Selective tax remission for sugar factories upheld where classification had a rational nexus with the statutory public purpose.

Section 14(1) of the U.P. Sugarcane (Purchase Tax) Act, 1961 confers a discretionary power on the State Government to grant remission in whole or in part when satisfied that it is necessary in the public interest; it does not compel remission for every sugar factory. Selective remission to factories purchasing cane with low recovery was within the statutory purpose, because such factories formed a distinct class linked to production cost and payment capacity. The notifications were also not discriminatory under Article 14, as the classification had an intelligible differentia and a rational nexus with the object of encouraging and regulating sugarcane supply. The challenge to the remission notifications therefore failed.

---

---

Issues: (i) Whether section 14(1) of the U.P. Sugarcane (Purchase Tax) Act, 1961 required remission of purchase tax to be granted to all sugar factories. (ii) Whether the notifications granting remission only to selected factories were discriminatory and violative of Article 14 of the Constitution of India.

Issue (i): Whether section 14(1) of the U.P. Sugarcane (Purchase Tax) Act, 1961 required remission of purchase tax to be granted to all sugar factories.

Analysis: Section 14(1) confers a discretionary power on the State Government to grant remission in whole or in part when satisfied that it is necessary in the public interest for the purposes stated in clauses (a), (b), and (c). The power is not obligatory and does not compel remission in favour of every factory. The State may lawfully decide that only factories needing encouragement or regulation should receive the benefit, and the choice of factories purchasing cane yielding low recovery is within the statutory purpose.

Conclusion: The section did not require remission to be extended to all sugar factories, and selective grant of remission was within the statutory power.

Issue (ii): Whether the notifications granting remission only to selected factories were discriminatory and violative of Article 14 of the Constitution of India.

Analysis: Article 14 prohibits class legislation but permits reasonable classification based on an intelligible differentia having a rational nexus with the object sought to be achieved. Factories purchasing cane yielding low recovery formed a distinct class because the recovery rate affected production cost and the ability to make timely payment for cane. The differentiation was therefore linked to the statutory object of encouraging and regulating supply of sugarcane.

Conclusion: The notifications were not discriminatory and did not violate Article 14.

Final Conclusion: The challenge to the remission notifications failed because the State Government validly exercised its statutory discretion and the classification adopted for granting remission was reasonable and constitutionally permissible.

Ratio Decidendi: Where a statute confers discretionary remission power for a defined public purpose, selective benefit to a distinct class is valid if the classification has an intelligible differentia and a rational nexus with the statutory object.

---