Case Note & Summary
The dispute arose from a writ petition under Article 32 of the Constitution filed by M/s. S. K. G. Sugar Ltd., a private limited company, challenging the validity of cane cess and purchase tax levied on it for January 1968. The State of Bihar, through its Certificate Officer and Collector of Champaran, had sent requisitions for realisation of these amounts under a notification issued under the Bihar Sugar Factories Control Act, 1937. The petitioner contended that the imposition was without authority of law because the Act's taxing provisions were allegedly invalid due to repugnancy with the Essential Commodities Act, 1955, or had been repealed under Article 372 of the Constitution. The Bihar Sugar Factories Control Act, 1937 was a pre-Constitution temporary enactment whose life was extended from time to time. Bihar Act 7 of 1955 made it permanent. Section 29 of the Act, substituted retrospectively by Bihar Act 17 of 1963, empowered the State Government to impose cess and tax on sugarcane by notification. The Essential Commodities Act, 1955 came into force on April 1, 1955, and Section 16(1)(b) expressly repealed any state law in force insofar as it controlled or authorised control of production, supply and distribution of essential commodities. Earlier, the High Court had held the Bihar Act unconstitutional, and on appeal, the Supreme Court in A.K. Jain's case held that if the Bihar Act provided anything contrary to the Sugar Cane (Control) Order, 1955, it must be deemed altered under Article 372. Subsequently, the Governor of Bihar promulgated an Ordinance in January 1968, whose Section 35 corresponded to Section 29 of the 1937 Act. Section 50 of the Ordinance repealed the 1937 Act and contained saving and validating provisions. A notification was issued in February 1968 imposing tax under Section 35. Successive Ordinances and ultimately the Bihar Sugar Cane (Regulation of Supply and Purchase) Act, 1969 (President's Act 8 of 1969) during President's Rule validated past actions. Section 66(1) of the President's Act provided that notwithstanding any judgment, decree or order of any court, all cesses and taxes imposed or collected under any State law before the commencement of the Act shall be deemed to have been validly imposed as if the Act had been in force at all material times. The core legal issues were: whether the 1968 Ordinance was constitutionally valid; whether the taxing provisions of the 1937 Act were invalid due to repugnancy with the Essential Commodities Act or repeal under Article 372; and whether Section 66(1) of the President's Act retrospectively validated the levy. The petitioner argued that the tax was without authority of law because the taxing provisions of the Bihar Act had lost validity; the State contended that the Ordinance was validly promulgated, the taxing provisions were not repugnant, and the President's Act cured any defect. The Supreme Court held that the Governor's Ordinance was within his competence under Article 213 because the State legislature was not in session and his satisfaction as to necessity is not justiciable, following State of Punjab v. Sat Pal Dang. On repugnancy, the Court reasoned that the 1937 Act dealt with two distinct matters: regulation of production, supply and distribution of sugarcane, referable to Entry 33 of the Concurrent List, and imposition and collection of cesses and taxes, referable to Entry 52 of the State List. The Essential Commodities Act related only to the regulatory aspect and repealed the Bihar Act to that limited extent. The taxing provisions were not inconsistent with any parliamentary law and remained operative. The Court further held that a legislature has power to validate retrospectively, and Section 66(1) of the President's Act with its wide amplitude cured any defect and validated the levy for January 1968. Accordingly, the petition was dismissed.
Headnote
A) Constitutional Law - Governor's Ordinance-Making Power - Article 213, Constitution of India - Governor empowered to promulgate ordinance when State Legislature not in session and Governor satisfied as to necessity; satisfaction is not justiciable - Court held Bihar Ordinance of 1968 valid as both conditions were satisfied, following State of Punjab v. Sat Pal Dang, [1969] 1 S.C.R. 633 - Held that Governor is the sole judge of existence of circumstances and his satisfaction cannot be questioned in court (Paras 317C-318D). B) Constitutional Law - Repugnancy and Severability - Article 254(1), Article 372, Constitution of India; Entry 33 of Concurrent List, Entry 52 of State List; Section 16(1)(b), Essential Commodities Act, 1955; Bihar Sugar Factories Control Act, 1937 - The 1937 Act dealt with two separate matters: regulation of production, supply and distribution of sugarcane (Entry 33, Concurrent List) and imposition and collection of cesses and taxes (Entry 52, State List); Central Act repealed only the regulatory provisions to the extent of inconsistency, leaving the taxing provisions valid and operative - Held that taxing provisions were neither rendered inoperative by Article 254(1) nor repealed or altered by Article 372, and were severable from the regulatory provisions (Paras 319A-D). C) Constitutional Law - Power of Validation - Retrospective Validation of Tax Laws - Section 66(1), Bihar Sugar Cane (Regulation of Supply and Purchase) Act, 1969 (President's Act 8 of 1969) - Legislature has power to make laws imposing tax retrospectively and to validate defective laws or past unlawful collections; validation is ancillary to legislative power - Court held that Section 66(1) of President's Act 8 of 1969 with its wide amplitude deemed all cesses and taxes imposed under any State law as validly imposed as if the President's Act had been in force at all material times, thereby curing any infirmity and validating the January 1968 levy (Paras 320C-320E). D) Tax Law - Cane Cess and Purchase Tax - Section 29, Bihar Sugar Factories Control Act, 1937; Section 35, Bihar Ordinance, 1968 - Notification issued under Section 29 of 1937 Act and continued under the Ordinance of 1968 remained operative during January 1968; tax levied had authority of law - Held that there was no period during which the tax was levied without authority of law, and the impugned notification derived force directly from the President's Act by legal fiction under Section 66(1) (Paras 317C-318D).
Issue of Consideration
Whether the Bihar Ordinance of 1968 was within the Governor's competence under Article 213 of the Constitution; whether the taxing provisions of the Bihar Sugar Factories Control Act, 1937 lost validity due to repugnancy with the Essential Commodities Act, 1955 or repeal under Article 372 of the Constitution; whether Section 66(1) of the President's Act 8 of 1969 retrospectively validated the imposition of cane cess and purchase tax for January 1968.
Final Decision
Petition dismissed. The validity of the impugned notification and the cess and tax imposed thereunder upheld with reference to successive Ordinances and the President's Act. Section 66(1) of President's Act 8 of 1969 by legal fiction deemed the notification to have been issued under the President's Act itself, deriving legal force directly from it, and validated all past impositions with retrospective effect.
Law Points
- Governor's satisfaction under Article 213 of Constitution not justiciable
- State legislature not in session requirement satisfied
- power to make retrospective laws and validate past collections ancillary to legislative competence
- taxing provisions of Bihar Sugar Factories Control Act
- 1937 not repugnant to Essential Commodities Act
- 1955 and remain operative
- repugnancy under Article 254(1) does not affect non-conflicting taxing provisions
- Article 372 repeal only to extent of inconsistency with Central Act
- regulatory and taxing provisions severable
- validating provision in Section 66(1) of President's Act 8 of 1969 cures all defects retrospectively
