such notific::tion, for consnmption, use or ·sale therein", There are two provisos to the sub-section, but they are not relevant for the purpose of the controwrsy before us. It would appear from sub-section that it permits the State Government to impose the cess on the entry of sugarcane into any area that may be specified in its notification, and there is nothing in it to confine the imposi'. ion to a "local area". As has been held by this Court in Diamond Sugar Mills Ltd and Aiwther v.
State of Uttar Pradesh and Another(') whion a similar point arose for consideraticm with the U. P. Sugarcane Cess Act, 1956, the proper meaning to be attached to th3 words "~ocal area" in Entry 52 List II of the Seventh Sch e from the appellant forthwith. He further directed that the "entire amount of the cane cess due from the B. S. I. " should be recovered and monthly progress report sent to him. This shows that the Collector did apply his mind to the matter, and made an express order for the recovery of the total amount of the ce'ss admitted by the appellant. It seems that the Naib-Tehsildar increased the amount beyond what had been admitted by the appellant and directed by the Collector, but the High Court rightly confined the recovery to Rs. _. - 5,44,835. 69 which was admitted by the appellant to be due from it on account of cess for the two seasons. Ther•e is thus no force in the argument of Mr. Desai to th·~ contrary. The appeal fails and is dismissed with costs. M. R.
Appea' dismissed.
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