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PETITIONER: GOBIND SUGAR MILLS LTD.

       Vs.

RESPONDENT: STATE OF BIHAR & ORS.

DATE OF JUDGMENT:       17/08/1999

BENCH: S.P.Bharucha, N.Santosh Hegde

JUDGMENT:

SANTOSH HEGDE, J.

     These  appeals  by  special   leave  are  against  the judgment  and order dated 4.7.1996 passed by the High  Court of  Judicature  at Patna in C.W.J.C.  No.8754/93  and  other connected  matters.   The  appellants in these  appeals  are engaged,  inter alia, in the business of manufacturing sugar and  for its production they use sugarcane as the basic raw- material.   The State of Bihar, according to the appellants, is  levying  and  collecting purchase tax on  the  sugarcane purchased  by  them both under the provisions of  the  Bihar Finance  Act, 1981 (for short ‘the Finance Act’] as well  as the  Bihar Sugarcane (Regulation of Supply & Purchase)  Act, 1981  (for short ‘the Sugarcane Act’).  Thus, subjecting the same  purchase of sugarcane to tax twice under two different Acts.   The  appellants contend that the  State  legislature having  once provided for the levy of purchase tax under the sugarcane Act, cannot impose the same levy under the Finance Act.  This challenge of theirs having failed before the High Court,  the  appellants are now before us in these  appeals. On  behalf  of the appellants, Mr.  Shanti Bhushan,  learned senior  counsel,  contended that the Sugarcane Act  being  a special  enactment  for levying purchase tax exclusively  on sugarcane while providing also for regulation of production, supply  and  distribution  of sugarcane, it would  become  a special  enactment and would override the provisions of  the Finance Act, with reference to levy of purchase tax on sugar cane.   He  contended that the Finance Act is a general  Act which  provides  for collection of commercial taxes on  sale and  purchase of goods.  Hence, on a harmonious construction of  the two enactments, it should be held that the State  of Bihar  could  only  levy  purchase tax on  the  purchase  of sugarcane under the Sugarcane Act.  In response, Mr.  Rakesh Dwivedi  and  Mr.   S.B.   Sanyal,  learned  senior  counsel appearing  for  the  State  of  Bihar,  contended  that  the purchase  tax levied under these two Acts are two  different levies,  covering different aspects and operate in different fields.   Therefore, according to them, the rule of  special Act  overriding the general is not attracted in the  instant case.   It is also contended on behalf of the State that the levy of purchase tax under Section 49(1)(b) of the Sugarcane Act  is  a provision to create a separate fund to cover  the expenses  of  the Board and the Council created  under  sub- section  (8)  of  Section  49 of the said  Act.   Lastly  an

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attempt  was  made to contend that the levy of purchase  tax under  Section  49 of the Sugarcane Act is, in fact, in  the nature  of  fee  and not a tax on purchase.   On  the  above arguments,  the following points arise for our consideration :

     a) Whether the two Acts under reference operate in the same  field ?  If so, which one of the two Acts is a special Act  ?  b) Is the Sugarcane Act an enactment intended solely for  the  purpose  of regulation of supply,  production  and distribution of sugarcane and the collection of purchase tax under  the  said Act is only incidental for the  purpose  of creating a fund for maintenance and functioning of the Board and  the  Council under the said Act ?  c) Whether the  levy under  the  Sugarcane  Act is only a fee  for  the  services rendered  ?  At the outset, it should be borne in mind  that both  the  enactments are legislated under the  same  Entry, namely,  Entry  54 of List II of the Seventh Schedule  which empowers  the  State  Legislature to levy tax  on  sale  and purchase  of  goods.   If it is not so, the State  of  Bihar could  not  have imposed the levy of purchase tax under  the Sugarcane  Act.  The object of the Finance Act reads thus  : "An  Act  to consolidate and amend the law relating  to  the levy of tax on the sale and purchase of goods in Bihar;"

     This  clearly shows that the Finance Act is a  general Act  relating  to  the levy of tax on sale and  purchase  of goods  in the State of Bihar and the same would apply to all transactions   of  sale  and   purchase  of  goods  wherever applicable.   Sections 4 to 6 of the said Act which  empower the  levy of various types of commercial taxes read thus  :- "4.   Levy of purchase tax.  - Subject to the provisions  of section  5, 6 and 7 of this part, every dealer liable to pay tax under section 3, who purchases goods in circumstances in which  no sales tax is payable or has been paid on the  sale price  of  such goods and either consumes such goods in  the manufacture of other goods for sale or otherwise or disposes of such goods in any manner other than by way of sale in the State  or  sale  in  the  course  of  inter-State  trade  or commerce,  shall be liable to pay tax on the purchase  price of  such goods at the same rate at which it would have  been leviable on the sale price of such goods under section 12.

     5.   Surcharge.   -  (1)   Every  dealer  whose  gross turnover  during a year exceeds rupees five lakhs shall,  in addition  to the tax payable by him under this part also pay a  surcharge at such rate not exceeding ten percentum of the total  amount of the tax payable by him, as may be fixed  by the  State  Government  by a notification published  in  the Official Gazette :

     Provided  that the aggregate of the tax and  surcharge payable under this part shall not exceed in respect of goods declared to be of special importance in inter-State trade or commerce,  by section 14 of the Central Sales Tax Act,  1956 (Act  74 of 1956), the rate fixed by section 15 of the  said Act :

     Provided  further  that in the case of  an  assessment year  which  has commenced before the commencement  of  this part  or this Section, if there be a different date for  the commencement  of this section, turnover of the whole of such assessment  year shall be taken into account for purposes of determining  whether  the dealer is liable to pay  surcharge under  this Section, but the surcharge shall be payable only

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in respect of that part of the turnover which relates to the period after the commencement of this section.

     (2)  All  provisions  of  this part  relating  to  the payment,  assessment,  recovery and refund of the tax  shall apply to the payment, assessment, recovery and refund of the surcharge.   (3)  Notwithstanding anything to  the  contrary contained  in this part, no dealer mentioned in  sub-section (1),  who  is liable to pay surcharge, shall be entitled  to collect  the  amount  of  this  surcharge.   (4)  The  State Government  may,  by  notification,   and  subject  to  such conditions  and  restrictions as it may impose, exempt  from the  levy of surcharge, any goods or class or description of goods.

     6.    Charge  of   additional  tax.-   Notwithstanding anything  contained  sub section (3) of section/or  sections 11,  12, 13 and 21 or in any notification issued  thereunder every dealer having a gross turnover exceeding the specified quantum  as laid down in section 3 shall, with effect from a date   to  be  specified  by   the  State  Government  by  a notification   published  in  Official   Gazette,   pay   an additional  tax at such rate, not exceeding two percentum of his gross turnover (excluding the sales or purchase of goods which  have taken place either in the course of  inter-State trade or commerce, or outside the State, or in the course of import  of  goods  into,  or  export of  goods  out  of  the territory  of India) as the State Government may, from  time to time by notification in the Official Gazette, fix :

     Provided that State Government may fix different rates within the ceiling rate of 2 percentum on the gross turnover of different goods :

     Provided  further that in the case of declared  goods, as  defined in the Central Sales Tax Act, 1956 (Act LXXIV of 1956) -

     (i) where the tax payable under section 3 or section 4 equals  the maximum amount of tax permissible under  section 15 of the Act, no additional tax shall be payable under this section  :  (ii) where the additional tax under this section together  with the tax payable under section 3 or section  4 would  exceed  the maximum amount of tax  permissible  under section  15  of  that Act, the additional  tax  shall  stand reduced  to such amount as, together with the tax payable as aforesaid, equals the said maximum amount.

     (2)  The  State  Government may  by  notification  and subject  to  such  conditions and restrictions,  as  it  may impose exempt from the levy of additional tax gross turnover in respect of any goods or class description of goods."

     A  perusal of these provisions shows that the  Finance Act  has  provided  for  the  levy  of  different  types  of commercial  taxes which are generally leviable in the  State of  Bihar.  The object of the Sugarcane Act says that it  is an  Act to regulate the production, supply and  distribution of  sugarcane  intended for use in sugar factories  and  for taxation  of  sugarcane  (emphasis   supplied)  and  matters incidental  thereto.  Section 49(1)(b) of the Sugarcane  Act reads thus "49.  Tax on Sugarcane.- (1) The State Government may, by notification in the official Gazette, impose - (a) x x x

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     (a)  a tax not exceeding one rupee per quintal on  the purchase  of sugarcane by or on behalf of the occupier of  a factory:"

     It is to be noted here the incidence of taxation is on the  purchase  of sugar cane, as in the Finance  Act.   This section  nowhere says that the levy of purchase tax  therein is   in  addition  to  the   levy  under  the  Finance  Act. Therefore,  it  is seen that this Act specifically  provides for  levy  of  purchase  tax  on sugarcane  and  it  is  not applicable  to levy of purchase tax on any other goods which are  otherwise taxable under the Finance Act.  The Sugarcane Act  also provides for regulation of production, supply  and distribution  of sugarcane.  Thus, it is an enactment  which is  specifically meant for the control of the activities  of production,  supply  and regulation of sugarcane,  including the levy of purchase tax.  So far as the activity of levy of purchase  tax  on  sugarcane is concerned,  both  the  Acts, namely, the Finance Act and the Sugarcane Act operate in the same  field.   Therefore, the Sugarcane Act being a  special Act pertaining to all aspects of the control of sugarcane as well  as  levy  of purchase tax, the same will  have  to  be construed  as  a special enactment with reference  to  sugar cane.  While determining the question whether a Statute is a general  or  a special one, focus must be on  the  principal subject-matter  coupled  with  particular  perspective  with reference  to  the intendment of the Act.  Keeping  in  mind this basic principle, we will have to examine the provisions of  the  two  Acts  to find out whether it  is  possible  to construe  harmoniously  the provisions of Section 4  of  the Finance  Act and Section 49 of the Sugarcane Act.  If it  is not  possible  then  an  effort  will have  to  be  made  to ascertain whether the legislature had intended to accord the levy  on sugarcane a special treatment vis-a-vis the levy of purchase  tax  on other items, and a further endeavour  will have  to  be  made  to find out whether Section  49  of  the Sugarcane  Act excludes the applicability of the levy  under Section  4  of  the  Finance  Act.   On  a  perusal  of  the provisions  of  the above Acts including the objects of  the two  Acts,  it  could  be seen that the  two  enactments  in question  contemplate  levy  of  purchase  tax.   While  the Finance  Act empowers the State to levy all commercial taxes generally,  the Sugarcane Act empowers the levy of  purchase tax  only on sugarcane.  In this background, there can be no doubt  that  the  Legislature intended to  enact  a  special enactment  for  the  purpose of levy of  purchase  tax  with reference  to  sugarcane  under  the Sugarcane  Act  to  the exclusion  of such levy under the Finance Act.  Once we come to  the  conclusion  that  this  is  the  intention  of  the legislation then the rule "general provision should yield to special   provision"  is  squarely   attracted.   The   next contention  on behalf of the State, as noted above, is  that the  two enactments operate in different fields inasmuch  as while  the  Finance Act is an enactment for the  purpose  of generating  revenue  for  the State, the  Sugarcane  Act  is enacted  generally for the purpose of production, supply and distribution  of sugar.  The power of taxation  contemplated under  this Act is only incidental to further the object  of Section  49(8)  of  the Sugarcane Act.  In other  words,  an attempt  was  made to contend that the tax which was  levied and  collected under Section 49 of the Sugarcane Act was  to be  appropriated  towards the requirements of the Board  and the  Council  constituted under the Sugarcane Act.  In  this connection, it was contended that Section 3 of the Sugarcane Act  contemplated establishment of the Sugarcane Board  with

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specific  power  to  fulfil  the objects of  the  said  Act. Therefore, the levy that was being collected as purchase tax under  Section 49(1)(b) of the Act, being an exclusive  levy for the purpose of the requirement of the Board, same cannot be  equated with the levy of purchase tax contemplated under Section  4  of the Finance Act.  We do not  find  sufficient force  in  this  argument  to repel the  contention  of  the appellant  that the tax collected under Section 49(1)(b)  of the  Sugarcane  Act  is the same as  is  contemplated  under Section  4 of the Finance Act but confined to sugarcane.   A perusal  of Section 49(8) of the Sugarcane Act shows that  a part  of  the  amount of purchase tax  collected  under  its sub-section (3) is utilised for the purpose of the Board and the  Council as grant but sub-section (8) of Section 49 does not,  in  any  manner,  indicate   that  entirety  of   this collection  under  Section  1(b)  of Section  49  is  solely earmarked for the purpose of the expenditure of the Board or the Council.  A perusal of Sections 6 and 9 of the Sugarcane Act  clearly  shows that the legislature has  made  separate provisions for the funds of the Board as well as the Council under  the  said Act, and only a portion of  the  collection under  sub-section 1(a) of Section 49 is earmarked for these purposes,  hence, it is clear that the balance of collection goes  to the State exchequer/general fund.  So, there is  no merit  in the arguments advanced on behalf of the State that the  collection  of purchase tax under sub-section  1(b)  of Section  49  is for the purpose of creating a fund  for  the exclusive use of the Board and the Council created under the said  Act.   Last argument advanced by Mr.  Sanyal,  learned senior  counsel appearing in some of the cases on behalf  of the respondent-State is that the amount collected under sub- section  3(b)  of Section 49 is in fact not a tax but a  fee for the services rendered by the Board and the Council under the  Sugarcane  Act.  With respect, this argument has to  be noted  only  for  the  purpose  of  rejection.   Legislative history  of  the Sugarcane Act bears testimony to  the  fact that  at  one point of time the legislature had intended  to collect a levy under sub- section (3) of Section 49 as a fee which imposition came to be challenged before the High Court and  the challenge succeeded because the State was not  able to  satisfy  the Court that the said levy was  supported  by quid  pro  quo.  It is in this background that  the  present section 1(b) of Section 49 came to be brought on the Statute book,  first by way of an Ordinance and then by virtue of an Act,  making the collection a tax under Entry 54 of List  II of  the Seventh Schedule.  It is too late in the day for the State  now to contend once again that the said levy is a fee and  not  a  tax.  It may also be noted at this  stage  that nowhere  in  the pleadings, material has been placed by  the State  to satisfy the requirement of levy of fee by  showing that  there  is  a  reasonable   service  rendered  to   the purchasers  of sugarcane so as to justify the said levy as a fee.   For  the  reasons  stated above,  these  appeals  are allowed,  setting  aside the judgment and order of the  High Court  impugned  herein, and the writ petitions  from  which these  appeals  arise, are allowed, with  all  consequential relief.