Sugar mills not liable to water cess under Entry 15 Schedule I Water Cess Act; sugarcane not treated as vegetable

SC held that sugar manufacturing units are not covered by Entry 15 of Schedule I to the Water (Prevention and Control of Pollution) Cess Act, 1977, as sugarcane is not a "vegetable" within the meaning of that entry, which refers to vegetable products in common parlance, not in the botanical sense. Consequently, sugar industries do not fall within the specified category for levy of water cess under Entry 15. Further, manufacture of alcohol from molasses, being a by-product of sugar production, also does not qualify as "processing of agricultural products" under Entry 15. The impugned cess demands were therefore unsustainable, and the civil appeals were allowed.

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Issues Involved:
1. Whether the industries manufacturing sugar from sugarcane are covered by Entry 15 of Schedule I to the Water (Prevention and Control of Pollution) Cess Act, 1977.
2. Interpretation of the term "vegetable" in the context of the Cess Act.
3. Whether the manufacture of alcohol from molasses falls under Entry 15 of Schedule I.

Summary of Judgment:

Issue 1: Coverage of Sugar Manufacturing Industries u/s Entry 15 of Schedule I
The primary question was whether sugar manufacturing industries fall under Entry 15 of Schedule I to the Water (Prevention and Control of Pollution) Cess Act, 1977, which pertains to "processing of animal or vegetable products industry." The Punjab and Haryana High Court and the Allahabad High Court held that sugar manufacturing industries come within Entry 15, while the Andhra Pradesh High Court and Patna High Court held the opposite view. The Supreme Court concluded that sugar manufacturing industries do not fall under Entry 15, as sugarcane is not considered a vegetable in common parlance.

Issue 2: Interpretation of "Vegetable"
The term "vegetable" was interpreted in its common parlance rather than its botanical sense. The Court referred to various dictionaries and previous judgments to conclude that "vegetable" typically refers to edible plants or parts of plants used for food, such as those grown in kitchen gardens or farms. The Court emphasized that the Cess Act is a fiscal enactment and must be strictly construed. Therefore, sugarcane, being an agricultural product and not a vegetable, does not fall under the term "vegetable" as used in Entry 15.

Issue 3: Manufacture of Alcohol from Molasses
The Court also addressed whether the manufacture of alcohol from molasses falls under Entry 15. Since the sugar manufacturing industry itself does not fall under Entry 15, the manufacture of alcohol from molasses, a by-product of sugar, also does not fall under this entry.

Conclusion
The Supreme Court allowed the civil appeals and writ petitions challenging the inclusion of sugar manufacturing industries under Entry 15 of Schedule I to the Cess Act. The Court dismissed the appeals supporting the inclusion and made the Rule Nisi absolute.

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