Civil Appeal No 712 of 1972
From the Judgment and Order dated 21 2 1972 of the Allahabad High Court in Civil  Misc
Writ No 527171
772 Civil Appeal Nos
962 964 of 1972 From the Judgments and Orders dated 14 2 197221 2 1972 of the Allahabad High Court in Civil Writ No 33571 477871 and 333471
Civil Appeal No 1013 of 1972
From the Judgment and Order dated 14 2 1972 of the Allahabad High Court in Civil Misc
Writ No 279171
Civil Appeal Nos 1063 1065 of 1972
From the Judgment and Order dated 2122 2 1972 of the Allahabad High Court in Civil Writ Nos 572 843 and 116972
Civil Appeal Nos
1066  1067 of 1972
From the Judgment and Order dated 2122nd Feb 1972 of the Allahabad High Court in CW Nos 527371 and 117072
Civil Appeal Nos 1140 1142 of 1972
From the Judgment and order dated 29 3 197214 2 1972 and 21 2 1972 of the Allahabad High Court in Civil Misc
Writ Nos
506471 180171 and 501871
Civil Appeal No 1160 of 1972
From the Judgment and order dated 18 4 1972 of the Allahabad High Court in Civil Misc
Writ No 422371
Civil Appeal Nos
1329 1330 of 1972
From the Judgment and order dated 18 4 1972 of the Allahabad High Court in Civil Misc
Writ Nos 458771 and 460571
Civi Appeal No 1367 of 1972
From the Judgment and order dated 5 4 1972 of the Allahabad High Court in CMW No 227870
Civil Appeal No 1405 of 1972
From the Judgment and order dated 14 2 1972 of the Allahabad High Court in Civil Misc
Writ No 180371
Civil Appeal Nos
1415  1598 of 1972
From the Judgment and order dated 14 2 1972 of the Allahabad High Court in Civil Misc
Writ No 180271  366870
Shanti Bhushan in CA 712 PR Mridul in CA 962 PN Tiwari KJ John and JS Sinha for the Appellants in CA 773 712 962 963 1063 1069 1140 1142 1160 1329 1330 and 159872
Shanti Bhushan in CA 409 OP Malhotra in CA 1415 RKP Shankar Das 1013 and 1409 H K Puri and VK Bahl for the appellants in CA 1013 and 1409 and 141572
Yogeshwar Prasad Mrs Rani Chhabra and Mrs section Bagga for the Appellants in CA 136772
O P Rana and R Ramachandran for the Respondents
The Judgment or the Court was delivered by KRISHNA IYER J
This phalanx of appeals over 200 strong has stagnated for eight years and slowed down other disposals which is unfortunate
We believe that the price of healthy justice from the highest Bench is eschewal of all but those cases which possess the twin attributes of i substantial question of law of general importance ii which needs to be decided by the Supreme Court itself whether the jurisdiction be under Article 133 134 or 136
Such being the jurisdictional dynamic of the Supreme Court save in exceptional cases of appalling injustice we hope the Bar will share this concern and avoid a breakdown for truly the question today is To be or not to be
All these appeals spring from a common demand for tax by the State of Uttar Pradesh from a number of sugar mills on the purchase of sugarcane at a rate related by weight not value a pragmatic novelty in the sales tax pattern which has provoked an argument about its validity
Legal ingenuity which rich mills making common cause could summon spun out several constitutional and other challenges to the levy in the High Court all of which became casualty when the Division Bench delivered judgment
Even so the memoranda of appeals have set forth an imposing array of grounds of varying merit all save three of which by the wise husbandry of counsel have been mercifully abandoned
The three survivors deserve no better fate but it behoves the court to state the triple challenges presented from various angles and ratiocinate at some length to reach the litigative terminus
One or two more minor matters which figure in the debate at the bar may however be noticed in the course of the stride
Far more facts and a fuller projection of the law may be in place here
We are concerned with a levy under the UP Sugarcane Purchase Tax Act 1961 for short the Act
Sales tax item 54 in the State List was once described in the thirties by a far sighted Chief 774 Minister and nation builder Sri C Rajagopalachariar as a Kamadhenu
True to his prescience every State today relies heavily on this levy for which the common man eventually pays heavily
Uttar Pradesh which grows sugarcane and runs sugar mills in the private sector hit upon a tax on the purchase of cane by millers who manufactured sugar and Khandasari at differential rates but it is a heritage from the thirties
A little legislative history mixed with tentative inferences illuminates the legal controversy since appellants  counsel set much store by this as an auxiliary circumstance
A broad brush projection of the fiscal story and back ground economy may now be attempted although we regret that no authoritative material beyond what Can be culled from the High Court judgment is forthcoming
We will make to with it although litigants especially in the battle field of unconstitutionally must produce the socio economic bio data of challenged legislation explaining the how  the why  and why not  of each clause lest lay minds lost in legal tuning should miss meaningful sound and social sense which experts may explain
Law cannot go it alone nor lawyers
Many Stales in India grow sugarcane all of which save negligible quantities suffer crushing and its sucrose content is recovered as sugar khandasari and on a cottage industry basis as gur
Andhra Pradesh Bihar Gujarat Haryana Kerala Karnataka Maharashtra Madhya Pradesh Punjab Pondicherry Tamil Nadu and Uttar Pradesh not only grow sugarcane but enjoy purchase tax a majority of which levy By weight rather than on price
And we cannot lose sight of the All India impact when the law is laid down under Article 141
Judgments of this Court are decisional between litigants but declaratory for the nation
Sugar is an export item and of course is a daily necessary at home
Uttar Pradesh according to the Report of the Tariff Commission on the cost Structure of the Sugar Industry and the Fair Price for Sugar 1969 has the heaviest concentration of sugar mills in the country but several of them are uneconomic and some sick
Modernization is a message lost on UP sugar manufacture and the cane cultivator s fortune hangs on the fluctuating prosperity of the marginal millers
The sugar and sugarcane economy is the victim of a variety of forces which add to the precariousness and poor efficiency of factories The area under cultivation recedes or expands with the decrease or increase of crushing by the factories and the misery of losses and instability of acreage under cane cultivation have played havoc with agriculturists
Dithering prices of sugar export promotion as a policy Levy  of sugar to feed the poor and a number of other intricate economic facts 775 have made the fiscal manoeuvring a matter of expertise and social justice
While on a pan Indian survey wide variations in quality of cane and efficiency of mills may be found within Uttar Pradesh broadly speaking the sucrose content differs but little and the percentage of recovery also is more or less the same or factories in the State save where the machinery effects efficiency
So much so the price of sugarcane usually decided by the Central Governments notification of minimum price depends on its weight and sucrose recovery and in practice within a region both gravitate towards a common point
Moreover the Uttar Pradesh sugar map reveals as pointed out by the High Court that the more you crush the more you produce the more you produce the more you earn
So the quantity of sugarcane crushed by a factory is an index of its earnings 
The relevance of this relationship between consumption of quantity by the mills their sugar production and quantum of profits to the question of tax incidence its equity and equality will be taken up by us later on
Prima facie there is a cane sucrose correlation for the State
Apart from it the more the cane purchased the more the profits spun and the justice of fixing the tax tag on the weight of cane purchased argues itself
And what makes for just impost of the tax burden is the antithesis of arbitrariness
When the majority of the sugarcane States have imposed purchase tax by weight net value a reinforcement of sorts is added to this inference
The High Court observes based on these data Prime facie purchase tax by weight would ensure more stable revenue over the years than the purchase tax by the price of sugarcane which rises and falls in a four years  cycle
This statement has not been upset by any facts placed before the court and ipse dixits of counsel sans data are airy economics
Another market eccentricity must be noticed
Business cycles of boom and slump have been the bane of the sorry sugar and sugarcane story of that State and fiscal policy to stabilise a wobbling market G economy has been presumably evolved thoughtfully
The Report we have referred to bears testimony to this cyclical factor and the High Court has drawn inferences therefrom
Let us view the inequity of the impost had it been related to the price of cane
The High Court gives some facts  The price of sugarcane is according to the Report of the Tariff Commission determined by the law of supply and 776 demand in a particular year
Accordingly it may vary disproportionately in various regions of the State
One factory may pay more for the same quantity of sugarcane than the other
Indeed the Basti Sugar Mills Company Limited has made that allegation
The Basti Sugar Mills Company Limited paid Rs 700000 less than the Seksaria Sugar Mills Private Limited for the same quantity of sugarcane
If the quantity of sugar manufactured by them in that year is more or less the same their earnings will be the same
So tax b price would be more oppressive on the Seksaria Sugar Mills Private Limited
On the other hand as tax is by weight both of them would have paid the same amount of tax in that year
Neither of them could complain of unfair or inequitable incidence of taxation
Of course stabilization or uniform fixation of cane prices is the annual endeavour of Central and State Governments and this reduces disparity among millers except the factor of efficiency
Variations in cane transport costs ale minimized and taken care of by zoning purchases statutorily and then weight price correlation becomes more stable and sober in practice that abstract arguments based on printed paper and flight of fancy may luridly suggest
The life of the law is real life not little logic and the High Court s deductions though a lay exercise cannot be faulted as fallacious by lay advocacy
Regrettably we have no contrary statistics and the learned judges have stressed this weakness
We agree with those observations and accept them since nothing urged before us has furnished factual contradiction of these premises The petitioners have not supplied for any period figures of actual prices paid by them actual quantity of cane crushed by them actual quantity of juice derived actual quantity of sugar produced and their earnings
They have not tried to prove that the standard of price would be more just and equitable than the standard of weight for levy of purchase tax
From the meagre data gleaned from the Tariff Commission s Report it is not possible to take the view that tax by weight is unfair and inequitable
And Article 14 ensures to the citizen the basic principle on which rests justice under the law
It assures to the citizen the ideal of fairness Corpus Juris Secundum Vol
XVI A p 296
The petitioners have failed to discharge the heavy burden of proof
777 Abstract submissions flung from imagination do not each the point of forensic take off if we may add
Tentatively subject to further examination the conclusion of the High Court commends itself to us The incidence of purchase tax by weight appears to be more related to the earning capacity of the assessee than the incidence of tax by price of sugarcane
To clinch the issue as it were the High Court winds up The petitioners have not argued that the impugned provision is confiscatory in nature
I have already shown that tax by weight has got fairer relation to the production of sugar by an earning of a factory than tax by price
Consequently no one can fairly complain that the impugned provision treats unequals as equals
Equal crushing attracts equal tax
 We may comment by way of supplement that equal crushing means equal weight of cane
So cane quantity and tax liability roughly match and remove the fear of uneven imposts
Let us go back to pick up the threads leaving this pertinent detour for a while
Sugarcane agriculture and sugar industry have been the cynosure of legislative attention at Central and State levels for long
We may start a rapid survey from 1932 when the Sugar Industry Protection Act 1932 was put on the statute book
Its object was to foster and develop the sugar industry by protective tariffs
Then came the which empowered the Provincial Government to fix a floor price for sugarcane sold to sugar factories
This was followed by the UP Sugar Factories Control Act 39 8 which replaced the earlier 1934 Act
Thus came into existence a statutory Sugarcane Control Board and a Cane Commissioner
Section 291 of this Act imposed a sales tax on the sale of sugarcane
Sub section 3 provides for a cess on the entry or sugarcane into a local area
The necessity for the fostering legislative care of sugarcane cultivation and the imposition of a tax in this behalf is explained in the Statement of objects and Reasons to the Bill of 1938 The future of the sugar industry depends to a very large extent on a big drive for the improvement of cane cultivation and its planned production on a rational basis
To enable Government to carry out the necessary measures in this connection which will involve considerable expenditure and to take other steps conducive to the welfare of 778 the industry cane growers and agriculturists generally it is proposed to impose a tax upto a maximum limit of six pies a maund of the sale of sugarcane to a factory or a cess at the same rate on the entry of cane into a local area notified in this behalf for consumption use or sale therein
 It is significant that 40 years ago the tax for the benefit of cane growers was linked up with weight
It is not as if a freak flash flit past the legislative mind of linking up purchase tax with weight of cane in 1961 only
Apparently measure of tax by weight of stuff in the peculiar circumstances of sugarcane economy has been tested by time and metabolized into the consciousness of the affected Trade and the Administration
Be that as it may the development of sugarcane cultivation was taken up on a systematic basis as per the statutory mandate
Both the tax and the cess contemplated by the 1938 Act went by the maund and although the cess was to be levied from the seller he was allowed to recover it from the purchaser
The 1938 Act gave place to the UP Sugarcane Regulations of Supply and Purchase Act 1953 which created a scientific scheme created a Fund injected the concept of cane growers  cooperatives and provided for levy of cess
The cess part of the Act was replaced by the UP Sugarcane Cess Act 1956
We must remember that by now the Government of India Act 1935 had ceased to exist and the Constitution of India had come vibrantly into being with the fundamental rights of Part III
The cess under the 1956 Act was attacked and fell victim to a constitutional challenge and this Court in Diamond Sugar Mills  Case declared the Cess Act ultra vires
The consequence of this mortality was the incarnation of the UP Sugarcane Purchase Tax Act 1961 which is being impeached as ultra vires in these appeals
When cess failed the State would have been constrained to refund nearly half a hundred crores of rupees
Validation by parliamentary legislation in conformity with the Constitution was therefore done
Eventually the levy of a purchase tax was enacted into law by the UP Sugarcane Purchase Tax Act 1961 referred to as the Act
In a fiscal sense the Purchase Tax Act is a reincarnation of the Cess Act but in a legislative sense it is an independent statute with a different source of power impact and structure
While the appellants have a case that this fiscal history substantiates their thesis that the present purchase tax is a disingenuous disguise the State contends that its power to impose a purchase tax is well within List II Entry 54
An appeal to history cannot impeach power
Plainly read the Act architectures 779 a typical tax scheme leviable at the purchase point with one difference but we have been invited by Shri Shanti Bhushan counsel for some of the appellants to lift the veil look at the true anatomy of the Act and discover the unseemly unconstitutionality in its bosom
Before we adventure into an assessment of the vulnerability of the provisions to the appellants  artillery we must project a picture af the impugned Act in its essentials sufficient to appreciate the grievances and their constitutional merit remembering the judicial limitation that where economic diagnostics and administrative pragmatics blend to produce a legislative outfit restraint is prudence save where caprice compels
The saga of the Act having been chronicled we may proceed to a dissection of the Act from the Constitutional angle
It is worth mentioning that Central and State Governments have been deeply concerned with the economic pros and cons of sugarcane and sugar
The Tariff Commission in its report gives much of the material relied on by the High Court
Indeed when any legislation is assailed as arbitrary unreasonable or otherwise unconstitutional one expects both sides not to assume the Court to be omniscient but to furnish the surrounding materials statistical data and the compulsive factors which operated to provide the prescriptions in the legislation consistently with the imperatives of Part III
This statutory intelligence should be a necessary accompaniment to any litigative exercise where constitutionality depends on social facts
Orality unlimited and invitation into abstractions can hardly do duty for a methodical marshalling of meaningful facts
Anyway we will discuss the merits of the contentions on the available materials supplemented by warrantable guesses with a presumption in favour of constitutionality strengthened by the High Court s affirmance since the principal attack is Article 14
Historically the tax in question is a successor to the cess which was struck down but jurisprudentially the levies are different in character and attributes and constitutionally the imposts derive from different legislative entries and have to be tested by different standards
In short the Purchase Tax Act has to be judged on its own merits in the light of submissions of counsel
The anatomy of the Act to the extent relevant may now be envisaged
Section 3 is the charging section and creates a Liability on the purchase of sugar cane payable by a factory owner or a unit owner
The rate is one rupee 25 Paise per quintal and 50 Paise per quintal for factories and unit respectively
The taxing event is the purchase transaction by the owner of a factory or a unit
An option is provided for in the case of owners 780 of units to pay tax on an assumed quantity prescribed by Government
This is obviously to simplify and to benefit owners of Units who are presumably tiny producers of khandsari sugar
By definition factories and units fall under different categories the former being geared to manufacture of sugar by power the latter being engaged in the production of Gur Rab or Khandsari sugar in crushers driven by mechanical power
A classification based on scale of operations product manufactured an other substantial differences bearing on production capacity profits of business and ability to pay tax is constitutionally valid and the feeble contention counsel put forward that there is discrimination between owners of factories and units must fail without much argument
Section 3A intended to guard against escape of tax ensures that the sugar produced out of the sugarcane transaction exigible to tax shall virtually stand security if we may crudely express ourselves that way
The sugar produced in the factory shall not be removed until the tax levied under Section 3 is paid
Other detailed provisions calculated to safeguard the tax are also contained in Section 3A Provision for revision of assessment is contained in Section 3B
While fines and punishments for contraventions find a place in Section 8 remission of taxes is also provided for in Section 14 and comprehensive rule making power is vested in government under Section 15
Section 152 F G and H in particular chase the sugar manufactured from the taxable sugarcane and empower Government to make rules to secure the sugar bags from leaving the factory premises until the liability of the State is discharged
To sum up the scheme is simple and workable
Uttar Pradesh has a number of factories which manufacture sugar
There are quite a few units which with less mechanisation produce out of raw sugarcane less refined perhaps more nutritious end products like khandsari sugar gur or rab
These two classes are well established their operations economics and manufactures are different and the fiscal legislation in question classifies them as factories and units and imposes differential levies
The Act by Sec 3 imposes a rate of tax of 1 rupee 25 Paise per quintal of sugarcane purchased by a factory owner the corresponding rate for a unit  being but 50 Paise
The charge is on the purchase transaction payable by the owner of the factory or unit on such date at such place and in such installments as may be prescribed  Sec
 Interest and penalty appeal prosecution and other consequential provisions find a place as usual but the basic challenge is to the charge of tax on three grounds
The charge is had firstly because argues counsel it is in its true character 781 a legislation in respect of a controlled industry  and this power belongs exclusively to Parliament under Entry 53 of List I VII Schedule
The next submission to shoot down the measure is that the Act masked as purchase tax in essence asks for an excise duty on sugar manufacture and is therefore invalid as colourable legislation seeking to achieve on the sly what it dare not do straight
Surely excise duty falls under Entry 54 of List I and the State Legislature cannot usurp that power
Even if the levy be a hybrid one as Sri Malhotra made it out to be it falls under Entry 97 of List I out of bounds for the State Legislature
The final shot fired to bring down the fiscal levy on the score of ultra vires is from the customary barrel of Article 14
A multiprolonged attack based on Article 14 was launched
The levy cast equal burdens on unequals and so was invalid on the ground of discrimination
A tax by this canon must be linked to price of canon not its quantity lest the millers be made to pay unevenly for two consignments of equal weight but unequal price
A refinement of the same argument was developed on the basis of the sugar output from the cane crushed
The sucrose content of sugarcane varies from cane to cane and perhaps from mill to mill and to lump them together quantitatively for a uniform impost is to turn the Nelson s eye on the inter se inequality
Procrustean cruelty is anathema for the law where unequals are equalised into arbitrary conformity
Counsel submit that sucrose is the touchstone and where that content varies but the levy is standardized on the weight of cane the exaction must he outlawed under Articles 14 and 13 and even 19 unreasonable
We reject all the three contentions and hold that the Act can parachute to safety despite the ineffectual artillery
For as on Bubaivat we heard great argument about it and about but evermore came out by the same door as in we went 
Let us anyway scan the substantial points  which have sojourned in this Court all these years awaiting a constitutional pronouncement
Incidentally most of these pleas have been negatived by this Court on earlier occasions but phantom arguments often survive after death
Is the legislation ultra vires because the State enters the forbidden ground by enacting on controlled industry It is undisputed that sugar industry is a controlled industry within the meaning of Entry 52 List I of Schedule and therefore the legislative power of Parliament covers enactments with respect to industries having regard to Article 2461 of the Constitution If the impugned legislation invades Entry 52 it must be repulsed by this Court
But entry 54 in List II 782 of the Seventh Schedule empowers the State to legislate for taxes on purchase of goods and so if the Act under consideration is attracted in pith and substance by this Entry legislative incompetence cannot void the Act
The primary question which we have to pose to ourselves is as to whether this State Purchase Tax Act is bad because it is a legislation with respect to a controlled industry to wit the sugar industry
What matters is not the name of the Act but its real nature its pith and substance
The same problem demands our attention at a later stage in considering the contention that the levy under examination is in a sense an excise duty and not a purchase tax
We are somewhat surprised that the argument about the invalidity of the Act on the score that it is with respect to a controlled industry dies hard despite the lethal decision of this Court in Ch
Tika Ramji s case
Enlightened litigative policy in the country must accept as final the pronouncements of this Court by a Constitution Bench Unless the subject be of such fundamental importance to national life or the reasoning is so plainly erroneous in the light of later thought that it is wiser to be ultimately right rather than to be consistently wrong
Stare decisis is not a ritual of convenience but a rule with limited exceptions
Pronouncements by Constitution Benches should not be treated so cavalierly as to be revised frequently
We cannot devalue the decisions of this Court to brief ephemerality which recalls the opinion expressed by Justice Roberts of the US Supreme Court in Smith vs Allwright that adjudications of the Court were rapidly  gravitating into the same class as a restricted railroad ticket good for this day and train only  
Let us examine the worth of the contention that the impugned legislation is one on a controlled industry  and therefore out of bounds for the State legislature
Tika Ramji s case supra deals with the identical question of controlled industry  vis a vis a UP Legislation regulating sugarcane supply and purchase
Certain sugarcane growers of Uttar Pradesh assailed the vires of the UP Sugarcane Regulations of Supply and Purchase Act 1953
That statute reserved or assigned to sugar factories specified cane purchasing centres for the purpose
This regimentation of sugarcane growers and regulation of cane supplies to specified millers by a State enactment was attacked on the precise ground that sugar being a controlled industry  any enactment effecting such industry including the regulation of supplies of raw materials 783 thereto was taboo
The plea was dismissed as specious and the appeals under our consideration are a fortiori case where the rejection of the contention can be more confidently made
NH Bhagwati J speaking for the Court traced the legislative history bearing on sugar and sugarcane
Reference was made to the Industries Development and Regulation Act 1951 which brought in as Item 8 of the First Schedule to the Act the industry engaged in the manufacture or production of sugar
The impugned legislative measures occasioned by the need to streamline the supplies of cane to factories
The law was designed to provide for a rational distribution of sugarcane to factories for its development on organised scientific lines to protect the interests of the cane growers and of the industry
The submission made there was that even though the impugned Act purported to legislate in regard to sugarcane required for use in sugar factories it was in pith and substance and in its true nature and effect legislation in regard to sugar industry which had been declared by Act LXV of 1951 to be an industry under Entry 52 of List I
It was urged that the word industry  was of wide import and included not merely manufacture but also the raw materials for the industry
The supply and Distribution of raw materials for the sugar industry were therefore matters having a clear impact on the production of sugar
In this view it was pleaded that sugarcane control vis a vis sugar factories was a colourable exercise of legislative power by the State trespassing upon  the field of Entry 52 in List I Tika Ramji s case supra gave short shrift to the submission that all sugarcane legislation linked to sugar factories was sugar legislation
Bhagwati J Observed What we are concerned with here is not the wise construction to be put on the term industry  as such but whether the raw materials of an industry which form an integral part of the process are within the topic of industry  for which forms the subject matter of Item 52 of List I as ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in that topic and whether the Central Legislature while legislating upon sugar industry could acting within the sphere of Entry 52 of List I as well legislate upon sugarcane The learned Judge stripped the argument naked and presented it for examination It was suggested that Item 52 of List I comprised not only legislation in regard to sugar industry but also in regard 784 to sugarcane which was an essential ingredient of the industrial process of the manufacture or production of sugar and was therefore ancillary to it and was covered within the topic
If legislation with regard to sugarcane thus came within the exclusive province of the Central Legislature the Provincial Legislature was not entitled to legislate upon the same 
The court was pressed to impart the widest amplitude to the topic industry  and take within its wings ancillary matters lie raw materials of the industry 
It was therefore contended that the Legislation in regard to sugarcane should be considered as ancillary to the legislation in regard to sugar industry which is a controlled industry and comprised within Entry 52 of List I  The edifice of exclusive Parliamentary jurisdiction so built stood on shifting sands
The semantic sweep of Entry 52 did not come in the way of the State Legislature making laws on subjects within its sphere and not directly going to the heart of the industry itself
The key to the problem was furnished in Tika Ramji s case supra
After comparing the provisions of the UP Act there considered which related to the regulation of sugarcane to factories and securing its price to the grower from the occupier of the factory even by checking the accounts relating to The manufacture of sugar The Court clinched the issue thus This comparison goes to show that the impugned Act merely confined itself to the regulation of the supply and purchase of sugarcane required for use in sugar factories and did not concern itself at all with the controlling or licensing of the sugar factories with the production or manufacture of sugar or with the trade and commerce in and the production supply and distribution of sugar
If that was so there was no question whatever of its trenching upon the jurisdiction of the Centre in regard to sugar industry which was a controlled industry within Entry 52 of List I and the UP legislature had jurisdiction to enact the law with regard to sugarcane and had legislative competence to enact the impugned Act
 785 Even the argument of repugnancy was repelled The pith and substance argument also cannot be imported here for the simple reason that when both the Centre as well as the State Legislatures were operating in the concur rent field there was no question of any trespass upon the exclusive jurisdiction vested in the Centre under Entry 52 of List I the only question which survived being whether putting both the pieces of legislation enacted by the Centre and the State Legislature together there was any repugnancy 
This Court further quoted Sulaiman J In Shyamakant Lal to lend strength to this latter limb of reasoning where the learned Judge had laid down the principle of construction in situations of apparent conflict When the question is whether a Provincial legislation is repugnant to all existing Indian Law the onus of showing its repugnancy and the extent to which it is repugnant should be on the party attacking its validity
There ought to be a presumption in favour of its validity and every effort should be made to reconcile them and construe both so as to avoid their being repugnant to each other and care should be taken to see whether the two do not really operate in different fields without encroachment
Further repugnancy must exist in fact and not depend merely on a possibility Tika Ramji notwithstanding
the contention was advanced by Sri Shanti Bhushan that industry was a pervasive expression ambient enough to embrace raw materials used for the industry and so sugar industry as a topic of legislation vested in Parliament exclusive power to legislate on sugarcane supplies to sugar factories and pursuing this expansionist logic
any taxation on supplies of cane to mills would be legislation on sugar industry
Ergo the Purchase Tax Act was a usurpation by the UP Legislature breaching the dykes of article 261 read with entry 52 of List I
He expanded on the theme by urging that any legislation which affected the sugar industry by taxing its raw materials was one with respect to that industry
The Tika Ramji ratio is diametrically opposed to this reasoning and a ruling which has stood the field so long has been followed by another Constitution 786 Bench as late as 1973 in the Kannan Devan case and its force of logic has our deferential assent and cannot be brushed aside by a mere appeal for reconsideration
Shri Shanti Bhushan candidly conceded that if Tika Ramji were good law his submission was still born
We agree Industry as a legislative topic is of large and liberal import true
But what peripherally affects cannot be confuse with what goes to the heart
An acquisition of land for sugar mills or of sugar mills may affect the industry but is not an action in the legislative field forbidden for the States
See the Kannan Devan Hills Produce Company Ltd case supra 
Sales tax on raw materials going to a factory may affect the costing process or the manufacture but is not legislation on industrial process or allied matters
Indeed if the State Legislature cannot go anywhere near measures which may affect topics reserved for Parliament a situation of reduction ad absurdum may be reached
The further refinement made by counsel that here was legislation confined to factories and units only the other buyers of sugarcane being left out and that therefore the Act was in intent and effect one with respect to the sugar industry has no substance either
For one thing the bulk of the consumption of sugarcane was by factories and khandsari units only and the omission of trivial consumers did not mean that the legislation was not on sugarcane purchases generally
Secondly it was open to the Legislature to make an intelligent choice of the persons on whom the tax should be imposed
Here the bulk consumers were selected and the marginal buyers omitted
We discern nothing in this policy which legislates upon the sugar industry
Before we move on to the submission as to the nature of the levy being an excise duty we may dispose of the little contention on alleged discrimination between sugar factories and khandsari units by the imp post of differential rates of tax and more serious contention founded on the breach of Article 14 to the effect that when a purchase tax liability is computed by the weight of the case as distinguished from its monetary value there is an inevitable arbitrariness built into the texture of the Scheme
If either of these submissions has substance the tax in question must fall to the forces of Articles 14 19 and 13 especially article 14 article 19 coming in only consequentially or where expropriation ensues
Article 14 a great right by any canon by its promiscuous forensic misuse despite the Dalmia decision has given the impression of being 787 the last sanctuary of losing litigants
In present case the levy which is uniform on all sugarcane purchases is attacked as ultra vires on the score that the sucrose content of various consignments may vary from place to place the range of variation being of the order of 8 to 10 per cent and yet a uniform levy by weight on these unequals is sanctioned by the Act
Price of cane is commended as the only permissible criterion for purchase tax
The whole case is given away by the very circumstance that substantially the sucrose content is the same for sugarcane in the State the marginal difference being too inconsequential to build a case of discrimination or is blamable on the old machinery
Neither in intent nor in effect is there any discriminatory treatment discernible to the constitutional eye
Price is surely a safe guide but other methods are not necessarily vocational
It depends practical considerations of the Administration traditional practices in the Trade other economic pros and cons enter the verdict but after a judicial generosity is extended to the legislative wisdom if there is writ on the status perversity madness  in the method or gross disparity judicial credulity may snap and the measure may meet with its funeral
Even so taxing statutes have enjoyed more judicial indulgence This Court has uniformly held that classification for taxation and the application of Article 14 in that context must be viewed liberally not meticulously
We must always remember that while the executive and legislative branches are subject to judicial restraint the only check upon our exercise of power is our own sense of self restraint
 In the Murthy Match Works case this Court observed Certain principles which bear upon classification may be mentioned here
It is true that a Ste may classify persons and objects for the purpose of legislation and pass laws for the purpose of obtaining revenue or other objects
Every differentiation is not a discrimination
But classification can be sustained only if it is founded on pertinent and real differences as distinguished from irrelevant and artificial ones
The constitutional standard by which the sufficiency of the differentia which form a valid basis for classification may be measured has been repeatedly stated by the courts
If it rests on a difference which bears a fair and just relation to the object for which it is proposed it is constitutional
To put it differently the means must have nexus with the ends
Even so a large latitude is allowed to the State for classification upon a reasonable basis and what is reasonable 788 is a question of practical details and a variety of factors which the court will be relucant and perhaps ill equipped to investigate
In this imperfect world perfection even in grouping is an ambition hardly even accomplished
In this context we have to remember the relationship between the legislative and judicial departments of government in the determination of the validity of classification
Of course in the last analysis courts possess the power to pronounce on the constitutionality of the acts of the other branches whether a classification is based upon substantial differences or is arbitrary fanciful and consequently illegal
At the same time the question of classification is primarily for legislative judgment and ordinarily does not become a judicial question
A power to classify being extremely broad and based on diverse considerations of executive pragmatism the judicature cannot rush in where even the legislature varily treads
 The further challenge must be clarified here
Counsel submitted that unequals were being treated equally by a uniform purchase tax where equality would have dictated classification and taxation based on sucrose recovery from the cane or its market price
Even here we may notice the observations in Murthy Match Works supra
Another proposition which is equally settled is that merely because there is room for classification it does not follow that legislation without classification is always unconstitutional
The court cannot strike down a law because it has not made the classification which commends to the court as proper
How can the legislative power be said to have been unconstitutionally exercised because within the class a sub classification was reasonable but has not been made
It is well established that the modern State in exercising its sovereign powers of taxation has to deal with complex factors relating to the objects to be taxed the quantum to be levied the conditions subject to which the levy has to be made the social and economic policies which the tax is designed to subserve and what not
In the famous words of Holmes J in Bain Peanut Co vs Finson We must remember that the machinery of Government would not work if it were not allowed a little play in its joints
 789 It is well established that classification is primarily for the legislature and becomes a judicial issue only when the legislation bears on its bosom obvious condemnation by way of caprice or irrationality
We have discussed earlier the history of legislative control the imposition of tax or cess by weight of cane and the acceptance of that methodology all through the decades without demur by the Trade
Moreover this Court has negatived an identical argument in a case from Andhra Pradesh where also a similar levy based on weight of sugarcane is extent in Andhra Sugar Ltd Anr etc
vs State of Andhra Pradesh  orsl The Court there observed Mr Setalvad submitted that there can be no levy of a purchase tax with reference to the tonnage of the cane
We cannot accept this contention
Usually the purchase tax is levied with reference to the price of the goods
But the legislature is competent to levy the tax with reference to the weight of the goods purchased
The contention of Mr Chatterjee that a purchase tax must be levied with reference to the turnover only is equally devoid of merit
Where the purchase tax is levied on a dealer the levy is usually with reference to his turnover which normally means the aggregate of the amounts of purchase prices
But the tax need not necessarily be levied on a dealer or by reference to his turnover
It may be levied on the occupier of a factory by reference to the weight of the goods purchased by him
 Maybe the discussion is brief but the conclusion is sound and we concur
Tax on sale or purchase must be on the occurrence of a taxing event of 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 superstition 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
Supposing a legislature classifies sales tax on the basis of human categories and reduces the rate or exempts the tax in respect of abject destitutes or starving flood 790 victims or notoriously hazardous habitations with respect to necessity of life
Such differentiation cannot be castigated as discrimination out of hand
Of course it is common and commonsense that reliable standard is the price although in regard to customs duties there are still items levied on the nature of the goods rather than its value in money
For the present it is sufficient to state that 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
The High Court has stated that the quantity crushed the sugar produced and the profits earned have a substantial linkage
The quality of cane over the whole of Uttar Pradesh varies over a range of 8 to 10 per cent which if converted to purchase tax may inflict a trivial difference per quintal Moreover for many years past the bulk of the sugar has been absorbed by levy  by the State and in the costing components the State as buyer of sugar has borne the burnt
We have no facts to hold that arbitrary or various burdens are cast because weight not price has been the yardstick for tax
Fine tuning to attain perfect equality may be a fiscal ideal but in the rough and tumble of work a day economics the practical is preferred to the ideal provided glaring caprice of gross disparity does not make the levy arbitrary or frolicsome
Article 14 is not intellectual chess unrelated to actual impact or the wear and tear of life but even handed justice with some play in the joints
Sri Mridul one of the advocates appearing for the appellants made a naive presentation that equality is inflexible as enshrined in Article 14 and so the differential in rate of tax as between sugar mills arid khandsari units is bad
The plea that infants and adults weeklings and strongmen paupers and princes should be put on a par lest legislative validity be imperilled has an elitist merit but sounds like an argumentum ad absurdum in the context of social justice
Unequals cannot be treated equally since mechanical uniformity may become unmitigated injustice
Khandsari units are cottage industries unlike sugar factories and need legislative succour for survival
Their economy justifies State action classifying them as apart from factories and we fail to appreciate the flaw in the scheme on this score
Reference to K T Moopil Nair s case was made at the bar to persuade us that unequals cannot be tortured into equality a vice which stultifies the soul of Article 14 as Anatole France exposed in his sardom epigram that the law in its majestic equality forbids the 791 rich as well as the poor to sleep under bridges to beg in the streets and to steal bread 
We are sure that equality has two sides both important and Moopil Nair adverted to one of the facets
Nothing more can be squeezed out of that case
The inequality of situation in the total conspectus of socio economic facts and human condition must be striking and the unjust equality the rule forces down on unequals must be glaring
In taxation the many criteria of intrinsic intricacy and pragmatic plurality persuade the Court as a realist instrument and respecter of the other two branches to allow considerable free play although never any play for caprice mala fides or cruel recklessness in intent and effect Sri Malhotra counsel for some appellants explored beyond Sri Shanti Bhushan the excise  argument in detail read to us several sections and rules which enables the tax authorities to keep effective track of and control over the sugar in the factories to the extent needed for recovery of the tax
Nothing in these provisions regulates or controls the industry itself nor exacts any levy on the manufacture of sugar or its wide ramifications
Nothing more than prevention of escapement of purchase tax on cane is done and what is done is legitimately incidental to the taxing power
Peripheral similarity between purchase tax and excise levy does not spell essential sameness
Sugarcane tax operates in the neighbourhood of sugar excise but proximity is not identity
The tax is only on purchase of cane not its conversion into sugar
If the miller has his own cane farm and crushes it he his no purchase tax to pay but cannot escape excise duty if any
Again if cane is purchased by a miller and it is later robbed or destroyed before sugar is manufactured the State tax is exigible although excise on production is not
A perspicacious appreciation of the implications of purchase and production
dispels confusion on this issue
To buy raw produce is a step preliminary to manufacture but is not part of manufacture
Maybe in some cases tax on such purchase and duty on manufacture therewith are so close that thin partition do their bounds divide  but how can we obliterate those bounds and telescope the two  All the appeals deserve to be and are dismissed with costs one set


Summary:
These appeals arise from a common demand for tax by the State from a number of Sugar Mills on the purchase of Sugarcane at a rate regulated by weight and not on value
The Cess under the UP Sugarcane Cess Act 1956 was declared ultra vires which resulted in the enactment of Sugarcane Purchase Tax Act 1961
In a fiscal sense the Purchase Tax Act is a reincarnation of the Cess Act but in a legislative sense it is an independent statute with a different source of power impact and structure
The tax in question is a successor to the Cess which was struck down but jurisprudentially the levies are different in character and attributes and constitutionally the imposts derive from different legislative entities and have to be tested by different standards
The Act by Section 3 imposes a rate of tax at the rate of Rs 125 paise per quintal of sugarcane purchased by a factory owner the corresponding rate for a unit being paise 50
Under Section 32 of the Act the charge is on the purchase transaction payable by the owner of the factory or unit on such date at such place and in such instalment as may be prescribed
The appellant had challenged the charge of tax
The High Court dismissed the Writ Petition on the ground that the petitioners have not supplied for any period figures of actual prices paid by them actual quantity of cane crushed actual quantity of juice derived actual quantity of sugar produced and their earnings and therefore it was not possible to take the view that tax by weight was unfair and inequitable
The High Court further held that tax by weight had fairer relation to the production of sugar by earnings of a factory than tax by price and consequently no one could complain that the impugned provisions treated unequals as equals Equal crushing attracts equal tax
On appeal to this Court it was argued on behalf of the appellants that i the scheme and sections of the Act are ultra vires ii the charge of tax is bad because in its true character it is a legislation in respect of Controlled Industry and this power belongs exclusively to Parliament under Entry 52 of List I Seventh Schedule of the Constitution iii there is discrimination between sugar factories and khandsari units by the impost of differential rates of tax and liability is computed by the weight of the cane as distinguished from its monetary value there is an inevitable arbitrariness built into the texture of the scheme and iv the Act masked as Purchase Tax in essence asks for an Excise Duty on sugar manufacture and is therefore invalid as colourable legislation
770  HELD i This Court cannot lose sight of the all India impact when the law is laid down under Article 141 of the Constitution and judgments of this Court are decisional between litigants but declaratory for the nation
The scheme of the Act is simple and workable
It is undisputed that sugar industry is a controlled industry within the meaning of Entry 52 List I of Schedule and therefore the legislative power of Parliament covers enactments with regard to industries having regard to Article 2461 of the Constitution
Entry 54 in List II of the Seventh Schedule empowers the State legislature to legislate for taxes on purchase of goods and so if the Act under consideration is attracted in pith and substance by this entry legislative incompetence cannot void the Act
774 E F 781 G H 782 A ii The contention that the charge of tax is bad because in its true character it is a legislation in respect of controlled industry and which power belongs exclusively to Parliament under Entry 52 of List I has no force
Tika Ram s case deals with the identical question of controlled industry  vis a vis UP Legislation regulating Sugarcane supply and purchase under the UP Sugarcane Regulation of Supply and Purchase Act 1953
That statute reserved or assigned to sugar factories specified cane purchasing centres for the purpose
This regimentation of sugarcane growers and regulation of cane supplies to specified millers by a State enactment was attached on the precise ground that sugar being a controlled industry any enactment affecting such industry including the regulation of supplies of raw materials thereto was taboo
The plea was dismissed as specious and the appeals under this Court s consideration are a fortiori cases where the rejection of the contention can be more confidently made
782 C F H 783 A Industry as a legislative topic has a large and liberal import true
But what peripherally affects cannot be confused with what goes to the heart
An acquisition of land for sugar mills or of sugar mills may affect the industry but is not an action in the legislative field forbidden for the States
Sales tax on raw materials going to a factory may affect the costing process of the manufacture but is not legislation on industrial process or allied matters
Indeed if the State Legislature cannot go anywhere near measures which may affect topics reserved for Parliament a situation of reductio ad absurdum may be reached
780 B C Ch
Tikka Ram s case  Shyamkant Lal  Kanan Devan Hills Produce Company Ltd followed
iii The contention that there is discrimination between sugar factories and khandsari units by the impost of differential rates of tax and that when a purchase tax liability is computed by the weight of the cane as distinguished from its monetary value there is an inevitable arbitrariness built into the texture of the scheme has no force
Neither in intent nor in effect is there any discriminatory treatment discernible to the constitutional eye
Price is surely a safe guide but other methods are not necessarily vocational
It depends Practical considerations of the Administration
traditional
practices in the Trade
Other economic pros and cons enter the verdict but after a judicial generosity is extended to the legislative wisdom if there is writ on the statute perversity madness  in the method or gross disparity judicial credulity may snap and the measure may meet with its funeral
This Court has uniformly held that classi 771 fication for taxation and the application of Article 14 in that context must be viewed liberally not meticulously
786 F H 787 B D Murthy Match Works case   applied
It is well established that classification is primarily for the legislature and becomes a judicial issue only when the legislation bears on its bosom obvious condemnation by way of caprice or irrationality
789 A iv The contention that the Act masked as Purchase tax in essence asks for an Excise Duty on sugar manufacture and is therefore invalid as colourable legislation has no force
Tax on sale of purchase must be on the occurrence of a taxing event of sale transaction
Beyond that is left to the free play of the legislature subject of course to the contra indication about capricious arbitrary or irrational features
It is a superstition cultivated by familiarity to consider that all sales tax must necessarily have nexus with the price of the commodity
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
Supposing a legislature classifies sales tax on the basis of human categories and reduces the rate or exempts the tax in respect of abject desuetudes or starving flood victims or notoriously hazardous habitations with respect lo necessity of life
Such differentiation cannot be castigated as discrimination out of hand
It is common and commonsense that reliable stand is the price although in regard to customs duties there are still items levied on the nature of the goods rather than its value in money
For the present it is sufficient to state that 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
Unequals cannot be treated equally since mechanical uniformity may become unmitigated injustice
Khandsari units are cottage industries unlike sugar factories and need legislative succor for survival
Their economy justifies State action classifying them as apart from factories and we fail to appreciate the flaw in the scheme on this score
789 F H 790 A B F G Nothing more than prevention of escapement of purchase tax on cane is done and what is done is legitimately incidental to the taxing power
Peripheral similarity between purchase tax and excise levy does not spell essential sameness
Sugarcane tax operates in the neighborhood of sugar excise but proximity is not identity
The tax is only on purchase of cane not its conversion into sugar
If the miller has his own cane farm and crushes it he has no purchase tax to pay but cannot escape excise duty if any
Again if cane is purchased by a miller and it is later robbed or destroyed before sugar is manufactured the State tax is exigible although excise on production is not
A perspicacious appreciation of the implications of purchase and production dispels confusion on this issue
To buy new produce is a step preliminary to manufacture but is not part of manufacture
791 D F