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The Gwalior Sugar Co. Limited Vs. the State of Madhya Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMadhya Pradesh High Court
Decided On
Case Number Miscellaneous Petition No. 369 of 1967
Judge
Reported in1973MPLJ156; [1973]30STC487(MP)
AppellantThe Gwalior Sugar Co. Limited
RespondentThe State of Madhya Pradesh and ors.
Appellant Advocate D.M. Dharmadhikari, Adv.
Respondent Advocate M.V. Tamaskar, Deputy Government Adv.
DispositionPetition dismissed
Cases ReferredSalar Jung Sugar Mills Ltd. v. State of Mysore and Ors. A.I.R.
Excerpt:
.....to 19th june, 1967, amounts to rs. the petitioner has filed this petition challenging the demand for sales tax as well as the purchase tax on, various grounds. 5. as for the rejection of the application for the year 1964-65, the position is as follows :under section 16 of the purchase tax act, the state government has been empowered to remit the tax under the act in any assessment year if it is satisfied that it is necessary to do so in public interest with a view to assisting factories which are continuously running into loss due to under-crushing or purchase of cane yielding low sugar recovery......as per details given in annexure t. as the company was running into loss it applied to the state government for remitting the purchase tax in respect of the assessment year 1964-65 and for 2 subsequent years under section 16 of the purchase tax act but the remission was not granted. the petitioner has filed this petition challenging the demand for sales tax as well as the purchase tax on, various grounds. it has been urged that the provisions of the purchase tax act are ultra vires and, therefore, the tax is not leviable. as regards sales tax, it has been urged that the transactions regarding the purchase of sugarcane were not of a voluntary nature and as such did not amount to sale and, therefore, sales tax could not be levied in respect thereof. the petitioner also prayed for a.....
Judgment:
ORDER

S.M.N. Raina, J.

1. This is a petition under Article 226 of the Constitution of India.

2. The petitioner, the Gwalior Sugar Co. Ltd., Dabra, runs a sugar factory at Dabra for the manufacture and sale of sugar since 1941. It obtains supply of sugarcane for manufacture of sugar from various sugarcane growers. The company was assessed to sales tax under the Madhya Pradesh General Sales Tax Act, 1958 (hereinafter referred to as 'the Sales Tax Act'), as well as to purchase tax under the Madhya Pradesh Sugarcane (Purchase Tax) Act, 1961 (hereinafter referred to as 'the Purchase Tax Act') and the total demand for the period from 1st April, 1959, to 19th June, 1967, amounts to Rs. 13,16,899.90 as per details given in annexure T. As the company was running into loss it applied to the State Government for remitting the purchase tax in respect of the assessment year 1964-65 and for 2 subsequent years under Section 16 of the Purchase Tax Act but the remission was not granted. The petitioner has filed this petition challenging the demand for sales tax as well as the purchase tax on, various grounds. It has been urged that the provisions of the Purchase Tax Act are ultra vires and, therefore, the tax is not leviable. As regards sales tax, it has been urged that the transactions regarding the purchase of sugarcane were not of a voluntary nature and as such did not amount to sale and, therefore, sales tax could not be levied in respect thereof. The petitioner also prayed for a writ of mandamus directing the State Government to consider the case of the petitioner for remission of tax under the Purchase Tax Act.

3. The contention that the provisions of the Purchase Tax Act are ultra vires and as such void was not pressed before us by the learned counsel for the petitioner in view of the decision of the Supreme Court in The Andhra Sugars Ltd. and Anr. v. The State of Andhra Pradesh and Ors. [1968] 21 S.T.C. 212 (S.C.). Similarly, the contention that the supply of sugarcane by the cane-growers to the company did not amount to sale because it was regulated by the provisions of the Madhya Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1958, and as such was not of a voluntary nature and, therefore, sales tax was not leviable in respect thereof was also not pressed before us in view of the decision of the Supreme Court in Salar Jung Sugar Mills Ltd. v. State of Mysore and Ors. A.I.R. 1972 S.C. 87.

4. Thus, the only point that was pressed before us was that the action of the Government in rejecting the petitioner's application for remission of purchase tax was arbitrary and illegal and was, therefore, liable to be quashed. From paragraph 16 of the return filed by the State Government, it would appear that the application for remission in respect of the year 1964-65 was rejected because the loss during the previous year was attributable to the fact that the factory remained closed for renovation while the application for subsequent years is still pending for consideration. As the application for 1966-67 and for subsequent years is still pending before the Government, there is no question of granting any relief to the petitioner in respect thereof. The proper course for him would be to pursue it and place necessary material before the Government to justify his claim for remission.

5. As for the rejection of the application for the year 1964-65, the position is as follows : Under Section 16 of the Purchase Tax Act, the State Government has been empowered to remit the tax under the Act in any assessment year if it is satisfied that it is necessary to do so in public interest with a view to assisting factories which are continuously running into loss due to under-crushing or purchase of cane yielding low sugar recovery. The function of the Government in exercise of this power is purely administrative and it can be challenged only when it is mala fide, discriminatory or for reasons not germane to the exercise of the power. The only ground on which the learned counsel for the petitioner impeached the action of the Government was that it had not recorded reasons for rejecting the application of the petitioner for remission. We do not think that it is necessary for the Government to state the reasons in the order rejecting the application. It is sufficient for the Government to satisfy this court that the application was rejected after Due consideration for reasons which were germane to the exercise of the power. From the return it appears that the petitioner was unable to satisfy the Government that it was continuously running into loss due to under-crushing or purchase of cane yielding low sugar recovery. The case of the petitioner admittedly does not fall under any other clause of Section 16 of the Purchase Tax Act. In these circumstances, the rejection of the application appears to be justified.

6. No other point was pressed before us. The petition, therefore, fails and is hereby dismissed. Since this petition was filed in the year 1967, before some of the important questions raised in this petition were finally settled by the, decisions of the Supreme Court referred to above, we hereby direct that the parties shall bear their own costs.


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