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Issues Involved:
1. Constitutionality and validity of Section 20 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953. 2. Constitutionality and validity of the U.P. Sugarcane Cess Act, 1956. 3. Legislative competence of the State Legislature under Entry 52 of the State List. 4. Permissible limits of delegated legislation. 5. Definition and interpretation of "local area" under Entry 52 of the State List. Detailed Analysis: 1. Constitutionality and validity of Section 20 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953: The appellants challenged the imposition of cess on the entry of sugarcane into their factory under Section 20 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953. They contended that Section 20 was unconstitutional and invalid. The High Court rejected this application, leading to the appeal before the Supreme Court. 2. Constitutionality and validity of the U.P. Sugarcane Cess Act, 1956: During the pendency of the application, the U.P. Legislature enacted the U.P. Sugarcane Cess Act, 1956, repealing the 1953 Act. Section 3 of this Act empowered the State Government to impose a cess on the entry of sugarcane into the premises of a factory. The appellants argued that this new Act was also unconstitutional and invalid. 3. Legislative competence of the State Legislature under Entry 52 of the State List: The primary issue was whether the impugned law fell under Entry 52 of the State List, which allows for "tax on the entry of goods into a local area for consumption, use or sale therein." The Court had to determine if the "premises of a factory" could be considered a "local area" within the meaning of Entry 52. The Court concluded that "local area" refers to an area administered by a local body like a municipality, district board, or panchayat, and not a single factory premises. Thus, Section 3 of the U.P. Sugarcane Cess Act, 1956, did not fall within Entry 52 and was beyond the legislative competence of the State Legislature. 4. Permissible limits of delegated legislation: The appellants also argued that the provisions of Section 3 amounted to excessive delegation because it gave the Governor the power to levy any cess not exceeding 4 annas without providing guidance on the fixation of the particular rate. However, since the Court found the legislation itself to be beyond the legislative competence of the State Legislature, it did not need to address this issue. 5. Definition and interpretation of "local area" under Entry 52 of the State List: The Court examined the meaning of "local area" in the context of Entry 52. It noted that the term "local area" is seldom used to denote a single house or factory and is generally associated with areas administered by local bodies. The Court referred to historical legislative contexts and previous judicial interpretations to conclude that "local area" in Entry 52 refers to areas such as municipalities, district boards, or panchayats. Therefore, the premises of a factory could not be considered a "local area" under Entry 52. Conclusion: The Supreme Court held that Section 3 of the U.P. Sugarcane Cess Act, 1956, was beyond the legislative competence of the State Legislature as it did not fall under Entry 52 of the State List. Consequently, the law was struck down as invalid. The appeal was allowed, the order of the High Court was set aside, and a writ was issued directing the respondents to forbear from levying and collecting cess from the appellants under the U.P. Sugarcane Cess Act, 1956. The appellants were awarded costs for the proceedings.
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