GANGA SUGAR CO. LTD., ETC. versus STATE OF U.P. & OTHERS ETC.

Citation: [1980] 1 S.C.R. 769 · Decided: 20-09-1979 · Supreme Court of India · Bench: Y.V. CHANDRACHUD · Disposal: Dismissed

Cited by 11 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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769 
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 a 
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 a 
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 
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 
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. 
B 
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G 
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770 
SUPREME COURT REPORTS 
[1980] 1 S.C.R. 
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 
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 charac-
ter 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 
case deals with the identical question of "controlled industry'
1 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 

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