GANGA SUGAR CO. LTD., ETC. v. STATE OF U.P. & OTHERS ETC (2)

Citation: [1980] 1 S.C.R. 769

Court: Supreme Court of India

Bench: Y.V. CHANDRACHUD, V.R. KRISHNA IYER, N.L. UNTWALIA, P.N. SHINGAL, A.D. KOSHAL

Case summary

(i) substantial question of law of general importance (ii) which. the cess contemplated by the 1938 Act went by the maund and alth01;gh the cess wa~ to be levied from the seller he was allowed to recover it from the purchaser.

Judgment text

GANGA SUGAR CO. LTD. , ETC. v. STATE OF U. P. & OTHERS ETC. September 20, 1979 [Y. V. CHANDRACHUD, C. J. , V. R. KRISHNA IYER, N. L. UNTWALJA, P. N. SHINGHAL AND. A. D. KosHAL, JJ. J U. P. Sugarcane Purchase Tax Act, 1961 Sections 3, 3A, 3B-Validity of. Constitution of India-Sales Tax Entry 54 List II-Drafting of legislation on "Controlled Industry" by ,the State-Validity of- • These appeals arise from a common demand for tax by the State from number of Sugar Mills on the purchase of Sugarcane at a rate regulated by weight and not on value. The Cess under the U. P. Sugarcane Cess Act, 1956 'fl. 'as declared ultra-vires \Vhich resulted in the enactment of Sugarcane Purchase Tax Act, 1961. In a fiscal sense, the Purchase Tax Act, is a reincarnation of the Cess Act, but in a legislative sense, it is an independent statute with a different source of power, impact and strLJcture.

The tax in question is successor to the Cess \vhich \Vas struck down but jurisprudentially, the levies are different in character and attributes and. constitutionally the1 imposts derive from different legislative entties and have to be tested bY'. different standards. The1 Act by Section 3 imposes a rate of tax at the rate of Rs. 1. 25 paise per quintal of sugarcane purchased by a factory owner, the corresponding rate for a "unit'~ being paisc 50. Under Section 3(2) of the Act, the charge is on the purchase trahsaction payable by the O\Vner of the factory or unit "on such date" at such t place and in such instalment as may be prescribed. 'fb_e . appellant had challenged the charge of tax.

The High Court dis· missed the Writ Petition on the ground that the petitioners have not supplied for any period figures of actual prices paid by them, actual quantity of cane crushed, actual quantity of juice derived, actual quantity of sugar produced and p their earnings and, therefore, it was not possible to take the view that tax by weight was unfair and inequitable. The High Court further held that tax by weight had fairer relation to the production of sugar by earnings of a factory than tax. by price ind consequently no one could complain that the impugned provisions treated unequals as equals. Equal crushing attracts equal tax. On appeal to this Court, it \Vas argued on behalf of the appeliants that (i) the scheme and sections of the Act are ultra-vires (ii) the charge of tax is bad bec.

ause in its true character it is a legislation in respect Of "Controlled Jndu~try" and this power belongs exclusively to Parliament under Entry 52 of List I (Seventh Schedule) of the Constitution, (iii) there is discrimination bet~ we¢n ~ugar factories and khands-ari units by the impost of differential rates of fftx and liability is computed by the weight of the cane· as distinguished from its monetary value, there is an inevitable arbitrariness built into the texture of th~ s~heme and (iv), the Act, masked as Purchase Tax, in essence askS for an Excis_e Duty on sugar-manufacture and is, therefore, invalid as colourable legislation. HELD: (i) This Court cannot lose sight of the all-India impact when the law is laid down under Article 141 of the Constitut. ion and judgments of this Court are decisional between litigants but declaratory for the nation. The scheme of the Act is simple and workable.

It is undisputed that sugar industry is a controlled industry within the meaning of Entry 52, List I of Schedule, and therefore, the legislative power of Parliament covers enactments 'vith regard to industries having regard to Article 246(1) of the Constitution. Entry 54 in 8 List II of the Seventh Schedule, empowers the State legislature to legislate for taxes on purchase of goods and so if the Act under consideration is attracted, in pith and substance by this entry, legislative incompetence cannot void the Act. [774 E-F, 781 G-H, 782 A] (ii) The contention that the charge of tax is bad because in iu. true character it is a legislation in respect of controlled industry and which power belongs exclusively• to Parliament under Entry 52 of List I has no force. Tika Ram's 1 case deals with the identical question of "controlled industry' vis-a-vis U. P. Legislation regulating Sugarcane supply and purchase under the U. P. Sugarcane (Regulation of Supply and Purchase) Act, 1953.

That statute reserved or assigned to sug3r factories· specified cane purchasing centres f0r the purpme. This regimentation of sugarcane growers and regulation of cane supplies to specified millers by a State enactment was attacked on the precise giound that sugar being a "controlled industry" any enactment affecting such industry including the regulation of supplies of raw inaterials thereto was taboo. The plea was dismissed as specious, and the appeals under this Court's consideration are a fortiori cases where the rejection of the contention can be more confidently made. [782 C, F-H, 783 A] . ulndustry" as a legislative topic has a large and liberal import, true. But what peripherally affects cannot be confused with what goes to the heort. An acquisition of land for sugar mills or of sugar mills may affect the indsutry but is not an action in the legislative field forbidden for the States.

Sales tax on raw materials going to a factory may affect the costing process of the manufacture' but is not legislation on industrial process or allied matters. Indeed, if the State Legislatur~ cannot go anywhere near measures which may affect topics reserved for Parliament a situation of reducao Od absurtfu1n may be reached. [780 B-C] • Ch. Tikka Ram's case [1956] SCR 393, Shyamkant Lal [1956] SCR 427, Kanan Devan Hills Produc• Company Ltd. [1973] 1 S. C. R. 357 followe. i. (iii) The contention that there is discrimination between sugar factories_ and khandsari unils by the impost of differential rates of tax and that when a purchase tax liability is computed by the weight of the eaue as distinguished from its monetary value, there is an inevitable arbit. rariness built into the texture of the scheme, has no force. Neither in intent nor in effect is there any discriminatory treatment discernible to the constitutional eye.

Price is surely a safe guide but other methods are not necessarily vocational. It depends Prai;tical considerations of the Administration, traditional practices id the Tratle, othe pecially · in the battle-field of unconstitutionality, must produce the socio-economic bio-data of challenged legislation, explaining the 'how', the 'why' and 'why not' of each clause lest lay minds, lost in legal tuning, should miss meaningful sound and social sense which experts may explain. Law cannot go it alone-nor lawyers. Ma;ty States in India grow sugarcane, all of which, save negligible quantities, suffer crushing and its sucrose! content is recovered as sugar, khandasari and, on a: cottage industry basis, as gur. Andhra Pradesh, · Bihar, Gujarat, Haryana, Kenda, Kamataka, Maharashtra, Madhya Pradesh, Punjab, Pondicherry, Tamil Nadu and Uttar Pradesh not only grow sugarcane but enjoy purchase tax, a majority' of which levy by weight rather than on price.

And we cannot Jose sight of the AU- India impact when the law is laid down under Article 141. Judg- · ments of this Court are decisional between litigants but declaratory for the nation. ' Sugar is an export item and, of course, is a daily necessary at home. Uttar Pradesh, according to the Report of the Tariff Commission on . C the cost Structure of the Sugar Industry a11d the Fair Price for Sugar (1969) has the heaviest concentration of sugar mills in the country but several of them are uneconomic and some sick. Modernisation is · message lost on U. P. sugar manufacture and the cane cultivator's fortune hangs on the fluctuating prosperity of the marginal millers. The sugar and sugarcane economy is the victim of a variety of forces which add to the precariousness and poor efficiency of factories.

The area under cultivation recedes or expands with the decrease or increase of crushing by the factories and the misery of losses and instability of acreage under cane cultivation have played havoc with agriculturists. Pithering prices of sugar, export promotion as a policy, 'levy' of sugar to feed, the poor and a number of other intricate economic facts GANGA SUGAR co. v. U. P. STATE (Krishna Iyer, J. ) 775 have made the fiscal manoenvring a matter of expertise and social ) justice. While, on a pan-Indian survey, wide variations in quality of cane and efficiency of mills may be found, within Uttar Pradesh, broadly speaking, the sucrose content differs but little and the percentage of recovery also is more or less the same :llor factories in the State save where the machinery effects efficiency.

So much so, the price of @garcane, usually decided by the Central Government's notification of minimum price, depends on its weight and sucrose recovery and, in practice, within a region both gravitate towards a common point. Moreover, the Uttar Pradesh sugar map reveals, as pointed ou! by the High Court, that 'the more you crush, the more you produce; the more you produce, the more you earn. So the quantity of sugarcane crushed by a factory is an ind~x of its earuings'. The relevance of this ;relationship between consumption of quantity by the mills, their sugar production and quantnm of pr;s, to the question of tax incidence, its equity' and equality will be ta en up by us later on. Prima facie, there is a cane-sucrose correlation, for the State. Apart from it, the more the cane purchase\! , the more the profits spun; and the justice of fixing the tax tag on thd weight of cane purchased argues itself.

And what makes for just impost of the tax burden is the antithesis of arbitrariness. When the majority of the sugarcane States have imposed purchase tax by weight, net value, a reinforcement of sorts is added to this inference. The High Court observes, based on these -Oata : "Prime facie, purchase tax by weight would ensure more stable revenue over the years than the purchase tax by the price of sugarcane" which rises and falls in a four years' cycle". This statement has not been upset by any facts placed before the court and ipse dixits of counsel, sans data, are airy economics. Another market eccentricity musf be noticed. Busiuess cycles -0f boom and slump have been the bane of the sorry sngar and sugar- ... cane story of that State, and fiscal policy to stabilise a wobbling market economy has been presumably evolved thoughtfully. The Report we have referred to bears testimony to this cyclical factor and the High Court has drawn inferences therefrom.

Let us view the inequity of the impost had it been related to the price of cane. The High Court ' . ,}'- gives some facts : "The price of sugarcane is, according to the Report of the Tariff Commission, determined by the Jaw of supply and deJlland in a particular year. Accordingly it may vary disproportionately in various regions of thei State. On • GANGA SUGAR: co. v. U. P. STATR (Krishna Iyer, l. ) 777 Abstract submissions· flung from imagination do not reach the ) IPOint of forensic take-off, if we· may add. Tentatively, subject to further examination, the conclusion of the High Court commends it- :self to us : "The incidence of purchase tax by weight appears fo be more related to the earning capacity of thel assessee. than the incidence of tax by price of sugarcane". "To clinch the issue, as it were, the High Court winds up : "The petitioners have not argued that the impugned provision is confiscatory in, nature.

I have ~lreal(y shown) that tax by weight has got fairer relation to the p~uction of ·sugar by an earning of a factory than tax by price. Conse- •quently, no one can fairly complain that . the impugned pro- ·vision treats unequals as equals. Equal crushing attracts equal tax. " We may comment by way of supplement that equal crushing m2ans -equal weight of cane. So cane quantity and tax liability roughly match :and remove tlm fear of ·uneven imposts. Let us go back to pick up the threads, leaving this pertinent detour for a while. Sugarcane agriculture and sugar industry 11ave been the ·cynosure of legislative attention at Central and State levels for long. We may start a rapid survey from 1932 when the Sugar Industry Protection Act, 1932 was put on the statute book. Its object was to foster and develop the sugar industry by protective tariffs. Then came the Sugarcane Act 1934 which empowered ·the Provincial Government to fix a flow price for sugarcane sold to sugar factories.

This was followed by the U. P. Sugar Factories Control Act 1938, which replaced the earlier 1934 Act. Thus came into existence a statutory Sugaa-cane Control Boatd~and a Cane Comm1ss10ner. Section 29(1} of this Act imposed a .. ·........ sales tax ·on the sale of sugarcane. Sub-section (3) provides for a cessl on the ·;:ntry of sugarcane into a local area. The necessity' for the fostering legislative care of sugarcane cultivation and the imposition of a tax in tfiis behalf is explained in the Statement of Objects and Rea. sons to the Bill of 1938 : "The future of the sugm industry depends to a very 1arge extent on a big drive for the improvement of cane cultivation and its planned productioμ on a rational basfs. To enable Government to carry out th.

e necessary measures in this connection, which 'will involve considerable expenditure, and to take other steps conducive to the wcifare of the industry, cane growers and agriculturists generally, it js proposed to impose a tax upto a maximum limit of six pies a maund of the sale of sugarcane to a factory or a; cess at the same rate on the entry of cane into a local area noti- ' fied in this behalf for consumption, use or sale therein. " It is significant that 40 years ago the tax for the benefit of cane growers· wos linked up with weight. It is not as if a freak flash flit post the legislative· mind of linking up purchase tax with weight of cane in 1961 only. Apparently, measure of tax by weight of stuff in the peculiar circumstances of· sugarcane economy has been tested by time and metabolised into the consciousness of the affected Trade and the Administraih,h. Be that as it may, the development of sugarcane cultivation was taken up on a systematic b~sis as per the statutory mandate.

· Both the tax am! the cess contemplated by the 1938 Act went by the maund and alth01;gh the cess wa~ to be levied from the seller he was allowed to recover it from the purchaser. The 1938 Act gave place to the U. P. Sugarcane (Regulations of Supply and Purchase) Act, 1953, which created a scientific scheme, created a Fund, injected the concept of cane growers' coop_eratives '! nd provided for levy of cess. The cess part of the Act was replaced by the U. P. Sugarcane Cess Act 1956. We must remember that by now the Government of India Act 1935 had ceased to exist and the Constitution of India had come vibrantly into being with the fur{damental rights of Part III. Th_e cess under (he 1956 Act was attacked and fell victim to a constitutional challeng sugarcane and had legislative competence t() enact the impugned Act. "(') II (1) Ibid. p. 414. (2) ·Ibid pp. 416·417. (3) Ibid pp. 422·423. GANGA SUCiAR CO· v. U. P. STATE (Kris/ma Iyer. J.

) 785 Even the argument of repugnancy was repelled : "The pith and substance argument also cannnt be imported here for the simple reason that; when both the Centre as well as the State Legislatures were operating in the concurrent field, there was no question of any trespass up01i the exclusive jurisdiction vested in the Centre under Entry 52 of List I, the only question which survived being whether, putting both the pieces of legislation enacted by the Centre and the State Legislature together, theJe was any repugnancy............ "(1) .. This Court further quoted Sulaiman, J. In Shyamakant Lal(2) to Je11d strength to this latter limb of reasoning, where the learned Judge had laid down the1 principle of construction in, situations of apparent conflict : "When the questi<lll is whether a Provincial legislation is repugnant to' an existing Indian Law, the. onus of showing its repugnancy and the extent to. which it is repugnan~ shquld be on the party attacking its validity.

There ought to be a presumption in favour of its validity, and every effort should be made to reconcile them and construe both so as to avoid their being repugnant to each other; and care should be taken to see whether the two do not really. operate in different fields without encroachment. Further, repugnancy must exist in fact, and not depend merely on a possibility. " Tika Ramji notwithstanding, the contention was advanced by Sri , Shanti Bhushan that industry was a pervasive expression, ambient enough to embrace raw materials used for the industry and so, sugar industry, as a topic of legislation, vested in Parliament exclusive power to legislate on sugarcane supplies to sugar factories, and, pursuing this expansionist logic, any taxation on supplies of cane to mills would be legislation on sugar industry. Ergo the Purchase! Tax Act was: a usurpation by the U. P. Legislature breaching the dykes ofl Art. 246(1) read with entry 52 of List I.

He expanded on the theme by urging that any legislation which affecte<l the sugar industry by taxing its raw materials was one with respect to that industry. The Tikka Ramji ratio ,is diametrically opposed to this reasoning and a ruling which has· stood the field so Jong, has been followed by another Constitution II (I) Ibid pp. 420421. ~) lb id p. 427. -A Bench as late as 1973 in the Kannan Devan case('), and its force of logic has our deferential assent and cannot be brushed aside by a mere appeal for reconsideration. Shri Shanti Bhushan candidly conceded that if Tikka Ramji were good law his submission was still-born. We agree IB 'Industry as a legislative topic is of large and liberal import; true. But what peripherally affects cannot be confused with what goes to the heart; An acquisition of land for sugar mills or of sugar mills · may affect the industry but is not an action in the legislative field for- / bidden for the States.

[See the Kannan Devan Hills Produce Com- , , pany Ltd. case (supra)]. Sales tax on raw materials going to a factory -<: may affect the costing process ol the manufacture\ but is not legislation on industrial process or allied matters. Indeed, ii the State Legislature cannot go anywhere m;ar meaSill"es which may affect topics reserved for Parliament a situation of reduction ad absurdum may be reached. The further refinement made by counsel that here was legislation . {) confined to factories and units only, the other buyers of sugarcane being left out, and that therefore the Act was in intent and effect one with respect to the sugar industry has no substance either. . . For one thing, the bulk of the consumption of sugarcane was by factories and khandsari units only and the omission of trivial consu- · mers did not mean that the legislation was not on sugarcane purchases generally.

Secondly, it was open to the legislature to make an intelligent choice of the persons on whom the tax should be imposed. Here, the bulk consumers Were selected and the marginal buyers omitted. We discern nothing in this policy which legislates upon the sugar industry. Before we move on to the submission as to the nature of the levy being an excise duty, we may dispose of the little contention on alleged discrimination between sugar factories and khandsari units by the imp~ post of differential rates of tax and more serious contention founded on the breach of Article 14 to the effect that when a purchase tax liability is computed by the weight of the case, as distinguished from its monetary value, there is an inevitable arbitrariness built into the texture of the Scheme. If either of these submissions has substance, the tax in question must fall to the forces of Articles 14, 19 and 13, especially Art. 14, Art. 19 coming in only consequentially or where expropriation ensues.

Article 14, a great right by any canon, by its promiscuous forensic j misuse, despite the Dalmia decision has given the impression of being ' (! ) [1973] I s. c. R. 3S6. '\ GANGA SUGAR co. v. u. P. STATE (Krishna ! ya, J. ) 787 , )~ l! he last sanctuary of losing litigants. In' present case, the levy which is . unifonn on all sugarcane purchases, is attacked as ultra vires, on the ~core that the sucrose content of various consignments may vary from place to place, the range of variation being of the order of 8 to 10 per cent and yet a uniform levy by weight on these unequals is sanctioned by the Act. Price of cane is commended as the only permissible criterion for purchase tax. The whole case is given away by the very circumstance that, substantially, the sucrose content is the same for sugarcane in the State, the marginal diffcnence being too inconsequential ! o . build a case of discrimination or is blamable on the old machinery. Neither in intent no.

r in effect is there any discriminatory treatment discernible to. the constitutional eye. Price is surely a safe. guide . but other methods are not necessarily vocational. It depends, practical considerations of the. Adrninisration, traditional practkes in the Trade, -0ther economic pros and cons enter the verdict but, after a judicial generosity is extended to the legislative wisdom, if there is writ on the status perversity, 'madness_' in the method or gross disparity, judicial . credulity may snap and the measure may meet w1th its funeral. Eyen so, taxing statutes have enjoyed more judicial indulgence. This Court has uniformly held that classification for taxation and the . application of Article 14, in that context, must be viewed liberally, not meticulously. We must always remember that while the executive and legislative branches are subject to judicial restraint, "the only check upon our exercise of power is our own sense of self-restraint.

"(') In the Murthy Match Works(2) case, this Court observed: "Certain principles which bear upon classification may be mentioned here: It is true that a State may classify persons and objects for the purpose of legislation and pass laws for the purpose of obtaining revenue or other objects. Every differentiation is not a discrimination. But classification can be sustained only if it is founded on pertinent and real differences . as distinguished from irrelevant and artificial ones. The constitutional standard by which the sufficiency of the differenbia which form a valid basis for classification may be measured, has been repeatedly stated by the courts. If it rests on a difference which bears a fair and just relation to the object for which it is proposed it is constitutional. To put it different1y, the means must have nexus with the ends. Even so, a large latitude is . allowed to the State for classification upon a reasonable basis and what is reasonable '(I) [1974] 3 S. C. R. 121.

'(2) Ibid. p. 130. is a question of practical details and a variety of factors which the court will be relucant and perhaps ill-equipped io investigate. In this imperfect world perfection even in grouping is an ambition hardly even accomplished. In this context, we have to remember the relationship between the legislativte and judicial departments of government in the determination of the validity of classification. Of course, in the last analysis courts possess the power to pronounce on ) the constitutionality of the acts of the other branches whether a classification is based upon substantial differences or is arbitrary, fanciful and consequently illegal. At the same time, the question of classification is ·primarily for legislative judgment and ordinarily does not become a judicial question. A power to classify being extremely broad and based on diverse considerations of executive pragmatism, the judicature cannot rush in where even the legislature varily treads.

" The further challenge must be clarified here. Counsel submitted, that unequals were being treated equally by a uniform purchase tax I . where equality would have dictated classification and taxation base(t on sucrose recovery from the cane or its market price. Even here, wemay notice the observations in Murthy. Match Works (supra). Another proposition which is equally settled is that merely because there is room for· classification it does n-0t follow that legisiation without classification is always unconstitutional. The court cannot strike down a law because it has not made the classification which commends to the court as proper. How can the legislative power be said to have . been unconstitutionally exercised because within the class a sub-classification was reasonable but has not been made.

· It is well established that the modern State, in exercising its sovereign powers of taxation, has to deal with complex factors relating to the objects to be taxed, the quantum to be levied, the conditions subject to which the levy has to be made, . the social and economic policies which the tax is · designed to subserve, and what not. In the famous words of Holmes, J. ip. Bain Peanut Co. v. Finson: 'We must remember that the machinery of Government . J.. I would not work if it were not allowed a little play in. -its joints. "(1) (I) Ibid. 130/131. GANGA SUGAR co. v. U. P. STATE (Krishna lyer,. J. ) 789 It is well established that classification is primarily for the legis~ lature and becomes a judicial issue only when the legislation bears on its bosom obvious condemnation by way of caprice or irrationality.

' We have discussed earlier the history of legislative control, the imposition of tax or cess by weight of cane and the acceptance of that methodology all through the decades without demur by the Trade. Moreover, this Court has negatived an identical argument in a· case from Andhra Pradesh (where also a similar leyy based on weight of sugarcane is extent) in Andhra Sugar Ltd. & Anr. etc. v. State of Andhra Pradesh & Ors. (1) The Court there observed : "Mr. Setalvad submitted that there can be no levy of a purchase tax with reference to the tonnage of the cane. We cannot accept this contention. Usually the purchase tax is levied with reference to the price of the goods. But the legislature is competent to levy the tax with reference to the weight of the goods purchased. The contention of Mr. Chatterjee that a purchase tax must be levied \'iith reference. to the turnover only is equally devoid of merit. Where the purchase tax is .

levied on a dealer, the levy is usually with reference to his turnover, which normally means the aggregate of the amounts of purchase prices. But the! tax need not necessarily be levied on a dealer or by reference to his turnover. It may be levied on the occupier of a factory by reference to the weight of the goods purchased by him. " Maybe, the discussion is brief but the conclusion is sound, and we concur. Tax on sale or purchase must be on the occurrence of a taxing event of sale transaction. Beyond that is left to the free play of the legislature, subject, of course, to the contra-indications about capricious, arbitrary or irrational features. It is a superstition, cultivated by familiarity, to consider that all sales-tax must necessarily have nexus with the price of the commodity.

Of course, price as basis is not only usual but also safe to avoid uneven, unequal burdens, although it is conceivable that a legislature can regard prices which fluctuate frequently, as too impractical to tailor the purchase tax. It may even be, in rare cases, iniquitous to link pur~hase tax with price, if more sensible bases can be found. Supposing a legislature classifies sales-tax on the basis of human categories and reduces the rate or exempts the tax in respect of abject destitutcs, or starving flood (I) [1968] I S. C. R. 705. 14-625 SCl/79 victims or notoriously hazardous habitations, with respect 'to necessity of life. Such differentiation cannot be castigated as discrimination out of hand. Of course, it is common and commonsense that reliable standard is the price, although in regard to customs duties there arc still items levied on the nature of the goods rather than its value in money.

For the present, it is sufficient to state that the practice has been to impose purchase tax by weight of cane. Also, in w<'ight • of cane its sucrose content and its price have a close nexus, although, thwretically, they may appear unconnected. The High Court has I stated that the quantity crushed, the sugar produced and the profits · earned, have a substantial linkage. The quality of eane over tlfe whole OL Uttar Pradesbi varies over a range of 8 to 10 per cent which, if conv&ted to purchase tax, may inflict a trivial difference per quintal. Moreover, for many years past the bull:: Qf the sugar has been absorbed' by 'levy' by the State and in the costing components the State, as buyer of sugar, has borne the burnt. We have no facts . to hold that arbiltary or vagariO'us burdens are cast because weight, not price. , has been the yardstick for tax.

Fine-tuning to attain perfect equality may be a fiscal ideal but, in the rough and tumble of work-a-day econqmics, the practical is preferred to the ideal, provided glaring caprice or gross disparity does not make the levy arbitrary or frolicsome. Article 14 is not intel! ectual chess unrelated to actual impact or the wear and tear of life but ·even-handed justice with some play in the joints. Sri Mridul, one of the advocates appearing for the appellants, made a naive presentation that equality is inflexible as enshrined in Article 14 and so the differential in rate of tax as between sugar mills arid khandsari units is bad. The plea that infants and adults, weeklings and strongmen, paupers and princes should be put on a. par lest legislative validity be imperilled has an elitist merit but sounds like an argumentum ad absurdum in the context of social justice. Unequals cannot be treated equally since mechanical uniformity may become unmitigated injustice.

Khandsari units are cottage industries unlike sugar factories and need legislative succour for survival. Their eco- 1 nomy justifies State actiO! Il, classifying them as. apart from factories and we. fail to appreciate the flaw in the scheme on this score. Reference to K. T. Moopil Nair's cas~ was made at the bar to persuade us that unequals cannot be tortured into equality.. :. -a: vice which stultifies the soul of Article 14 as Anatole France exposed in his sardom epigram that 'the law, in its majestic equality, forbids the GANGA SUGAR CO· v, U. P. STATE (Krishna Iyer,]. ) 791 h. as well as the poor to sleep under bridges, to b~g in the streets, nd to steal bread'. We are sure that equality has two sides, both portant, and Moopil Nair adverted to one of the facets. Nothing ~ more cart be squeezed out of that case.

The inequality of situation, in the total conspectus of socio-eConomic facts and human condition, must be striking and the unjust equality the rule forces down on unequals must be glaring. In taxation, the many criteria of intrinsic intricacy and pragmatic plurality persuade th~ Court, as a\ realist instrument and respecter of the. other two branches, to allow considerable free play although never any play for caprice, mala {ides.. , or cruel recklessness in intent and effect. Sri Malhotra, counsel for some appellants, explored beyond Sri Sl1anti Bhushan, the 'excise' argument in detail, read to us several sectio1\s and rules which enables the tax authorities to keep effective track of and control over the sugar in the factories to the extent needed f9r recovery of the tax. Nothing in these provisions regulates or controls the industry itself nor exacts any levy on the manufacture of sugar or its wide. r ramifications. Nothing more than prevention of esc.

ape- ( ment of purchase tax on cane is done and what is done is legitimately incidental to the taxing power. Peripheral similarity between purchase tax and excise levy does not spell essential sameness. Sugarcane tax operates in the neighbourhood. of sugar excise but proximity is not identity. The tax is only on purchase of cane, not its conversion jnto sugar. If the miller has his own cane farm and crushes it, he ha. -s no purchase tax to pay but cannot escape excise duty, if any. Again, if cane is purchased by a miller and it is later robbed or destroyed before sugar is manufactured, the State ta.. x: is exigible although excise on production is not. A perspicaciou,s appreciation of the implications of purchase and production dispels confusion on this issue. To )buy raw produce is a step preliminary to manufacture but is not part • of manufacture.

Maybe, in some cases tax on such purchase and duty on manufacture therewith are so close that thin 'partition do their bounds divide' but how cab we obliterate those bounds and telescope the two ? All the appeals deserve to be and are! dismissed with costs one ' set. ·N. K. A. Appeals dismissed..