SHETKARI SAHAKARI SAKHAR KARKHANA LTD., SANGLI, MAHARASHTRA STATE ETC. v. THE COLLECTOR OF SANGLI AND OTHERS (2)

Citation: [1980] 1 S.C.R. 982

Court: Supreme Court of India

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

Case summary

By this Judgment we shall dispose of five civil appeals in each one of which the appellant who is a registered co-operative society, challenges a judgment of the High Court of Bombay dismissing its petition for the issuance of an appropriate writ striking down the levy and...

Judgment text

\ SHETKARI SAHAKARI SAKHAR KARKHANA LTD. , SANGLI, MAHARASHTRA STATE ETC. v. THE COLLECTOR OF SANGLI AND OTHERS October 22, 1979 • T [Y. V. CHANDRACHUD, CJ. , V. R. KRISHNA IYER. N. L. UNTWALIA, P. N. SHINGHAL AND A. D. KOSHAL, J. J. j Bo1nbay Sugarcane Cess Act, 1948, Ss, 4, 7 ancf 8 & Sugarcan1' l'css (Validation) Act 1961, Ss. 2(li) and 3(1)(c)--State Act levying . in connection therewith : "The decision in Diamond Sugar Mills' case came up for consideration in this Court in 1aora Sugar Mills (P) Ltd. v. State of Madhya Pradesh and Others with a specific referenc-o to the provisions of the State Act, and it was once again hdd, following that decisioh, that the imposition of the cess was outside the legislative competence of the State.

,/ While examining that asp~ct of the controversy, this Court t made it clear that what Parliament had done by enacting sec:ion 3 of the Validation Act was not to validate the invalid State statutes, but to make a law concerning the cess covered by the said statuks a'nd to provide that the said law shall come into operation retrospectively. This Court clarified that by virtue of section 3 of the Validation Act, the command under which the cess would be deemed to have been recovered would be the command of the Parliament, because (I) [197912 S. C. R. 605. the relevant sections, no:ifications, orders and rules had been adopted by the Parliamentary statute itself. '; With respect, we also fully agree with. the view expresscJ in • Jaora Sugar Mills' case (supra). It is thus plain that sec:ioh 3 of the Central Act did not merely validate what the State autheritics had aiready done under the Bombay Act but ac'.

ually re-enacted the provisions of th~ Bombay Act by virtue of the authority vested in P,arliament under Entry 97 in List I of the Seventh Schedule to the Constitution of India so that the Bombay Act became. fully alive and operative as an enactment of Parliament as soon as the Central Act was promulgated and the authorities named in the Act were invested with full power to assess and recover the cess not under the Bombay Act but under the Central Act into which the provisions of the Bombay Act and the rules framed as well as the notifications issued thereunder became incorporated. r 6. The only other contention put forward by Mr. Sen (which was reiterated by Mr. Shanti Bhushan on behalf of the appellant in Civil Appeal No.

39 of 1969) was that the assessments having been made under statutory provisions which were invalid because of lack of legislative competence on the part of the Bombay Legislature, Parliament could not pass a law retrospectively validating those assessments by converting their . character from assessmllllts under the State statutes to those made under its own statute <4perating retrospectively. This contention also was repelled by this Court in Jaora Sugar Mills' case (supra) with the following observations : "So, the crucial question is : if collections are made under statutory provisions which are invalid because they deal 'F with a topic outside the legislative competence of the State legislatures, call Parliament, in exercise of its undoubted legislative competence, pass a Jaw retrospectively validating the said collections by converting their character from collections made under the State statutes to that of collections made under its own statute operating vestrospectively ?

In our opinion, the answer to this question has to be in the affirmative, because to hold otherwise would be to cut down the width and amplitude of the legislative comp~tence conferred on Parliament by Art. 248 read with Entry 97 in List I of the Seventh Schedule. Whether or not retrospective operation . of such a law is reasonable; may fall to be considered in certain cases; but that consideration has not be~n raised before us and ill the circumstances of this case, it cannot validity be raised either. We must, therefore, hold that the High Court was right in rejecting the appellant's case that the Act was invalid, and hence no demands could be made under its provisions either for a cess or for commission. " With the greatest respect, we find no reason at all to differ. 7. Article 265 of the Constitution of India was pressed into • service by :\fr. Sha'nti Bhnshan in support of the proposition that no tax could be levied or collected except by authority of Jaw.

The proposition is unexceptionable but we fail to see in what manner Parliament lacked the authority of Jaw while enacting the Central Act and incorporating into it the provisions of the Bombay Act. As pointed out above, Entry 97 in List I of the Seventh Schedule to the Constitution of India provides full legislative competence to Parliament in relation to the Central Act inasmuch as it vests all residuary powers of legislation in Parliament. The contention b,ased on alleged Jack of authority of 'Jaw in Parliamtnt is therefore repelled. 8. The submissions made by Mr. Patel appearing for the appellants in Civil Appeals No. 1925 and 1926 of 1972 alone now remain to be considered. He put forward two points. The first one was that section 4 of the Bombay Act was discriminatory, that the power confnPcd by it was unguided and uncanalised and that therefore it was hit by article 14 of the Constitution of India. When asked as to whether the point had been rais•cd before the High Court, Mr.

Patel's answer was in the negative and it transpired that no foundation for the point had b~en laid even in the pleadings submitted to the High Court. It was therefore not allowed to be raised by us at this late stage. Mr. Patel's second point was that in view of the proviso to clause (4) of section 2 of the Bombay Act, the managing agents of the factories in question would alone be JiableJ and that the assessed cess could not be recovered from his clients who were owners of the concerned factories. The point is wholly without substance and that for two reasons. For one thing, no managing agent is involved in the two appeals in which Mr. Patel has. put in appearance. Secondly, clause (4) of section 2 merely defines the term 'occupier' and has .... 'nothing to say about the person on whom the cess is to be imposed or from whom it is to be recovered.

Them are no doubt other provisions in the Bombay Act [section 6, sub-section (1) of section 7 and section 8] which indicate that the authorities assessing or recovering the tax are primarily to deal with the occupi•or but those provisions have obviously been enacted as a matter of convenience A. both for the said authorities and the assessees so that an absent owner may not be unduly harassed nor proceedings delayed by reason of his absence and not for limiting to the occupier alone the liability to pay the cess. In fact sub-section (2) of section 7 which is in the following terms would indicate that the liability. of the owner of the concerned factory is not excluded : •• "7. (1) ...................... ..

(2) If the occupier fails to furnish in due time the return referred to in section 6 or furnishes a r~turn which in the opinion of the prescribed authority is incorrect 9r defective, the prescribed authority shall assess the amount payable by him in such manner as may be prescrib~d and the provisions of sub-rection (1) shall apply as if such assessment has been made on the basis of a return furnished by the owner.... " Both the submissions made by Mr. Patel are therefore, repelled. r 9. In the result all the five app~als fail and are dismissed with costs, one set. N. V. K. Appeals dismissed. t )