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Issues Involved:
1. Validity of the Central Act - The Sugarcane Cess (Validation) Act, 1961. 2. Legislative competence of the State Legislatures and Parliament concerning the cess. 3. Validity of the demand for cane commission for the year 1959-60. Issue-wise Detailed Analysis: 1. Validity of the Central Act - The Sugarcane Cess (Validation) Act, 1961: The principal question of law in this appeal concerns the validity of the Central Act, The Sugarcane Cess (Validation) Act, 1961. The appellant, a sugar manufacturing company, challenged the demands made by the State of Madhya Pradesh for sugarcane cess and cane commission, alleging that the Act under which these demands were made was ultra vires and unconstitutional. The Supreme Court examined whether the Act was constitutionally valid and whether it effectively validated the imposition and collection of cesses under various State Acts. The Court concluded that Section 3 of the Act does not purport to validate the invalid State Statutes but rather makes a law concerning the cess covered by the said Statutes and provides that the said law shall come into operation retrospectively. Therefore, the Act was held to be constitutionally valid. 2. Legislative Competence of the State Legislatures and Parliament Concerning the Cess: The Court referenced its decision in Diamond Sugar Mills Ltd. v. The State of Uttar Pradesh, where it was held that the premises of a factory are not a "local area" within the meaning of Entry 52 in List II of the Seventh Schedule to the Constitution, thus rendering the State Acts imposing cess invalid. Consequently, the Madhya Pradesh High Court struck down Section 23 of the Madhya Pradesh Act. The Supreme Court reiterated that the cess in question was beyond the legislative competence of the States, leading to the inference that Parliament would have legislative competence to deal with the subject matter in question under Article 248 read with Entry 97 in List I of the Seventh Schedule. The Court held that Parliament had the legislative competence to enact the Act in question and to provide for the recovery of the specified cesses and commissions retrospectively. 3. Validity of the Demand for Cane Commission for the Year 1959-60: The appellant argued that the demand for cane commission for the year 1959-60 was invalid because the Cane Development Council was constituted only on August 26, 1960, and thus could not have rendered any service during the period in question. The Supreme Court agreed with the appellant, stating that it is plainly illegal to recover a fee for a period during which the council did not exist and could have rendered no service. The Court emphasized that the imposition of a fee is generally supported on the basis of quid pro quo, and in this case, no service was rendered by the Council during the entire period covered by the demand. Therefore, the demand for cane commission for the year 1959-60 amounting to Rs. 54,037.57P was held to be invalid, and the notice to that extent was ordered to be canceled. Conclusion: The Supreme Court upheld the constitutional validity of The Sugarcane Cess (Validation) Act, 1961, and confirmed the legislative competence of Parliament to enact the law retrospectively. However, the demand for cane commission for the year 1959-60 was found to be invalid due to the non-existence of the Cane Development Council during that period. The appeal was substantially dismissed, with a modification regarding the invalid demand for cane commission for the year 1959-60. There was no order as to costs.
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