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PETITIONER: GANGA SUGAR CO.. LTD., ETC.

       Vs.

RESPONDENT: STATE OF U.P. & OTHERS ETC.

DATE OF JUDGMENT20/09/1979

BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. CHANDRACHUD, Y.V. ((CJ) UNTWALIA, N.L. SHINGAL, P.N. KOSHAL, A.D.

CITATION:  1980 AIR  286            1980 SCR  (1) 769  1980 SCC  (1) 223  CITATOR INFO :  R          1984 SC 981  (8)  R          1989 SC 100  (32)  R          1989 SC1933  (25)  F          1990 SC 913  (26)

ACT:      U.P. Sugarcane  Purchase Tax  Act, 1961 Sections 3, 3A, 3B-Validity of.      Constitution of  India-Sales  Tax  Entry  54  List  11- Drafting of  legislation on  "Controlled  Industry"  by  the State, Validity of-

HEADNOTE:      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  U.P.  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. 1.25 paise per quintal of sugarcane purchased by  a factory  owner, the corresponding rate for a "unit" being  paise 50.  Under Section  3(2) 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

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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 246(1) 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  U.P. Legislation  regulating  Sugarcane supply and  purchase under the U.P. 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

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reached. [780 B-C]      Ch. Tikka  Ram’s case  [1956] SCR  393.  Shyamkant  Lal [1956] SCR  427, Kanan  Devan  Hills  Produce  Company  Ltd. [1973] 1 S.C.R. 357 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, [1974] 3 S.C.R. 121, 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]

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    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]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: 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. 5271/71. 772              Civil Appeal Nos. 962-964 of 1972      From the Judgments and Orders dated 14-2-1972/21-2-1972 of the  Allahabad High  Court  in  Civil  Writ  No.  335/71, 4778/71, and 3334/71.                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. 2791/71.             Civil Appeal Nos. 1063-1065 of 1972.      From the  Judgment and  Order dated 21/22-2-1972 of the Allahabad High  Court  in  Civil  Writ  Nos.  572,  843  and 1169/72.            Civil Appeal Nos. 1066 & 1067 of 1972.      From the  Judgment and Order dated 21/22nd Feb. 1972 of the Allahabad High Court in C.W. Nos. 5273/71 and 1170/72.             Civil Appeal Nos. 1140-1142 of 1972.      From the  Judgment and  order dated 29-3-1972/14-2-1972 and 21-2-1972  of the  Allahabad High  Court in  Civil Misc. Writ Nos. 5064/71, 1801/71 and 5018/71.                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. 4223/71.             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. 4587/71 and 4605/71.                Civi] Appeal No. 1367 of 1972.      From the  Judgment and  order  dated  5-4-1972  of  the Allahabad High Court in C.M.W. No. 2278/70.                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. 1803/71.            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.  1802/71  & 3668/70.      Shanti Bhushan  (in C.A. 712) P.R. Mridul (in C.A. 962) P.N. Tiwari,  K.J. John and J.S. Sinha for the Appellants in CA 773 712, 962-963,  1063-1069, 1140-1142,  1160, 1329,  1330  and

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1598/72.      Shanti Bhushan  (in C.A.  409), O.P.  Malhotra (in C.A. 1415) R.K.P. Shankar Das (1013 and 1409) H. K. Puri and V.K. Bahl for the appellants in CA 1013 and 1409 and 1415/72.      Yogeshwar Prasad,  Mrs. Rani  Chhabra and Mrs. S. Bagga for the Appellants in CA 1367/72.      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 U.P. 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

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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 U.P.  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

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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.  7,00,000/-  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

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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  Sugarcane  Act  1934 which empowered  the Provincial  Government to  fix a  floor price for  sugarcane  sold  to  sugar  factories.  This  was followed by  the U.P.  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  29(1) 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

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the purchaser. The 1938 Act gave place to the U.P. 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 U.P. 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 U.P. 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  U.P.  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.

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    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  15(2) (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. 3(2).)  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,

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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  246(1)   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

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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 U.S. Supreme Court  in Smith  v. 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   U.P. Legislation  regulating   sugarcane  supply   and  purchase. Certain sugarcane  growers of  Uttar  Pradesh  assailed  the vires of  the U.P.  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.      N.H. 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

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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 U.P.  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 U.P.  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

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    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  U.P. Legislature breaching  the dykes  of Art.  26(1)  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

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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 Art. 14, Art.  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

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    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. v. 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

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sugarcane is  extent) in  Andhra Sugar  Ltd.   Anr. etc.  v. State of Andhra Pradesh & ors.(l) 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.

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    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. N. K. A.  Appeals dismissed 792

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