2007 (9) TMI 620 - SC - VAT and Sales Tax

Supreme Court modifies molasses supply order, emphasizes Advisory Committee role

M/s DHAMPUR SUGAR MILLS LTD Versus STATE OF U.P. & ORS

The Supreme Court allowed the appeal partly, setting aside the directive to supply 20% molasses for manufacturing country liquor if there is no balance ... Whether no balance stock and even for its own requirement, it has to import molasses? Whether the allegation of the respondents is that excess and balance molasses was available with the appellant which it had sold in open market? Issues Involved:1. Constitution of Advisory Committee under Section 3 of the Uttar Pradesh Sheera Niyantran Adhiniyam, 1964.2. Directive to supply 20% of molasses for manufacturing country liquor.3. Validity of show cause notices issued for non-compliance.4. Alternative remedy and maintainability of writ petition.5. Public policy and Article 47 of the Constitution.Issue-wise Detailed Analysis:1. Constitution of Advisory Committee:The appellant argued that Section 3 of the Uttar Pradesh Sheera Niyantran Adhiniyam, 1964 mandates the State Government to constitute an 'Advisory Committee'. The High Court dismissed this argument, stating the provision was directory, not mandatory. However, the Supreme Court disagreed, emphasizing that the legislative intent and the scheme of the Act necessitate the constitution of such a committee. The Court noted that the Committee plays a crucial role in advising on matters related to the control of molasses and directed the State Government to constitute the Advisory Committee expeditiously.2. Directive to Supply 20% of Molasses:The appellant challenged the Government Orders directing the supply of 20% molasses for manufacturing country liquor, arguing that the entire production was required for captive consumption, and it even had to import molasses. The High Court upheld the directive, but the Supreme Court found that the directive applies only to the 'balance stock' of molasses, i.e., the excess stock after captive consumption. The Court held that if the appellant had no excess stock, the directive could not be enforced against it.3. Validity of Show Cause Notices:The appellant contended that the show cause notices issued for non-compliance with the directive were illegal. The Supreme Court clarified that if there is no balance stock of molasses, the authorities cannot compel the supply of 20% molasses for manufacturing country liquor. The Court allowed the appeal to this extent, indicating that the show cause notices would not be valid if there was no excess stock.4. Alternative Remedy and Maintainability of Writ Petition:The respondents argued that the writ petition was not maintainable due to the availability of an alternative remedy under Section 9 of the Act. The High Court rejected this preliminary objection, considering the totality of facts and circumstances, and the Supreme Court upheld this view. The Court noted that once a policy decision is taken by the Government, the remedy of appeal becomes an 'empty formality' or 'futile attempt'.5. Public Policy and Article 47 of the Constitution:The appellant argued that the directive to supply molasses for manufacturing country liquor was against public policy as reflected in Article 47 of the Constitution, which aims at prohibiting intoxicating drinks. The High Court ruled that Article 47 could not be enforced by a Court of Law, and the Supreme Court refrained from expressing any opinion on this issue, considering it unnecessary for the decision.Conclusion:The Supreme Court allowed the appeal partly, setting aside the High Court's order to the extent that the directive to supply 20% molasses would not apply if there is no balance stock. The Court directed the State Government to constitute the Advisory Committee as required by the Act and clarified that the respondents could take appropriate action in accordance with the law if there is evidence of excess molasses. Each party was ordered to bear its own costs.