SAURASHTRA KHANDSARI MANUFACTURERS ASSOCIATION Vs. SALES TAX OFFICER VERAVAL

JUDGEMENT

(1.) The petitioners in all these writ petitions are the manufacturers of Khandsari sugar and claim to be utilising sugar canes for manufacturing Khandsari in village industry. The State Government have issued a notification under sec. 49(2) of the Gujarat Sales Tax Act 1969 which is hereinafter referred to as the Act giving exemption to certain categories of dealers from paying purchase tax on the purchase of sugar canes for manufacturing Khandsari sugar. One of these categories of dealers can get the exemption only after obtaining a certificate from Gujarat Rajya Khadi Gramodyog Board which is hereinafter referred to as the Board or Khadi and Village Industries Commission which is hereinafter referred to as the Commission to the effect that the industry of a dealer is a village industry. The case of the petitioners is that this requirement of obtaining such a certificate is illegal and unconstitutional and that even if the same is found to be legal and constitutional the Board or the Commission cannot refuse to grant this certificate on irrelevant considerations such as whether the petitioners are running their industries in co-operative sector or not. The petitioners have therefore prayed for a declaration that the requirement of a certificate from the Board or the Commission is illegal and unconstitutional that the Board or the Commission cannot refuse to grant the required certificate on any ground which is extraneous to the consideration of title question whether the concerned industry is a village industry and that the Sales Tax Officers have got no authority to take any action against then on the footing that they have not shown in their returns the purchase tax on the purchase of sugar canes used by them in the manufacture of Khandsari. The petitioners have also prayed for the appropriate consequential reliefs.

(2.) Since the facts and points of law involved in all these three petitions are the same with a view to understand the nature of the disputes between the parties we shall state the facts of only one petition which is Special Civil Application No. 472/73. This petition is filed by Shri Saurashtra Khandsari Manufacturers Association and some other petitioners who claim to be manufacturing Khandsari. These other petitioners are 24 in number. Many of these petitioners are registered dealers and some are in process of obtaining registration under the Act. Under sec. 49(2) of the Act the State Government is authorised by the Legislature to issue notification in the Official Gazette giving exemption from sales tax to any specified class or classes of sales or purchase. This exemption is required to be given by the State Government in the public interest. Accordingly on 29th April 1970 the State Government issued a notification under the Act exempting from the payment of tax certain articles mentioned in the Schedule attached to it. On 15th January 1971 entry No. 55 of this Schedule exempted the purchase of sugar canes used in the manufacture of Khandari sugar from the whole of the purchase tax. The relevant portion of this notification was as under:

(3.) We shall deal with the analysis of this notification at a subsequent stage. For the present however it should be noted that the third category of exempted dealers is of those persons who purchase sugar canes use in the manufacture of Khandsari in an industry owned by them but certified as a village industry either by the Board or by the Commission. Thus the dealers who were running Khandsari industries as a village are expected to get a certificate either from the Board or from the Commission to the effect that their industry is a village industry. of the petitioners therefore applied to the Board on 13th November 1972 to obtain the requisite certificate to enable them to get exemption under the amended entry No. 55. On 7th December 1972 however the Board refused to issue any such certificate stating as under: With reference to the said letter it is to be intimated that the Board is recommending for the purposes of exemption from the purchase tax on sugar canes only those co-operative societies or registered public institutions which are recognised by the Board for the purpose of Khandsari industry. This may be noted This letter is not in dispute and the same is found at Annexure A/5. From this letter it is evident that the Board refused to give any certificate to the petitioners not on the ground that the it industry was not a village industry but on the ground that they did not happen to be the co-operative societies or registered public institutions.