STATE OF MADHYA PRADESH Vs. GWALIOR SUGAR COMPANY, LIMITED
LAWS(SC)-1960-11-56
SUPREME COURT OF INDIA (FROM: MADHYA PRADESH)
Decided on November 30,1960

STATE OF MADHYA PRADESH Appellant
VERSUS
Gwalior Sugar Company, Limited Respondents





Cited Judgements :-

GORUK MAL VS. HIMACHAL PRADESH GOVERNMENT [LAWS(DLH)-1968-8-1] [REFERRED 4.]
VENKATESWARA CHEMICALS VS. GOVERNMENT OF ANDHRA PRADESH [LAWS(APH)-2001-7-89] [REFERRED TO]
SANKAR LAL SHAH VS. SUPRINTENDENT GUN AND SHELL FACTORY COSSIPORE [LAWS(CAL)-1964-11-4] [REFERRED TO]
RAMCHANDRA KOTASTHANE VS. STATE OF MADHYA PRADESH [LAWS(MPH)-1967-7-4] [REFERRED TO]
SRINGERI NELAMAU SAMSTHANAM HEROR VS. STATE OF KARNATAKA [LAWS(KAR)-1997-12-42] [REFERRED TO]
MAGAJI MHAVARSA KAMAKSHI BAI VS. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES [LAWS(KAR)-2003-5-29] [REFERRED TO]
TATA SKY LIMITED VS. STATE OF TAMIL NADU [LAWS(MAD)-2012-10-99] [REFERRED TO]


JUDGEMENT

- (1.)These are cross appeals from two judgments of the erstwhile High Court of Madhya Bharat. Both of them arise out of a writ petition presented by the Gwalior Sugar Company Ltd., who are respondents in C.A. 98 of 1957, in which they challenged the validity of the levy of a cess on sugarcane purchased by the respondents. The grounds on which validity of the cess is challenged are two. The first ground is that it was not levied under any law and the second ground is that it is discriminatory against the respondents.
(2.)In order to appreciate these contentions it is necessary to set out certain facts. In the year 1940 in pursuance of an agreement entered into between the Government of Gwalior State and Sir Homi Mehta and others a sugar factory was established at Dabra. The name of that factory is The Gwalior Sugar Co., Ltd. On June 20, 1946, the Maharaja Scindia, the ruler of Gwalior State constituted a Committee to consider the desirability of imposing a "cane cess on the lines of the United Provinces or Bihar and to recommend a procedure for fixation of sugar prices within the terms of the agreement subsisting between the Government and the factory". The Report of the Committee was submitted to the Maharaja by the Chairman on July 23, 1946. In their report the Committee observed that in order to put the industry on a sure and stable footing it was absolutely necessary to develop the cane area and yield in the shortest possible time. For this purpose the Committee recommended that it was essential to levy a cane cess of one anna per maund on all sugar cane purchased by the respondent factory. At the foot of this report the Maharaja made the following endorsement "Guzarish sanctioned, J.M. Scindia, 27-7-46". It may be mentioned that the Committee also recommended the establishment of a Cane Development Board. This recommendation was also accepted by the Ruler. On August 26, 1946, the Economic Adviser to the Government of Gwalior wrote a letter to the Manager of the respondent factory. It will be useful to reproduce the text of that letter as it will have some relevance on the second ground on which the cess is challenged. The letter runs thus :
"Dear sir,

With a view to expand cane area and cane yield in the Harsi commanded area so that the Gwalior Sugar Co., Ltd., be put on a sound and stable basis, the Gwalior Government have decided to impose a cane cess of one anna per maund on all sugarcane purchased by your factory. The operation of this cess will start from the coming sugarcane crushing season.

The proceeds of the cess have been earmarked for cane development work in the Harsi region that will be undertaken by a Cane Development Board constituted for the purpose.

The Cane Development Board expects your co-operation in this development work, which is proposed to be undertaken as soon as possible.

Yours sincerely,

Secretary, Cane Development Board."

(3.)The respondent factory protested against this levy. After the formation of the State of Madhya Bharat, the respondent made a representation to the Government of Madhya Bharat against the levy of the cess. The representation was, however, rejected. They, then, paid the cess for the years 1946 to 1948 amounting to Rs. 1,17,712-8-2. The Government of Madhya Bharat made a demand from the respondents for a sum of Rs. 2,79,632-14-9 for the years 1949 to 1951. The respondents challenged the demand upon the two grounds set out above and presented a petition before the High Court of Madhya Bharat for quashing the demand. The petition was opposed on behalf of the State of Madhya Bharat which was the successor State of the former Gwalior State. The High Court granted the petition partially by holding that the State of Madhya Bharat was not entitled to recover the cess due from the respondents after January 26, 1950. It may be mentioned that it was conceded on behalf of the respondent company before the High Court that the State was entitled to recover the cess prior to January 26, 1950. Later, however, the respondents preferred a review petition to the High Court that in which they sought relief even in respect of the cess for the period prior to January 26, 1950. The review petition was dismissed by the High Court upon the ground that no such petition lay. The respondents are challenging the view of the High Court in C.A. No. 99 of 1957. After the coming into force of the States Re-organization Act, 1956, the State of Madhya Pradesh has been substituted for the State of Madhya Bharat and they are shown as appellants and respondents respectively in the two appeals.
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