TaxTMI 
TaxTMI 
2004 (5) TMI 533
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....ons of the U.P. Act of 1953. Turning to first question, I find no statutory basis for the 'State advised cane price'. The very expression 'advised' connotes that the State advised price has no statutory flavour. If the fixation has been done in exercise of statutory power traceable to any provision in the U.P. Act, it would be most inapt to describe it as 'advised price'. The statutorily fixed price can never take the form of advice. It binds, enforces obedience by providing for punishment or penal consequences and does not look for volition of the persons concerned for its compliance. But, that is not the case here. From year to year, the State Government has been announcing the 'advised price' in the hope and expectation that the sugar factories in the private sector will also agree to pay that price. It is worth quoting a typical order/communication issued by the Government and the Cane Commissioner. The following is the communication dt. 15.11.96 addressed by Principal Secretary to Govt. to the Cane Commissioner of U.P:- "As is evident, that for every crushing season State Advised Cane Prince is announced by the....
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....d since the private sugar factories are also aware that the cane growers will not supply sugarcane at a lower price, they have also in the previous years agreed to pay the aforesaid price without any objection. The State Advised cane price also ensures that there is parity in the price of sugarcane throughout the state and it removes the element of disparity in any manner." *** *** *** "It has already been stated above that since 1973 the policy of State Advised cane price is in existence in the State of U.P. and it is in existence in all other sugar producing areas of the country. The aforesaid policy has been invoked merely for the purposes of ensuring that the sugarcane continues to be a cash crop and that the cane growers do not resort to any other alternative crop. It is for this purpose that the State Government intervenes and advise a price which is remunerative and is comparable to the prices of sugar in the State during the relevant period." I may also refer to the order issued by the Government in the State of A.P. where the provisions similar to U.P. Act exist and the averments in the counter-affidavit....
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....rice is not an 'Imposition'. The stand taken by the State Governments in the cases previously decided by this Court, viz., Jaora Sugar Mills and SKG Sugars, which has been accepted by the Court was that efforts were made by the official machinery of the State to convene the meetings and to arrive at an agreed price which was notified as the State advised price. Thus, the real basis for compliance with the State advised price is the agreement but not its statutory authority or binding force. The apparent reason for not notifying the price under the provisions of the statute, namely, U.P. Act of 1953 seems to be the doubt cast on the State's power to fix such price in the light of the observations made in Tika Ramji's case and, it may also be attributable to the difficulty arising on account of lack of criteria or guidelines under the Act and Rules regarding fixation of price. Be that as it may, the fact remains that the 'State advised price' cannot be said to have been fixed in purported exercise of any statutory power and it cannot be elevated to the level of a statutory price fixation order. The decisions of this Court referred to supra did not hold that the State advised price....
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....milnadu, there is no such provision. In fact, Section 42 of the Bihar Act lays down that the minimum price determined under the Act shall not exceed the minimum price payable under any law for the time being in force. It would suffice to confine the discussion to the provisions of U.P. Act. Section 16 of U.P. Act carries the heading 'Regulation of purchase and supply of cane in the reserved and assigned areas'. Sub-Section(1) empowers the State Government, "for the purpose of maintaining supplies", to regulate (a) "the distribution, sale or purchase of cane in any reserved or assigned area" and (b) "purchase of cane in any area other than a reserved or assigned area". After thus laying down the broad parameters of regulatory power, it is followed by sub-Section (2) spelling out the specific areas to which such power can extend. The fixation of price of cane is not one of them. However, sub-Section(2) does not exhaust the field of operation of the regulatory power. The price fixation could still come under the generality of the power reserved under sub-Section (1). It is contended with much force that the power to regulate the sale or purchase of sugarcane comprehends within its ....
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....the power of price fixation, going by the observations made therein and the basis of reasoning adopted to arrive at the conclusion that there was no repugnancy, it is fairly clear that the Constitution Bench negatived the existence of any provision empowering the State Government to fix the price. The Court in addition observed that factually, there was no fixation of minimum price by the State Government. On a comparative analysis of the provisions, this Court found no repugnancy between the impugned Act (U.P. Act of 1953) and the Sugarcane Control Order of 1955. The provisions were held to be mutually exclusive and did not impinge upon each other. It is appropriate to refer to the relevant observations made and the reasons given by the Constitution Bench which are crucial. While dealing with the point No.1, i.e., whether the U.P. Act of 1953 had trenched upon the subject of notified industries falling within the exclusive domain of Parliament, this Court noticed that the provisions in the repealed U.P. Act 1 of 1938 dealing with the minimum price of sugarcane were deleted. The following observations may be noticed: &n....
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....purchasing agent as the case may be at each purchasing centre. <emphasissupplied) The price of cane fixed by Government here only meant the price fixed by the appropriate Government which would be the Central Government, under Clause (3) of the Sugarcane Control Order, 1955, because in fact the U.P. State Government never fixed the price of sugarcane to be purchased by the factories. * * * * * * * * * * ** * * * * * * ** * * * * * * ** * * * * * * * * * * * * * The provisions thus made by the Sugarcane Control Order, 1955, did not find their place either in the impugned Act or the Rules made thereunder or the U.P. Sugarcane Regulation of Supply and Purchase Order, 1954, and the provision contained in Section 17 of the impugned Act in regard to the payment of sugarcane price and recovery thereof as if it was an arrear of land revenue did not find its place in the Sugarcane Control Order, 1955. These provisions, therefore, were mutually exclusive and did not impinge upon each other there being thus no trenching upon the field of one Legislature by the other." No doubt, the content of regulatory power under Section 16 was not discussed by the Constitution Bench. But, as vi....
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....n that price regulation was not within the contemplation of the Act. In contrast to the preamble of the predecessor Act, namely, the U.P. Sugar Factories Control Act, 1938 (as amended by Act 16 of 1952) the expression 'to regulate the price of the sugarcane' has been omitted. Then, the specific provision contained in the earlier Act (Section 21 of U.P. Act 1 of 1938) conferring power on the State Government to fix minimum price and Section 22A empowering the State Government to direct payment of additional price was omitted, the reason for such omission being the promulgation of the Sugar and Gur control Order, 1950 by the Central Government, as noticed by this Court in Tika Ram ji's case. Having omitted to reenact those provisions, if the U.P. legislature wanted to retain the power to fix higher price over and above the minimum fixed by the Central Government, it is reasonable to expect the legislature to make a specific provision to that effect rather than leaving it to the general regulatory power under Section 16 to take care of it. It cannot be gainsaid that the power to fix the price and to regulate dealings between the parties accordingly is a matter of great importance. Whe....
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....ndia is not a party to these proceedings. I, therefore, express no view on the Constitutional issue relatable to Article 254. Having considered the main points at issue, certain aspects concerning the inter-relation between Agreements and State advised price and the role of State machinery in this regard need to be dealt with. The ratio of certain decisions of this Court cited at Bar in a bid to impart binding force to the State advised price should also be considered. First, I would like to clarify that the signing of an agreement incorporating the State recommended Price should not cloud the issue whether the State Government has statutory authority to fix such price. I agree with Srikrishna, J. that the existence or otherwise of an agreement is not determinative of the crucial controversy relating to the power of the State Legislature or its delegate. If there is no authority to fix the price, the fact that the Agreement is entered into adopting the 'State advised price' does not impart statutory basis to such price. On the other hand, if there is power under the Statute and such power has been demonstrably exercised by the State, there is no need to have recourse to the a....
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....ements, but that is an immaterial factor. Once the agreement is entered into the price specified therein (whether equivalent to State advised price or otherwise), is liable to be paid without raising further questions. No support can be drawn even from the decision in Maharashtra Rajya Sahakari Shakkar Kharkhana Sangh, (1995) Suppl. SCC 475 case. The following are the observations of R.M. Sahai, J. at para 21 :- "..the Central Government did not fix any maximum price obviously because the conditions in the agricultural sector differed from State to State. Therefore, it having fixed a minimum price expects the State to offer remunerative price to its cultivators. In a controlled economy, the price fixation machinery is to be determined by the Government or under the 1966 Order in the manner provided therein....." The observations must be confined to the facts and the issue arising therein. The distinguishing feature in that case, as pointed out by Srikrishna, J., is that the bye-laws of the co-operative society empowered the State Government to determine the price of the sugarcane to be paid to the members so long....