TaxTMI 
TaxTMI 
1986 (4) TMI 341
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.... under which the Government of Kerala agreed to grant to the appellant the right of free use of water from the Muvattupuzha river for the purpose of manufacturing newsprint and also to make available annually to the appellant 1,50,000 tonnes of eucalyptus wood. The Government of Kerala further agreed to keep reserved from the date of agreement the State plantations of eucalyptus grandis in Pamba, Kottayam, Punalur, Thenmalai and Trivandrum Forest Divisions as constituted then for the appellant and not to permit harvesting of eucalyptus wood and reeds by other parties and for the regeneration of the forest in the areas, the Chief Conservator of Forests, Kerala State was required in consultation with the appellant to prepare and implement a scientific management plan which would include fireprotection and epidemic control programmes. The appellant agreed to pay to the Government of Kerala royalty for the raw materials supplied to the appellant at the rate of Rs. 11 per tonne of green wood of eucalyptus grandis and eucalyptus tereticornis (both with 50 per cent moisture) and at the rate of Rs. 12 per tonne of green reeds with 50 per cent moisture. There were several other conditions i....
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....t or any forest officer at a price which is less than the selling price of that forest produce. (2) The sale of any forest produce in contravention of sub-section (1) shall be null and void and shall not he enforceable in a court of law." There is no prohibition of sale of forest produce at prices higher than the prices mentioned in the notification. Section 7 of the Act provides that 10 per cent of the amount obtained by the sale of forest produce after the commencement of the Act, subject to such rules as may be made under the Act, should be set apart for being utilised for the development of forests. Section 8 enables the Government to make rules for the purpose of carrying into effect the provisions of the Art. We are concerned in these cases with the validity of section 6 of the Act which reads thus : "6. Exemption - The Government may, in the public interest, by notification in the Gazette, exempt the sale of any forest produce - (a) to any company owned by the Central Government or the Government of Kerala; (b) not exceeding ten cubic meters, to any cooperative society registered or deemed to be registered under the Kerala Co-operative Societies Act, 1969 (21 ....
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....sp; K.V. Vidhyadharan &nb....
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.... he was not able to offer any good answer to the contentions urged by the other side in support of the challenge to the constitutionality of the concerned provision. A reference to this concession which was neither here nor there is found at the end of paragraph 22 of the judgment of the High Court. The High Court held that sec. 6 of the Act was violative of Art. 14 of the Constitution and struck it down along with the Notification. No appeal was filed by the State Govt. The above appeals are filed by the Hindustan Paper Corporation Ltd. the appellant herein which is one of the beneficiaries of the Notification granting exemption. But, at the hearing of these appeals in this Court the learned counsel for the Government of Kerala stated that the concession made by the learned counsel for the State before the High Court was incorrect, and supported the validity of section 6 of the Act and the Notification granting exemption issued thereunder. These appeals are filed against the judgment of the High Court after obtaining the leave of this Court under Article 136 of the Constitution. Section 6 of the Act has already been set out above. It confers the power on the State Government to....
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....vernment companies, and (4) the submission made by the Additional Advocate General to the effect that he could not support the validity of section 6 of the Act. We find it difficult to accept the grounds on which the High Court has held section 6 of the Act to be unconstitutional. So far as consumers of forest produce who are not granted any exemption under section 6 of the Act are concerned, any sale of forest produce in their favour cannot be effected at a price less than the price notified under section 3 of the Act. The notified price has to be fixed on the basis of the recommendation to be made by the Expert Committee constituted under section 4 of the Act and the Expert Committee is required to take into consideration the market price of the forest produce, the cost of regenerating and maintaining the forest produce in cases where regeneration is necessary after selling the forest produce and such other matters as may be prescribed. If section 5 of the Act provides that the forest produce covered by the Act shall not be sold at a price less than the price which is determined on the basis of the factors referred to above which appear to bequite relevant they cannot have ....
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....result in the benefit to the members of the general public. The profit, if any, enriches the public coffer and not the private coffer. The role of industries in the public sector is very sensitive and critical from the point of view of national economy. Their survival very often depends upon the budgetary provision and not upon private resources which are available to the industries in the private sector. They are often established to break the power of strangulation on economy which the industries in private sector may have developed and may be using to choke the industrial growth of the country. An exemption or a concession might provide them some breathing time or settling down time. It may be treated as a subsidy at the worst. This appears to be the policy behind Article 19(6)(ii) of the Constitution. In appropriate cases in order to place an industry owned by the Government on an enduring basis in the national interest, some concession may have to be shown to it. It is neither alleged nor established that if the exemption is annulled the petitioners will be richer by a single paise or if it is retained they will be poorer by a single paise. The only purpose hinted at is that i....
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....treated the villages and urban worker and petty farmer as untouchables and so do not figure in the picture. To exempt the categories above referred to is reasonable." Hence preference shown to Government companies under section 6 of the Act cannot be considered discriminatory as they stand in a different class altogether and the classification made between Government companies and others for the purposes of the Act is a valid one. Same is the case with the clause which gives power under section 6 of the Act to the Government to exempt sales of forest produce in favour of co-operative societies upto the limit mentioned therein. In P.V. Sivarajan, v. Union of India & Anr., [1959] Suppl. 1 S.C.R. 779 the exemption granted in favour of traders carrying on export business in a small scale who formed co-operative societies was upheld. In Orient Weaving Mills (P) Ltd. v. Union of India, [1962] Suppl. 3 S.C.R. 481 this Court upheld the exemption granted in favour of powerloom weavers in a cooperative society from the levy of central excise duties. We do not find any substance in the contention that the provision granting exemption in favour of Government companies and the co-operative s....