GWALIOR SUGAR CO. LTD. Vs. STATE OF MADHYA BHARAT
LAWS(MPH)-1954-5-1
HIGH COURT OF MADHYA PRADESH
Decided on May 07,1954

Gwalior Sugar Co. Ltd. and Ors. Appellant
VERSUS
STATE OF MADHYA BHARAT Respondents


Referred Judgements :-

JOHNSON V. SARGANT AND SONS [REFERRED TO]
ABEYESEKERA V. JAYATILAKE [REFERRED TO]
LOWER MAINLAND DAIRY V. (SIC)RSTAL DAIRY LTD [REFERRED TO]
RAMJILAL VS. INCOME TAX OFFICER MOHINDAR GARH [REFERRED TO]
HARLA V. STATE OF RAJASTHAN [REFERRED TO]
MOHAMMAD YASIN VS. TOWN AREA COMMITTES JALALABAD [REFERRED TO]
STATE OF RAJASTHAN VS. RAO MANOHAR SINGHJI [REFERRED TO]
COMMISSIONER HINDU RELIGIOUS ENDOW MENTS MADRAS VS. LAKSHMINDRA THIRTHA SWAMIAR OF SHIRUR MUTT [REFERRED TO]
FATHIMA BI VS. STATE OF MADRAS [REFERRED TO]
PHALTAN SUGAR WORKS LTD VS. COMMISSIONER OF INCOME-TAX [REFERRED TO]


JUDGEMENT

Dixit, J. - (1.)THIS is an application under Article 226 of the Constitution of India for the issue of a writ or a direction in the nature of mandamus, directing the State of Madhya Bharat not to levy any cess on the Petitioner Company on the sugar -cane purchased by it and not to realise any cess from the said company, and to refund the amount already recovered as cess. The petition arises in the following circumstances.
(2.)ON 1 -5 -1940 an agreement was entered into between the Government of the former Gwalior State and Sir Homi Mehta and others for the establishment of a sugar factory in Dabra. In pursuance of the agreement the Petitioner -company was floated, sugar factory was established at Dabra and in due course it want into production. On 20 -6 -1946, His Highness the Maharaja Scindia, the Ruler of the Gwalior State, constituted a committee
to consider the desirability of imposing a cane cess on the lines of the U.P. or Bihar and to rccommend the procedure of fixation of sugar prices within the terms of the agreement subsisting between the Government and the factory.

One Minister and three officials of the State were appointed by name as members of this committee. The committee submitted its report to the Gwalior Darbar on 23 -7 -1946 together with a "Guzarish" (Submission) from Sardar M.R. Phalke who was a member of the committee and who presided over the deliberation of the committee. Sardar Phalke was at that time also a Revenue Minister in the Government of His Highness the Maharaja Scindia. The Gujarish presented by Sardar Phalke contained the following submissions to the Darbar:

1. that "following U.P. policy it is essential to levy on the factory a cane cess of one anna per mauncl on all sugar -cane purchased by the factory."

2. that "the proceeds of the cess will primarily be used for cane development work and the utilization and administration of the fund will be under the Cane Development Board" A recommendation was also made as to how the Board should bo constituted.

That "sugar prices will be fixed on the recommendation of this Board on the basis unanimously recommended in this report.

3. On this Cujarish llis Highness the Maharaja Scindia passed on 27 -7 -1946 the order "Guzarish. sanctioned". On the basis of this order the Economic Adviser of the Gwalior Government wrote a letter to the Petitioner -company which stated inter alia:

With a view to expand cane area and cane yield in the Ilarsi commanded area so That the Gwalior Sugar Company Limited be put on a sound and stable basis, the Gwalior Government have decided to impose a cane ccss of one anna per niaund 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 Ilarsi region That will be undertaken by a Cane Development Board constituted for the purpose.

(3.)IN reply the pctitioner -company made several unsuccessful representations protesting against the levy of the cess. After the formation of Madhya Bharat the Petitioner again made a representation to the Madhya Bharat Government against the levy of the cess. This time also the Petitioner company was unsuccessful and was informed (hat the imposition and recovery of the cess having boon imposed in the past under "competent authority of His Highness the Maharaja of Gwalior was valid." Some time after the coming into foree of the Constitution of India the company again appealed to the Government for the withdrawal of the cess.
According to the Petitioner, on this appeal a meeting of the officers concerned was called by the Adviser to the Government, and that as a result, the Adviser decided to recommend to the Government that the cane purchased by the Petitioner company from the Gwalior Agriculture Company should be exempted from ccss, and that since the levy of a cess on the Petitioner company alone was not equitable, the Industries and Agricultural Departments and the Economic Adviser to the Government should study the question of the levy of the cess and advise the Government

whether the cess should be continued and if so in what manner an uniform cess on all factories can be levied.

The Petitioner company further states that it has already paid to the Government a sum of Rs. 1,17,712/8/2 as cess in respect of the "seasons" from 1946 to 1948 and that the Government has now made a demand for the payment of the cess in respect of the subsequent 'seasons' from 1949 to 1951 amounting to Rs. 2,79,632/14/9. The Petitioner -company says that the levy and demanded (sic) the cess is without the authority of law; that law was ever passed by the Legislature of (sic) while Gwalior State imposing the cess; that (sic) levy is repugnant to Article 14 of the Constitution (sic) infringes the Petitioner's right guaranteed (sic) Article 19(1)(g) ; and that the levy is in contraction of the terms of the agreement dated 1 -5 -(sic) mentioned above.

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