1979 (9) TMI 176 - SUPREME COURT

Whether this State Purchase Tax Act is bad because it is a legislation with respect to a controlled industry, to wit, the sugar industry?

Held that:- Appeal dismissed.Nothing more than prevention of escapement of purchase tax on cane is done and what is done is legitimately incidental to the taxing power. Peripheral similarity between purchase tax and excise levy does not spell essential sameness. Sugarcane tax operates in the neighbourhood of sugar excise but proximity is not identity. The tax is only on purchase of cane, not its conversion into sugar. If the miller has his own cane farm and crushes it, he has no purchase tax to pay but cannot escape excise duty, if any. Again, if cane is purchased by a miller and it is later robbed or destroyed before sugar is manufactured, the State tax is exigible although excise on production is not. A perspicacious appreciation of the implications of purchase and production dispels confusion on this issue. To buy raw produce is a step preliminary to manufacture but is not part of manufacture. Maybe, in some cases tax on such purchase and duty on manufacture therewith are so close that "thin partition do their bounds divide" but how can we obliterate those bounds and telescope the two.