# M/s. S. K. G. SUGAR LTD v. STATE OF BIHAR AND ORS

- **Citation:** [1975] 1 S.C.R. 312
- **Court:** Supreme Court of India
- **Decided:** 1974-04-26
- **Case number:** Writ Petition No. 370 of 1969
- **Bench:** A. N. Ray, K. K. Mathew, A. Alagiriswamj, P. K. Goswami, R. S. Sarkaria
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-s-k-g-sugar-ltd-v-state-of-bihar-and-ors-6331
- **Pages:** 9

## Headnote

B
J"
T_he Bihar Sugar 1:ac~ori~s Control Act, (7 of 1937)-Provisions re : production, s1;1pply and d~s~nbut1on of sugar held to be in con/Uc/ with provisions
aj Essential Commod1fles Act (10 of 1955)-Validity of taxing provisions of
Bihar Act, if affected-President's Act 8 of 1969-Efject of.
~he Bihar _Sugar Factories Control. Act, (7. of 1937), was a temporary Act
the hfe of which was extended from time to time and Bihar Act 7 of 1955 reenacted. it permanently.
Bihar Act 17 of 1963 substituted in the Act, with retrospective effect. from January .1. 1?62, a new s. 29, which empowered the State
G~vernmen! ~o impose by notification cess and tax on sugarcane. The Constitutional vahdity of the Act was cha·lleng,ed and the Hicrh Court held the Act unconsti_tutional and invalid.
Who~n the matter came up o~ appeal to this Court (A.
K. Jam"s case ([1969] 2 S.C.C. 340) it was held th&t if Bihar Act of 1937 provicks
anything contrary to rule 3(3) of the Sugar Cane (Control) Order 1955 issued
under the Essential Comn1odities Act 1955 it must be held to hav~ b-een' altered
as per Art. 372 of the Constitution.
In January, 1968, an Ordinance was promulgated. by the Governor of Bihar, and s. 35 of the Ordinance corresponded
to s. 29 inserted by the 1963-Act. Sec. 50 of the Ordinance repealed Bihar Act
7 of 1937, and s. 50(2) contained a saving and validating provfaion \~1ith regard
to anything done, tax i111posed or liability incurred etc. under the Repealed .Act.
A notification under s. 35 of th~ Ordinance imposing a tax was issued by the
Government in February, 1968.
Suc1:essive Ordinances thereafter promulgated
by the Governor
validated the provisions
or anything
done thereunder.
In
August 1969, during th~ President's Rule, the Bihar Sugar Cane (Regulation of
Supply and Purchase) Act, (Presidents Act 8 of 1969) was passed. sec. 66(1) of
the Act provided that notwithstanding any judgment, decree or order by any court
all cesses and taxes imposed or collected under any State law before the commencement of the Act shall be deemd to have been validly imposed etc., as if
the Act had been in force at a1l material times.
With respect to certain purchases of su_gar cane made by the petitioner in
January 1968 the respondent State sent requisitions to the petitioner for realisation of cane cess and purchase tax due under the notification under Bihar Act 7
c
D
E
of 1937. The petitioner chaUenged the imposition in a petition under Art. 32,
F
on the ground that the imposition was without the authority of law.
Dismissing the petition,
HELD : The validity of the impugned notification and the cess and tax imposed thereunder has to ~ ju.dged with referen.ce t? ~uccessive Ordinanc~s a.nd
the President's Act.
By vir~ue of the 1legal fiction introduced by the validating
provision ins. 66(1) of the President's ~ct, the impugned .notification will be
deemed to have been issued not necessanly under the Ordinance of 1968 but
under the President's Act itself deriving its legal force and validity directly from
the latter.
I
(1 )_The Bihar Ordinance of 1968 was !within the competence of the Governor
under Art. 213 of the Constitution. The two conditions required by that A.rticle
are satisfied in the present case.
The Sthte legislature was not in session nod
the Governor was satisfied as to the necessity of promulgating the ordinance. The
Governor is the sole judge as to the existence of the necessary
circum5tances
and his satisfaction is not a justiciable mf,tter.
State of'Punjab v. Sat Pal Dang, [1969~ I S.C.R. 633, followed.
(2) (i) The taxing pr?visions of the Bih?r Ac;t o~ 1937 never lost t~eir. vali~
dity and continued to be 10 force.
The noufication issued under the B1ha1 Act
(;
H
....
•
r
'
i
'ft
A
..
B
c
D
•
E
F
•
G
H
s KG SUGAR LTD. v. BIBAR (Sarkaria., J.)
313
of 1937 and continued under the latter Acts imposing the taxes or cesses also
remained operative during the period in question till it was replaced by another
notification under the Ordinance of 19

## Text

312
M/s. S. K. G. SUGAR LTD.
A
v.
STATE OF BIHAR AND ORS.
April 26, 1974
(A. N. RAY, C. J., K. K. MATHEW, A. ALAGIRISWAMJ, P. K. GOSWAMI
AND R. S. SARKARIA, JJ.)
B
J"
T_he Bihar Sugar 1:ac~ori~s Control Act, (7 of 1937)-Provisions re : production, s1;1pply and d~s~nbut1on of sugar held to be in con/Uc/ with provisions
aj Essential Commod1fles Act (10 of 1955)-Validity of taxing provisions of
Bihar Act, if affected-President's Act 8 of 1969-Efject of.
~he Bihar _Sugar Factories Control. Act, (7. of 1937), was a temporary Act
the hfe of which was extended from time to time and Bihar Act 7 of 1955 reenacted. it permanently.
Bihar Act 17 of 1963 substituted in the Act, with retrospective effect. from January .1. 1?62, a new s. 29, which empowered the State
G~vernmen! ~o impose by notification cess and tax on sugarcane. The Constitutional vahdity of the Act was cha·lleng,ed and the Hicrh Court held the Act unconsti_tutional and invalid.
Who~n the matter came up o~ appeal to this Court (A.
K. Jam"s case ([1969] 2 S.C.C. 340) it was held th&t if Bihar Act of 1937 provicks
anything contrary to rule 3(3) of the Sugar Cane (Control) Order 1955 issued
under the Essential Comn1odities Act 1955 it must be held to hav~ b-een' altered
as per Art. 372 of the Constitution.
In January, 1968, an Ordinance was promulgated. by the Governor of Bihar, and s. 35 of the Ordinance corresponded
to s. 29 inserted by the 1963-Act. Sec. 50 of the Ordinance repealed Bihar Act
7 of 1937, and s. 50(2) contained a saving and validating provfaion \~1ith regard
to anything done, tax i111posed or liability incurred etc. under the Repealed .Act.
A notification under s. 35 of th~ Ordinance imposing a tax was issued by the
Government in February, 1968.
Suc1:essive Ordinances thereafter promulgated
by the Governor
validated the provisions
or anything
done thereunder.
In
August 1969, during th~ President's Rule, the Bihar Sugar Cane (Regulation of
Supply and Purchase) Act, (Presidents Act 8 of 1969) was passed. sec. 66(1) of
the Act provided that notwithstanding any judgment, decree or order by any court
all cesses and taxes imposed or collected under any State law before the commencement of the Act shall be deemd to have been validly imposed etc., as if
the Act had been in force at a1l material times.
With respect to certain purchases of su_gar cane made by the petitioner in
January 1968 the respondent State sent requisitions to the petitioner for realisation of cane cess and purchase tax due under the notification under Bihar Act 7
c
D
E
of 1937. The petitioner chaUenged the imposition in a petition under Art. 32,
F
on the ground that the imposition was without the authority of law.
Dismissing the petition,
HELD : The validity of the impugned notification and the cess and tax imposed thereunder has to ~ ju.dged with referen.ce t? ~uccessive Ordinanc~s a.nd
the President's Act.
By vir~ue of the 1legal fiction introduced by the validating
provision ins. 66(1) of the President's ~ct, the impugned .notification will be
deemed to have been issued not necessanly under the Ordinance of 1968 but
under the President's Act itself deriving its legal force and validity directly from
the latter.
I
(1 )_The Bihar Ordinance of 1968 was !within the competence of the Governor
under Art. 213 of the Constitution. The two conditions required by that A.rticle
are satisfied in the present case.
The Sthte legislature was not in session nod
the Governor was satisfied as to the necessity of promulgating the ordinance. The
Governor is the sole judge as to the existence of the necessary
circum5tances
and his satisfaction is not a justiciable mf,tter.
State of'Punjab v. Sat Pal Dang, [1969~ I S.C.R. 633, followed.
(2) (i) The taxing pr?visions of the Bih?r Ac;t o~ 1937 never lost t~eir. vali~
dity and continued to be 10 force.
The noufication issued under the B1ha1 Act
(;
H
....
•
r
'
i
'ft
A
..
B
c
D
•
E
F
•
G
H
s KG SUGAR LTD. v. BIBAR (Sarkaria., J.)
313
of 1937 and continued under the latter Acts imposing the taxes or cesses also
remained operative during the period in question till it was replaced by another
notification under the Ordinance of 1968. lt is therefore incorrect to say that
there was any period during whi0.::h the tax was levied without the authority of
Jaw.
The taxing provisions of the Bihar Act were neither rendered inoperative
by Art. 254(1), nor repealed or altered by the competent legislature \Vithin the
contemplation of Art. 372 of the Constitution.
The Act of 1937 dealt \vith
!Wo distinct and ·separate matters, namely, (a) the reg11lation of production, supply and distribution of sugar cane, and (b) imposition and collection of cesses
and taxes in respect of sugar cane.
Matter (a) was referable to Entry 33 of the
Concurrent List and matter (b) to Entry 52 of the State List.
The Essential
Commodities Act (Central Act of 1955) related to matter (b) only. In the light
of Art. 372 the Bihar Act would be deemed to have been repealed \Vith effect
from the date on which the Central Act came into force (April 1, 1955) only
in so far as it controlled or authorised control of production supply and distribution of, and trade and commerce in sugar cane. The taxing provision~ of the
Bihar Act were not in any way repugnant to the Central Act or any other law
passed by Parliament.
[317C-318D; 3!9FJ
(ii) The ob~crvations of the H;g:h Court whil·! striking down the A.ct. though
very widely expressed, must b.: confined to the precise points for determination
that arose before it.
The High Court was not concerned with the validity of
the taxing provisions of the Bihar Act. The qu~stion before the High Court \Vas
the conflict bet\veen the Essential Commodities Act and the Sugar Control Order,
1955, issued thereunder on the one hand, and the Bihar Act of 1937 on the other,
because the regulation of price of sugarcane was expressly dealt \vith by
the
Bihar Act.
Thus only that part of the Bihar Act came UJ for cons:der:1tion
which related to Entry 33 of the Concurrent List and that part could be said to
be inconsistent '.Vith the Central A.ct, but no question of the validity of the taxing
prO\'isions of the Bihar Act aro~e before the High Col'.rt.
[319'ARDJ
(iii) The m<itters rdatable to Entry 33 of the Concurrent List in the
Act
were severable from the other provisions of the Act. There was no competition
or collision between the taxing provisions of the Bihar Act and those of th:! Central Act.
The two existed side by side and each remains operative in its own
distinct field 'vithont .interfering with the other.
[319DRE1
(iv) A Legislature has the power to make a law imposing a tax: r~trospec
tively or validate defective laws by subsequent legislation or even past unlawful
coJlections, the pow·.!r of validation be-ing ancillary to and included in the rower
to legis1ate on a particular subject.
[320C]
(vi) The language of the validating provisions of the President':!! Act are of
Wide amplitude.. and even if it is assumed that the Essential Commodities Act
had cast any doubt on or introduced any infirmity in the taxing provisions of
the State Act, the same had been removed or cured by s. 66 ( 1) of the President's
Act which not only nullify the effect if any, of the judgment of the 1-Iigh Court
on the taxing provisions of the Act of 1937 but also validates the imposition,
assessment or collection of all cesses and taxes imposed under any State law
with retrospective effect as if the President's Act had been in force at all mateR
rial tin1es including the period in ques!ion, that is January, 1968.
[3200-E]
ORIGINAL JURISDICTION : Writ Petition No. 370 of 1969.
Under Article 3 2 of the Constitution of India.
P. K. Chatt~rjee, N. H. Hingorani and Rathin Das, for the appdlant.
L. N. Sinha, Solicitor General, R. K. Garg, S. C. Agarwal and S. S.
Bhatnagar, for respondent no. 1
The Judgm~nt of the Court was delivered by
SARKARIA, J.-ln this petition under Article 32 Of the C.oi:stitution,
the petitioner, a Private Ltd. Company, challenges the vahd1ty of the
314
SUPREME COURT REPORTS
[1975] 1 S.C.R.
Cane Cess and Purchase tax levied on it for the month of January,
1968. Respondents 1, 2 and 3 are the State of Bihar, Certificate Officer
and the Collector of Champaran, respectively.
The facts are these :
There was in force in the State of Bihar a pre-Constitution Jaw
known as Bihar Sugar Factories Control Act, 1937 (Act 7 of 1937).
By notification issued under s. 29 of that Act, cane cess and purchase
tax were being levied in respect of sugar cane intended to be used or
used in a sugar factory. It was a temporary enactment.
Originally,
it was to remain in force until June 30, 1941. But its life was extended
from time to time by different amending Acts. The last extension was
made by Bihar Act 6 of 1950 upto January 30, 1955, which came into
force on January 9, 1950 when it was published in the Bihar Government Gazette. Thereafter, Bihar Act 7 of 1955 which came into force
on March 30,-1955, amended s. 1(3) of Act 6 of 1950 extending the
life of Act 7 of 1937, indefinitely beyond June 30, 1955. In the meantime, the Essential Commodities Act No. 10 of 1955 (hereina(ter called
the Central Act) was enacted by Parliament. After the assent of the
President, it came into force on April 1, 1955. Section 16(1) (b) of
the Central Act expressly repealed "any other law in force in any State
immediately before the commencement of this Act in so far as such
law controls or authorises the control of the production, supply and
distribution of, and trade and commerce in, any essential commodity."
Bihar Act 17 of 1963 substituted in Act 7 of 193 7 with retrospective
effect from January 1, 1962, this new Section 29 :
"Cess and tax on cane-The State Government may by
notification impose-
( a) a cess not exceeding fifty-one naya paise per quintal
on the entry of sugarcane into a local area, specified
in such notification, for consumption, use or sale
therein;
(b) a tax not exceeding fifty-one naya paisc per quintal on
the purchase of sugarcane by or on behalf of the
occupier gf a factory;
Provided that such tax shall not be payable in respect of
sugarcane for which a cess imposed under clause (a)
is
payable."
The Government of Bihar, acting under this Section, issued and
published a notification on October 21, 1963, in the Gazette whereby
cane cess and purchase tax at certain rates were levied in the local
areas specified in the notification.
..
The constitutional validity of Bihar Act 7 of 1937 and the rules
framed thereunder was challenged by a writ petition in the High Court
of Patna which by its judgment, dated July 4, 1966, in A. K. fain and
anr. v. Union of India,(!) held Act 7' of 1937 and the rules framed
thereunder to be unconstitutional and invalid. On appeal against that
(!) 1968 Pat. Law Journal Reports p. 179 .
A
B
,..
c
D
E
•
F
G
•
H
A
B
c
D
E
F
•
G
•
H
s KG SUGAR LTD, v. B!HAR (Sarkaria, !.)
315
judgment this Court in A. K. Jain and others v. Union of India and
ors.(1) held that if the Bihar Act 7 of 1937 provides anything contrary
to Rule 3(3) of the Sugarcane (Control) Order 1955, issued under
the Central Act, it must be held to have been altered in view of Art.
372 of the Constitution. The Patna High Court followed its earlier
decision in A. K. Jain's case, iu.JJugauli Sugar Works Pvt. Ltd. v. Co·
operative Development and Cane Marketing Union(') and in Be/sand
Sugar Co. Ltd. v. Thakur Girja Nandan Singh(").
After Bihar Act 7 of 1937 was struck down by the High Court, no
legislative measures were taken until January 1,2, 1968 when Ordinance
No. 3 was promulgated by the Governor of Bihar with instructions of
the President.
Section 35 of the Ordinance corresponded to s.29 inserted in Act
7 of 1937 by the Amending Act of 1963, excepting that the maximum
rate of the cess/tax leviable was fixed at 67 paise per quintal.
Section 50 of the Ordinance repealed the Bihar Act 7 of 1937.
Its sub-section (2) contained a saving and validating provision with
regard to anything done, tax imposed or liability incurred etc. under
the Repealed Act 7 of 1937.
A notification under s. 35 imposing a tax under this Ordinance 3 of
1968, however, was issued by the Government on February ! 6, 1968.
Ordinance No. 3 lapsed on February 28, 1968, on which date, another
Ordinance (No. 6 of 1968) was promulgated. Sub-sections (I) and
(2) of s. 35 of this Ordinance were the same as those of the preceding
Ordinance excepting that a second proviso to sub-s. (!) was added in
these terms :
"Provided further that any tax imposed by the State
Government in respect of the crushing year 1967-68 under
the provisions of the Bihar Sugarcane (Regulation of supply
and purchase) Ordinance 1968 (Bihar Ordinance No. 3 of
1968) shall be deemed to have been effectively imposed
from the date of enforcement of the Ordinance."
By s. 35 (3) Ordinance 3 of 1968 was repealed. But s. 50 saved
and validated everything done under Act 7 of 193 7 and the repealed
Ordinance.
On July 4, 1968, the Governor promulgated Bihar Ordinance 4
of 1969. It provided that except its ss. 1 and 52 which came into
force at once, the remaining provisions "shall be deemed to have come
into force from the 25th June 1969". Section 49 reproduced the taxing
provisions contained in its preceding Ordinance. Section 66 contained
validating provisions analogous to those
found
in
the
preceding
Ordinance :
" ... Notwithstanding any judgment, decree or order of
any court, all cesses and taxes imposed, assessed or collected
- -------
(!) [1969] 2 s.c.c. 340.
(2) Misc. J. Case No. 1344 of 1964 decided by Patna High Court on July 29
1966.
(3) AIR 1969 Pat. 8.
316
SUPREME COURT REPORTS
[1975] 1 S.C.R.
or purporting to have been imposed, assessed or collected
A
under any State Law, before the 25th June, 1968, shall be
deemed to have been validly imposed, assessed or collected
in accordance with law as if this Ordinance had been in force
at all material times when such cess or tax was
imposed,
assessed or collected, and accordingly .... "
On August 31, 1969 during the President's Rule, Bihar Sugarcane
(Regulation of Supply and Purchase) Act, 1969 (President's Act 8
of 1969) was passed. Section 66(1) of that Act provided:
"Notwithstanding any judgment, decree or order of any
court, all cesses and taxes imposed, assessed or collected or
purporting to have been imposed, assessed or' collected under
any State law, before the commencement of this Act, shall
be deemed to have been validly imposed, assessed or collected
in accordance with law as if this Act had been in force at
all material times
when such
cess or tax was
imposed,
assessed or collected and accordingly .... "
B
c
In January 1968, the petitioner purchased sugarcane for production
of sugar in its factory from the sugarcane growers of the area allotted
to its factory on payment of the price fixed by the State Government.
D
Respondent 1 sent four· requisitions for realization of cane cess and
purchase tax said to be due under the Bihar Act 7 of 1937. The
demand notices were issued under s.5 of the Bihar and Orissa Public
Demands Recovery Act 4 of 1914. One of such notices was a demand
of Rs. l,71,543/56P. alleged to be cess/purchase tax dues for January,
1968.
The petitioner challenges these impositions and consequent
requisitions and demands on several grounds out of which the following
have been canvassed before us :
(!) Bihar Act 7 of 1937 and Act 7 of 1955 which attempted
to make it permanent and the notification issued thereunder imposing the cess and tax in question, were declared
unconstitutional and invalid by the Patna High Court in
A. K. Jain's case (supra) on July 4, 1966 and that decision
was affirmed by this Court in appeal. There was no Jaw
in force authorising the levy of the cess/tax liil January
12, 1968 when Bihar Ordinance 6 of 1968 was promulgated;
(2)_ The 2nd proviso to s.35 of Bihar Ordinance 6 of 1968 is
invalid. Section 35 of Ordinance 3 and 6 of ! 968 per se
did not impose any tax.
It only empowered the
State
Government to do so by notification, and that too prospectively. The second proviso cannot operate to give
retrospective effect to the notification, dated February 16,
1968. Reference has been made to Hukam Chand etc. v.
Union of India and ors.(1)
(I) [19731 1 S.C.R. 896.
E.
F
G
H
r
•
)
A
B
c
D
E
F
•
G
H
s KG SUGAR LTD, v. BIHAR (Sarkaria, !.)
317
(3) The second proviso to s.35 of Ordinance 6 of 1968 antedated the imposition of tax from January 12, 1968, lhe
date of promulgation of the first Ordinance 3 of
1968.
Assuming this proviso to be valid, there was no notification
imposing the tax, in existence for the period from January
1, 1968 to January 11, 1968. Any tax or cess levied for
this uneovered period was without the authority of law :
( 4) The Bihar Ordinance 3 of 1968 was beyond the competence of the Governor under Article 213 of the Constitution because there was no urgency for the promulgation
of the Ordinance and the power was exercised ma/afide'-.
We shall take the last contention first. Barring those cases where
tl1e Governor has to obtain previous instruction from the President,
the Governor's power to promulgate Ordinances under Art. 213
is
_ subject to two conditions, namely :
(a) that the house or houses, as the case may be, of
the State Legislature must not be in-session when the
Ordinance is issued; and
(bl the Governor must be satisfied as to the existence
of circumstances which render it necessary for him
take immediate action.
There is no dispute with regard to the satisfaction of the first cbndition.
Existence of condition (b) only is questioned. It is however
well-settled that the necessity of immediate action and of promulgating
an Ordinance is a matter purely for the subjective satisfaction of the
Governor. He is the sole Judge as to the existence of the circumstances
necessitating the making of an Ordinance. His satisfaction is not a
justiciable matter. It cannot be questioned on ground of error of judgment or otherwise in court-sec State of Punjab v. Sat Pal Dang(!)
The contention is devoid of merit.
Moreover, after the coming into
force of the President's Act 8 of 1969, this question had become merely
academic.
This takes us to the other contentions. They
are
interlinked.
To us, none of them appears to be well-founded.
The first question is, whether alter the
commencement of the
Central Act on April 1, 1955, the whole of Act 7 of 1937 became
'void' and inoperative ? The question further resolves itself into the
issue : To what extent this pre-Constitution Act 7 of 1937 was repugnant to the Central Act, and, in consequence
stood
repealed
or
altered?
Act 7 of 1937 dealt with two distinct and s<parate matters viz., (a)
the regulation of production, supply and distribution of sugar-cane, and
(b) imposition and collection of cesses and taxes in respect of sugarcune.
Matter (a) was referable to Entry 33 of the Concurrent List (III)
and matter (b) to Entry 52 of the State List (IJ) in the 7th Schedule
of the Constitution which corresponds to Entry 49 of the Provincial
Legislative List (List II) of the Government of India Act, 1935. The
Central Act 10 of 1955 related to matter (b) only. Bihar Act 7 cf
(1) [1969] I S.C.R. 633.
318
SUPREME COURT REPORTS
[1975] 1 s.c.R.
1937 and Bihar Act 7 of 1955 which purported to reenact the former
A •
permanently, in so far as it provided for regulation of production, supply
and distribution of sugarcane-a matter falling under Entry 33 of the
Concurrent List- was repugnant to the Central Act 10 of 1955, and,
in view of Article 254 of the Constitution, to the extent of that
repugnancy or inconsistency would be void. In the light of Article 3 72
of the Constitution read with s. 16 (1) (b) of the Central Act, the Bihar
Act would be deemed to have been repealed with effect from April 1,
B
1955, only in so far as, it controlled or authorised the control of the
production, supply and distribution of, and l'rade and commerce in
sugar-cane. The taxing provisions of the Bihar Act were not in any
way repugnant to the Central Act or any other law passed by Parliament. Those · taxing provisions, as already noticed, fall under Entry
52, List II and that was why s.16 of the Central Act confined the repeal
only to those provisions which were covered by Entry 33, List III. The
C
taxing provisions of the Bihar Act, therefore, never lost their validity
and continued to be in force. The notification issued under the Bihar
Acts of 1937, (and continued under the Acts of 1955 and
1963),
imposing the tax or cess, also remained operative during the period in
question, till it was replaced by another notification issued ot1 January
12, 1968 under the Ordinance 3 of 1968. It is therefore, incorrect
to say that there was any period, much less in January 1968, during
D
which the tax was levied without the authority of law.
.
Mr. Chatt~rjce, however, contended that the Patna High Court had
10 A. K. Jams case (supra) struck down the Bihar Act 7 of 1937 in
its entirety and that decision was affirmed in appeal by this Court. In
this connection he has invited our attention to the observations of the
High Court in A. K. Jain's case and in Be/sand Sugar Company's case
E
(supra).
The observations in question in A. K. Jain's case art :
"Assuming here that Bihar Act 7 of 1937 is severable
and can be bifurcated into two parts, one dealing with the
control of sugar industry, a topic falling under Entry 52 of
List I and the other dealing with sugarcane, a topic, as held
F
by me above, falling under Entry 33 of List III, it follows that
the Central Parliament was competent under Article 246 to
repeal law in relation to sugarcane and thus the Bihar Act
and the Rules in relation to sugarcane stood repealed and
became unenforceable in accordance with the provisions of
Article 3 72 of the Constitution."
, 1
The above remarks were re-echoed hy the same High Court in
G
r
Belsand Suiiar Co's case thus :
''The State Legislatnre .......... was not competent to
•
enact. ..... and to extend the life of even the severable part
of Bihar Act 7 of 1937, without taking recourse to the procedure prescribed in clause (2) of Article 254 of the Constitution, but, unfortunately, Bihar Act 7 of 1955
did
not
H
receive the assent of the President, and, therefore, being repugnant to certain provisions of the Central Act, it could not
have any effect, and it was void on this ground as well."
i
•
-,-
A
B
c
D
E
F
H
s KG SUGAR LTD. V, BlHAR (Sarkaria, !.)
319
The observations extra_cted above, tl]ough very widely expressed,
must be confined to the precise points for determination that had arisen
in those cases. These observations were apparently made in the context
of those matters in the Bihar Act which were either referable to Entry
52, Union List or Entry 33, Concurrent List. In neither oE those cases,
the High Court, was concerned with the validity of the taxing provisions
of the Bihar Act, covered by Entry 52 of the State List. In A. K. Jain's
case (supra), the only question that fell for determination was, whether
Sections 3 and 7 of the Central Act 10 of 1955 and Clause 3 (iii) of the
Sugar Control Order 1955 issued under that Act, were valid and within
the legislative competence of Parliament.
It was contended that the
regulation of price of sugarcane was expressly dealt with by Bihar Act
7 of 1937 and the action taken against the petitioners by the police and
the Magistrate was without jurisdiction being in contrav_ention of Bihar
Act and the rules framed thereunder. Thus only that part of the Bihar
Act came up for consideration which related to Entry 33 of the Concurrent List, and which only could be said to be inconsistent with the
Central Act. No question of the validity of the taxing provisions of the
Bihar Act arose in that case.
Even the High Court found that the matters relatable to Entry 33,
Concurrent List were severable from the other provisions of the Act.
Before us also, it has not been seriously urged that the taxing provisions
of the Bihar Act were so interwoven and inextricably connected with
the provisions referable to Entry 33 List Hi, that the whole Act would
stand or fall together. There was no competition or collision between
the taxing provisions of the Bihar Act and those of the Central Act.
The two exist side by side and each remains operative in its own distinct
field without interfering with the other.
It will bear repetition that the taxing provisions of the Bihar Act
were advisedly kept out of the purview of s. 16(1) (b) of the Cen:ral
Act which repealed the State laws only in so far as they controlled or
authorised control of the production, supply and distribution of sugarcane.
The taxing provisions of the Bihar Act therefore were neither
rendered inoperative by Article 254(1), nor repealed or altered by the
competent Legislature within the contemplation of Article 372 of the
Constitution.
It is important to recall that when A. K. Jain's case came up in
appeal, this Court, did not endorse the sweeping proposition sought to
be spelled out by the petitioners from the wide language used by the
High Court in the extracts above. The only reference to the Bihar Act,
made by this Court, was as follows :
" ..... Sub-rule (3) of Rule (3) specifically provides that
unless there is an agreement in writing to the contrary between the parties the purchaser shall pay to the seller the price
of the sugarcane purchased within 14 days from the date of
the delivery of the sugarcane.
This is a specific mandate.
If the Bihar Act provides anything to the contrary the same
must be held to have been altered in view of Article 372 of
the Constitution ... " (emphasis added)
320
SUPREME COURT REPORT
[1975] 1 S.C.R.
Since the taxing provisions of the Bihar Act do not contain "anything contrary" to the Central Act, they could not in the light oi the
observations of this Court, be held to have been altered in view
of
Article 3 72.
Indeed, as pointed out already, the Court in that case
was not at all concerned with the taxing provisions of the Bihar Act.
In view of the above discussion the conclusion is inescapable that
the taxing provisions of the Bihar Act 7 of
193 7,
as
re-enacted
permanently by Bihar Act 7 of 1955, continued to be operative and
validly in force at all material times, even after the enactment of the
Central Act.
Further, the successive Ordinances promulgated by the
Governor validated by way of abundant caution those taxing provisions
or anything done thereunder.
lt is well-settled that within its competence, a Legislature has the
power to make a law imposing a tax retrospectively or validate defective
laws by subsequent legislation, or even past unlawful collections, the
power of validation being ancillary to and included in the power to
legislate on a particular subject.
We have extracted earlier in this judgment, such validating provisions in s. 66 of the Bihar Ordinance 4 of 1969 and s. 66(1) of the
President's Act 8 of 1969. The language of these provisions is of the
widest amplitude; and, even if it is assumed that the Central Act had
cast any doubt on or introduced any infirmity in the taxing provisions
of the State Act, the same had been removed or cured bys. 66(1) of
the President's Act which not only nullifies the effect, if any, of the
judgment of the High Court on the taxing provisions of the Bihar Act
7 of 1937, but also validates the imposition, assessment or collection
of all cesses and taxes imposed under any state law with retrospective
effect as if the President's Act had been in force at all material times
including the period in question i.e. of January 1968.
The validity of the impugned notification and the cess and tax
imposed thereunder has to be judged with reference to the successive
Ordinances and finally to the President's Act. By virtue of the legal
fiction introduced by the validating provision ins. 66(1), the impugned
notification will be deemed to have been issued not necessarily under
the Ordi1iance No. 3 of 1968 but under the President's Act, i\self,
deriving its legal force and validity directly from the latter.
For the foregoing reasons, we negative the contentions
of
the
petitioners and dismiss this petition with costs.
V.P.S.
Petition dismissed.
-
A
B
c
D
E
F
G