Case Note & Summary
The dispute concerned the levy on rice under the U.P. Rice and Paddy (Levy and Regulation of Trade) Order, 1985, framed under Section 3 of the Essential Commodities Act, 1955. The State of Uttar Pradesh had issued a levy order imposing levy on rice effective from the intervening night of September 30 and October 1, 1995. Rice millers challenged the applicability of the levy to stock that existed with them as on that intervening night. The Allahabad High Court, by its Division Bench orders dated February 27, 1996 in Writ Petition No. 31392 of 1995 and connected matters, held that the levy order would be effective only from October 1, 1995, and that existing stock on the intervening night was not liable to levy. Aggrieved by this, the State of Uttar Pradesh filed special leave petitions which were granted, leading to Civil Appeal Nos. 447-449 of 1997 before the Supreme Court. The State contended that the levy was effective from the midnight of September 30 and October 1, 1995 within the specified areas, and that all rice mills covered by the notification were subject to the levy. The State argued that the High Court erred in postponing the effective date and in exempting existing stock. The Supreme Court examined Clause 24 of the Levy Order, which empowers the State Government, with the concurrence of the Central Government, to exempt areas, varieties, or percentages of levy in the public interest. The Court noted that by proceedings dated May 31, 1996, the Principal Secretary to the Government had conveyed the decision of the Government that levy was lifted in Uttar Pradesh from rice for the rest of the Kharif 1994-95 season till September 30, 1995 with immediate effect. This order constituted an exemption covering rice stock existing with rice millers as on September 30, 1995, i.e., all purchases made or rice produced up to that date. The Court found that while issuing the subsequent levy order for Kharif 1995-96, the earlier exemption order was not withdrawn. Consequently, the levy order could not legally apply to the limited stock on hand existing with rice millers as on the intervening night of September 30 and October 1, 1995. The exemption continued to operate for that limited stock. The levy order became effective only in respect of purchases made or rice produced on and from the daybreak of October 1, 1995. Accordingly, the Supreme Court upheld the High Court's orders and dismissed the appeals, directing that no costs were payable.
Headnote
A) Essential Commodities - Levy on Rice - Exemption and Effective Date of Levy - Essential Commodities Act, 1955, Section 3; U.P. Rice and Paddy (Levy and Regulation of Trade) Order, 1985, Clauses 3 and 24 - The State of U.P. imposed levy on rice effective from intervening night of September 30 and October 1, 1995. The State had earlier exempted levy for Kharif 1994-95 till September 30, 1995 vide order dated May 31, 1996 communicated by Principal Secretary. The Supreme Court held that since the exemption was not withdrawn before issuing the new levy order, stock of rice existing with millers as on the intervening night remained exempt. The levy order became effective only for purchases made or rice produced from daybreak of October 1, 1995. Held that High Court was right in holding existing stock not liable to levy (Para 1).
Issue of Consideration
Whether existing stock of rice on the intervening night of 30th September and 1st October 1995 was liable to levy under the U.P. Rice and Paddy (Levy and Regulation of Trade) Order, 1985 despite a prior exemption lifting levy till September 30, 1995.
Final Decision
Appeals dismissed. The Supreme Court upheld the High Court orders. Levy order under U.P. Rice and Paddy (Levy and Regulation of Trade) Order, 1985 became effective only in respect of purchases made or rice produced from daybreak of October 1,1995. Stock existing with rice millers on the intervening night of September 30 and October 1,1995 remained exempt. No costs.
Law Points
- Clause 24 of U.P. Rice and Paddy (Levy and Regulation of Trade) Order
- 1985 empowers State Government with Central concurrence to exempt areas or reduce levy percentage
- an exemption order continues until withdrawn
- levy order issued under Clause 3 for Kharif 1995-96 cannot apply to stock on hand as on September 30
- 1995 when earlier exemption till that date was not withdrawn
- levy effective only from daybreak of October 1
- 1995
