BHOPAL SUGAR INDUSTRIES LTD. versus STATE OF MADHYA PRADESH & ORS.

Citation: [1979] 2 S.C.R. 605 · Decided: 05-12-1978 · Supreme Court of India · Bench: P.N. SHINGAL · Disposal: Dismissed
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Judgment (excerpt)

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605 
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. culti-
vators. 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 noti-
fication under s. 23 of the Act imposing a ccss of 12 paise per maun<l on the 
entry of sugarc:ine 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 <luring such season exceeded 10 lakh n1aund';." 'fhe 
11:igh Court, on a \i.trit application by the appellants. declared the notification 
illegal as the imposition of the levy was with reference to particular premises. 
rfhe Parliament thereupon enacted the Sugarcane Cess (Validation) Act, 1961. ' 
Section 3 of the Validation Act '"'as taken to val:date the imposition and col-
lection of the cess under the State Act. 
In April, 1964, the appeUant received 
an intin1ation from the Additional Collector stating that a sum of Rs. 5,49.262.92 
was due from it as cess for the period 1959-60 to December 25, 1'961, and asking 
for a bank guarantee for payment of the balance. 
"fhe appellant replied that 
the amoU'.1t of cess worked out only to R5. 5,44.835.69 and the Collector h&l 
not as5essed the cess in accordance with the rules. 
Its objection was ignored 
and a den1and notice was served on it under s. 146 of the M.P. Land Revenue 
Code, 1959, for Rs. 5,49,262.92. The appellant filed a writ petition chalieng1ng 
the constitutionality of the Validation Act under which the Collector had d'e-
manded tbc cess. 
The High Court upheld the imposition of cess but reduced 
it to Rs. 5,44,835.69. 
It was contended that s. 23 of the State Act was not ultra vires the Con· 
stitution, as the expression "an area" ins. 23(1) means "a local area" within the 
meaning of Entry 52 of List II, 7th Schedule of the Constitution, and the Parlia-
ment could not, therefore, enact an Act validating a valid Act. It was further 
contended that when a law provides for th~ assessment of a cess or tax, il is 
required to be done by a specific order to that effect, but it was not made in 
this case. 
Dismissing the appeal, the Court1 
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606 
SUPREME COURT REPORTS 
[1979] 2 s.c.R. 
1-IELD : 1. Section 23 of the State Act was ultra vires the Constitution, and 
cannot be upheld on such a construction of the words "an area" in s. ( 1) as 
to restrict it to mean a "l(!Cat area". The proper meaning to be attached to the 
words "local area" in Entry 52, List JI of the Seventh Schedule of the Constitu-
tion; (when the area is a part of the State imposing the law) is an area adminis-
tered by a local body like a Municipality, a district boan:l, a local board, a 
union board, a panchayat or the like. The premises of a factory are therefore 
not a "local area" falling within Entry 52 of the State List, and there is no 
other Entry in the State List or the Concurrent List in which the Act could 
fall, [608 E-H] 
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Dia111ond Sugar Mills Ltd. and Anr. v. State of U.P. & Anr. [1961] 3 SCR 
242 and laora Sugar Mills (P) Ltd. v. State of M.P. and Ors., [1966] I SCR 
C 
523; followed. 
2. What the Parliament had done by enacting s. 3 of the Validation Act, was 
not to validate the invalid State statute, but to make a law concerning the cess 
covered by the said statute and to provide that the said law shall come into 
operation retrospectively. 
By virtue of s. 3, the command under which the cess 
would be deemed to have been recovered, would be the command of the Parlia-
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ment, because the relevant sections, notifications, orders and rules had 
been 
adopted by the Parliamentary Statute itself. [609 B-C] 
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3. The State Act and the Rules do not req
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