Bombay High Court
Padmashri Dr. Vithalrao Vikhe ... vs The State Of Maharashtra on 22 December, 2015
Bench: S.C. Dharmadhikari
WP.2060.1997+.Judgment.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 2060 OF 1997
Niphad Sahakari Sakhar }
Karkhana Ltd. }
Pimplas, Bhausahebnagar }
Tal. Niphad, distt. Nashik. } Petitioner
versus
1. State of Maharashtra }
through the Secretary, }
Department of Finance, }
Mantralaya, }
Mumbai - 400 032. ig }
}
2. Commissioner of Purchase }
Tax (Sugarcane), }
th
having his office at 8 floor, }
Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai 400 010. }
}
3. Purchase Tax Officer }
(Sugarcane) having his }
office at Dr. Gondkar }
Building, Panchvati, }
Nashik - 3. } Respondents
WITH
WRIT PETITION NO. 2364 OF 1999
1. The Ravalgaon Sugar }
Farm Limited, }
a Company incorporated }
under the provisions of }
the Indian Companies Act, }
1913, having its registered }
office at P. O. Ravalgaon - }
423 108, Taluka Malegaon, }
District - Nashik. }
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2. Shri. H. B. Doshi }
a shareholder and Director }
of Petitioner No. 1 }
abovenamed, carrying on }
business at P. O. Ravalgaon - }
423 108, Taluka Malegaon, }
Dist. Nashik. } Petitioners
versus
1. State of Maharashtra }
(service through }
Government Pleader, }
High Court, Mumbai) }
}
2. Commissioner of Purchase }
Tax (Sugarcane), having his }
office at 8 th floor, Vikrikar }
Bhavan, Nesbit Road, }
Mazgaon, Mumbai - 400 010. }
}
3. The Assistant }
Commissioner of Purchase }
Tax (Sugarcane), P-36, }
Nashik Division, Panchavati, }
Nashik 422 003. }
}
4. Purchase Tax Officer }
(Sugarcane), having his }
office at Dr. Gondkar }
Building, Panchavati, }
Nashik - 3. }
}
5. Sales Tax Officer (E-210) }
Enforcement Branch, }
th
R. No. 502, 5 floor, }
Old Building, Vikrikar }
Bhavan, Mazgaon, }
Mumbai - 400 010. } Respondents
WITH
WRIT PETITION NO. 3198 OF 2015
M/s. Shri. Chatrapati }
Sahakari Sakhar Karkhana }
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Ltd., At Post Bhavnnagar, }
Tq. Indapur, Dist. Pune, }
through its Managing }
Director, Ramakant }
S/o. Suryakant Naik, }
Age - 52 years, }
Occ. - Service (Managing }
Director) Karkhana, Ltd., }
Bhavani Nagar, Tq. Indapur, }
Dist. Pune. } Petitioner
versus
1. The State of Maharashtra}
through its Secretary, }
Finance Department, }
Mantralaya, Mumbai. ig}
(copy to be served upon }
Government Pleader Office) }
}
2. The Joint Commissioner }
of Purchase Tax }
(Sugarcane), Pune, }
Dist. Pune. }
}
3. The Deputy Commissioner }
of Sales Tax (Appeals), }
Pune, Dist. Pune. }
}
4. The Sugarcane Purchase }
Tax Officer, Pune, }
Dist. Pune. } Respondents
WITH
WRIT PETITION NO. 7543 OF 2015
WITH
CIVIL APPLICATION NO. 2197 OF 2015
M/s. Samartha Sahakari }
Sakhar Karkhana Ltd., }
A Co-operative Society }
registered under the }
provisions of Maharashtra }
Co-operative Societies }
Act, 1960, represented }
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through Shri. Pratapsinha }
R. Chavhan, Chief }
Accountant of the Petitioner, }
Indian inhabitant, }
aged 57 years, having office }
address at - Ankushnagar, }
Taluka - Ambad, }
District - Jalna. } Petitioner
versus
1. The State of Maharashtra }
through the Secretary, }
Department of Finance, }
Mantralaya, }
Mumbai - 400 032. }
ig }
2. The Commissioner of }
Purchase/Sales Tax, }
Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai - 400 032. }
}
3. The Joint Commissioner }
of Purchase/Sales Tax }
(Appeal), Vikrikar Bhavan, }
Near Railway Station, }
Aurangabad. }
}
4. The Additional }
Commissioner of Purchase/ }
Sales Tax, Mumbai having }
th
his office at 8 floor, }
Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai - 400 032. }
}
5. The Deputy Commissioner }
of Sales Tax, Aurangabad }
Division, having its office }
address at Vikrikar Bhavan, }
near Railway Station, }
Aurangabad. }
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6. Sugarcane Purchase }
Tax Officer, having his }
office address at Vikrikar }
Bhavan, near Railway }
Station, Jalna, }
District - Jalna. }
}
7. The Advocate General, }
Mumbai High Court, Bombay. } Respondents
WITH
WRIT PETITION NO. 12068 OF 2012
WITH
CIVIL APPLICATION NO. 1696 OF 2015
The Kopargaon Sahakari }
Sakhar Karkhana Limited ig }
at Gautamnagar, }
Post - Kolpewadi, }
Tq. Kopargaon, }
Dist. Ahmednagar }
(Maharashtra) } Petitioner
versus
1. State of Maharashtra }
(copy to be served on }
Govt. Pleader, High Court }
of Judicature at Bombay, }
Bench at Aurangabad). }
}
2. The Commissioner of }
Sales Tax and Sugarcane }
Purchase Tax, Vikrikar }
Bhawan, Mazgaon, }
Mumbai - 10. }
}
3. Sugarcane Purchase Tax }
Officer, Patel Building, }
Ahmednagar, }
Dist. Ahmednagar }
(Maharashtra) }
}
4. The Advocate General }
of Maharashtra }
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(copy to be served on Govt. }
Pleader, High Court of }
Judicature of Bombay, }
Bench at Aurangabad). } Respondents
WITH
WRIT PETITION NO. 12070 OF 2012
WITH
CIVIL APPLICATION NO. 2649 OF 2013
WITH
CIVIL APPLICATION NO. 2984 OF 2013
1. Padmashri Dr. Vithalrao }
Vikhe Patil Sahakari Sakhar}
Karkhana Ltd., P. O. }
Pravaranagar, }
Tq. Shrirampur, ig}
District Ahmednagar }
(Maharashtra) }
}
2. Sangamner Bhag Sahakari }
Sakhar Karkhana Ltd. }
Amrutnagar, Taluka }
Sangamner, }
Dist. Ahmednagar. }
}
3. Sanjivani Sahakari }
Sakhar Karkhana Ltd., }
Shahajanandnagar, }
P. O. Shinganapur, }
Tal. Kopargaon, }
District - Ahmednagar. }
}
4. Shree Ganesh Sahakari }
Sakhar Karkhana Ltd., }
Ganeshnagar, }
Taluka Kopargaon, }
District -Ahmednagar. }
}
5. Dnyaneshwar Sahakari }
Sakhar Karkhana Ltd., }
Bhende (Bk.) Taluka }
Newase, Dist. Ahmednagar. } Petitioners
versus
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1. The State of Maharashtra }
through the Secretary, }
Department of Finance, }
Mantralaya, }
Mumbai - 400 032. }
}
2. Commissioner of Purchase }
Tax (Sugarcane), }
th
having his office at 8 floor, }
Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai - 400 032. }
}
3. Additional Commissioner }
of Sales Tax,Mumbai Zone, }
Mumbai, having his office }
th
at 8 floor, Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai - 400 010. }
}
4. Sugarcane Purchase Tax }
Officer, Ahmednagar, }
having his office at Patel }
Building, Maliwada, }
Ahmednagar. } Respondents
WITH
WRIT PETITION NO. 12071 OF 2012
Parner Taluka Sahakari }
Sakhar Karkhana Ltd., }
Devi Bhoyre, At and Post }
Devi Bhoyre, Tq. Parner, }
Dist. Ahmednagar }
(Maharashtra) } Petitioner
versus
1. State of Maharashtra }
(copy to be served on }
Govt. Pleader, High Court }
of Judicature at Bombay, }
Bench at Aurangabad). }
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2. The Commissioner of }
Sales Tax and Sugarcane }
Purchase Tax, Vikrikar }
Bhawan, Mazgaon, }
Mumbai - 10. }
}
3. Sugarcane Purchase Tax }
Officer, Patel Building, }
Ahmednagar, }
Dist. Ahmednagar }
(Maharashtra) }
}
4. The Advocate General }
State of Maharashtra }
High Court of Bombay, }
Anex Building, Mumbai. } Respondents
ig WITH
WRIT PETITION NO. 12072 OF 2012
Mula Sahakari Sakhar }
Karkhana Limited, Sonai, }
Tq. Newasa, }
Dist. Ahmednagar. } Petitioner
versus
1. State of Maharashtra }
(copy to be served on }
Govt. Pleader, High Court }
of Judicature at Bombay, }
Bench at Aurangabad). }
}
2. The Commissioner of }
Sales Tax and Sugarcane }
Purchase Tax, Vikrikar }
Bhawan, Mazgaon, }
Mumbai - 400 010. }
}
3. Sugarcane Purchase Tax }
Officer, Patel Building, }
Ahmednagar, }
Dist. Ahmednagar }
(Maharashtra) }
}
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4. The Advocate General }
State of Maharashtra }
High Court of Bombay, }
Anex Building, Mumbai. } Respondents
WITH
WRIT PETITION NO. 12073 OF 2012
The Rahuri Sahakari Sakhar }
Karkhana Limited, }
at Shri-Shivaji-nagar, }
Tq. Rahuri, }
Dist. Ahmednagar }
(Maharashtra) } Petitioner
versus
1. State of Maharashtra
(copy to be served on
ig }
}
Govt. Pleader, High Court }
of Judicature at Bombay, }
Bench at Aurangabad). }
}
2. The Commissioner of }
Sales Tax and Sugarcane }
Purchase Tax, Vikrikar }
Bhawan, Mazgaon, }
Mumbai - 400 010. }
}
3. Sugarcane Purchase Tax }
Officer, Patel Building, }
Ahmednagar, }
Dist. Ahmednagar }
(Maharashtra) } Respondents
WITH
WRIT PETITION NO. 12074 OF 2012
Agasti Sahakari Sakhar }
Karkhana Ltd., Agastinagar, }
Tq. Akole, Dist. Ahmednagar, }
through its Managing }
Director. } Petitioner
versus
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1. State of Maharashtra }
(copy to be served on }
Govt. Pleader, High Court }
of Judicature at Bombay, }
Bench at Aurangabad). }
}
2. The Commissioner of }
Sales Tax and Sugarcane }
Purchase Tax, Vikrikar }
Bhawan, Mazgaon, }
Mumbai - 400 010. }
}
3. Sugarcane Purchase Tax }
Officer, Patel Building, }
Ahmednagar, }
Dist. Ahmednagar }
(Maharashtra) ig }
}
4. The Attorney General }
of Maharashtra }
(copy to be served on }
Govt. Pleader, High Court }
of Judicature of Bombay, }
Bench at Aurangabad) } Respondents
WITH
WRIT PETITION NO. 12075 OF 2012
Jai Jawan Jai Kisan }
Sahakari Sakhar Karkhana }
Limited, Lalbahadur Shastri }
Nagar, Nalegaon, Tq. Chakur, }
Dist. Latur, through its }
Managing Director. } Petitioner
versus
1. State of Maharashtra }
(Notice to be served on Govt. }
Pleader in his office at }
High Court of Judicature }
of Bombay, Bench at }
Aurangabad). }
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2. The Commissioner of }
Sales Tax and Sugarcane }
Purchase Tax, Vikrikar }
Bhawan, Mazgaon, }
Mumbai - 400 010. }
}
3. Sugarcane Purchase Tax }
Officer, Patel Building, }
Ahmednagar, }
Dist. Ahmednagar }
(Maharashtra) }
}
4. The Advocate General }
of Maharashtra, }
(copy to be served on Govt. }
Pleader, High Court of }
Judicature of Bombay, ig }
Bench at Aurangabad). } Respondents
WITH
WRIT PETITION NO. 12076 OF 2012
Kedareshwar Sahakari }
Sakhar Karkhana Ltd., }
Post Bodhegaon, Taluka }
Shegaon, District }
Ahmednagar, through its }
Managing Director }
Shri. Nivruttin Laxman }
Kalokhe, Age - 52 years. } Petitioner
versus
1. State of Maharashtra }
(copy to be served on }
Govt. Pleader, High Court }
Bench at Aurangabad). }
}
2. The Commissioner of }
Purchase Tax (Sugarcane) }
th
having his office at 8 floor, }
Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai. }
}
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3. The Additional }
Commissioner of Sales Tax, }
Mumbai Zone, Mumbai, }
having his office at 8 th floor, }
Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai. }
}
4. The Sugarcane Purchase }
Tax Officer, Ahmednagar, }
having his office at Sales }
Tax Office, at Ahmednagar. } Respondents
WITH
WRIT PETITION NO. 12077 OF 2012
The Shrigonda Sahakari ig }
Sakhar Karkhana Limited, }
at. Po. Shrigonda Factory, }
Tq. Shrigonda, }
Dist. Ahmednagar, }
through its Managing }
Director Shri. Vinayak }
Sahebrao Bhoyate, }
Age 53 years. } Petitioner
versus
1. State of Maharashtra }
(Notice to be served on Govt. }
Pleader in his office at }
High Court of Judicature }
of Bombay, Bench at }
Aurangabad). }
}
2. The Commissioner of }
Sales Tax and Sugarcane }
Purchase Tax, Vikrikar }
Bhawan, Mazgaon, }
Mumbai - 400 010. }
}
3. Sugarcane Purchase Tax }
Officer, Patel Building, }
Ahmednagar, }
Dist. Ahmednagar }
(Maharashtra) }
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4. The Advocate General }
of Maharashtra, }
(copy to be served on Govt. }
Pleader, High Court of }
Judicature of Bombay, }
Bench at Aurangabad). } Respondents
WITH
WRIT PETITION NO. 12078 OF 2012
Samarth Sahakari Sakhar }
Karkhana Ltd., }
Ankushnagar, }
Post Wadigodri, Tq. Ambad, }
District - Jalna, through its }
Managing Director. } Petitioner
versus
1. The State of Maharashtra }
through the Secretary, }
Department of Finance, }
Mantralaya, }
Mumbai - 400 032. }
}
2. The Commissioner of }
Purchase Tax (Sugarcane) }
th
having his office at 8 floor, }
Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai 400 010 }
}
3. The Additional }
Commissioner of Sales Tax, }
Mumbai Zone, Mumbai, }
th
having his office at 8 floor, }
Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai 400 010 }
}
4. The Sugarcane Purchase }
Tax Officer, Jalna, }
having his office at Sales }
Tax Building, near Railway }
Station, Jalna, }
Tq. And Dist. Jalna. } Respondents
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WITH
WRIT PETITION NO. 12079 OF 2012
Samarth Sahakari Sakhar }
Karkhana Ltd. Ankushnagar, }
Post Wadigodri, Tq. Ambad, }
District Jalna, through }
its Managing Director. } Petitioner
versus
1. The State of Maharashtra }
through the Secretary, }
Department of Finance, }
Mantralaya, }
Mumbai - 400 032. }
ig }
2. The Commissioner of }
Purchase Tax (Sugarcane) }
th
having his office at 8 floor, }
Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai 400 010 }
}
3. The Additional }
Commissioner of Sales Tax, }
Mumbai Zone, Mumbai, }
th
having his office at 8 floor, }
Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai 400 010 }
}
4. The Sugarcane Purchase }
Tax Officer, Jalna, }
having his office at Sales }
Tax Building, near Railway }
Station, Jalna, }
Tq. and Dist. Jalna. } Respondents
WITH
WRIT PETITION NO. 1441 OF 2014
Kukadi Sahakari Sakhar }
Karkhana Ltd., }
A Co-operative Society }
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deemed to be registered }
under Maharashtra }
Co-operative Societies Act, }
1960, At and Post- }
Pimpalgaon Pisa, }
Taluka - Shrigonda, }
District - Ahmednagar, }
Ahmednagar - 413 703. } Petitioner
versus
1. The State of Maharashtra }
through the Secretary, }
Department of Finance, }
Mantralaya, }
Mumbai - 400 032. }
ig }
2. The Commissioner of }
Sales Tax (Sugarcane), }
th
8 floor, Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai - 400 032. }
}
3. The Deputy Commissioner }
of Sales Tax, (Mumbai Zone), }
8 th floor, Vikrikar Bhavan, }
Nesbit Road, Mazgaon, }
Mumbai - 400 032. }
}
4. The Asst. Commissioner }
of Sales Tax, Vikrikar }
Bhavan, near State Bank }
of India, Ahmednagar. }
}
5. Advocate General, }
Mumbai, High Court Mumbai } Respondents
Mr. Sudam Kale for the Petitioner in
WP/3198/2015.
Mr. P. C. Joshi with Mr. Piyush Shah for
the Petitioner in WP/2060/1997 and
WP/12070/2012.
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Mr. P. C. Joshi with Mr. Ms. Nandini Joshi
i/b. M/s. Harish and Co. for the Petitioners
in WP/2364/1999.
Mr. S. P. Surte with Mr. Niranjan Shimpi
for the Petitioner in WP/12068/2012.
Mr. Vinod Sangvikar for the Petitioner in
WP/12071/2012.
Mr. Gopal Ozalwar i/b. Mr. Bhushan
Mahadik for the Petitioner in
WP/1441/2014 and WP/7543/2015.
Mr. V. A. Sonpal - Special Counsel with
Ms. M. S. Bane - AGP 'B' Panel for
Respondent State in all Petitions.
CORAM :- S. C. DHARMADHIKARI &
B. P. COLABAWALLA, JJ.
Reserved on :- 6 th October, 2015
Pronounced on:- 22 nd December, 2015
JUDGMENT :- (Per S. C. Dharmadhikari, J.)
In all these Petitions, the Petitioners have challenged
the constitutional validity of some of the provisions of the
Maharashtra Purchase Tax on Sugarcane Act, 1962 (for short
"the Act of 1962"). Since common questions of fact and law are
involved, all these Petitions are disposed of by this common
judgment.
2) We grant Rule in some of the Petitions which have
been listed for admission and along with others which are ready
for hearing. Even these Petitions would be disposed of finally by
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this judgment. In other words, since all parties agreed and are
present before the Court, with their consent, the Petitions are
disposed of finally by this judgment.
3) The leading argument canvassed is in Writ Petition
No. 2060 of 1997. We would refer to the facts in this Writ
Petition.
4) The Petitioner is a Co-operative Society registered
under the Maharashtra Co-operative Societies Act, 1960. It is a
Co-operative Sugar Factory situate at Nashik District of
Maharashtra. The Respondents to the Petition are the State,
Commissioner of Purchase Tax (Sugarcane), Purchase Tax Officer
(Sugarcane). The Petitioner also holds licence under the Act of
1962. It is stated that the Petitioner, at its factory, manufactures
sugar and allied products out of sugarcane received from
respective members, majority of whom are cultivators of
sugarcane having their own land under cultivation. Apart from
challenging the constitutional validity of sections 2, 3 and 6 of the
Act of 1962 as amended from 1st October, 1995, the Petitioner
also challenges the legality and validity of the letters dated 19 th
October, 1996, 20th November, 1996 and 6th January, 1997,
issued to the Petitioner by Respondent No. 3. The Maharashtra
Act IX of 1962 was enacted on 18 th April, 1962. It is an Act to
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provide for levy and collection of a tax on the purchase of
sugarcane for use in manufacture or production of sugar
including Khandsari Sugar. The words commencing from "the
manufacture or production of sugar including Khandsari Sugar"
were substituted for the words "the manufacture of sugar" by
Maharashtra Act 60 of 1974. Section 1 provides that this Act will
extend to the whole Maharashtra. Section 2 contains definitions
and we are concerned with the definition of the terms "factory",
"licence", "occupier", "prescribed" and "unit". These definitions
read as under:-
"2(b) "Factory" means any premises (including the
precincts thereof), wherein twenty or more workers are
working and in which, or in any part of which any
manufacturing process connected with the production of
sugar by means of vacuum pans is being carried on, or
ordinarily carried on, with the aid of power.
2(c) "licence" means a licence granted or renewed under
this Act.
2(d) "occupier" of a factory or of a unit means the person
who has ultimate control over the affairs of the factory or
the unit and where the said affairs are entrusted to a
managing agent, such agent shall be deemed to be the
occupier of the factory or of the unit, as the case may be; and
the term includes also any person appointed by the occupier
to act as a purchasing agent.
2(f) "prescribed" means prescribed by rules made under
this Act.
2(h) "unit" means a unit engaged or ordinarily engaged in
the manufacture or production of Khandsari sugar and
which is capable of handling or processing sugarcane juice
produced with the aid of a crusher driven by power."
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5) Therefore, unless the context otherwise requires, the
definitions will have to be read and understood as enacted above.
By section 3, it is stated that there shall be levied and collected a
tax on the purchase of sugarcane being purchased for use in the
manufacture or production of sugar in a factory or a unit. By
section 3A, which was inserted by Maharashtra Act 15 of 2011,
certain provisions of the Maharashtra Value Added Tax Act,
2002 and Rules made thereunder are made applicable so far as
they relate to the electronic filing of returns and electronic
payment of tax, or any amount payable under this Act of 1962.
6) The Act of 1962 has been amended on several
occasions. By section 4, taxing and licensing authorities are set
out and that is how the State Government can appoint an officer
to be called the Commissioner of Purchase Tax (Sugarcane) and
may appoint one or more officers to assist such Commissioner for
the purpose of functions under this Act and give them such
designations as may be prescribed. By section 5, there is a
provision made for issuance of a licence for purchasing sugarcane
for use in the manufacture or production of sugar. By section 6,
every occupier liable to pay tax under the Act of 1962 shall,
within thirty days after the end of every month to which the
return relates, submit a monthly return in the prescribed form to
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the Commissioner. By section 6A, special provisions for
transitional accounting year have been made. By section 7,
provisions are made for assessment and collection of tax. By
section 7A, penalty is imposed for failure to submit the return.
By section 7B, there is a liability to pay interest if the occupier
fails to submit the return. By section 7C, interest on amount of
refund is provided for, whereas, by section 7D, interest on
delayed refund is dealt with. By section 7E, refund of excess
payment of tax is contemplated, whereas, by sections 8 and 9,
there is a provision for Appeal and Revision to a person
aggrieved. By section 10, Court fees on appeal and applications
are provided for and by section 11, it is clarified that in
computing the period laid down in sections 8 and 9, provisions of
section 4 and 12 of the Indian Limitation Act, 1963 shall, so far as
may be, apply. By section 12, finality is given to an assessment,
imposition of penalty or interest or charging of interest and by
section 12A, special mode of recovery is set out. By section 12B,
there is a power of remission and exemption and by sections 13,
14, 15 and 15A, service of notice, power to inspect and take
copies of records and documents, information acquired to be
treated as confidential, publication and disclosure of information
respecting occupiers of factories and units and other persons of
public interest are the matters dealt with. By section 16, the
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WP.2060.1997+.Judgment.doc
offences and penalties are set out. By section 17, the
compounding of offence is permitted. By section 18, there is a
power conferred in the State Government to make Rules and
generally to carry out the purpose of the Act and such Rules made
includes Rules for levy of fees for any of the purposes of the Act.
Certain purchases are not liable to tax and which are falling
within section 19 of the Act and by section 20, the Maharashtra
Purchase Tax on Sugarcane Ordinance, 1961 is repealed.
7)
This sums up the provisions of the Act, but the
individual section, the changes and amendments thereto and the
impact of the same would be considered while dealing with the
rival contentions.
8) The Petitioners state that they have submitted their
periodical returns and paid the tax under the Act. However, the
State, by enacting the Maharashtra Tax Laws (Levy and
Amendment) Act, 1995, amended several enactments and which
included the provisions of the Act of 1962. It is the case of the
Petitioners that by the amending Act XVI of 1995, the Act of
1962 was radically changed so as to provide for levy of tax on the
purchases of sugarcane based on the purchase price instead of
the quantity purchased. The Petitioners therefore challenge the
validity of the said amendments carried out by this Amendment
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Act. It is the case of the Petitioners that by the amendments, the
definitions of "purchase price, "turnover purchases", which were
not in the original Act, were introduced for the first time. The
definition of the term "purchase" was also inserted for the first
time to mean purchase of sugarcane made within the State of
Maharashtra for a valuable consideration and includes the supply
by a shareholder to a Co-operative society for cash, deferred
payment or other valuable consideration. The Petitioners,
therefore, submit that these sweeping changes in the Act of 1962
adversely affected the sugar units like the Petitioners. The
earlier system was to allow the units to make payments of
purchase tax by two installments, 50% payable during the season
while the balance 50% was allowed to be paid in five equal
installments during off season. The amended position in law, in
nutshell, made departure from earlier system of levying tax on
quantity basis coupled with the deductions that were provided
under the unamended section 3(3). After the amendment, the
tax is provided to be levied not only on the consideration that a
buyer would pay to the seller, but two more additions were
required to be made to the said consideration before arriving at
the purchase price for the purpose of the Act, on which tax is
sought to be levied. The direct result of such amendment is that
the amounts which may have been charged by the cultivator for
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transporting the sugarcane to the factory gate or the expenses
incurred for harvesting the sugarcane in the farm, would also be
added to the consideration as forming part of the purchase price.
The Petitioner is a member of the Federation, namely,
Maharashtra State Co-operative Sakhar Karkhana Sangh
Limited. Through that Federation, representations were made to
the State Government requesting to clarify the impact of the
amendment carried out to the Act. Accordingly, the Deputy
Commissioner of Sales Tax (Headquarters), by his letter dated 5 th
September, 1996, clarified that it was necessary to include the
expenses incurred for sugarcane transport in the purchase price
before paying tax. Similarly, it was clarified that the expenses
incurred by the cultivator for cutting the sugarcane being
incidental expenses would also be covered under the definition of
the term 'purchase price' as amended. According to the said
clarification, the purchase tax was payable on the consideration
as also on the expenses incurred for transporting the sugarcane
to the factory gate and cutting charges. The above referred
facility of making payment of tax in two installments was also
withdrawn. Annexure 'A' is copy of this letter. This clarification
was in addition to the earlier clarification by the Deputy
Commissioner of Sales Tax (Headquarters) dated 27 th June, 1996
Annexure 'B'. Since the interpretation placed by Respondent
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No.2 through its subordinate was erroneous and arbitrary, the
Petitioners sought legal advice and they were informed that the
Respondents were not justified in holding that the expenditure
incurred for transportation of sugarcane, even though paid to
some third party, amounted to the sum charged by the cultivator.
This, according to the Petitioner, tantamounts to ignoring the
meaning of the phrase "the amount charged". The Petitioners
complain that if provisions are read in the context in which they
appear, it is apparent that wherever the cultivator charges
separately to the occupier the amount for transporting the
sugarcane severed from the farm to the factory gate, such
amount would form part of purchase price. There can be no
dispute about such an addition, but according to the
interpretation placed by the Respondents, any expenditure
incurred by the factory or the Petitioners, distinct separate and
independent of the purchase of sugarcane in question, would also
have to be included or added to the consideration paid to the
cultivator. This interpretation, according to the Petitioners, runs
counter to the provisions of the Sale of Goods Act, 1930 as also
the principles which determine the transfer of title to the goods
from the buyer to the seller.
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9) The Petitioner then refers to several other Acts
enacted by the Parliament and particularly the Essential
Commodities Act, 1955, the control orders pertaining to
sugarcane thereunder. They also refer to the provisions of Sale of
Goods Act and all this is referred and relied upon to explain the
procedure followed by the Petitioners throughout the year. The
procedure commences from supplying the seeds to the cultivator
to the point when the sugarcane so grown and severed from the
land as per the programme formulated much in advance is
explained. The emphasis is that sugar industry is a seasonal
industry. The sugar season normally commences from October-
November and culminates by April-May of the following year.
However, the exact duration of the season entirely depends on
the growth of sugarcane, which in turn entirely depends on the
rainfall during rainy season. Sugarcane is the main raw material
for the sugar industry and therefore, each sugar manufacturer
would ensure adequate supply of raw materials. With that view in
end, the Petitioner Societies have established a separate Cane
Development Department. In paras 30, 31, 32 and 33, this is
what is urged by the Petitioners:-
"30. Whenever a particular cultivator desires or plans to
have the crop planning, the cultivator concerned would first
approach the sugar factory in his area for procuring
sugarcane seeds. The crop planning would be finalized after
considering the availability of water in the area concerned.
J.V.Salunke,PA
WP.2060.1997+.Judgment.doc
The Petitioner in question would thereafter supply the
sugarcane seed to the cultivator from its own nursery and
in case the required seeds are not available in the nursery,
the cultivator in question would be permitted to procure the
sugarcane seed from the market and its cost would be
reimbursed by the Petitioner in question. The cost of seed
supply at this initial stage is treated as interest-free loan by
the sugar factories to the cultivator which is to be adjusted
against the purchase price, i.e., the consideration to be paid
to the cultivator for supply of sugarcane which he would be
cultivating in his farm. Thus, right from the moment of
sowing the seed for sugarcane, there is an agreement
between the cultivator concerned and the factory in
question that the entire crop that may be grown in his land
out of the seeds so supplied, would be sold by the cultivator
to the sugar factory in question.
31. In order to ensure the execution of proper planning
of sugar crushing, the cultivator concerned is required to
submit the information of sugarcane plantation in a
prescribed form to the Agricultural Department of the
factory in question. After receiving the information about
sugarcane plantation, the same is counter-checked by the
staff employed by the factory owner as the field Mukadam,
who would verify the area of plantation, the quality of the
sugarcane in question, the date of plantation etc. After
receiving such a scrutiny report from the field Mukadam,
the Agricultural Department records the finding in a
separate register mentioning therein the name of the
cultivator, the date of plantation etc. After the cultivator
satisfies the correctness of the information as confirmed by
the report of the field Mukadam, the factory in question
would issue a certificate on the basis of which the cultivator,
if he so desires, can obtain the finance from the bank which
is known as crop loan so that he can meet the expenses of
cultivation including the cost of fertilizers, pesticides, wages
to workers etc. As per the system and the procedure
adopted in the State of Maharashtra, the crop loan so
granted to the individual cultivator, may be by a bank or the
co-operative credit society, is again required to be adjusted
against the sale proceeds of the sugarcane purchased from
the cultivator in question.
32. Each factory would prepare its own harvesting
programme on the basis of the entries in their register
referred to hereinabove. In the interim period, the sugar
factory would depute one of its officers known as Cultivator
Officer or Cane Development Officer to the farm so as to
ensure the proper growth of sugarcane planted by
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sugarcane grower. He would also guide the farmer about
the proper quantity of fertilizers to be utilized depending on
the analysis he may obtain of the contents of the soil in
question.
33. Before the sugarcane is severed, or before the
commencement of the crushing season as is generally
known, the sugar factory in question would arrange to test
the maturity of the cane by selecting at random the samples
of sugarcane grown in the field. After successful testing is
done at the laboratory, and if found fit, the sugar factory
would give a notice to the cultivator concerned to stop
watering the cane for a period of 15 days so that proper
harvesting of the cane could be done. Accordingly, a
timetable is prepared as to which field is to be visited for the
purpose of harvesting the sugarcane from a particular
period. With the help of the workers employed by the sugar
factory, the sugarcane grown in a particular field is severed
and stacked on the border of the farm in question. The
Petitioner herein has maintained Crop Collecting Centres in
all remote places. As and when the crops are brought to the
Collecting Centre, the representative of the sugar factory
would accept the delivery of the sugarcane and issue a
receipt on behalf of the sugar factory concerned. The sugar
factory, thereafter, i.e., after the completion of the event of
its purchase from the cultivator, arrange for the
transportation of the sugarcane through its own agency by
its own truck or by the trucks arranged for the purpose
from outside agencies. However, in all such cases, three
copies of the receipt issued by the representative of the
sugar factory at the Collecting Centre accompany the truck
driver to the factory where the sugarcane so brought are
weighed at the weigh bridge. The weighment is recorded on
all the three copies of the receipts, one such receipt is
returned to the truck driver while another copy is delivered
to the cultivator for his information, and the third copy is
transmitted to the Accounts Department for payment
process. In nutshell, the ownership of the sugarcane always
vests with the sugar factory in question, though in the eyes
of law, the sugarcane can be said to have been purchased
only when the sugarcane is severed from the firm in
question. After its severance, the cultivator transfers the
physical property or the title to the goods by delivering the
severed sugarcane to the agent of the buyer-sugar factory.
Therefore, the point of time when the transaction of sale by
the cultivator and the purchase by the sugar factory, can be
said to have been fructified, is the time when the delivery of
the sugarcane is given by the cultivator to the
representative of the sugar factory in question. That
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necessarily would mean that the seller cultivator would not
be responsible for any damage or loss to the sugarcane in
question after he delivers the sugarcane to the
representative of the sugar factory in question. It would not
be his concern as to how and by which mode the sugarcane
so collected is transported by the buyer/sugar factory to his
factory, whether such transport is through a bullock cart,
camel cart or by a motor truck or whether such a vehicle is
owned by the buyer himself or not. As far as the cultivator
is concerned his responsibility would cease when he
delivers the severed sugarcane at the Collecting Centre and
obtains the receipt acknowledging the delivery thereof,
from the representative of the sugar factory. The general
property over the goods therefore would pass from the
cultivator to the sugar factory at the moment of delivery of
the sugarcane in question by the cultivator to the Collecting
Centre in question. The passing of the property to the sugar
factory at the Collecting centre would not be affected by the
fact that the crops in question are to be weighed at the
factory gate with the help of weigh bridge and therefore the
title to the goods, viz., sugarcane, would be deemed to have
been passed from the cultivator to the sugar factory when
the sugarcane severed from the farm are delivered by the
cultivator to the representative of the buyer-factory owner
at the Collecting Centre in question. It is by now well
established that the delivery to the agent or the servant of
the buyer-factory owner would be sufficient to establish the
transfer of title to the goods from the seller to the buyer."
10) Then, reliance is placed on certain definitions under
the Sale of Goods Act and it is submitted that the concept of
delivery is understood as the point of time when there is a change
of the possession of the goods in question from the seller to the
buyer. Then, relying upon the definition of the term "goods"
appearing in section 2(7) of the Sale of Goods Act, it is submitted
that the Petitioners having agreed to buy and the cultivator
agreed to sell the sugarcane crop, much before its harvest, at a
time when the seeds were supplied, the agreement would be an
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agreement of sale and therefore, governed by the Sale of Goods
Act. In para 36, Entry 54 of List II of the VII th Schedule to the
Constitution of India is referred and it is submitted that even
though Article 366(29A) is introduced in the Constitution of
India, none of the six categories set out therein would cover the
transaction accomplished by the Petitioner. The term "purchase
of sugarcane" will have to be interpreted in the same manner as is
done in the Sale of Goods Act. Throughout the Petition, reliance
is placed on the Sale of Goods Act to urge that the Petitioners
effect purchase of sugarcane at the moment when there is a
transfer of property from the cultivator to them and that would
be only when the sugarcane severed is delivered to the Collecting
Centre or to the representative of the factory owner/Petitioners.
It is at that time the sale by the cultivator and the purchase by
the factory owner would be complete. The culmination of that
transaction does not depend on the later weighment at the weigh
bridge, which is to be done only for the purpose of proper
accounting and quantification of the amount payable to the
concerned cultivator. The reference is then made to the
procedure adopted by sugar factories in the State of Maharashtra
and it is complained that for the reason best known to the
Commissioner (Respondent No. 2), there is a misinterpretation of
the provisions of the Act. That is how uncalled for and
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unwarranted additions are made to the consideration agreed to
be paid to the cultivator. The Petitioners have been submitting
their returns, but the complaint is that though there is a
provision of assessment in the Act, there is no assessment made
for the period covered by the amendment with effect from 1 st
October, 1995. Though there was no such assessment,
Respondent No. 3, by his letter dated 19 th October, 1996, called
upon the Petitioners to provide the information sought therein.
He called upon the Petitioner to furnish details and asserted that
the sugarcane cost should include the cane harvesting expenses
as also the expenses incurred for transporting the same. He
therefore calls upon the Petitioners to furnish the details of
amount spent on cane harvesting and the expenses incurred for
transportation in the season 1995-96 so that he can ascertain the
amount of cane purchase tax payable by the Petitioners. He also
directed that information be provided about purchase tax payable
during the month of May, 1996, June, 1996 and July, 1996.
Annexure 'D' is a copy of this letter.
11) Following the letter at Annexure 'D', there is another
letter dated 5th November, 1996, under which, Respondent No. 3
informed the Petitioner that certain amount of purchase tax was
due in the month of May and June, 1996 in respect of 1995-96
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season and the purchase tax on harvesting and transport
expenses also was required to be paid. The Petitioners were also
called upon to submit the Treasury Challan, failing which, the
third Respondent threatened coercive action. The original letters
in Marathi and their English translation are referred. It is stated
that the letter of 5th November, 1996 was followed by similar
letters in January, 1997, copies of which are at Annexures 'E' and
'E1'.
12)
Since Respondent No. 1 had threatened to take
coercive measures on the basis of interpretation of the provisions
of the Act of 1962 that the Petitioners are constrained to
challenge the vires of the Act and the legality and validity of the
aforementioned letters. It is on this footing and by raising several
grounds in para 41 that this Writ Petition has been filed.
13) On this Writ Petition, an order of admission was made
on 24th June, 1997. The Respondents were given time to file
affidavit and an affidavit in reply has been filed by the Joint
Commissioner of Sales Tax (Profession Tax), Pune Zone, Pune.
14) It is stated in this affidavit that prior to the
amendment made in the Act of 1962, the scheme of the Act was to
levy tax on the basis of weight of the sugarcane. There were
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disparities in prices of sugarcane paid by Sakhar Karkhanas to
the cultivator in different areas. Though the prices were above
the support price and therefore in any area where the prices were
paid less to the cultivator, the Karkhana had to bear the same
burden of tax as compared to the Karkhanas which pay higher
prices for sugarcane. In order to remove disparity and ensure
social justice, the amendments were carried out from 1 st October,
1995 to change the structure of taxation. Though it is stated that
the Petitioner has not challenged the legality and validity of the
amended provisions, it is apparent that after the affidavit was
filed, one opposing admission on 20th June, 1997 and the other on
13th April, 2010, the amendments have been made to the Writ
Petition. Thus, the validity of the amended provisions has also
been challenged. The Commissioner asserts that the field of
legislation in respect of the levy of tax on sale or purchase of
goods is set out in Entry 54 of List II of the 7 th Schedule to the
Constitution of India. The Bombay Sales Tax Act, 1959 is enacted
by the legislature for levy of Sales Tax on goods. Entry 44 of
Schedule 'A' of the Bombay Sales Tax Act, 1959 gives exemption
to the levy of tax on sale and purchase of sugarcane. The tax on
purchase of the sugarcane is under the Act of 1962. It is
therefore within the field of legislation provided by Item No. 54 of
the List II of the VIIth Schedule to the Constitution of India.
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15) The Commissioner explains that the amounts spent
for transport charges will also form a part of the purchase price
which is very clear from the language of the definition. It is
submitted that the argument and challenge that if transport
charges are paid by the factory, the same shall not form part of
the purchase price is no longer available in view of the clear
language of the definition. It is urged that there is no substance in
the challenge to clause (iii) of section 2(f-b) of the Act of 1962. It
is urged that the Petitioner is creating an unnecessary
controversy. The argument is that amount of harvesting charges
spent by the factory for harvesting the standing crop on the field
of the farmers should not form part of purchase price, since the
same has not been charged. However, by the amended definition
the word "charge" has been substituted by word "spent" in clause
(iii) of section 2(f-b). Even when it is not charged separately by
any farmer since amendment is effective from 1st October, 1995
though amount has been paid by the Karkhana, it will form part
of the purchase price. The argument that the expenses incurred
have been brought in and the tax is not on purchase of sugarcane
but expenditure incurred is dealt with in the subsequent
paragraphs of this affidavit. It is submitted that question of
jurisdiction to determine any amount of tax cannot be raised
inasmuch as the power conferred on the officers under sections 3
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WP.2060.1997+.Judgment.doc
and 4 of the Act of 1962 to levy and collect the purchase tax is
within the constitutional field. Therefore, the impugned notices
are legal and valid. Further, on the basis of these notices,
assessment orders are also passed on 30 th March, 2007.
Thereafter, the Petitioner preferred Appeals against these orders
and the Appeals were also decided on 5th February, 2008 by the
appellate authority. It is in these circumstances that the
information was sought by the letters addressed in November,
1996 and January, 1997. Once the tax has been levied legally
and validly, then, the amount thereof can be demanded by the
officers and if that demand is not satisfied, they are justified in
recovering the tax by coercive means. For these reasons and
when the levy is constitutional and valid, the impugned
communications and letters cannot be questioned and set aside.
16) It is explained that the expenses incurred are treated
as a purchase price and the tool of calculation of purchase price
cannot be said to be tax on expenses. In these circumstances,
there is no merit in the Petitions and it should be dismissed.
17) Then, and upon the amendment to the Writ Petitions,,
an affidavit has also been filed in Writ Petition No. 2364 of 1999
filed by the Ravalgaon Sugar Farm Limited. Independently, this
Writ Petition is raising an identical challenge. The reply,
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therefore, is in identical terms. The same principles are relied
upon to support the levy. Hence, we need not refer to the facts in
the other Petitions in detail. Similarly, in other Petitions, which
were heard along with Writ Petition No. 2060 of 1997, the
challenge being identical, the pleadings are identical. Some of the
Petitions have been called from the Benches of this Court at
Aurangabad.
18) Mr. P. C. Joshi, learned Counsel led the arguments on
behalf of the Petitioners. His arguments were adopted by others
and they only made some factual additions thereto. It would be
advantageous to refer to the arguments of Mr. Joshi.
19) Mr. Joshi contends that if the Act originally enacted
and later on amended is perused, it would be evident that the
same seeks to include the amounts spent or the expenditure
incurred. Once the amount spent by the cultivator is sought to be
made the basis of the levy, then, that necessarily means the
expenditure incurred by the cultivator before delivery would be
forming part of the purchase price. In other words, criticizing the
definitions in section 2(f-a) (f-b)(ii), Mr. Joshi would submit that
if these definitions and the sub-clauses therein are read together,
it would mean that the aggregate of the amounts of purchase
price paid as provided by section 2(g-a) is not the determinative
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or conclusive test. The attempt is to include other sums or
amounts incurred or spent. That is not contemplated by law. He
would submit that section 2(f-b)(ii) is not applicable to the
factory. The sugar factory cannot be said to be spending the
amount towards transport of sugarcane. The Revenue's
interpretation that this forms part of the purchase price
necessarily is therefore erroneous. After referring to sections 6,
7(1) and the impugned communications, Mr. Joshi would submit
that the letters and communications are without authority of law.
There cannot be any demand and recovery of tax prior to the
assessment. The demand should be crystallized and ascertained.
That would be only on adjudication. Once the adjudication is not
done, then, no coercive recovery can be effected. Mr. Joshi was at
pains to invite our attention to pages 66-A, namely the Ordinance
VI of 1998. He would also refer to the compilation Volume - I of
which relevant documents form part to submit that each and
every amount cannot be taken into consideration. The amount
taxed is on expenditure and therefore beyond the competence of
the State legislature. Mr. Joshi emphasises Entry 54 of List II of
VIIth Schedule to the Constitution of India, the language of section
2(1), section 18 and other provisions of the Sale of Goods Act to
submit that the severance, harvesting or cutting expenses cannot
be included in the definition of the term "purchase price". The
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Petitioners are not concerned with the delivery of the crop
because their factories are set up to manufacture or produce
sugar from sugarcane crop supplied to it. If this is understood,
then, in pith and substance, the subject tax is on expenditure.
That is how the word "spent" has been used.
20) Mr. Joshi then submits that the Ordinance has no
saving clause. The impugned letters cannot be saved by the
amendments. Mr. Joshi has referred to the full text of
Maharashtra Act XX of 2002. He would submit that section 1(2)
(a) of this Maharashtra Tax Laws (Levy and Amendment) Act,
2002, Maharashtra Act XX of 2002 refers to the amendments to
the Act of 1962. He would submit that these amendments do not
restore the earlier position.
21(A) Mr. Joshi's contentions can be summarised as under:-
The aforesaid Act was amended on more than one
occasion but in the Petition, the amendment by the Maharashtra
Tax Laws (Levy and Amendment) Act, 1995 with effect from 1 st
October, 1995 and the subsequent amendments by the
Maharashtra Ordinance VI of 1998 read with Maharashtra Act
20 of 2002 and the Exemption Notification under section 12B of
the said Act dated 29th March, 2003 read with Circular No. 12T of
2003 dated 31st March, 2003 coupled with the amendment by the
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Maharashtra Act 8 of 2003 dated 29th March, 2003 are
questioned. The Petition also challenges the validity and
correctness of the latest circular issued by the commissioner of
Sales Tax dated 23rd November, 2009 being Trade Circular No.
31T of 2009 on various grounds set out in the Petition as
amended.
21(B) Under the provisions of the Central Act No. 10 of
1955 i.e. the Essential Commodities Act, 1955 the term "food
crops" is defined to include the "sugarcane crop" also. As
contemplated under the said Act, the Central Government issued
the Sugarcane (Control) Order, 1966 from time to time fixing the
price for sugarcane payable by the sugar factory to the sugarcane
grower. Accordingly, the Sugar Control Order was issued on 22 nd
November, 1996 for the relevant period. In addition to the price
fixed by the Central Government under the provisions of the
Essential Commodities Act, 1955, the impact of Sale of Goods Act
will also have to be considered for determining the legality of the
amendments impugned before this Court.
21(C) The procedure adopted by the sugar factories during
the relevant period has been succinctly mentioned in paras 28 to
33. In a nutshell, it can be mentioned that the Petitioner had
established various crop growing centres in the vicinity of the
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field of the grower concerned so as to have quick delivery of the
sugarcane at such centres.
21(D) The levy of purchase tax on the purchase price of
sugarcane is covered by Entry 54 of List II to Schedule VII of the
Constitution of India. However, the field mentioned therein over
which the State legislature can provide for levy of tax on sale or
purchase of goods, do not cover the tax on expenses, that may or
may not have been incurred by the sugar factory after the event
of purchase was completed at the crop growing centres where the
property over the sugarcane severed from the farm was intended
to be transferred to the Petitioner by the cultivator upon
delivering the crop to the Petitioner's agent at the respective crop
growing centres. The general property over the sugarcane
severed from the farm was thus affected by respective cultivator,
did not depend on the later weighment of the crops so purchased
at the factory gate, solely for the purpose of effecting the payment
to the cultivator concerned.
21(E) As per the then existing law, the Petitioner submitted
the returns periodically and paid the purchase tax on the
purchase price. However, disregarding the submissions of the
Petitioners, the orders of assessment were passed under section 7
of the Act. Since the stand of the Respondent was unsupported by
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any law, the present Petition was submitted challenging those
orders of assessment alongwith the legality of amendments and
the circulars mentioned herein above.
21(F) Much before the orders of assessment that were
passed, the Petitioner was being continuously pressurised with
directions by the Respondent to make the payment of purchase
tax on sugarcane purchase also on the expenses incurred for
transportation of the sugarcane from the crop growing centre to
its factory by adding harvesting and transport expenses to the
actual consideration paid by the Petitioner to the cultivators as
purchase price from time to time.
21(G) After amendment through the Maharashtra Act XVI
of 1995, with effect from 1 st October, 1995, the Governor of
Maharashtra issued an Ordinance bearing No. VI of 1998 on 1 st
May, 1998 whereby the purchase amount "charged" wherever it
appeared in the entire enactment, was deemed to be substituted
from 1st October, 1995 by the word "spent". That also has been
challenged through the amendment to the Petition under the
permission granted by this Court on 23 rd April, 2010. According
to the Petitioner, the Ordinance in question was issued solely with
the purpose of frustrating the present Petition by disturbing the
provisions brought in the enactment from 1 st October, 1995 by
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the Maharashtra Tax Laws (Levy and Amendment) Act, 1995.
(Act XV1 of 1995). The said Ordinance VI of 1998 did not
contain any validating and saving clause, therefore the impugned
three letters being Exhibits 'D', 'E' and 'E1' be declared as without
jurisdiction.
21(H) In addition thereto, the State Government having
realised the position of law regarding its competency to charge
purchase tax on the expenses incurred by the Petitioner in
respect of transportation and other expenses; by including such
expenses to be part of the purchase price; by the Maharashtra
Tax Law (Levy and Amendment) Act, 2002 the definition of
"purchase price" so amended with effect from 1 st October, 1995
was deleted with effect from 1st May, 2002 by deleting the
definitions under clause (f-a), (f-b) and (g-a). The procedure of
levying purchase tax that was adopted prior to 1 st October, 1995
was resorted to by the said Levy and Amendment Act, 2002.
That amendment also have been inserted and referred to in the
petition by the additional clause No. (h-a).
21(I) It is shocking to note that overlooking the Civil
Application No. 530 of 2010 submitted on 4th February, 2010, by
the Petitioner seeking permission to amend the Petition, the
Respondent, by its additional affidavit in reply dated 13 th April,
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2010, referred only to the amendment by Ordinance No. VI of
1998 dated 1st May, 1998 conveniently ignoring the later
developments of deleting the relevant definitions and restoring
the earlier method of levying tax.
21(J) It is worthwhile to note that in the Statement of
Objects and Reasons appended to the Maharashtra Tax Law
(Levy and Amendment) Act, 2002, nothing is mentioned as to
why the definition clauses inserted from 1 st October, 1995 were
deleted by the said Amendment Act.
21(K) The Petitioner would like to mention herein that
sections 10 to 12 of the said Maharashtra (Levy and
Amendment) Act, 2002 were relevant for the purpose of the
present Petition. The amendments related to the deletion of the
definition clauses (f-a), (f-b) and (g-a), substitution of section 3
and amendment of section 6 by the said Amendment Act deleting,
substituting and amending certain provisions. The amendment
was brought into force with effect from 1 st May, 2002 by virtue of
the provisions of section 2(a) of the said Maharashtra Act 20 of
2002. In the memorandum of delegated legislation, appended to
the said Amendment Act 20 of 2002, it has been expressly
mentioned that the Act of 1962 was being amended to replace the
ad-volarem duty on purchase of sugarcane by a specific duty.
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21(L) In their additional affidavit of reply, the Respondents
have also overlooked the later amendment by the Maharashtra
Act 8 of 2003 and subsequent Notification dated 29 th March,
2003. Under the powers conferred by the amended section 12B,
the said Notification expressly exempted the purchase of
sugarcane effected by the occupier of a factory from whole of tax
if the sugar factory had exported the sugar manufactured by it
during nine months from 1st January, 2002 to 30th September,
2002. While in case of other sugarcane purchases made during
the period from 1st May, 2002 to 30the September, 2002, tax on
cost of cutting and transport charges purported to be forming
part of the purchase price of sugarcane; was exempted without
any condition; in case of purchases from 1 st October, 2002 to 31st
March, 2003, the same were completely exempted under Entry 3
of the said Notification dated 29th March, 2003.
21(M) The said development was clarified by the
Commissioner of Sales Tax under Circular 12T of 2003. In
addition thereto, the said circular also confirmed the fact that the
amendment through sections 10, 11 and 12 of the Maharashtra
Act 20 of 2002 were brought into force with effect from 1 st May,
2002. The said circular, however, misinterpreted the
amendments by the Maharashtra Act 8 of 2003. The amendment
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to section 2 of the Amendment Act 20 of 2002 was construed to
mean that such an amendment automatically amended the duly
amended provisions of sections of the main Act by sections 10, 11
and 12 of the Amendment Act, which already became part of the
main enactment with effect from 1st May, 2002.
21(N) Such an erroneous version by the Respondent was
again repeated by another Trade Circular 31T of 2009 dated 23 rd
November, 2009. Under the said Circular, the Respondents have
gone a step further by mentioning that the deleted provisions of
the Act 20 of 2002 stood restored by the later Amendment Act 8
of 2003 with retrospective effect from 1 st May, 2002, without
appreciating the true and correct legal position that the amended
sections of the main Act, which were already brought into force
and thus formed part of the main enactment, cannot be deemed to
have been restored automatically by the later Amendment Act 8
of 2003. Under the circumstances, the Petitioner submits that
the provisions deleted, amended and substituted with effect from
1st May, 2002 by the Maharashtra Act 20 of 2002 continued on
the statute book unaffected by Act 8 of 2003 and therefore no tax
can be levied on the expenses from the amounts spent by the
Petitioner. Accordingly, Rule be made absolute with due relief in
terms of prayers (a), (b), (b1), (b2), (c) and (d) of the Petition.
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21(O) Mr. Joshi has relied upon the following judgments:-
(i) Govind Saran Ganga Saran vs. Commissioner of Sales
Tax, (1985) 60 STC 2.
(ii) Hindustan Sugar Mills Ltd. vs. State of Rajasthan and
Ors. and J. K. Synthetics Ltd. vs. Commercial Tax Officer,
Kota, (1979) 43 STC 13 (SC).
(iii) State of Rajasthan and Anr. vs. Rajasthan Chemists
Association, (2006) 147 STC 542 (SC).
(iv) The State of Tamil Nadu vs. The Madurantakam Co-
operative Sugar Mills, (1976) 36 STC 238 (Mad.).
(v) Ugar Sugar Works Ltd. vs. Dy. Commissioner of
Commercial Taxes, (2006) 139 STC 413 (Kar.).
(vi) P. S. N. S. ambalavana Chettiar and Co. Ltd. and Anr.
vs. Express Newspapers Ltd., AIR 1968 SC 741.
(vii) The State of Orissa vs. Utkal Distributors (P) Ltd.,
(1966) 17 STC 320 (SC).
(viii) Thiru Arooran Sugars Ltd. vs. Deputy Commercial
Tax Officer, (1988) 71 STC 444 (Mad.).
(ix) State of Tamil Nadu and Ors. vs. Kothari Sugars and
Chemicals Ltd., (1996) 101 STC 197 SC.
(x) Chief Commissioner vs. T. N. T. India Pvt. Ltd. (2010)
31 VST 92 (Kar.).
22(A) On the other hand, Mr. V. A. Sonpal, learned Special
Counsel appearing for the State and the Respondents submitted
that there is no substance in all the contentions of Mr. Joshi and
other Counsel. Mr. Sonpal would submit that essentially
amendments made in 1995 related to addition of definition of
"purchase price" in section 2 (f-a), (f-b) and (f-c) so as to include
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transportation expenses and other expenses spent by the dealer
(there is no ambiguity as to spent by who since tax is on the sugar
factory, spent word relates to the sugar factory and not grower).
The hitherto amendment in 1995 was leviable on weight basis
and from 1995, basis of levy of tax is changed to ad-volarem.
Though there is no challenge to ad-volarem levy of purchase tax,
real grievance is of adding the amount spent on transportation
and money spent for any thing done before delivery of the
sugarcane to the dealer. The challenge is only on the basis of
measure for the purpose of calculating the percentage of
purchase price. In other words, the challenge is the method of
calculating the sale price to include amount spent as stated above
in purchase price.
22(B) The answer to the challenge is no more res-integra. In
"Goodrick Group's case" followed by case of "Bombay Tyre
International" of the Hon'ble Supreme Court the ratio of which is
applied in the judgment in case of Baramati Grapes Ltd. It is
clearly held that the measure of tax and incidence of tax are
different. If the levy is relatable to field of legislation, in present
case, Entry 54 of 7th Schedule to the Constitution of India the
State or Center has full, unbriddled power to fix the measure of
tax that is to what will be basis of calculating tax.
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22(C) In several cases as per compilation given separately,
in case of sugarcane, the State has power to include harvesting
and transportation charges to the agreed or disbursed price is
upheld. Sugarcane is a controlled commodity and as per
Sugarcane Order each year published by the Central Government
fair and reasonable price for sugarcane is declared. As per
Sugarcane Control Order, 1966 and more particularby clause 3A
proviso (iv) as amended from time, to time it is permissible for
the sugar factory to deduct the expenses for transportation and
harvesting from the fair price. The fair price that is declared is
agreed customarily by the grower in his agreement with sugar
factory, in writing, that supply will as per the price declared by
the Central Government and deductions for the harvesting
expenses and transportation expenses are agreed to be deducted
from fair price. Hence, going by the principles that disbursement
or adjustment does not affect the purchase price at which tax is to
be levied. It is therefore submitted that there is no extraneous or
alien or irrelevant or unreasonable consideration for inclusion of
expenses prior to delivery and transportation expenses to be
included in the purchase price.
22(D) So far as vires of the amendments are concerned,
suffice it to say that none of the grounds propounded by the
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Petitioner merit consideration.
22(E) The field of legislation under Entry 54 for State
includes making provisions for every incidental thing including
enforcement and recovery, levy of penalty etc. Besides, it is well
settled that when a power is conferred in the legislature to levy
tax, that power itself must be widely construed. It must include
the power to impose a tax and select the articles or commodities
for the exercise of such power. It must likewise include the power
to fix the rate and prescribe the machinery for the recovery of the
tax. This power also gives jurisdiction to the legislature to make
such provisions as, in its opinion, would be necessary to prevent
the evasion of the tax. In imposing taxes, the legislature can also
appoint authorities for collecting taxes and may prescribe the
procedure for determining the amount of taxes payable by any
individual, all the provisions are subsidiary to the main power to
levy a tax and, therefore, once it is shown that the tax in question
has been levied on goods carried, it would be open to the
legislature to prescribe the machinery for recovering the said tax.
22(F) If the impugned legislation invades Entry 52, it must
be repelled by this Court. But, Entry 54 in List II of the 7 th
Schedule empowers the State to legislate for taxes on purchase of
goods and if that is attracted, in pith and substance by the Entry,
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legislative incompetence cannot void the Act. What matters is
not the name of the Act but its real nature, its pith and substance.
Tax on sale or purchase must be on the occurrence of a taxing
event of a sale transaction. Beyond that is left to the free play of
the legislature, subject, of course, to the contra-indications about
capricious, arbitrary or irrational features. It is a situation,
cultivated by familiarity to consider that all sales tax must
necessarily have nexus with the price of the commodity. Of
course, price as basis is not only usual but also safe to avoid
uneven, unequal burdens, although it is conceivable that a
legislature can regard prices which fluctuate frequently, as too
impractical to tailor the purchase tax. It may even be, in rare
cases, iniquitous to link purchase tax with price, if more sensible
bases can be found. The practice has been to impose purchase tax
by weight of cane. Also, in weight of cane its sucrose content and
its price have a close nexus, although, theoretically, they may
appear unconnected.
22(G) Simply because the method for quantifying the tax is
by reference and determinable to the expenses of the
transportation and other expenses before delivery, it is not a tax
on expenses.
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22(H) The bottom line of the said doctrine is to look at the
legislation as a whole and if it has a substantial connection with
the entry, the matter may be taken to be legislation on the topic.
22(I) The nomenclature of a levy is not conclusive for
deciding its true character and nature. For deciding the true
character and nature of a particular levy, with reference to the
legislative competence, the Court has to look into the pith and
substance of the legislation.
22(J)
The statute enacted by Parliament or a State
legislature cannot be declared unconstitutional lightly. The Court
must be able to hold beyond any iota of doubt that the violation of
the constitutional provisions was so glaring that the legislative
provision under challenge cannot stand. Sans a flagrant violation
of the constitutional provisions, the law made by Parliament or a
State legislature is not declared bad.
22(K) Ordinary laws have to answer two tests for their
validity: (1) the law must be within the legislative competence of
the legislature as defined and specified in Chapter I, part XI of the
Constitution, and (2) it must not offend against the provisions of
Articles 19, 13(1) and (2) of the Constitution.
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22(L) When a law is impugned on the ground that it is ultra
vires the powers of the legislature which enacted it, what has to
be ascertained is the true character of the legislation. To do that
one must have regard to the enactment as a whole, to its objects
and to the scope and effect of its provisions. If on such
examination it is found that the legislation is in substance one on
a matter assigned to the legislature, then, it must be held to be
valid in its entirety, even though it might incidentally trench on
matters which are beyond its competence. It would be quite an
erroneous approach to the question to view such a statute not as
an organic whole, but as a mere collection of sections, then,
disintegrate it into parts, examine under what heads of legislation
those parts would severally fall, and by that process determine
what portions thereof are intra vires and what are not.
22(M) Mr. Sonpal has relied upon the following judgments:-
(i) Baramati Grape Industries Ltd. and Ors. vs. The State
of Maharashtra and Ors., 1997(3) Bom. C. R.190.
(ii) Black Diamond Beverages and Anr. vs. Commercial
Tax Officer, Central Section, Assessment Wing, Calcutta and
Ors., (1998) 1 SCC 458.
(iii) Chengalvarayan Co-operative Sugar Mills Ltd.
vs.State of Tamil Nadu, (1997) 105 STC 497.
(iv) Hindustan Sugar Mills vs. State of Rajasthan and Ors.
(1978) 4 SCC 271.
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(v) E. I. D. Parry (I) Ltd. vs. Asstt. Commissioner of
Commercial Taxes and Anr. and connected cases, (2000) 2
SCC 321.
(vi) Jiwajirao Sugar Company Limited and Anr. vs. State
of Madhya Pradesh and Anr. (1995) 96 STC 13 (MP).
(vii) Ponni Sugars (Erode) Ltd. vs. Deputy Commercial Tax
Officer (2005) 142 STC 543.
(viii) Union of India and Ors. vs. Bombay Tyre International
Ltd. and Ors., AIR 1984 SC 420.
(ix) Maharashtra Chamber of Housing Industry and Ors.
vs. State of Maharashtra and Ors., (2012) 51 VST 168
(Bom.).
(x) Commissioner of Wealth-Tax, Kanpur vs. J. K. Cotton
Manufacturers Ltd., (1984) 146 ITR 552.
(xi) Goodricke Group Ltd. and Ors. vs. State of West Bengal
and Ors., Writ Petition (Civil) No. 951 of 1989 (Supreme
Court) decided on 25th November, 1994.
(xii) Karnataka Bank Ltd. vs. State of A. P. and Ors., Appeal
(Civil) 1994 of 2002 (Supreme Court).
(xiii) Jindal Poly Films Ltd. and Anr. vs. The State of
Maharashtra and Ors., Writ Petition (A.S.) No. 313 of 2010
and connected matters. (Bombay High Court).
(xiv) Khyerbari Tea Co. Ltd. and Anr. vs. State of Assam,
AIR 1964 SC 925.
(xv) Ganga Sugar Corporation Ltd. vs. State of U. P., AIR
1980 SC 286.
(xvi) M/s. Hoechst Pharmaceuticals Ltd. vs. State of Bihar,
AIR 1983 SC 1019.
(xvii) Vijay Kumar Sharma and Ors. vs. State of Karnataka,
AIR 1990 SC 2072.
(xviii) State of A. P. and Ors. vs. Mc. Dowel, AIR 1996 SC
1627.
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(xix) State of Bihar and Ors. vs. Shree Baidyanath
Ayurvedic, AIR 2005 SC 932.
(xx) State of West Bengal and Anr. vs. Kesoram Industries,
AIR 2005 SC 1646.
(xxi) All India Federation of Tax Practitioners vs. Unionof
India, AIR 2007 SC 2990.
(xxii) State of Karnataka and Ors. vs. Chamudeshwari
Sugar Ltd., AIR 2009 SC (Supp) 494.
(xxiii) State of Madhya Pradesh vs. Rakesh Kohli, AIR 2012
SC 2351.
(xxiv) Rajkot District Co-operative Bank Ltd. vs. State of
Gujarat, AIR 2015 SC 489.
(xxv) Shreya Singhal vs. Union of India, AIR 2015 SC 1523.
(xxvi) Shri. Prithvi Cotton Mills Ltd. and Anr. vs. Broach
Borough Municipality and Ors. 1969 (2) SCC 283.
(xxvii) Indian Aluminium Co. and Ors. vs. State of Kerala
and Ors. (1996) 7 SCC 637.
(xxviii) National Agricultural Cooperative marketing
Federation of India Ltd. and Anr. vs. Union of India and Ors.
(2003) 5 SCC 23.
(xxix) Godfrey Phillips India Ltd. and Anr. vs. State of U. P.
and Ors. (2005) 2 SCC 515.
(xxx) M/s. Hiralal Rattanlal Etc. Etc. vs. State of U. P. and
Anr., (1973) 1 SCC 216.
(xxxi) Union of India and Anr. vs. Raghubir Singh (Dead)
by Lrs. Etc. and Ors., (1989) 2 SCC 754.
(xxxii) State of Karnataka etc. vs. M/s. Pro Lab and Ors.
etc., 2015 SCC Online SC 81.
23) For properly appreciating the rival contentions, it
must be noticed that the Petitioners are challenging the vires of
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amended sections 2, 3 and 6 of the Act of 1962. They have also
challenged the legality and validity of the three letters so also the
Exemption Notification under section 12B dated 29 th March,
2003 Annexure 'H' read with Circular No. 12T of 2003 at
Annexure 'I' dated 31st March, 2003. The Petitioners have also
challenged the amendment of the Maharashtra Act 8 of 2003.
24) The Petitioners also state that the Maharashtra Act IX
of 1962 is an Act to provide for the levy and collection of a tax on
purchase of sugarcane for use in the "manufacture of sugar" and
which words were then substituted with the words "manufacture
or production of sugar including Khandsari Sugar". The
Statement of Objects and Reasons leading to the enactment are
relevant and some of the clauses thereof are reproduced herein
below:-
"STATEMENT OF OBJECTS AND REASONS.
The Supreme Court in the case of Diamond Sugar
Mills Ltd. versus State of Uttar Pradesh (1961) I. S. C. J.
652, held the U. P. Sugarcane Cess Act, 1956, ultra vires
and beyond the competence of the State Legislature.
Parliament thereupon enacted the U. P. Sugarcane Cess
(Validation) Act, 1961 (4 of 1961) to protect the taxes
collected under the U. P. Act. Later, Parliament enacted
the Sugarcane Cess (Validation) Act, 1961 (38 of 1961)
to protect similar levies collected under other State laws
which were also affected by the aforesaid judgment. The
latter Act, which inter alia protects the imposition and
collection of the cess on entry of sugarcane into the
premises of a factory for use therein, under the Bombay
Sugarcane Cess Act, 1948 (Bom. LXXXII of 1948), was
proposed to be brought into force in this State with effect
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from 31st December 1961. As thereafter it was not
possible to collect the tax on sugarcane, it was necessary
to take immediate action to levy, with effect from 1st
January 1962, a purchase tax on sugarcane purchased
by factories for the manufacture of sugar to make up the
loss of revenue due to cessation of the Sugarcane Cess Act
from that date. As both Houses of the State Legislature
were not in session, the Maharashtra Ordinance No. V of
1961 was promulgated by the Governor on the 30 th
December 1961. The Bill seeks to replace the Ordinance
by an Act of the State Legislature, subject to a few formal
modifications."
25) The above material is necessary to understand the
backdrop and the context in which the Act came to be enacted.
Some of the definitions as found in the Act of 1962 were amended
by the Maharashtra Act 21 of 1998 with effect from 1 st May,
1998 and are reproduced. Since heavy reliance has been placed
on the definitions of the terms "factory", "licence", "occupier",
"purchase", "purchase price" and "turnover of purchases", we
reproduce these definitions hereinbelow:-
"2(b) "factory" means any premises (including the
precincts thereof), wherein twenty or more workers are
working and in which, or in any part of which any
manufacturing process connected with the production of
sugar by means of vacuum pans is being carried on, or
ordinarily carried on, with the aid of power.
2(c) "licence" means a licence granted or renewed under
this Act.
2(d) "occupier" of a factory of or a unit means the person
who has ultimate control over the affairs of the factory of
the unit and where the said affairs are entrusted to a
managing agent, such agent shall be deemed to be the
occupier of the factory or of the unit, as the case may be;
and the term includes also any person appointed by the
occupier to act as a purchasing agent.
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2(f-a) "purchase" means a purchase of sugarcane made
within the State for cash or deferred payment or other
valuable consideration and includes any supply by a
shareholder to a co-operative society or limited company
for cash, deferred payment or other valuable consideration.
2(f-b) "purchase price" means aggregate of the following
sums, -
(i) the amount of valuable consideration paid or
payable by the occupier for purchase of sugarcane made by
the factory or by the unit;
(ii) the amount spent towards transport of
sugarcane (whether separately spent or not); and
(iii) any other sum spent for anything done in
respect of the sugarcane at the time of or before delivery
thereof.
2(g-a)"turnover of purchases" means the aggregate to the
amounts of purchase price paid and payable by an occupier
during a given period.
26) These definitions indicate as to how the reference is to
a factory where manufacturing process connected with the
production of sugar and by the means set out in the definitions is
undertaken. A licence is required for purchasing sugarcane for
use in the manufacture or production of sugar and that is granted
under the Act. The term "occupier" is defined so that an officer is
identified for the purposes of discharging several obligations in
terms of the Act. The term "purchase" is defined so that it would
be understood as a deal within the State for cash or deferred
payment or other valuable consideration. It includes any supply
by a shareholder of the Co-operative Society or limited company
by similar mode. Thus, purchase by the manufacturer or
producer of sugar directly and any supply by shareholder of the
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manufacturing or producing company or Co-operative Society by
the aforestated modes is brought within the purview of the Act.
The term "purchase price" means aggregate of the sums referred
to in the sub clauses of the definition of the term "purchase price".
The word "aggregate" means total amount or sum total. It is
understood as composed of several, combined whole. It also
means to collect into a whole (see "Advanced Law Lexicon by P.
Ramanatha Aiyar 3rd Edition Reprint 2007").
27)
The term purchase price, therefore, means the total of
the amount of valuable consideration paid or payable by the
occupier for purchase of sugarcane made by the factory or by the
unit, the amounts spent towards transport of sugarcane, whether
separately spent or not. The word "spent" is substituted for the
word "charged" and shall be deemed to have been substituted
with effect from 1st October, 1995 by the Maharashtra Act 21 of
1998. It also means any other sum spent or anything done in
respect of the sugarcane at the time of the delivery thereof. The
term turnover of purchase has been defined once again by using
the word "aggregate". It means the sum total of the amounts of
purchase price paid and payable by an occupier during the given
period. Thus, by the charging section 3, it is stated that there
shall be levied and collected a tax on the turnover of purchase of
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sugarcane. It is such sugarcane purchased for the use thereof in
the manufacture or production of sugar in the factory or unit on
which the tax is levied and collected. The rates thereof are to be
specified in terms of sections 2 and 3 and the tax as levied is
payable by the occupier at such intervals and in such manner as
may be prescribed.
28) We have also to consider other provisions of the Act,
for, they have a bearing on the charge and levy of the purchase
tax.
By section 5, it is mandated that except under and in
accordance with law, conditions of a licence issued by the
Commissioner, no person shall purchase any sugarcane for the
purpose of the use thereof in the manufacture or production of
sugar in a factory or a unit. By the sub-sections of this section 5
as also by sub section (1) of section 6, it is apparent that the
licence is for purchasing sugarcane for the purpose of use thereof
in the manufacturing or production of sugar in a factory or a unit.
By sub section (1) of section 6, every occupier liable to pay tax
under this Act is obliged to file a return in the prescribed form
and showing a turnover of purchases of sugarcane purchased by
him for above use. Thus, upon a licence being issued, sugarcane
can be purchased and for use in the manufacture or production of
sugar in the factory or unit. The occupier of factory is obliged to
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file a return depicting above details. The provision following the
same, namely, assessment and collection of tax would indicate as
to how a Commissioner shall assess the tax and by a single order
of assessment payable in respect of the period, in any year to
which all the returns under section 6 collectively relate. If the
amount has already not been paid, then, the Commissioner shall
issue a notice and serve it by requiring the payment of the
amount assessed. The consequences of not filing the return are
set out in sub section (2) of section 7. By section 7A, penalty is
provided for failure without reasonable cause to submit a return
as required and by sub section (1) of section 7B, interest payable
by occupier in certain cases is set out. The provision of Appeal
under section 8 and Revision under section 9 would indicate that
a complete machinery for assessment and collection of tax is
provided in the Act.
29) On a reading of the provisions together and
harmoniously, we are not in agreement with Mr. Joshi that the
tax is on expenses or expenditure and not on purchase of
sugarcane. The above provisions have been minutely referred by
us together with those enabling recovery of tax. There is a
inherent fallacy in the submission of the Petitioners that
components which are not germane or relevant to the purchase of
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sugarcane and the price paid therefor are taken into
consideration by the legislature. It is apparent that the term
"purchase price" is defined in such a way as to include amounts
mentioned in sub-clauses (i) to (iii) of section 2(f-b) of the Act of
1962. Once it is apparent that the components or elements stated
therein go into fixation of purchase price and that is the measure
for computation of the tax, then, depending upon facts and
circumstances in each case, the occupier can point out that not all
components or elements are included in the purchase price in his
case. That it is only the actual costs which have been taken into
account or that they have not included all the heads simply
because not all of them form part of the purchase price. Then, it
would be open for the Assessing Officer/Commissioner to consider
such pleas and material in support thereof. He would, then,
compute the tax liability after duly considering them. However, it
is the turnover of purchases meaning the aggregate of the
amounts of purchase price paid and payable by an occupier, on
which tax is levied and collected. The turnover is computed on
the basis of the purchase transactions and the price paid for the
same. Thus, it would be open for the Petitioners to point out that
the turnover of purchases in their case involves payment of
purchase price without the elements that are set out in the
definition of the term "purchase price" referred above. In the
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event the Assessing Officer/Commissioner does not agree with the
Petitioner, then, there are remedies open in law. We cannot
presume on the strength of the arguments of the Petitioners'
Counsel that the tax is not on turnover of purchase of sugarcane,
but on expenditure or amount incurred on cultivation and supply
of sugarcane. Thus, expenses of this nature incurred by the
factory or unit is the measure of the tax according to the Counsel.
However, the levy of tax cannot be confused with the measure of
tax. The levy is on purchase of sugarcane used for manufacture
or production of sugar in a factory or unit. If that is the
transaction or dealing on which the tax is levied and for such
transaction or deal to be struck, a licence is required, then, all the
more we cannot agree with Mr. Joshi.
30) Mr. Joshi's arguments as noted above are based on
paras 28 to 33 of the Petition argued by him. We are not going by
individual facts and circumstances of each Petitioner/factory. It
could be open for it to point out to the Assessing Officer during the
course of arguments that its mode of acquisition or purchase of
sugarcane is as explained in the paragraphs 28 to 33 of Writ
Petition No. 2060 of 1997 or somewhat different or distinct
thereto. It could also be pointed out that all the elements or
components of determination of purchase price are not taken
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care of in the individual sugar factory's determination of
purchase price. Thus, it is not compensating for the costs
allegedly incurred by the cultivator or farmer or supplier and
that is how it would be in a position to convince the Assessing
Officer about the computation of the tax and the liability in
pursuance thereof. It must at once be noticed that the definition
of the term "purchase price" takes within its fold the amount of
valuable consideration paid or payable by the occupier for the
purchase of sugarcane made by the factory or by the unit. It
could also include or be an aggregate of the sums such as amounts
paid towards transport of sugarcane whether separately spent or
not and any other sum spent for anything done in respect of the
sugarcane at the time of or before delivery thereof. Thus, the
purchase price determined would take care of all these expenses
or expenditure, but they may be incurred by the transporter or
such other entity at the time or before delivery of the Sugarcane.
It could be pointed out that the act of purchase of sugarcane was
for cash or deferred payment or other valuable consideration, but
does not include a supply by a shareholder of the factory or
limited company. Therefore, it could be said that the supplier of
sugarcane is not a shareholder. It could also be said that the
sugarcane is obtained from the farmer or cultivator directly and
it is his responsibility to reach the sugarcane, for which the
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purchase price is tendered, directly to the factory or unit where
the production or manufacturing of sugar is undertaken. The
transporter may or may not be involved in such process. Equally,
there would not be any sum spent for anything done in respect of
the sugarcane at the time of or before delivery thereof. These
expenses may be to the account of the cultivator or farmer. The
Assessee/factory is not required to compensate him for the same.
The computation of the purchase price is indicated so that the tax
to be levied and collected is correctly computed. If sum total of
the purchases would constitute the turnover and the measure of
that would be the amount of purchase price paid and payable by
an occupier during the given period, then, it is only to enable the
assessment and collection of tax in accordance with law that
these provisions have been inserted. Thus, we are in complete
agreement with Mr. Sonpal on the legality and validity of the tax.
It is not unconstitutional and ultra vires as alleged.
31) Mr. Joshi relied upon Entry 54 in the State List (List -
II), which enables the State to impose taxes on the sale or
production of goods other than newspapers, subject to the
provisions of Entry 92A of List I. The argument is that the
subject levy is covered by this Entry. The further argument is
that this Entry does not enable State legislature to levy tax in
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such a manner so as to cover expenses that may or may not have
been incurred. We are unable to accept this contention and for
more than one reason. The term "tax on the sale or purchase of
goods" has also been defined in the Constitution of India itself and
by an amendment particularly by (Forty sixth Amendment Act,
1982). In Article 366 (29A), the term "tax on the sale or
purchase of goods" is defined in a conclusive manner as under:-
"366(29A) "tax on the sale or purchase of goods" includes
- (a) a tax on the transfer, otherwise than in pursuance of
a contract, of property in any goods for cash, deferred
payment or other valuable consideration;
(b) a tax on the transfer of property in goods (whether
as goods or in some other form) involved in the execution
of a works contract;
(c) a tax on the delivery of goods on hire-purchase or
any system of payment by installments;
(d) a tax on the transfer of the right to use any goods for
any purpose (whether or not for a specified period) for
cash, deferred payment or other valuable consideration;
(e) a tax on the supply of goods by any unincorporated
association or body of persons to a member thereof for
cash, deferred payment or other valuable consideration;
(f) a tax on the supply, by way of or as part of any
service or in any other manner whatsoever, of goods, being
food or any other article for human consumption or any
drink (whether or not intoxicating), where such supply or
service, is for cash, deferred payment or other valuable
consideration,
and such transfer, delivery or supply of any goods shall be
deemed to be a sale of those goods by the person making
the transfer, delivery or supply and a purchase of those
goods by the person to whom such transfer, delivery or
supply is made"
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32) Therefore, a reading of the same would indicate as to
how the tax could be on the delivery of goods on hire purchase
system or any system of payment of installments, it could be a tax
on the transfer of right to use any goods for any purpose for cash,
deferred payment or valuable consideration, a tax on the supply
of goods by any incorporated association or body of persons to a
member thereof, a tax on the supply by way of or as a part of any
service or in any manner whatsoever of goods, being food or any
other article for human consumption or any drink (whether or
not intoxicating), whether such supply is for cash, deferred
payment or other valuable consideration. The definition also
clarifies that such transfer, delivery or supply of any goods shall
be deemed to be a sale of those goods by the person making the
transfer, delivery or supply and a purchase of those goods by the
person to whom such transfer, delivery or supply is made. In the
circumstances, the subject tax does not go beyond Entry 54 of
List - II (State List) to the Seventh Schedule of the Constitution.
33) The other argument also need not detain us. That is
that amendments which have been made with effect from 1 st
October, 1995 by Ordinance VI of 1998 issued on 1 st May, 1998
are also ultra vires the Act. According to the Petitioners, the
Ordinance was issued solely with a purpose of frustrating a
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WP.2060.1997+.Judgment.doc
challenge to the provisions brought in the law from 1 st October,
1995. This argument has no substance, simply because an Act of
the competent legislature can be amended from time to time. It is
presumed also in matters of imposition of tax that the legislature
understands and appreciates the economic realities. It performs
a balancing act and while plugging loopholes and removing
defects and lacunas, it has full freedom to make changes in the
tax structure or in the process of assessment and collection of
tax. Therefore and in the absence of any constitutional
prohibition, the legislature was not prevented from amending the
Act even during the pendency of these Petitions. Secondly, the
executive is a sole Judge of the urgency and if it is required to act
expeditiously to subserve larger public interest, then, it is equally
empowered to issue an Ordinance. This contention therefore
must be negatived.
34) Then, the argument is that the Act, which was enacted
in 1962, came to be amended. The legislature in enacting the
Amendment Act, stated that the Maharashtra Amendment Act
21 of 1998 would be effective from 1st October, 1995. Mr. Joshi
would submit that Maharashtra Tax Laws (Levy and
Amendment) Act in Chapter VI refers to the Amendment to the
Maharashtra Purchase Tax on Sugarcane Act, 1962. It states
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WP.2060.1997+.Judgment.doc
that the definition as appearing in section 2(f-b) of the term
"purchase price" in its sub clause would have the word "spent"
instead of "charge" and it shall be deemed to have been
substituted with effect from 1st October, 1995. Then, Mr. Joshi
would submit that the Maharashtra Tax Laws (Levy and
Amendment) Act, 2002 in Chapter I entitled 'Preliminary',
particularly section 1(2)(a) thereof stated that sections 1 to 8, 10
to 12, 14, 15, 17, 18, 20 to 27 and 29 shall come into force on 1 st
May, 2002 and by section 1(2)(b), it is stated that section 9, 16,
19 and 28 shall come into force on the dates expressly mentioned
in those sections. Mr. Joshi relied upon Chapter V of this Act,
which contains amendments to the Maharashtra Purchase Tax on
Sugarcane Act, 1962. Chapter V reads as under:-
"CHAPTER V
Amendments to the Maharashtra Purchase Tax on
Sugarcane Act, 1962
10. Amendment of section 2 of Mah. IX of 1962. - In
section 2 of the Maharashtra Purchase Tax on Sugarcane
Act, 1962 (hereinafter, in this Act, referred to as "the
Purchase Tax on Sugarcane Act"), clause (f-a), (f-b) and (g-
a) shall be deleted.
11. Substitution of section 3 of Mah. IX of 1962. -
For section 3 of the Purchase Tax on Sugarcane Act, the
following section shall be substituted, namely:-
3. Levy of purchase tax. - (1) There shall belevied
and collected a tax on the purchase of sugarcane being
purchased for use in the manufacture or production of sugar
in a factory or a unit.
(2) The tax under sub-section (1) shall be
levied at such rate per kilogram of sugarcane purchased for
the purpose aforesaid, as may be specified by the State
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WP.2060.1997+.Judgment.doc
Government, by notification in the Official Gazette, and
different rates may be specified for the sugarcane purchased
for the manufacture or production of sugar in a factory and
of Khandsari sugar in a unit:
Provided that, different rates may also be
specified for sugarcane purchased for the manufacture or
production of Khandsari sugar in units situated in areas,
which are declared by the State Government, from time to
time, by notification in the Official Gazette, as developed
areas or undeveloped areas, so however that the rate or
rates so specified shall not exceed four paise per kilogram of
sugarcane so purchased.
(3) for the purpose of the levy of tax, as
provided in sub-section (2), there shall be deducted from the
gross weight of sugarcane so purchased, such portion
thereof representing the average weight of the top of the
sugarcane plant consisting of pith devoid of any sugar
content and leaves and other trash usually present in the
sugarcane, as may be prescribed; and the tax shall be levied
only on the remaining weight of the sugarcane after such
deduction has been made.
(4) The tax levied under the foregoing sub-
sections shall be paid by the occupier of the factory or of the
unit, as the case may be, at such intervals and in such
manner, as is hereinafter provided.
12. Amendment of section 6 of Mah. IX of 1962. - In
section 6 of the Purchase Tax on Sugarcane Act, in sub-
section (1), for the words "the turnover of purchase of" the
words "in kilograms the total quantity of" shall be
substituted."
35) Thus, the argument is that these sections came into
force on 1st May, 2002. In effect, it means section 2(f-a), 2(f-b)
and 2(g-a) from the Act of 1962 stood deleted. However, Mr.
Joshi then invited our attention to Maharashtra Act VIII of 2003,
which is an Act to further amend certain Tax Laws in operation in
the State of Maharashtra and by which section 12B of the act of
1962 was substituted. Section 4 of the Maharashtra Act VIII of
2003 reads as under:-
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WP.2060.1997+.Judgment.doc
"4. In section 1 of the Maharashtra Tax Laws (Levy and
Amendment) Act, 2002 in sub-section (2) -
(a) in clause (a), the figures and word "10 to 12" shall be
deleted and shall be deemed to have been deleted with effect
from the 1st May 2002 and
(b) in clause (c), for the word and figures "section 13" the
words and figures "sections 10 to 13" shall be substituted
and shall be deemed to have been substituted with effect
from the 1st May, 2002."
36) The argument is that though this Act amends the
Maharashtra Tax Laws (Levy and Amendment) Act, 2002,
insofar as the amendment relating to the Act of 1962, the figures
and words "10 to 12" stand deleted and shall be deemed to have
been deleted with effect from 1st May, 2002. Therefore, there is
non application of mind on the part of the authorities. It only
means that the amendments which were already brought into
force were purported to be deleted. The amendments brought in
by Maharashtra Act VIII of 2003 could not have changed the
amended provisions or sections of the main Act.
37) Mr. Sonpal has clarified that this is an improper
reading of the amended provisions. He would submit that the Act
of 1962 was amended by the Maharashtra Act XVI of 1995 with
effect from 1st October, 1995 and the Maharashtra Act XIX of
1996 with effect from 9th June, 1996. It was amended by
Maharashtra Act XXI of 1998 with effect from 1 st May, 1998.
Our attention is invited to these amendments carried out
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WP.2060.1997+.Judgment.doc
particularly by the Maharashtra Act XVI of 1995. It is urged by
Mr. Sonpal that the Maharashtra Tax Laws (Levy and
Amendment) Ordinance 1998 purported to amend several
provisions in the Maharashtra Tax Laws. Insofar as that
Ordinance is concerned, it was later on enacted as the
Maharashtra Act XXI of 1998. The Maharashtra Act XXI of
1998, vide Chapter VI, amended section 2(f-b) of the Act of 1962
and for the word "charge", wherever it occurred, the word "spent"
stood substituted and is deemed to have been substituted with
effect from 1st October, 1995. Mr. Sonpal then invited our
attention to the Maharashtra Tax Laws (Levy and Amendment)
Act, 2002 and the amendments contained in Chapter V thereof
proposing changes in the Act of 1962. That deleted clauses (f-a),
(f-b) and (g-a) in section 2 of the Act of 1962. It also substituted
section 3 and made certain changes in section 6 of the Act of
1962. However, the further Act to amend certain Tax Laws in
operation in the State of Maharashtra, namely Maharashtra Act
VIII of 2003 substituted section 12B for the earlier section in the
Act of 1962 and clarified that the Maharashtra Tax Laws (Levy
and Amendment) Act, 2002 insofar as it amended the Act of
1962 and brought them into effect from 1st May, 2002 shall be
deemed to have been deleted with effect from 1 st May, 2002.
Thus, the amendment sought to be made to the Act of 1962 by the
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Maharashtra Tax Laws (Levy and Amendment) Act, 2002 never
came into effect.
38) We find substance in the contentions of Mr. Sonpal,
because by the 2002 Amendment Act, the legislature, vide section
10 thereof, sought to delete section 2(f-a), (f-b) and (g-a) from the
Act of 1962. Though that deletion came into effect from 1 st May,
2002, that provision was not brought into force at all. That is how
the Maharashtra Act VIII of 2003 reads. This Act of 2003 was
first published after its having received assent of the Governor, in
the Maharashtra Government Gazette on 29 th March, 2003. The
impact of the same has been rightly understood that a levy on tax
on purchase of sugarcane will continue to be based on purchase
price as is defined prior to 1st May, 2002. The substitution of the
Maharashtra Act XXI of 1998 with effect from 1 st October, 1995
in clause (f-b) with effect from 1st October, 1995 is unaffected.
That was sought to be affected by Chapter V of the Maharashtra
Tax Laws (Levy and Amendment) Act, 2002 with effect from 1 st
May, 2002. However, the Maharashtra Amendment Act 2002
seeking to amend the Act of 1962 itself stands deleted. That
Chapter V of the Amendment Act, 2002 being deleted on account
of subsequent Maharashtra Act VIII of 2003, we do not see any
change in the position.
J.V.Salunke,PA
WP.2060.1997+.Judgment.doc
39) We are not impressed by the argument of Mr. Joshi
that such amendments cannot be construed to mean that
provisions already brought into force and effected being deleted
will not restore those sections which have already been removed
from the Statute Book. In other words, amendment to an
amendment already brought into effect would not restore the
position prior to the first amendment. The contention as raised in
writing is that if a statute is first amended and by the second
amendment, the first amendment is deleted does not mean that
the position prior to the first amendment stands automatically
restored.
40) Mr. Joshi sought to rely on the principle enunciated in
Maxwell on Interpretation of Statutes, particularly laid down in
12th Edition on Commencement, Repeal and Revival of
Legislation. He would submit that where an Act is repealed and
the repealing enactment is then repealed by another, which
manifests no intention that the original Act shall continue
repealed, the common law rule was that the repeal of the second
Act revived the first ab-initio. However, according to the
Maxwell, the common law on the point was altered in 1850, by a
provision now to be found in section 11(1) of the Interpretation
Act, 1889 to the effect that where an Act passed after 1850
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WP.2060.1997+.Judgment.doc
repeals a repealing enactment, it shall not be construed as
reviving any enactment previously repealed, unless words are
added reviving that enactment. We have not been shown any
such statutory prescription as far as India is concerned. The
principle that repeal of a repealing Act does not necessarily
revive what is repealed by the repealing Act thus cannot be
stretched and applied to the present case. Rather the Principles
of Statutory Interpretation as summarised by Justice G. P. Singh
in 13th Edition, 2012 would show that the common law rule of
revival has been abrogated by section 6(a) and 7 of the General
Clauses Act, 1897. However, we are not concerned with such a
wider controversy. In the present case, the amendment made by
the Amendment Act of 1st May, 2002 did not come into effect at
all. That has been clarified now by the Maharashtra Act VIII of
2003. Once these amendments made with effect from 1 st May,
2002 stood deleted from a prior date, then, the consequences are
clear. No assistance can be derived from the principle which
Mr.Joshi seeks to apply. Now, it is apparent that if one statute is
repealed by a second which in turn is repealed by a third, the
effect is to revive the first statute unless a contrary indication is
indicated in the third statute. In such circumstances, we do not
see any reason to accept the contentions of Mr. Joshi.
J.V.Salunke,PA
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41) Further, in the case of Ameer-un-Nissa Begum and
Ors. vs. Mahboob Begum and Ors. reported in AIR 1955 SC
352, the Hon'ble Supreme Court settled the principles in the
following words:-
".....
(24) The result will be the same even if we proceed on the
footing that the various 'Firmans' issued by the Nizam were
in the nature of legislative enactments determining private
rights somewhat on the analogy of private Acts of
parliament. We may assume that the 'Firman' of 26-6-1947
was repealed by the 'Firman' of 24-2-1949 and the latter
'Firman' in its turn was repealed by that of 7-9-1949.
Under the English Common Law when a repealing
enactment was repealed by another statute, the repeal of
the second Act revived the former Act 'ab initio'. But this
rule does not apply to repealing Acts passed since 1850 and
now if an Act repealing a former Act is itself repealed, the
last repeal does not revive the Act before repealed unless
words are added reviving it: vide Maxwell's Interpretation
of Statutes, p. 402 (10th Edition).
It may indeed be said that the present rule is the
result of the statutory provisions introduced by the
Interpretation Act of 1889 and as we are not bound by the
provisions of any English statute, we can still apply the
english Common Law rule if it appears to us to be
reasonable and proper. But even according to the Common
Law doctrine, the repeal of the repealing enactment would
not revive the original Act if the second repealing
enactment manifests an intention to the contrary. In the
present case the 'Firman' of 7-9-1949, does not repeal the
earlier 'Firman' of 24-2-1949, 'simpliciter' but makes a
further provision providing for fresh enquiry and report
which presupposes the continuance of the repeal of the
original 'Firaman' of 26-6-1947.
This being the position, we are constrained to hold
that there was no final or effective decree in existence
subsequent to the issuing of the 'Firman' of 7-9-1949, and
the execution proceedings started by the respondents are,
therefore, untenable in law. In the view that we are taking
it becomes unnecessary to discuss the third point raised by
the Attorney General, namely, whether the City Civil Court
has jurisdiction to execute the decree.
....."
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42) Once all the legal submissions are taken care of and
duly considered, then, on facts, we are not required to go into the
rival contentions. If the assessment is not in accordance with law
or the assessment is pending and not finalised in a given year, it
would be open for the Petitioners to point out that no notices of
demand can be issued straight away unless the amount due and
payable is crystallised and ascertained. It is needless to clarify
that unless the process is complete, recovery by coercive means
is not permissible in law. Therefore, we need not consider the
legality and validity of the demand notices in the light of this
settled position in law. It would be open for the Petitioners to
resist the demand by all means provided in law. We are,
therefore, not required to consider factual aspects any further.
All the more, as the Department has understood the legal position
correctly vide their Circular No. 23-T of 2003 dated 22 nd October,
2003. In paras 2 and 3 of this Circular, the Commissioner has
clarified that no letter making a demand shall be issued even in
the form of request, unless the party concerned is heard and
appropriate statutory orders are passed. Though this is issued by
the Commissioner of Sales Tax, the principle would equally apply
to the present case and levy.
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43) In the light of the above, we are of the view that no
factual aspects need to be gone into. In individual cases, it would
be open for the Petitioners to contest the computation of tax. It
would be open to produce such material as is permissible in law in
the event the computation is erroneous and illegal. All such
remedies and contentions therein are kept open.
44) We have only dealt with the arguments on legality and
validity of the levy and the provisions with regard thereto. Since
these contentions are negatived for the reasons as indicated
above, each of these Petitions fail. Rule is discharged in each of
them, but without any order as to costs. In the light of the
dismissal of the Petitions, the Civil Applications do not survive
and to stand disposed of as such.
(B.P.COLABAWALLA, J.) (S.C.DHARMADHIKARI, J.)
J.V.Salunke,PA
