RAMA SUGAR INDUSTRIES LTD. versus STATE OF ANDHRA PRADESH & ORS.

Citation: [1974] 2 S.C.R. 787 · Decided: 17-12-1973 · Supreme Court of India · Bench: A.N. RAY · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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RAMA SUGAR INDUSTRIES LTD. 
v. 
STATE OF ANDHRA PRADESH & ORS. 
December 17, 1973 
787 
[A. N. RAY, CJ., H. R. KHANNA, K. K. MAmEW, A. ALAGJRISWMU 
AND P. N. BHAGWATI, ]J.] 
Arullira Pradesh Sugarcane (Regulation of Supply and Purchase) Acl, l-951-
Sec. 21(3)(b)-Gof'ernment.r discretion to grant exemption from payment of 
Purchase Tax. 
Adniinistrative discretion-Wllelher Government had fettered its discrerion by 
·laying' down- a policy of confining tire benefit of ·exemption to Cooperative Su;:ar 
·Factories. 
Section 20(3)(b) of the Act lays down that the Government may, by notifi· 
cation, exempt from the payment of tax any factory which in the opinion of the 
Government. has substantially expanded to the extent of such expansion for a 
period not exceeding two years from the date of completion of the expansion. 
The Andhrll Pradesh Government took a policy decision to grant exemption from 
payment of purchase tax to new and expanded supr factories in- the cooperative 
sector only due to present financial poo1tiOn of the Government. In pursuance 
of the said policy, the exemption was granted for one year from the ·payment of 
tax to the cooperati_ve societies of arowers of sugarcane. The benefit of the 
exemption wiu refused to the appellant and other joint stock companies running 
the sugar- factories. 
On behalf Of the appellant it was contended that the Govern-
ment could not by laying down a policy to exempt OD!y cooperative sugar factories 
fetter their hands from examiains the merits of each individual case. It was also 
contended that the policy beblnd oec. 21 (3) being to encourage new •agar facto-
ries or expanded factories the Government could not refuse to consider all except 
one clus, that is, the cooperative sugar factories, for the purpose of granting 
exemption. lt was further urged that new sugar factories and· expanded sugar 
factories all fall into one clUB and there is nothing particular or special about 
. cooperative auaar factories justifying their treatment 81 a special class deserving 
a special treatment, The State of Andhra Pradesh contended that it had full dis· 
-cretion to decide the Policy in granting the exemption and that cooperati\'e sugar 
!actories consisting of cane growers is a distinct category justifying their treatment 
as a class separate from other sugar factories. On facts it was asserted. by the 
State that the exemption was granted only to new cooperative sugar factories and 
that too only for one year. It was also asserted that the case of the appeJlant-; 
was individually comidered and rejected on merits. 
• Dismissina the appeal and writ petitions, the majority of the Court, 
HEID: Per A. N. Ray, C.J., H. R . .Khanna and A. Alagiriswami, JJ (I) The 
purpose of the Act is tQ encourage new nor factories and expanded sugar facto-
ries. 
But how that Power is ID be exercised will have to be decided by taking into 
consideration all tile relevant factors relating to the sugar industry. It is 
\vell 
known that there is a difference in the sycrose content in the cane produced - in 
different areu. At one period the industry may be in a very prosperous condi-
tion and miaht not.need the exemption. It may also be that factories in a parti-
cular area are in need of this concession but not factories in another area. 
We are 
therefore of opinion that it would be open to the State Government to grant exemp-
tion to new factories only but not the expanded factories, to grant the exemption 
for one year instead of three years or two years as contemplated under the Section, 
to grant the exemption to factories in QQe area but not to factories in .another 
area, to Jtrant the exemption during a particular period but not during another 
period. (791 H-792 Cl 
(II) The coonerative sugar factories consisting of sugarcane growers faU 
under a distinct category different from other categories and the Government is 
justified in treating the cooperative sugar factories as a distinct class for the pur• 
poses of the protection and concessions, considering their contribution to tilt 
sizable sugar Industry now built up in this country. {792 'C-D] 
788 
SUPREME COURT REPORTS 
(1974j. Z S.C.R. 
(Ill) There is DO reason to reject the 'statement OD behalf of the State of 
Andhra Pradesh tbat they had con:;idered the rcqu:st of the appellant as well as 
of the petitioners on their merits and that the exemption had been granted only 
to new cooperative factories· for the sho

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