KOLHAPUR SUGAR MILLS LIMITED Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) BY the present writ petition under Article 226 of the Constitution of India, the petitioners have challenged the legality and validity of communication dated 16th January 1987 and notices dated 31st July 1987 addressed to the Sangli Bank Ltd., Canara Bank and United Agencies, Kolhapur and the petitioners have asked for the quashing and setting aside of the same.

(2.) THE first petitioner is a company incorpora-ted under the provisions of the Companies Act, 1913. the 2nd petitioner is the shareholder and the Director of the 1st petitioner. Prior to 14th August 1972, the 1st petitioner company owned and operated a Sugar Factory at Kolhapur known as The Kolhapur Sugar Works Limited. (hereinafter referred to as 'the said Undertaking'). With effect from 14th August 1972 the petitioners transferred the said Undertaking to a subsidiary of theirs known as Kolhapur Cane Sugar Works Limited (hereinafter referred to as 'KCSW'). The said subsidiary i.e. KCSW thereafter operated the said Undertaking as an independent manufacturer and was separately licenced under the relevant provisions of law. Thus at all material times particularly for the sugar year 1978-79, the said Undertaking was of the ownership of KCSW. However, in 1983 it was decided to co-operativise the said undertaking pursuant to which an agreement was entered into with Chhatrapati Rajaram Sahakari Sugar Karkhana Limited (hereinafter referred to as 'CRSSK Ltd.'). In fact even earlier, the Government of Maharashtra had passed necessary resolution on 9th December 1983 for co-operativisation and possession of the said Undertaking had been handed over to the Joint Management Committee. The Government had also appointed Valuation Committee for determining the value of the said Undertaking and certain other assets and the Joint Valuation Committee had made a report on 23rd May 1985. Ultimately it was agreed that the entire shareholding in respect of KCSW which were then held by another subsidiary of the 1st Petitioner Company known as Unikol Food and Beverages Private Limited would be sold by Unikol to CRSSK Ltd. for a consideration of Rs.25 lakhs. The entire liability including the liability to pay the cane growers was agreed to be taken over by CRSSK Ltd. However, certain liability including the liability in respect of purchase tax loans for the 1978-79 was not taken over by the said co-operative and was agreed to be the liability of the 1st Petitioner-Company. The said transfer took place on the terms and conditions recorded in the agreement dated 31st October 1986 inter alia contained the above provisions for purchase tax loan for the year 1978-79. The present writ petition revolves around the said liability which was agreed to be retained by the Petitioner-Company. It is the petitioners' contention in the petition that in fact the liability in relation to the purchase tax loan for the period 1978-79 could not be that of the 1st petitioner but that of KCSW by virtue of the fact that the said liability arose by virtue of KCSW being the occupier as defined in the Maharashtra Purchase Tax on Sugarcane Act, 1962 (herein-after referred to as 'the said Act"). It was only in order to settle the matter once and for all and not to prevent the process of cooperativisat-ion which had become inevitable, the petitioners agreed to take over the said liability pending settlement of the issue with the Government which settlement as narrated in the writ petition never took place. By communication dated 28th November 1982 the 1st petitioners were informed by the State of Maharashtra that because the 1st petitioner had agreed to take over the liabilities in respect of purchase tax loan for the year 1978-79 that they were required to pay the amount of Rs.35,58,000/- with interest to the Government. As the petitioners felt that the State Government was not justified in calling upon the 1st Petitioners to pay the said amount, the petitioners made a representation to the Respondents that as far as the 1st petitioners were concerned, they should not be discriminated against in the manner in which it was done and that the 1st petitioner should have been granted remission as earlier proposed. Thereafter by a letter dated 5th March 1987 the Joint Director of Sugar, again made a demand of the above mentioned amount. Consequent upon these demands the 2nd Respondent by his letters addressed to Sangli Bank Ltd., Canara Bank and United Agencies, Kolhapur required under Section "17/17/39" of the said Act to pay to him forthwith any amount due from them to or held by them for or on account of Purchase Tax Loan for 1978-79 Rs.35,58,000/- to the amount of arrears shown therein. At the top of the said notice reference is made to Section 12 of the said Act. The petitioners in the present petition as mentioned above, have challenged the communication dated 20th November 1986, communication dated 5th March 1987 and the three notices addressed to the said Banks and United Agencies.

(3.) DR .Chandrachud took us through several provisions of the said Act especially definition of 'occupier' contained in Section 2(d) of the said Act which inter alia provides that 'Occupier' of a factory means the person who has ultimate control over the affairs of the factory and where the said affairs are entrusted to a Managing Agent such Agent should be deemed to be the 'Occupier' of the said factory which term would include also any person appointed by the occupier to act as a purchasing agent. Levy of purchase tax, according to Dr. Chandrachud was as per Section 3 of the said Act which provides that there shall be levied and collected a tax on the purchase of sugar-cane such sugarcane being purchased for the purpose of the use thereof in the manufacture of sugar in a factory, and sub-section (4) thereof further provides that the tax levied under the earlier sub-sections of the said Act shall be paid by the Occupier of the factory at such intervals, and in such manner as is further provided in the said Act. Section 6 thereof provides for Returns to be filed by the Occupier. Section 7 provides for assessment and collection of tax and sub-section (2) thereof provides for the best judgment assessment in the event of failure on the part of the Occupier to submit the return. Section 12 of the said Act lastly provides that an assessment made in accordance with the provisions of section 7 shall, subject to section 8 and 9, be final and shall not be called in question in any Court, and more importantly sub-section (2) thereof provides for any tax or penalty recoverable under the Act and remaining unpaid to be recovered as an arrears of land revenue.