LexZILA PARISHAD KHERI versus HINDUSTAN SUGAR MILLS & ANR.
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I'. A B c D E F 423' ZILA PARISHAD KllERI v, HINDUSTAN SUGAR MILLS & ANR. August 26, 1971 [K. S. HEGDE AND A. N. GROVER, JJ.] U.P. Kshettra Samitis and Zita Parishads, Adhiniyam, 1961 s. 121- U.P. District Boards Act, 1922, s. 114--Regular purchase of raw material in a rurlll area whether amounts to cc.rrying on business in that area. The appellant Zila Parishad sought to impose circumstances and pro- perty tax on the respondent whose factories for manufacturing sugar were situated outside the area of appeUant's jurisdiction but who regularly made purchases of sugar cane in the said area. On the question whether such purchases amounted to carrying on business in the area within the meaning of s. 121 of the U.P. Kshettra Samitis and the Zila Parisha~• Adhiniyam, 1961. HELD : The buying of raw material in the shape of sugarcane may be a process or activity of a continuous character but it cannot be said that the respondent company was making any separate profits or income by means of purchasing sugarcane. Nor was the sugarcane so purcha5ed subjected to any process resulting in a product which by itself could earn profits. If a-·manufacturing concern continuously acquires raw material not only from different parts of India but also from other parts of the world it cannot be said that it was carrying on business in all those places from where the raw materials were acquired or purchased. Such a wide connotation cannot be given to the wor<!s 'carrying on business" in s.121 (a) of the Adhiniyam [426 H-427 F] Chas l. Webb Sons & Co. Inc. Philadelphia v. Commissioner of Income-tax, East Punjab, 18 I.T.R. 33, Commissioner of Income-fax, Bombav v. A hmedebhai UmarbhGi & Co. Bombay, [1950] S.C.R. 335 and Zila Parishad. Muza_ljarnagar & Anr. v. Jugal Kishore Ram Swarup & Anr., (1969) All. L.J. 24, referred to. CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1893 and 1894 of 1968. Appeals by special leave from the judgment and order dated August 7, 1967 of the Allahabad High Court, Lucknow Bench in Special Appeals Nos. 60 and 61 of 1966 and Civil Appeal No. G 172 of 1969. Appeal from the judgment and decree dated April 23, 1968 of the Allahabad High Court, Lucknow Bench in Special Appeal No. 22 of 1966. Kripa Shankar Baze/a, Naunit Lal and Swaranjit Sodhi, for the, ff appellant (in all the appeals). M. C. Chag/a, Bishan Singh, N. N. Sharma and C. P. Lal, for' the respondent no. I (in C.As. Nos. 1893 and 1894 of 1968). 424 SUPREME COURT REPORTS [1972] l s.c.R. The Judgment of the Court was delivered by Gronr, J. These are connected appeals from a judgment of the Allahabad High Court. Civil Appeals Nos. 1893-1894/68 are by special leave and Civil Appeal No. 172/69 is by certificate. The point which has to be decided is common to all of them. A It is necessary to refer to the facts in Civil Appeal No. 1893/ B 68 only. The Hindustan Sugar Mills Ltd. is a company manu- facturing sugar. Its factory is situate in Gola Gokaran Nath in District Kheri in the State of U.P. For manufacturing sugar the company purchases sugarcane in the District of Kheri. It main- tains some staff and also makes certain advances to cultivators within the rural area of the said district. It was assessed to what c is known as the circumstances and property tax. The relevant provision unde.r which this tax could be levied was s. 114 of the District Boards Act, 1922 which was repealed by the U.P. Kishettra Samitis and Zila Parishads Adhiniyam, 1961, herein- after referred to as the "Adhiniyam" but a similar provision, s. 121 was enacted in that statute. The material portion of s. 121 is as D follows:- "121. Conditions and restrictictts for tax on Cir- cumstances and Property.-The pov.~r of a Parishad to impose a tax on circumstances and prcperty shall be subject to the following conditions and restrictions, namely- E (a) the tax may be imposed on any person residing or carrying on business in the rural area provid- ed that such person has so resided or carried on business for a total period of at least six months in the year under assessment; (b) ,, ........................ F The company objected to the levy of the aforesaid tax but the assessing authorities did not accept its objections and made the assessment for the years 1961-1962 and 1962-63. The company filed an appeal to the Commissioner, Lucknow Division, who held that the tax had been wrongly i
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