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TMI Blog1973 (12) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... -------------------------------------------------- The judgment of RAY, C.J., KHANNA and ALAGIRISWAMI, JJ., was delivered by ALAGIRISWAMI, J. The judgment of MATHEW and BHAGWATI, JJ., was delivered by MATHEW, J.] ALAGIRISWAMI, J.-The appeal and the writ petitions raise the question of interpretation of section 21(3) of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961. The appellant and the petitioners are sugar factories in the State of Andhra Pradesh. They applied under the provisions of section 21 (3) for exemption from the tax payable under sub-section (1) of that section on the ground that they, having substantially expanded, were entitled, to the extent of such expansion, to exemption from the payment of tax. The Government of Andhra Pradesh having refused that request these writ petitions have been filed before this court contending that the decision denying them exemption is contrary to section 21(3) which does not countenance any classification and that the classification adopted is based on no nexus to the object of the Act. The appeal is against the decision of the Andhra Pradesh High Court dismissing a writ petition filed for sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the existing factories need encouragement and incentives. The exemption in favour of new and expanding factories is based on legitimate legislative policy. The question whether the exemption should be granted to any factory, and if so, for what period and the question whether any factory has substantially expanded and if so, the extent of such expansion have to be decided with reference to the facts of each individual case. Obviously, it is not possible for the State Legislature to examine the merits of individual cases and the function was properly delegated to the State Government. The legislature was not obliged to prescribe a more rigid standard for the guidance of the Government. We hold that section 21 does not violate article 14." Though, as we have stated, it was sought to be argued originally that under the provisions of this section it was obligatory on the part of the Government to grant exemption, it was later argued based on the above observations that the question whether the exemption should be granted to any factory and if so for what period and the question whether any factory has substantially expanded and if so the extent of such expansion, has to be decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that the discretion has been given to the State to decide which factory or which class of factories should be granted exemption, whether any exemption should be granted at all and if so for what period, that the discretion is to be exercised by taking into consideration the state of the industry and the financial position of any sugar factory during any particular period or in any particular area, that it is open to the State to take into account all relevant considerations and decide which class of factories should be granted exemption, and that the co-operative sugar factories consisting of cane-growers is a distinct category justifying their treatment as a class separate from other sugar factories. In view of the abandonment at a later stage of the contention that it was obligatory on the part of the Government to grant the exemption contemplated under section 21(3) to every new factory or expanded factory for the period mentioned in the section, it is unnecessary to consider whether the word "may" found in that section should be interpreted to mean "shall" except to indicate that the policy behind the whole of section 21 does not indicate that it is obligatory on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even a sugarcane grower in U.P. might get a reasonable return on his produce. We are of opinion, therefore, that the Government are justified in treating the sugar factories consisting of sugarcane growers as a distinct category. In this connection we should mention that the appellant in Civil Appeal No. 1453 of 1969 urged before this court that out of its 1,280 shares 1,247 shares were held by cane growers. But this was not urged in the petition before the High Court nor had the State an opportunity of meeting such a contention. It is therefore not possible for us at this stage to go into the question whether that appellant has been discriminated against. The only question that arises is whether the Government would be justified in refusing to consider the question of exemption to all factories other than co-operative sugar factories. In its counter-affidavit the State of Andhra Pradesh has stated that the application of each one of the petitioners was considered on its merits and it was refused. On the other hand, the petitioners referred to the letter (annexure III) written by the Government of Andhra Pradesh to the appellant in Civil Appeal No. 1453 of 1969 which reads: "I am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a tribunal in the honest exercise of its discretion has adopted a policy, and, without refusing to hear an applicant, intimates to him what its policy is, and that after hearing him it will in accordance with its policy decide against him, unless there is something exceptional in his case............if the policy has been adopted for reasons which the tribunal may legitimately entertain, no objection could be taken to such a course. On the other hand there are cases where a tribunal has passed a rule, or come to a determintation, not to hear any application of a particular character by whomsoever made. There is a wide distinction to be drawn between these two classes." The present cases come under the earlier part and not the latter. The case in Rex v. London County Council [1918] 1 K.B. 68. is distinguishable on the facts of the case. The policy behind the Act there under consideration was obviously to permit sale of any article or distribution of bills or like things and in deciding that no permission would be granted at all the London County Council was rightly held not to have properly exercised the discretion vested in it. In the decision in Padfield v. Minister of Agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t provided the authority is always willing to listen to anyone with something new to say-of course I do not mean to say that there need be an oral hearing. In the present case the Minister's officers have carefully considered all that the appellants have had to say and I have no doubt that they will continue to do so. The Minister might at any time change his mind and therefore I think that the appellants are entitled to have a decision whether these cylinders are eligible for grant." Viscount Dilhorne again after referring to the passage in R. v. Port of London Authority [1919] 1 K.B. 176., said: "Bankes, L.J., clearly meant that in the latter case there is a refusal to exercise the discretion entrusted to the authority or tribunal but the distinction between a policy decision and a rule may not be easy to draw. In this case it was not challenged that it was within the power of the Board to adopt a policy not to make a grant in respect of such an item. That policy might equally well be described as a rule. It was both reasonable and right that the Board should make known to those interested the policy that it was going to follow. By doing so fruitless applications involving expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properly exercised the discretion conferred on it by the statute. The appeal and the writ petitions are dismissed with costs, one set. MATHEW, J.-The short question for consideration in these writ petitions and the civil appeal is whether the Government of Andhra Pradesh was right in dismissing the applications filed by the writ petitioners and the appellant claiming benefit of exemption from payment of the tax as provided in section 21(3)(b) of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1951, hereinafter called the Act, for the reason that the Government has taken a policy decision to confine the benefit of the exemption to sugar factories in the co-operative sector. The material provisions of section 21 of the Act are as follows: "21. (1) The Government may, by notification, levy a tax at such rate not exceeding five rupees per metric tonne as may be prescribed on the purchase of cane required for use, consumption or sale in a factory. (2) The Government may, by notification, remit in whole or in part such tax in respect of cane used or intended to be used in a factory for any purpose specified in such notification. (3) The Government may, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provision in question in particular indicate any policy which the Government has to follow? The legislature has, no doubt, clearly laid down the conditions of eligibility for the exemption and it has clearly given to the Government a discretion so that the Government is not bound to grant the exemption to a factory which Is eligible to the exemption. But the discretion must not so unreasonably be exercised as to show that there cannot have been any real or genuine exercise of It. The general rule is that anybody exercising a statutory discretion should not, in the words of Bankes, L.J., in R. v. P.L.A.: ex p. Kynoch Ltd. [1919] 1 K.B. 176 at 184 "shut his ears to the application". The question, therefore, is whether the Government shut its ears and fettered its discretion when it said that it will confine the benefit of the exemption provided in clause (b) of sub-section (3) only to factories establish- ed in the co-operative sector. It was submitted that there is nothing in the provisions of sub- section (3)(b) to indicate that the Government could confine the benefit of the exemption only to new and expanded sugar factories in the co- operative sector fulfilling the condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear Rajah Saheb, Sub: Purchase tax on sugarcane-Exemption from payment of purchase tax to the extent of expansion-regarding. Ref: Your letter No. 54/66-67 dt. 6-2-1967 addressed to the Director of Agriculture. I am to invite reference to your letter cited and to state that the Government have given careful consideration to your request for exemption from payment of purchase tax to the extent of expansion for two crushing seasons in respect of Bobbili and Seethanagaram Units. The present policy of the Government is to grant exemption from payment of purchase tax to new and expanded sugar factories in the co-operative sector only. Besides Bobbili and Seethanagaram Sugar Factories, there are a few other sugar factories in the private sector which have also embarked on expansion programmes. Any concession given in one case will be a precedent for others and it cannot be denied to others who will naturally apply for a similar concession. The present financial position of the Government does not permit them to be generous. In the circumstances, the Government very much regret that it is not possible for them to accede to your request. With regards, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies consisting of cane growers alone should be the object of the legislative bounty. What is the relevant distinction between a factory established by a co-operative society consisting of sugarcane growers and a factory established by a sugarcane grower or a firm consisting of sugarcane growers for the purpose of the sub-section. The object of the sub-section, as we said, is to give incentive to new and expanded factories with the ultimate object of increasing the production of sugar. Whether a factory is established or owned by a co-operative society consisting of sugarcane growers or by a company of which sugarcane growers are the shareholders or established by an individual who is a sugarcane grower or a firm consisting of sugarcane growers would make no difference in this respect. They all stand on the same footing so far as their claim to the legislative bounty is concerned. We do not also say that it is illegal for the Government to adopt a general line of policy and adhere to it. But the policy it adopts must comport with and be reconcilable with the provisions of the Act and must have some relevance to its object. Generally speaking, an authority entrusted with a discret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case warrant special treatment." In British Oxygen Co. Ltd. v. Minister of Technology[1970] 3 All E. R. 165., the question was whether the Industrial Development Act, 1966, which provided at the relevant time that the Board of Trade may make to any person a grant towards approved capital expenditure incurred by that person in providing new machinery or plant for carrying on a qualifying industrial process in the course of business, authorized the Board of Trade to frame a policy decision to refuse subsidies in respect of any item costing less than GBP25. The House of Lords held that the Board may decline to make a grant towards bulk capital expenditure on the individual cylinders on the sole ground that each cylinder costs less than GBP25, because the discretion conferred was unqualified and the Minister was accordingly not precluded from making such a rule or policy provided that he did not refuse to listen to an application for the exercise of his discretion. After referring to this decision, H.W.R. Wade has said See "Administrative Law", 3rd Ed., pp. 66-67.: "But however firm its policy may be, nothing can absolve a public authority from the duty of forming i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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