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TMI Blog1960 (12) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... overnor of U. P. the power to impose by notification a cess not exceeding 4 annas per maund on the entry of sugarcane into an area specified in such notification for consumption, use or sale therein . This Act it may be mentioned had taken the place of an earlier Act, the U. P. Sugar Factories Control Act, 1938, s. 29 of which authorised the Governor of U. P. to impose by a notification after consultation with the Sugar Control Board under the Act a cess not exceeding 10 per cent of the minimum price, if any, fixed under s. 21 or 4 annas per maund whichever was higher on the entry of sugarcane into a local area specified in such notification for consumption, use or sale therein . Notifications were issued under this provision for different crushing seasons starting from 1938- 39, the last notification issued thereunder being for the crushing season of 1952-53. These notifications set out a number of factories in a schedule and provided that during 1952-53 crushing season cess at a rate of three annas per maund shall be levied on the entry of all sugarcane into the local areas comprised in factories mentioned in the schedule for consumption, use or sale therein. Act No. XXIV of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adesh set apart for the purchase 'of cane intended or required for use. consumption or sale in such factory shall be deemed to be the premises of the factory. (2) The cess imposed under sub-section (1) shall be payable by the owner of the factory and shall be paid on such date and at such place as may be prescribed. (3) Any arrear of cess not paid on the date prescribed under sub-section (2) shall carry interest at 6 per cent. per annum from such date to date of payment. There is a later amendment by which the words four annas have been altered to twenty-five naye paise and the words Gur, Rab or Khandsari Sugar Manufacturing Unit have been added after the words factory in sub-section (1). These amendments are however not relevant for the purpose of this appeal. Section 9 of this Act repealed s. 20 of the Sugar Cane (Regulation of Supply and Purchase) Act, 1953. Sub-sections 2 and 3 of s. 9 are important. They are in these words:- 2. Without prejudice to the general application of section 24 of the U.P. General Clauses Act, 1904, every notification imposing cess issued and every assessment made (including the amount of cess collected) under or in pursuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal has been filed. Of the several grounds urged before the High Court only two are urged before us in appeal. One is that the law was invalid, being beyond the legislative competence of the State legislature; the other is that in any case the provision giving the Governor power to levy any cess not exceeding 4 annas without providing for any guidance as to the fixation of the particular rate, amounted to excessive delegation, and was accordingly invalid. The answer to the question whether the impugned law was within or beyond the legislative competence of the State legislature depends on whether the law falls under Entry 52 of the State List- List II of the Seventh Schedule to the Constitution. It is quite clear that there is no other entry in either the State List or the Concurrent List under which the legislation could have been made. Entry 52 is in these words:- Tax on the entry of goods into a local area for consumption, use or sale therein . Section 3 of the impugned Act which has already been set out provides for imposition of a cess on the entry of sugarcane into the premises of a factory for use, consumption or sale therein. Is the premises of a factory a local are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egion of the country as distinguished from the general area. While it may not be possible to say that the words local area have acquired a definite and precise meaning and the phrase may have different connotations in different contexts, it seems correct to say that it is seldom, if ever, used to denote a single house or a single factory. The phrase appears in several statutes, some passed by the Central Legislature and some by the Provincial or State Legislatures; but in many of these the words have been defined. These definitions being for the peculiar purpose of the particular statute cannot be applied to the interpretation of the words local area as used in the Constitution. Nor can we derive any assistance from the judicial interpretation of the words local area as used in the Code of Criminal Procedure or other Acts like Bengal Tenancy Act as these interpretations were made with reference to the scope of the legislation in which the phrase occurs. Researches into dictionaries and law lexicons are also of 'no avail as none of these give the meaning of the phrase local area . What they say as regards the meaning of the word local offers no guidance except that it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration in determining the meaning of the terms used in the British North America Act in conferring power and the extent of that power. This has necessarily to be so as in the words of Mr. Justice Brewer in South Carolina v. United States (1) to determine the extent of the grants of power, we must, therefore place ourselves in the position of the men who framed and adopted the Constitution, and inquire what they must have understood to be the meaning and scope of those grants. Turning now to the previous legislative history we find that in the Government of India Act, 1935, Entry 49 of the Legislative List (List II of the 7th Schedule) was in the same words as Entry 52 of the Constitution except that instead of the words taxes as in Entry 52 of List II of the Constitution, Entry 49 List II of the Government of India Act, used the word cess . In Government of India Act, 1915, the powers of the provincial legislatures were defined in s. 80A. 'Under clause (a) of the third sub- section of this section the local legislature of any province has with the previous sanction of the Governor- General power to make or take into consideration any law imposing or authorising the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i tax then was that it was on the entry of goods into an area administered by a local body. Bearing in mind this characteristic of octroi duty we find on an examination of items 7 and 8 of the Schedule Rules mentioned above that under the Government of India Act, 1919, the local legislature of a Province could without the previous sanction of the Governor-General impose a tax-octroi--for entry of goods into an area administered by a local body, that is, a local government authority and the area in respect of which such tax could be imposed was mentioned in item 8 as local area. It is in the background of this history that we have to examine the use of the word local area in item 49 of List II of the Government of India Act, 1935. Here the word octroi has given place to the longer phrase cesses on the entry of goods into a local area for consumption, use or sale therein. It was with the knowledge of the previous history of the legislation that the Constitution-makers set about their task in preparing the lists in the seventh schedule. There can bring title doubt therefore that in using the words tax on the entry of goods into a local area for consumption, use or sale th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns which were issued under this provision set out a number of factories for the levy of a cess at the rate of three annas per maund on entry of all sugarcane into the local area comprised in the factories mentioned in the schedule for consumption, use or sale therein. Section 29 was clearly within the words of entry 49 of List 11. The question that arose before the Court was whether the specification of certain factories as local areas was valid law. The learned Judge appears to have proceeded on the basis that the Governor had notified the area comprised in 74 factories as one local area and held that once this was 'done the entire area covered by all these factories should be considered as one statutory local area. It appears to us that the learned Judge was not right in thinking that the area comprised in 74 factories was notified as one local area. What appears to have been done was that the area of each factory was being notified as a local area for the purpose of the Act. Proceeding on the basis that the area comprised in the 74 factories was notified as one local area the learned Judge addressed himself to the question whether this entire area was a local area within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of the words local area and proper weight to the rule of interpretation mentioned above, we are of opinion that the Constitution makers did not use the words local area in the meaning which the learned Judge attached to it. We are of opinion that the proper meaning to be attached to the words local area in Entry 52 of the Constitution, (when the area is a part of the State imposing the law) is an area administered by a local body like a municipality, a district board, a local board, a union board, a Panchayat or the like. The premises of a factory is therefore not a local area . It must therefore be held that s. 3 of the U. P. Sugarcane Cess Act, 1956, empowering the Governor to impose a cess on the entry of sugarcane into the premises of a factory did not fall within Entry 52 of the State List. As there is no other Entry in either State List or Concurrent List in which the impugned law could fall there is no escape from the conclusion that this law was beyond the legislative competence of the State Legislature. The law as enacted in s. 3 of the U. P. Sugarcane Cess Act, 1956, must therefore be struck down as invalid. It may be mentioned that this is not a case wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Province and to divide up the entire province into industrial areas or factory areas or mill areas or in any other kind of areas, and each one of these areas may be notified and be treated as a local area. And once such areas come into existence and remain in operation they can be regarded as of List II in which a cess may be levied. In other words, the view which they favoured was to read the expression local area . practically to mean any area entry into which was by the relevant fiscal statute, made the subject of taxation. In my opinion that is not a correct interpretation of the entry and agree with my learned brethren that having regard to the historical material, which has been exhaustively set out and discussed in their judgment, the word local area can in the entry designate only a predetermined local unit--a unit demarcated by statutes pertaining to local self government and placed under the control and administration of a local authority such as a municipality, a cantonment, a district or a local board, an union or a panchayat etc. and not any region, place or building within the State which might be defined, described or demarcated by the State's taxing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the context of the points requiring decision in the present case. With this background I shall analyse the terms of s. 3(1) of the Act (United Provinces Act XXII of 1956) to ascertain where precisely the provision departs from the scope or content of entry 52. I will read that section which runs: 3. (1). The State Government may by notification in the official gazette impose a cess not exceeding four annas per maund on the entry of the cane into the premises of a factory for use, consumption or sale therein: Provided that the State Government may likewise remit in whole or in part such cess in respect of cane used or to be used in factory for any limited purpose specified in the notification. Explanation:-If the State Government, in the case of any factory situate outside Uttar Pradesh, so declare, any place in Uttar Pradesh set apart for the purchase of cane intended or required for use, consumption or sale in such factory shall be deemed to be the premises of the factory. Leaving the Explanation for-the present, there are two matters which require advertence: (1) The first was the point emphasised by Mr. Sanyal for the appellant, that entry into the premises of a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rea but there is no legal obligation to do so, and the place at which the entry of the goods is checked and the duty realised is a matter of administrative machinery which does not touch on the validity of the tax imposition. It would thus not detract from the validity of the tax if by reason of convenience for effecting collection, the tax was levied at the stage of entry into the premises of a factory. So long, therefore, as the cane which enters a factory for the purpose of consumption therein comes from outside that local unit of administration in which the factory is situated, in my opinion it would be covered by the words of entry 52 and well within the legislative competence of the State Government. The language of s. 3, as it stands appears, however, also to extend to cases where the supply of cane to a factory is from within the same local unit of administration; in other words, where there is no entry of the cane into the local area as explained earlier. If this were the true position, the enactment cannot be invalidated as a whole. It would be valid to the extent to which the tax is levied on cane entering a factory for the purpose of consumption etc. therein from outsid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red upon the State Legislature by the relevant legislative entry. In view of the strong opinion entertained by my learned brethren, I have given the matter the utmost consideration, but I feel that the words which I have suggested are a permissible mode of construction of a statute by which wide words of an enactment which would cover an event, contingency or matter within legislative power as well as matters not within it, are read as confined to those which the law making only had authority to enact. In my judgment the opinion of the Federal Court in In re Hindu Women's Rights to Property Act, 1937 (1), affords a useful analogy to the present case. The enactment there impugned provided for the devolution or succession to property in general terms which would have included both agricultural as well as nonagricultural property, whereas the Central Legislature which enacted the law had no power to deal with succession to agricultural property. The contention urged before the Court was that by the use of the expression property , the legislature had evinced an intention to deal with property of every type and that it would be rewriting the enactment and not carrying out the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state situate within the Colony, in respect of which alone the Supreme Court of Victoria had power to grant probate: Their Lordships thought that in imposing a duty of this nature the Victorian Legislature also was contemplating the property which was under its own hand, and did not intend to levy a tax in respect of property beyond its jurisdiction . And they held that the general expressions which import the contrary ought to receive the qualification for which the appellant contends, and that the statement of personal property to be made by the executor under s. 7(2) of the Act should be confined to that property which the probate enables him to administer (Per Sir Maurice Gwyer, C. J. [1941] F.C.R. 12, 23,). To confine the tax to the limitations subject to which it could, under the Constitution, be levied is, in my opinion, not an improper method of construing the statute. The manner in which the word property was read down by the Federal Court in In re Hindu Women's Rights to Property Act, 1937 (1) and the word personal property construed by the Privy Council in Blackwood v. Queen ([1882] 8 A.C. 82.) make in my opinion less change in the text of the impugned provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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