Under the Sugarcane Control Order, 1966 factory means any premises including the precincts thereof in any part of which sugar is manufactured by vacuum pan process, price means the price or the minimum price fixed by the Central Government from time to time delivered at the gate of the factory or sugarcane purchasing centre and reserved area means any area where sugarcane is grown and reserved for a factory in terms of the Order.
Fourthly, the quantity of sugarcane required by the factory was fixed at 1,50,000 tons a year.
The Order further stated that the factory was to secure the quantity of sugarcane from the area specified in Schedule I and the quantity of sugarcane to be, supplied by each grower was fixed at 95 per cent of the sugarcane grown by the grower.
The Mysore Sugarcane Control Order, 1963 specified the India Sugars and Refineries Ltd. as the factory and enumerated the areas reserved for supply of sugarcane to the specified factory.
Counsel on behalf of the appellants companytended that there was numbersale and purchase of sugarcane by reason of want of mutual assent and further that the entire transaction was only by operation of statutes, and at numberstage there was any element of freedom to buy or sell.
Export of sugarcane from a reserved area was also prohibited except under permit.
Thirdly, the quantity of supply by the sugarcane grower, namely, 95 per cent of the produce was fixed.
First, the price was fixed.
Additional price for sugarcane companyld also be fixed under clause 5.
Clause 4 of the Sugarcane Control Order, 1955 was amended and substituted by a new clause.
On 26 September, 1963 sugar was numberified under Rule 125 B of the Defence of India Rules as a thing essential to the life of the companymunity.
Sugar Mills Ltd. On 16 July, 1966 in exercise of the powers companyferred by section 3 of the Essential Commodities Act, 1955 the Central Government made the Sugarcane Control Order, 1966 and repealed the Sugarcane Control Order, 1955.
Every sugarcane grower and the factory companycerned were required to enter into an agreement to supply or purchase the quantity of sugarcane determined under clause 4.
On 7 October, 1963 the Central Government directed that the powers companyferred by Rule 125 B of the Defence of India Rules shall be exercised by the State Government.
Fifthly, the grower in the reserved area companyld number export sugarcane to any place or person outside the area.
2225 of 1967, 29 to 31, of 1968, 2208 of 1967 and 32 to 34 of 1969 respectively.
The appellants raised three principal companytentions.
Vasanta Pai, G. L. Sanghi, P. C. Bhartari, B. Datta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appel lants in all the appeals .
Secondly, the sugarcane grower was required to deliver sugarcane and the factory was required to receive supply only from the sugarcane grower in the reserved area.
Clause 3 of the 1966 Sugarcane Control Order dealt with minimum price of sugarcane fixed by the Central Government having regard to a companyt of, production of sugarcane, b the return to the grower from alternative crops on the general trend of prices of agricultural companymo dities, c availability of sugar to the companysumer at a fair price, d the price at which sugar produced from sugarcane is sold by producers of sugar, and e the recovery of sugar from sugarcane.
It was said that under the statutes these companysequences emerged.
Purchase and sale of sugarcane at a price lower than that fixed was prohibited.
The price of sugarcane became payable 14 days from the date of delivery.
S. Desai, S. S. Javali and R. B. A tar, for the respondents in all the appeals .
First, there was numbermutual assent by and between the appellants and the growers of sugarcane in regard to supply of sugarcane by the growers and the acceptance by the factories and therefore there was numberpurchase and sale of sugarcane.
Strong reliance was placed by companynsel for the State on the agreement entered into between the growers and the factory as decisive of purchase and sale.
Clause 4 of the Order of 1955 gave the Government power to prohibit or restrict or otherwise regulate export of sugarcane from any area for supply to different factories and also to direct that numberjaggery or sugar shall be manufactured from sugarcane except under and in accordance with the companyditions specified in a licence issued in that behalf.
Appeals from the judgment and order dated April 16, 1968 of the Mysore High Court in Writ Petitions Nos.
The new clause 4 companyferred powers on the Central Government to reserve areas where sugarcane was grown for a factory, determine the quantity of sugarcane which the factory would require for crushing during the year, fix with respect to any specified sugarcane grower in a reserved area the quantity or percentage of sugarcane grown by such grower which such grower would supply to the factory companycerned require the sugarcane grower and the factory to enter into an agreement for supply and purchase of the quantity of sugarcane so determined.
Thereafter, the Mysore Sugarcane Regulation of Supply Order, 1963 applied to the India Sugar and Refineries Ltd. and the Mysore Sugarcane Regulation of Supply Munirabad Order, 1965 applied to the Salar Jung.
In exercise of the powers companyferred by clause 6 of the Sugarcane Control Order, 1966 the Mysore Sugarcane Regulation of Distribution Munirabad Order, 1966 was made by the Government of Mysore repealing the Mysore Sugarcane Regulation of Supply Munirabad Order, 1965.
Export of sugarcane from reserved area was prohibited.
The Judgment of the Court was delivered by Ray, J. These appeals are by certificate against the judgment and order dated 16 April, 1968 of the High Court of Mysore dismissing the applications of the appellants under Article 226 of the Constitution for writs, orders and directions prohibiting the respondent State of Mysore and the Commissioner for Commercial Taxes at Bangalore from levying or taking proceedings to levy any purchase tax on purchase of sugarcane from the grower or from companylecting or taking any proceedings for recovery of any such tax with or without penalty from the appellants.
The grower and the factory were required to enter into an agreement for supply or purchase of sugarcane.
Factories companyld ask for more than 95 per cent of the yield.
Under clause 6 of the Order the Central Government companyld reserve area where sugarcane is grown for the factory having regard to the crushing capacity of the , factory, the availability of sugarcane in the reserved area and the need for production of sugar and also determine the quantity of sugarcane required by the factory for crushing during any year and fix the quantity to be supplied by a grower to the factory.
In exercise of the powers companyferred by section 3 of the Essential Commodities Act, 1955 the Central Government on 27 August, 1955 made the Sugarcane Control Order, 1955.
Purchase of sugarcane by power crusher or for manufacture of gur, shakkar, gul, jaggery, rab or khandsari sugar was prohibited.
The Sugarcane Regulation of Supply Order, 1963 in so far as it related to matters provided for in the Mysore Sugarcane Munirabad Order, 1965 was repealed.
The Central Government was empowered by clause 3 of the Sugarcane Control Order, 1955 to fix the minimum price of sugarcane to be paid by purchasers of sugar.
The sugarcane grower and the factory were required to enter into an agreement for supply and purchase of sugarcane.
Contravention of the Mysore Sugarcane Control Order was made punishable by forfeiture of property in respect of which there was a companytravention.
The Mysore Sugarcane Munirabad Order of 1965 in clause 2 c defined factory to mean the premises of the appellant Salar Jung Sugar Mills Ltd. at Munirabad.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
11 A in the Third Schedule to the Mysore Sales Tax Act, 1957.
On 20 February, 1964 in exercise of the powers companyferred by clause 6 of the Sugarcane Control Order, 1955, the Central Government directed that the powers companyferred on the Central Government by clause 4 of the said Order, shall be exercisable by the State Governments of Andhra Pradesh, Assam, Bihar, Gujarat, Kerala, Madhya Pradesh, Madras, Maharashtra, Mysore, Orissa, Punjab, Rajasthan, Uttar Pradesh and West Bengal and the Chief Commissioner of Pondicherry.
The growers according to the State might ask for advance payment of price in cash or in the form of seedlings, fertilisers and the like.
It may be stated here that the Salar Jung Sugar Mills Ltd. was also specified in the Schedule and it remained specified until 1965 when the Mysore Sugarcane Munirabad Order, 1965 was made as specially applicable to Salar Jung Sugar Mills Ltd. On 14 February, 1964 in exercise of the powers companyferred by section 3 of the Essential Commodities Act, the Central Government amended the Sugarcane Control Order, 1955.
The appellants also asked for orders, writs and directions for refund of several sums of money companylected as and for purchase tax.
The Central Government, however, companyld fix an additional price under certain circumstances and companytingencies.
Rule 125 B inter alia stated that if the Central Government was of opinion that it was necessary or expedient for regulating or increasing the supply of sugarcane or for securing the equitable distribution of sugarcane the Central Government companyld pass orders to reserve areas where sugarcane was grown for a factory determine the quantity of sugarcane which a factory would require for crushing during a year fix with respect to any specified sugarcane grower in a reserved area the quantity or percentage of sugarcane grown by such grower for supply to the factory companycerned require a factory to enter into an agreement with the grower to purchase the quantity of sugarcane so determined and further direct that numbersugarcane shall be exported from a reserved area except under and in accordance with a permit issued by the Central Government.
Every factory to which supply of sugarcane was to be made was required to enter into an agreement with each sugarcane grower to purchase the quantity of sugarcane determined.
In the fifties practically all the States in which sugarcane was grown for the purpose of manufacturing sugar used to levy cess on sugarcane brought into the premises of sugar factories.
The 1966 Sugarcane Munirabad Order was in relation to the appellants Salar Jung Sugar Mills Ltd. Clause 3 of the Order dealt with the crushing capacity of the factory being 1000 tons per day and the quantity of sugarcane required for the factory during the year was determined to be 1,50,000 tons.
The appellants are the India Sugars and Refineries Ltd. and the Salar Jung Mills Ltd. The India Sugars and Refineries Ltd. is situated at Hospet in Bellary District in Mysore and the Salar Jung Sugar Mills Ltd. is situated at Munirabad in Raichur District in Mysore.
The appellants factory was to secure the quantity of sugarcane determined under clause 3 2 from the areas specified in Schedule I being the reserved areas for supply of sugarcane to the factory.
The decision of this Court was given on 13 December, 1960.
This Court in Diamond Sugar Mills v. State of U.P. 1 1961 3 C.R. 242 held that section 3 of the U.P. Sugarcane Cess Act, 1956 which empowered the Governor of the State to impose cess on entry of sugarcane into the premises of a factory did number fall within Entry 52 of List II and as there was numberentry in the State List or in the Concurrent List in which the said Act companyld fall, it was beyond the legislative companypetence of the State Legislature.
The appellant, the India Sugars and Refineries Ltd. in four applications number Civil Appeals No.
Clause 4 as amended further provided that every sugarcane grower or factory to whom the order applied would be bound to supply or purchase the quantity of sugar companyered by the agreement entered into and wilful failure on the part of anyone would companystitute a breach of the provisions of the said Order.
In this background the Mysore Government on 14 November, 1963 in exercise of the powers companyferred by Rule 125 B of the Defence of India Rules brought into existence the Mysore Sugarcane Regulation of Supply Order, 1963.
In Schedule I of the Mysore Sugarcane Regulation of Supply Munira bad Order, 1965 the area reserved for supply of sugarcane to the factory was enumerated setting out the names of the villages.
On 15 January, 1965 the Mysore Government in exercise of the Powers companyferred by clause 4 of the Sugarcane Control Order, 1955 as amended and read with the numberification dated 20 February, 1964 made the Mysore Sugarcane Regulation of Supply Munirabad Order, 1965.
2002 to 2005 and 2014 to 2017 of 1968.
The appellant Salar Jung Sugar Mills Ltd. in four applications number Civil Appeals No.
Export of sugarcane from any reserved area was prohibited.
By Mysore Act No.
2015, 2016, 2017 and 2014 of 1968 impeached the demand and companylection made against the appellant for large sums of money as and for purchase tax and penalty on the purchase of sugarcane from the growers for the period 1 April, 1962 to 30 June, 1967 and further asked for refund of large sum of money companylected as purchase tax.
The Mysore Sugarcane Order, 1955 determined the crushing capacity of the appellant Salar Jung Sugar Mills Ltd. to be 1000 tons per day and the quantity of sugarcane required by the factory during the crushing season to be 1,50,000 tons.
In order to appreciate the rival companytentions on the first ground as to whether there was a purchase or sale of sugarcane the relevant legislation has to be looked into and facts and circumstances have to be ascertained for finding out as to what the actual transaction was.
Secondly, the appellants are number dealers within the meaning of section 2 k of the Mysore Sales Tax Act.
2003, 2004, 2005, and 2002 of 1968 asked for similar orders and directions in respect of the period 1 July, 1963 to 30 June, 1967.
As a result of the amendment the appellants were subjected to levy of tax on purchase of sugarcane.
11 of 1961 which came into force on 1 October, 1961 sugarcane was included at Serial No.
On 4 October, 1963 in exercise of the powers companyferred by section 3 of the Defence of India Act, 1962 the Central Government introduced Rule 125 B to the Defence of India Rules.
Sale or purchase of sugarcane at a price lower than the price fixed under section 3 was prohibit ed.
The Sugarcane Cess Validation Act, 1961 was passed by Parliament validating the imposition of companylection of cess on sugarcane under several State enactments before the companymencement of the Validation Act of 1961, The Mysore State Legislature imposed tax on purchase of sugarcane purchased by sugar factories.
Third, the levy of tax on purchase of sugarcane at different rates in different States was discriminatory and in violation of Article 14.
The sugarcane growers in the reserved area were to supply 95 per cent of the sugarcane grown by them to the factory.
Sixthly, it was said that entering into agreement between the grower and the factory for supply and purchase of sugarcane was under the statute.
In Schedule I of the Order factories were specified and reserved areas were enumerated in the said Schedule for supply of sugarcane to the specified factory and the sugarcane growers in the reserved areas were to supply 95 per cent of sugarcane grown to the factory companycerned.
