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Issues: (i) Whether the expression "industry" in Entry 52 of List I of the Seventh Schedule is confined to the process of manufacture or production, or extends to the growing and sale of raw tobacco so as to confer legislative competence on Parliament under the Tobacco Board Act, 1975. (ii) Whether the Tobacco Board Act, 1975 and the State Agricultural Produce Markets Acts can operate simultaneously in relation to sale of tobacco in market areas. (iii) If both enactments collide, whether the Central enactment prevails and the State levy of market fee on tobacco must yield.
Issue (i): Whether the expression "industry" in Entry 52 of List I of the Seventh Schedule is confined to the process of manufacture or production, or extends to the growing and sale of raw tobacco so as to confer legislative competence on Parliament under the Tobacco Board Act, 1975.
Analysis: The constitutional entries are legislative fields and must receive a broad and liberal construction, but not in a manner that renders other entries otiose. The earlier Constitution Bench line beginning with Tika Ramji treats "industry" in the constitutional scheme as referring to the process of manufacture or production, while raw materials and distribution of products remain within the distinct fields assigned elsewhere in the Lists unless expressly covered. Decisions such as Calcutta Gas, Kanan Devan Hills, Ganga Sugar, Viswanathiah and Belsund Sugar were treated as consistent with that approach. The Tobacco Board Act was examined as a law concerning a declared industry, but the power under Entry 52 was not read as an all-encompassing power over agriculture, markets, raw materials, or sale of tobacco in market yards merely because tobacco is the raw material for a controlled industry.
Conclusion: The expression "industry" in Entry 52 was held to be broad enough to sustain Parliament's competence over the Tobacco Board Act, including provisions relating to tobacco growth and sale, in aid of effective control of the declared industry.
Issue (ii): Whether the Tobacco Board Act, 1975 and the State Agricultural Produce Markets Acts can operate simultaneously in relation to sale of tobacco in market areas.
Analysis: The provisions of the Tobacco Board Act and the State market legislation were compared, especially the State provisions regulating sale in market yards and levying market fee, and the Central provisions dealing with registration, auction platforms, regulated sale, and fee for services. It was held that the two enactments were aimed at the same commodity and their operative provisions were in direct collision. The Court found that the scheme of the Central Act was to impose an effective and comprehensive control over the tobacco industry and that permitting the State market regime to continue for tobacco would frustrate the Central control. Section 31 of the Tobacco Board Act was not treated as preserving an inconsistent State levy where the Central law itself occupied the field with respect to tobacco.
Conclusion: The two enactments were held incapable of simultaneous operation in relation to tobacco sold in market areas.
Issue (iii): If both enactments collide, whether the Central enactment prevails and the State levy of market fee on tobacco must yield.
Analysis: Once Parliament was held competent under Entry 52 and the Central legislation was found to cover the relevant field, the State law could not survive to the extent of the inconsistency. The Court applied the supremacy of Parliament under Article 246(1), holding that the State market legislation, so far as it authorised levy of fee on sale and purchase of tobacco within the market area, could not operate against the Central scheme. The majority view in the earlier ITC case was held to be correct, though the reasons were restated on a slightly different basis.
Conclusion: The Central enactment prevails, and the State levy of market fee on tobacco within market areas is inoperative to the extent of the conflict.
Final Conclusion: The Tobacco Board Act, 1975 was upheld as constitutionally valid, the State market laws were held ineffective insofar as they authorised levy of market fee on tobacco in market areas, and the earlier majority view in ITC was affirmed.
Ratio Decidendi: For a declared industry under Entry 52 of List I, Parliament may legislate comprehensively on matters reasonably incidental to effective control of that industry, and where the Central law occupies the field in respect of the commodity concerned, a conflicting State levy under its market legislation must yield.
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