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TMI Blog1973 (12) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to the exercise of the power of granting exemption. X X X X Extracts X X X X X X X X Extracts X X X X ..... nner and by such authority as may be prescribed. (5) Arrears of tax shall carry interest at the rate of nine per cent per annum. (6) If the tax under this section together with the interest, if any, due thereon, is not paid by the occupier of a factory within the prescribed time, it shall be recoverable from him as an arrear of land revenue.' In its judgment in Andhra Sugars Ltd. v. A.P. State [1968] 21 S.T.C. 212 (S.C.); [1968] 1 S.C.R. 705., this court up- held the constitutional validity of section 21(3) and made the following observations: "It was next argued that the power under section 21(3) to exempt new factories and factories which in the opinion of the Government have substantially expanded was discriminatory and violative of article 14. We are unable to accept this contention. The establishment of new factories and the expansion of the existing factories need encouragement and incentives. The exemption in favour of new and expanding factories is based on legitimate legislative policy. The question whether the exemption should be granted to any factory, and if so, for what period and the question whether any factory has substantially expanded and if so, the extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, i.e., the co-operative sugar factories for the purpose of granting exemption. It was further urged that new sugar factories and expanded sugar factories all fall into one class and there is nothing particular or special about co-operative sugar factories justifying their treatment as a special class deserving a special treatment. It was also urged that the only discretion which the Government had was in deciding whether a factory had substantially expanded or not and in no other respect. On behalf of the State of Andhra Pradesh, however, it was stated that only new co-operative sugar factories have been granted exemption and that too only for one year as against the period of three years contemplated by the Act in the case of new factories and no expanded factory, even a co-operative sugar factory, has been granted any exemption. It was contended that the discretion has been given to the State to decide which factory or which class of factories should be granted exemption, whether any exemption should be granted at all and if so for what period, that the discretion is to be exercised by taking into consideration the state of the industry and the financial position of any sugar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w factories only but not the expanded factories, to grant the exemption for one year instead of the three years or two years as contemplated under the section, to grant the exemption to factories in one area but not to factories in another area, to grant the exemption during a particular period but not during another period. We are also of opinion that co-operative sugar factories consisting of sugarcane growers fall under a distinct category different from other categories. Sugarcane growers have been the object of particular consideration and care of the legislature. This country which was at one time a big importer of sugar has built up a sizable sugar industry by a policy of protection given to the sugarcane growers and sugar industry. The figures we have given above have been one of the factors in fixing the price of sugar- cane so that even a sugarcane grower in U.P. might get a reasonable return on his produce. We are of opinion, therefore, that the Government are justified in treating the sugar factories consisting of sugarcane growers as a distinct category. In this connection we should mention that the appellant in Civil Appeal No. 1453 of 1969 urged before this court th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sugarcane growers' factories cannot show that they have fettered their discretion in any way. As we have already mentioned, even in the case of co-operative sugar factories the exemption is granted only to new factories and that too only for one year. As regards the power of a statutory authority vested with a discretion, de Smith also points out: "but its statutory discretion may be wide enough to justify the adoption of a rule not to award any costs save in exceptional circumstances, as distinct from a rule never to award any costs at all.........although it is not obliged to consider every application before it with a fully open mind, it must at least keep its mind ajar." In R. v. Port of London Authority [1919] 1 K.B. 176 at 184., Bankes, L.J., stated the relevant principle in the following words: "There are on the one hand cases where a tribunal in the honest exercise of its discretion has adopted a policy, and, without refusing to hear an applicant, intimates to him what its policy is, and that after hearing him it will in accordance with its policy decide against him, unless there is something exceptional in his case............if the policy has been adopted for reasons w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to, Lord Reid went on to state: "But the circumstances in which discretions are exercised vary enormously and that passage cannot be applied literally in every case. The general rule is that anyone who has to exercise a statutory discretion must not 'shut (his) ears to the application' (to quote from Bankes, L.J.). I do not think that there is any great difference between a policy and a rule. There may be cases where an officer or authority ought to listen to a substantial argument reasonably presented urging a change of policy. What the authority must not do is to refuse to listen at all. But a Ministry or large authority may have had to deal already with a multitude of similar applications and then they will almost certainly have evolved a policy so precise that it could well be called a rule. There can be no objection to that provided the authority is always willing to listen to anyone with something new to say-of course I do not mean to say that there need be an oral hearing. In the present case the Minister's officers have carefully considered all that the appellants have had to say and I have no doubt that they will continue to do so. The Minister might at any time change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t disable itself from exercising a genuine discretion in a particular case directly involving individual interests; hence it must be prepared to consider making an exception to the general rule if the circumstances of the case warrant special treatment. These propositions, evolved mainly in the context of licensing and other regulatory powers, have been applied to other situations, for example, the award of discretionary investment grants and the allocation of pupils to different classes of schools. The amplitude of a discretionary power may, however, be so wide that the competent authority may be impliedly entitled to adopt a fixed rule never to exercise its discretion in favour of a particular class of person; and such a power may be expressly conferred by statute." We are satisfied that in this case the State of Andhra Pradesh has properly exercised the discretion conferred on it by the statute. The appeal and the writ petitions are dismissed with costs, one set. MATHEW, J.-The short question for consideration in these writ petitions and the civil appeal is whether the Government of Andhra Pradesh was right in dismissing the applications filed by the writ petitioners and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period not exceeding two years from the date of completion of the expansion. So, if in the opinion of the Government, a factory has substantially expanded, it is open to the Government in its discretion to exempt that factory from payment of tax to the extent of such expansion and that for a period not exceeding two years from the date of the completion of the expansion. We are unable to read the section as imposing a mandatory obligation upon the Government to grant the exemption even if all the conditions specified in clause (b) of sub-section (3) are satisfied. There is nothing in the context which compels us to read the word "may" as "shall" and it seems to us clear that the Government was intended to have a discretion. But how was the Government intended to operate or exercise the discretion. Does the Act as a whole or the provision in question in particular indicate any policy which the Government has to follow? The legislature has, no doubt, clearly laid down the conditions of eligibility for the exemption and it has clearly given to the Government a discretion so that the Government is not bound to grant the exemption to a factory which Is eligible to the exemption. But ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assume that co- operative sugar factories consisting only of sugarcane growers stand on a different footing and form a class by themselves or, for that matter, a distinct category. But what follows? Can the Government evolve a policy confining the benefit of the exemption to that category alone and exclude others however deserving they might be from the point of view of the object of the provision for the legislative bounty. The letter of the Government (annexure III) reading as under leaves no doubt in our mind that the Government could not have considered the applications of the writ petitioners and the appellant on their merits "Annexure III S.A. Quader, I.A.S. Hyderabad Special Secretary to Govt. Dated 6th Jan. 1968. Food & Agriculture Department D.O. letter No. 3960/Agri. III/67-1. Dear Rajah Saheb, Sub: Purchase tax on sugarcane-Exemption from payment of purchase tax to the extent of expansion-regarding. Ref: Your letter No. 54/66-67 dt. 6-2-1967 addressed to the Director of Agriculture. I am to invite reference to your letter cited and to state that the Government have given careful consideration to your request for exemption from payment of purchase tax to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the factories established in the co-operative sector. Whence then did the Government draw its inspiration for the policy? We should not be understood as saying that sugarcane factories established by co-operative societies of. sugarcane growers do not deserve encouragement or that they should not be granted exemption from payment of tax. All that we say is that the wholesale exclusion of other factories established, say, by a firm consisting of sugarcane growers, or a company of which sugarcane growers are the shareholders, is not warranted by anything in the provisions of section 21(3). How could we assume in the light of the language of section 21(3)(b) that the legislature intended that new factories owned by co-operative societies consisting of cane growers alone should be the object of the legislative bounty. What is the relevant distinction between a factory established by a co-operative society consisting of sugarcane growers and a factory established by a sugarcane grower or a firm consisting of sugarcane growers for the purpose of the sub-section. The object of the sub-section, as we said, is to give incentive to new and expanded factories with the ultimate object of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e passage from Halsbury's Laws of England quoted with approval in the majority judgment Vol. I, 4th Ed., para 33 at p. 35.: "A public body endowed with a statutory discretion may legitimately adopt general rules or principles of policy to guide itself as to the manner of exercising its own discretion in individual cases, provided that such rules or principles are legally relevant to the exercise of its powers, consistent with the purpose of the enabling legislation and not arbitrary or capricious. Nevertheless, it must not disable itself from exercising a genuine discretion in a particular case directly involving individual interests; hence it must be prepared to consider making an exception to the general rule if the circumstances of the case warrant special treatment." In British Oxygen Co. Ltd. v. Minister of Technology[1970] 3 All E. R. 165., the question was whether the Industrial Development Act, 1966, which provided at the relevant time that the Board of Trade may make to any person a grant towards approved capital expenditure incurred by that person in providing new machinery or plant for carrying on a qualifying industrial process in the course of business, authorized th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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