Judgment

RAY, J.:- These appeals are by certificate against the judgment and order dated 16 April, 1968 of the High Court of Mysore dismissing the applications of the appellants under Article 226 of the Constitution for writs, orders and directions prohibiting the respondent-State of Mysore and the Commissioner for Commercial Taxes at Bangalore from levying or taking proceedings to levy any purchase tax on purchase of sugarcane from the grower or from collecting or taking any proceedings for recovery of any such tax with or without penalty from the appellants. The appellants also asked for orders, writs and directions for refund of several sums of money collected as and for purchase tax.

2. The appellants are the India Sugars and Refineries Ltd. and the Salar Jung Sugar Mills Ltd. The India Sugars and Refineries Ltd. is situated at Hospet in Bellary District in Mysore and the Salar Jung Sugar Mills Ltd. is situated at Munirabad in Raichur District in Mysore.

3. The appellant, the Indian Sugars and Refineries Ltd. in four applications now Civil Appeals No. 2015, 2016, 2017 and 2014 of 1968 impeached the demand & collection made against the appellant for large sums of money as and for purchase tax and penalty on the purchase of sugarcane from the growers for the period 1April, 1962 to 30 June, 1967 and further asked for refund of large sum of money collected as purchase tax.

4. The appellant Salar Jung Sugar Mills Ltd. in four applications now Civil Appeals No. 2003, 2004, 2005 and 2002 of 1968 asked for similar orders and directions in respect of the period 1 July, 1963 to 30 June, 1967.

5. In the fifties practically all the States in which sugarcane was grown for the purpose of manufacturing sugar used to levy cess on sugarcane brought into the premises of sugar factories. This Court in Diamond Sugar Mills v. State of U. P. (1961) 3 SCR 242 held that Section 3 of the U. P. Sugarcane Cess Act, 1956 which empowered the Governor of the State to impose cess on entry of sugarcane into the premises of a factory did not fall within Entry 52 of List II and as there was no entry in the State List or in the Concurrent List in which the said Act could fall, it was beyond the legislative competence of the State Legislature. The decision of this Court was given on 13 December, 1960. The Sugarcane Cess (Validation) Act, 1961 was passed by Parliament validating the imposition of collection of cess on sugarcane under several State enactment s before the commencement of the Validation Act of 1961.

6. The Mysore State Legislature imposed tax on purchase of sugarcane into force on 1 October, 1961, by Mysore Act No. 11 of 1961 which cane purchased by sugar factories. Sugarcane was included at Serial No. 11-A in the Third Schedule to the Mysore Sales Tax Act, 1957 The relevant provision in the Mysore Act is as follows:-

"11-A Sugarcane Purchased by the last dealer in the State liable to tax under this Act. fifteen per cent".

7. As a result of the amendment the appellants were subjected to levy of tax on purchase of sugarcane.

8. The appellants raised three principal contentions. First, there was no mutual assent by and between the appellants and the growers of sugarcane in regard to supply of sugarcane by the growers and the acceptance by the factories and therefore there was no purchase and sale of sugarcane. Secondly, the appellants are not dealers within the meaning of Section 2 (k) of the Mysore Sales Tax Act. Third, the levy of tax on purchase of sugarcane at different rates in different States was discriminatory and in violation of Article 14.

9. In order to appreciate the rival contentions on the first ground as to whether there was a purchase or sale of sugarcane the relevant legislation has to be looked into and facts and circumstances have to be ascertained for finding out as to what the actual transaction was.

10. In exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1955 the Central Government in 27 August, 1955 made