judgement:
Appeal No. 38 of 1989.
From the Judgment and order dated 15.3.
1988 of the Central Administrative Tribunal, Ahmedabad in M.A. No. 49 of 1988.
P.H. Parekh and Shishir Sharma for the Appellant.
B. Dutta, Additional Solicitor General, Ms. Indu Malho tra and C.V. Subba Rao for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The appellant was working as an Upper Division Clerk in the year 1975.
He was placed under suspen sion by an order dated 25.7.1975 as a result of the institu tion of a criminal prosecution against him and he continues to remain under suspension till today.
By an order dated 4.9.
1975 he was sanctioned subsistence allowance at the rate of 50 per cent of his salary last drawn.
By a further order made on 6.6.1982 the subsistence allowance was reduced to 25 per cent of the salary he was drawing on the date of suspension.
The increments he would have earned from time to time and the periodical revisions of pay scales were not taken into consideration in determining the subsistence allowance.
The charge sheet was filed in the criminal case against the appellant in 1976 and the case was committed to the sessions, but the committal proceedings were quashed by the High Court in 1978.
Then the proceedings again began before the Metropolitan Magistrate in 1979.
The case, however, has not yet come to an end.
Aggrieved by the denial of the salary and allowances due to him for a long time on account of the order of suspension and in particular the order fixing the subsistence allowance at 25 per cent of the salary which he was drawing at the time of suspension by the Order dated 6.5.
1982, the appel lant approached in the year 1988 the Central Administrative Tribunal (Ahmedabad Bench) for a direction to be 227 issued to the Government to restore the original Order dated 4.8.
1975 by which the subsistence allowance was fixed at 50 per cent of his salary.
That petition was dismissed by the Tribunal by its order dated 15.3.1988 on the ground that the appellant had approached the Tribunal more than five years after the date on which the Order dated 6.5.
1982 had been passed apparently on the ground of limitation set out in sub section (2) of section 21 of the Administrative Tribu nals Act, 1985 (hereinafter referred to as 'the Act ').
Aggrieved by the order of the Tribunal, the appellant filed this appeal.
The question for consideration in this appeal by special leave is whether in a case of this nature, the Tribunal was right in holding that the application before it, was barred by time.
Sub section (1) of section 21 of the Act, no doubt, says that a Tribunal shall not admit an application in a case where a final order such as is mentioned in clause (a) of sub section (2) of section 20 has been made in connection with the grievance unless the application is made, within one year from the date on which such final order has been made, and in a case where an appeal or representation such as is mentioned in clause (b) of subsection (2) of section 20 has been made and a period of six months had expired thereafter without such final order having been made, within one year from the date of expiry of the said period of six months.
Sub section (2) of section 21, however, provides that notwithstanding anything contained in sub section (1) of section 21 where the grievance in respect of which an application is made had arisen by reason of any order made at any time during the period of three years immediately preceding the date on which the jurisdiction, powers and authority of the Tribunal become exercisable under the Act in respect of the matter to which such order related, and no proceedings for the redressal of such grievance had been commenced before the said date before any High Court, the application shall be entertained by the Tribunal if it is made within the period referred to in clause (a), or, as the case may be, clause (b) of sub section (1) or within a period of six months from the said date, whichever period expires later.
Sub section (3) of section 21 further confers power on the Tribunal to condone the delay in certain cir cumstances if the applicant satisfies the Tribunal that he had sufficient cause for not making the application within such period.
In the present case the main grievance of the appellant was not that the Order dated 6.5.1982 by which the subsist ence allowance payable to him was reduced to 25 per cent was bad at the commencement although there were some allegations to that effect but it was one relating to the failure of the authority or the Government to review the Order dated 6.5.1982 even though a long period of 5 years had elapsed 228 after the reduction of the subsistence allowance.
His con tention was that the delay in the conclusion of the criminal proceedings as a consequence of which he had been kept under suspension was not due to him and in the circumstances it was not just and proper that he should be paid a subsistence allowance at a reduced rate for an unreasonably long period.
In support of his case the appellant relied upon a decision dated 23.6.1987 of the very bench of the Tribunal in Shri Bhupendra Mahashuklal Mehtap vs The Union of India & Ors., in T.A. No. 223 of 1986 (S.C.A. No. 3509 of 1922) in which Fundamental Rule 53 which authorised the Government to review an order regarding subsistence allowance arose for consideration.
In the said case the Ahmedabad Bench of the Tribunal quashed the Order dated 6.5.1982 passed against the applicant in that case by which the subsistence allowance payable to the said applicant had been reduced.
An order of suspension is not an order imposing punish ment on a person found to be guilty.
It is an order made against him before he is found guilty to ensure smooth disposal of the proceedings initiated against him.
Such proceedings should be completed expeditiously in the public interest and also in the interest of the Government servant concerned.
The subsistence allowance is paid by the Govern ment so that the Government servant against whom an order of suspension is passed on account of the pendency of any disciplinary proceeding or a criminal case instituted against him could maintain himself and his dependants until the departmental proceeding or the criminal case as the case may be comes to an end and appropriate orders are passed against the Government servant by the Government regarding his right to continue in service etc.
depending upon the final outcome of the proceedings instituted against him.
The very nomenclature of the allowance makes it clear that the amount paid to such a Government servant should be suffi cient for bare subsistence in this world in which the prices of the necessaries of life are increasing every day on account of the conditions of inflation obtaining in the country.
It is luther to be noted that a Government servant cannot engage himself in any other activity during the period of suspension.
The amount of subsistence allowance payable to the Government servant concerned should, there fore, be reviewed from time to time where the proceedings drag on for a long time, even though there may be no express rule insisting On such review.
In doing so the authority concerned no doubt has to take into account whether the Government servant is in any way responsible for the undue delay in the disposal of the proceedings initiated against him.
If the Government servant is not responsible for such delay or even if he is responsible for such delay to some extent but is not primarily responsible for it, it is for the Government to recon 229 sider whether the order of suspension should be continued or whether the subsistence allowance should be varied to his advantage or not.
The decision on the said question no doubt depends upon several factors relevant to the case.
In the instant case the appellant was suspended in the year 1975.
Now nearly 13 years have elapsed from the date of suspen sion.
He was paid subsistence allowance at the rate of 50 per cent of the salary last drawn by him from 1975 and 1982 and from 1982 he is being paid 25 per cent of the salary last drawn by him.
It is not clear from the record before us, since the application made by the applicant was dis missed by the Tribunal at the preliminary stage, whether the appellant was responsible for the inordinate delay in the disposal of the case instituted against him.
In the circum stances of the case we are of the view that even though no relief could be given to the appellant in respect of the period which was beyond three years from the date on which the Tribunal commenced to exercise its powers under the Act, it was quite open to the Tribunal to consider whether it was proper for the Government to continue to give effect to the Order dated 6.5.1982 from any subsequent date and if the Tribunal came to the conclusion that the Order dated 6.5.1982 was required to be revised it could pass an appro priate order notwithstanding the fact that a period of five years had elapsed from the date on which the order reducing the subsistence allowance was passed.
While doing so it was open to the Tribunal to fix a date within the period of the said three years from which the appellant should be paid the subsistence allowance at the revised rate of course, having due regard to the date of the application also.
In the alternative, the Tribunal could have asked the authority concerned to review the order.
In the circumstances, the Tribunal was not right in rejecting the application solely on the ground that the order reducing the subsistence allowance having been passed on 6.5.
1982 the Tribunal could not entertain an application for directing the Government to revise the Order dated 6.5.
1982 even in respect of any period within three years from the date on which the Tribunal commenced to exercise its powers having due regard to the date of the application also since we feel that the cause of action in respect of such prayer arises every month in which the subsistence allowance at the reduced rate is paid.
We therefore set aside the order of the Tribunal and remand the case to it to dispose of the application made by the appellant on merits.
We make an order accordingly.
There is no order as to costs.
P.S.S. Appeal allowed.

summary/full:
Sub section (2) of section 21 of the empowers the Tribunal not to entertain an applica tion the grievance in respect of which had arisen beyond three years immediately preceding the date on which the jurisdiction, powers and authority of the Tribunal became exercisable under the Act.
The appellant, an Upper Division Clerk, was suspended from service, in July 1975 pending on account of the insti tution of criminal proceedings against him.
By an order dated August 4, 1975 he was sanctioned subsistence allowance at the rate of 50 per cent of his salary last drawn.
By a further order dated May 6, 1982 the subsistence allowance was reduced to 25 per cent of the salary he was drawing on the date of suspension.
He moved a petition before the Tribunal in the year 1988 for a direction to the Government to restore the original order of August 4, 1975.
That peti tion was dismissed by the Tribunal solely on the ground that the order reducing the allowance having been passed on May 6, 1982, it could not entertain the application made more than five years thereafter, apparently on the ground of limitation set out in section 21(2) of the Act.
In this appeal by special leave it was contended for the appellant that the Government had failed to review the order of May 6, 1982 even though a long period of five years had elapsed after the reduction of the subsistence allowance, that the delay in conclusion of the criminal proceedings, as a consequence of which he had been kept under suspension, 225 was not due to him and in the circumstances it was not just and appropriate that he should be paid a subsistence allow ance at a reduced rate for an unreasonably long period.
Allowing the appeal, HELD: 1.
The Tribunal was not right in rejecting the application.
[229F] 2.
The cause of action in respect of a prayer seeking enhancement of subsistence allowance arises every month in which the said allowance at the reduced rate is paid.
There fore, in the instant case, though no relief could be given to the appellant in respect of the period which was beyond three years from the date on which the Tribunal commenced to exercise its powers under the Act, it was quite open to the Tribunal to consider whether it was proper for the Govern ment to continue to give effect to the order dated May 6, 1982 from any subsequent date, and if the Tribunal came to the conclusion that the said order was required to be re vised it could pass an appropriate order notwithstanding the fact that a period of five years had elapsed from the date on which the order reducing the subsistence allowance was passed.
While doing so it was open to the Tribunal to fix a date within the period of the said three years from which the appellant should be paid subsistence allowance at the revised rate having due regard to the date of the applica tion.
[229C E] 3.1.
The very nomenclature of the allowance makes it clear that the amount paid to a Government servant under suspension should be sufficient for bare subsistence in this world in which the prices of the necessaries of life are increasing every day on account of the conditions of infla tion obtaining in the country.
More so, when a Government servant cannot engage himself in any other activity during the period of suspension.
The amount of subsistence allow ance payable to the Government servant concerned should, therefore, be reviewed from time to time where the proceed ings drag on for a long time, even though there may be no express rule insisting on such review.
[228F G] 3.2.
In doing so, the authority concerned no doubt has to take into account whether the Government servant is in any way responsible for the undue delay in the disposal of the proceedings initiated against him.
If the Government servant is not responsible for such delay or even if he is responsible for such delay to some extent but is not pri marily responsible for it, it is for the Government to consider whether the 226 order of suspension should be continued or whether the subsistence allowance should be varied to his advantage or not.
[228G H; 229A] 4.
The case is remanded to the Tribunal to dispose of the application made by the appellant on merits.
[229G]


judgement:
ivil Appeal Nos. 850852 of 1988.
From the Order dated 23.10.87 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 830/83 B2 and C/3 105 & 3 105 of 87/B 2.
Order Nos.
2091 to 2093/87 B. A.N. Haksar, H.S. Anand and Mrs. M. Karanjawala for the Appellants.
G. Ramaswamy, Additional Solicitor General, Ashok K. Shrivastava and P. Parmeswaran for the Respondent.
283 The Judgment of the Court was delivered by RANGANATHAN, J.
The appellant, M/s Auto Tractors Limit ed, is a company manufacturing tractors.
For purposes of manufacture, the company imports certain parts and compo nents from abroad.
There are two notifications on the Government of India granting certain concessions from the levy of customs duty which are applicable to such goods as have been imported by.
the appellant.
The first of these, namely, Notification No. 200/79 dated 28.09.1979 (as amended from time to time) exempts components "required for the manufacture of heavy commercial motor vehicles . or of tractors" from so much of the customs duty as is in excess of 25 per cent ad valorem and the whole of the additional duty leviable there on.
The grant of the concession was subject to the fulfill ment of certain conditions specified in the notification.
The second notification was Notification No. 179/80 dated 4.9.1980 (as amended from time to time).
This notification confers an exemption in respect of parts of articles falling under specific headings in the First Schedule to the .
These admittedly included parts required for the purposes of the initial setting up or for the assem bly or manufacture of "tractors", this being an article falling under heading No. 87.01(1) of the First Schedule above referred to.
This exemption was in respect of so much of the customs duty as is in excess of the rate applicable to the said article (i.e. tractor) when imported complete.
This concession was again subject to a certificate and recommendation from certain specified authorities, one of whom is the Directorate General of Technical Development (DGTD) The relief available to the assessee under the first notification of 1979 is, apparently, larger than the one available under the second notification of 1980.
The appellant company imported three consignments.
Each of the consignments was cleared after production of a cer tificate from the DGTD in the following terms: "Certified that M/s Auto Tractors Ltd., Luc know are holding a valid Industrial Licence for the manufacture of agricultural tractors and have an approved manufacturing programme.
It is further certified that the above compo nents of agricultural tractors, which fall under ICT No. 87.01 (1) qualify for conces sional rate of import duty in terms of Cus tom 's Notification No. 179/F No. 370/99/79CUS.
I dated 4.9.1980." (underlining ours).
284 Apparently, since the certificates of the DGTD referred only to Notification No. 179/80, the appellant was granted the concession available under the said Notification.
The appel lant cleared the goods, availing itself of the said conces sion, in March, May and June 1981.
Subsequently, the appellant appears to have realised that it was entitled to the larger concession available under Notification No. 200 of 1979 and that it had erred in clearing the goods after payment of duty subject only to the smaller concession available under Notification No. 179 of 1980.
The appellant therefore filed three refund applica tions in August, September and October 1981 claiming refund to the extent of Rs. 1,55,342.50, Rs. 1,28,350.05 and Rs.6,46,415.44, being the difference between the entitle ments on concession under the two notifications in question.
It also appears that the appellant subsequently applied to the DGTD for an amendment of the original certificates to make it clear that the goods imported by the appellant were eligible for the concession under notification No. 200 of 79.
The DGTD on such application issued a certificate to the following effect: "Certified that M/s. Auto Tractors Ltd. Pra tapgarh are holding an Industrial Licence to manufacture Agricultural Tractors and have an approved manufacturing programme.
It is fur ther certified that the items listed above are components of agricultural tractors falling under ITC No. 87.01 (1) and are eligible for concessional rate of import duty under custom notification No. 200/79 and 52/81 as extended by Custom 's notification No. 81/81 and 82/81 both dated 28.3.
This supersedes the earlier duty concession certificate issued by this office vide Notifi cation No. 179/F No. 370/ 99/79 CUS.
I dated 4.9.1980 under this office letter No. DD II/5(49)/79 Ag dated 16.1.81.
" These amended certificates were also produced before the Customs authorities.
The assessee 's prayer for refund was however rejected by the Assistant Collector of Customs on the ground that the assessee had failed to produce "end use" certificates.
The assessee 's appeals to the Collector of Customs (Appeals) also failed.
There were further appeals to the CUstoms, Excise and Gold (Control) Appellate Tribunal, which by its order dated 23.10.1987, dismissed the appeals of 285 the Appellants and hence the present appeals.
The Tribunal disposed of the assessee 's claim by a short order.
It observed that the Notification No. 200/79 entitled an assessee to the concessions therein mentioned on the fulfillment of three conditions: (i) A manufacturing programme as duly approved by the Direc tor General of Technical Development (D.G.T.D.) should be produced at the time of clearance of the goods.
(ii) The list of components and goods should be produced duly certified by the D.G.T.D.; and (iii) An End use certificate from the same Directorate to be produced in clue course in regard to the consumption of goods in the manufacture of the motor vehicles or tractors, etc.
The Tribunal proceeded to observe: "The first statutory condition of the notifi cation that the manufacturing programme of the appellants as approved by the D.G.T.D. should have been produced before the Assistant Col lector at the time of clearance of the goods was not fulfilled by the appellants.
As a matter of fact at the time of clearance of the goods there was no claim even by the appel lants under Notification Nos. 200 and 201/79Cus.
Their claim at that time was under a different notification No. 179/80 Cus.
Which contained no requirement to produce an ap proved manufacturing programme.
Since the statutory wording of the notification made it imperative for the appellants that the ap proved manufacturing programme should have been produced at the time of clearance and since this condition was not fulfilled, the entitlement of the appellants to the exemption is not accepted.
The approved manufacturing programme was available all along with the appellants yet they did not produce it at the time of clearance before the Assistant Collec tor." (underlining ours) We have heard the learned counsel for the appellant as well as learned Additional Solicitor General and we are of the opinion that 286 the Tribunal has erred in denying the appellant the benefit of the Notification No. 200 of 1979.
This notification made the availability of the concession thereunder subject to three conditions of which one alone is relevant for our purposes.
The Tribunal thought that this condition was that the approved manufacturing programme should have been pro duced at the time of clearance and it has denied the asses see the benefit of the concession, even though satisfied that the approved manufacturing programme was all along available with the assessee, because such programme was not produced at the time of the clearance.
The Tribunal has committed an error in its reading of the relevant condition of the notification.
The condition is not that the manufac turing programme should be produced but that "the importer should produce evidence to the Assistant Collector of Cus toms at the time of clearance of the components or the goods that they have a programme duly approved by the Ministry of Industry and the Industrial Adviser or Additional Industrial Adviser of the Directorate General of Technical Development of the Ministry of Industry for the manufacture of such motor vehicles . . or of tractors".
In other words, the importer had only to satisfy the customs authorities that it had an approved industrial programme for the manufacture of tractors by production of a certificate from the DGTD.
It is indeed common ground before us that the second set of cer tificates issued by the DGTD constitutes sufficient evidence that would entitle the appellant to the concession under Notification No. 20)/1979.
But the argument is that the amended certificates were produced not at the time of the clearance of the goods but only much later and that there fore the appellant is not entitled to the concession under the said notification.
There is a fallacy in this approach, for, even ignoring the subsequent amendment of the certifi cates, we are of the opinion that the production of the original set of certificates at the time of clearance of the goods was sufficient compliance with the terms of the noti fication in question.
We have extracted the terms of this certificate earlier.
It is an unequivocal certificate by the DGTD that the appellant holds a valid industrial licence for the manufacture of agricultural tractors and that it also has an approved manufacturing programme.
That is all the second set also says.
There is therefore no doubt that the assessee had produced evidence, in the form of the said certificate, of the fact that the appellant had an approved industrial programme.
This was the only requirement of the notification and this requirement has, in our opinion, been complied with.
The further words in the first set of certif icates that the assessee was eligible for the concession under 1980 notification were mere surplusage.
The omission of the assessee to request the DGTD to refer to the asses see 's entitlement under the 287 1979 notification or the omission of the DGTD to refer to the assessee 's entitlement under the 1979 notification cannot take away the assessee 's rights.
The grant of conces sion depends on a certificate that the assessee had an approved manufacturing programme which is there and not the reference therein to the notifications that can be availed of by the assessee.
We are therefore of the opinion that the order of the Tribunal should be set aside and that the assessee should be held entitled, in respect of the three consignments referred to earlier, to the concession available under Notification No. 200 of 79.
We direct ac cordingly.
The appeals are allowed but having regard to the circumstances we make no order as to costs.
P.S.S Appeals allowed.

dataset_name: IN-Abs

summary/full:
Customs Notification No. 200/79 dated 28.9.1979 exempts components required for the manufacture of heavy commercial motor vehicles or of tractors from customs duty in excess of 25 per cent ad valorem and whole of the additional duty leviable thereon.
Notification No. 179/ 80 dated 4.9.1980 exempts components required for the purpose of initial setting up or for the assembly or manufacture of tractors, an article falling under Heading No. 87.01(1) of the First Schedule of the Act from so much of the customs duty as is in excess of the rate applicable to the said article when imported complete.
The appellant company imported three consignments of components of agricultural tractors.
The Directorate General of Technical Development issued certificate in terms of notification No. 179/80 stating that the appellant company was holding a valid industrial licence for the manufacture of agricultural tractors and have an approved manufacturing programme.
The appellant cleared the goods availing itself of the said concession.
Having realised later that it was entitled to the larger concession available under Notifica tion No. 200 of 1979, it filed three applications in respect of the said consignments claiming refund to the extent of the difference between the entitlements to concession under the two notifications.
The DGTD issued certificates in terms of notification No. 200 of 1979 in its favour.
The Assistant Collector of Customs rejected assessee 's prayer on the ground that it had failed to produce end use certificate.
Its appeals before the Collector of Customs (Appeals) failed.
The Customs, Excise and Gold (Control) Appellate Tribunal dismissed the appeal on the ground that the appellant did not produce the approved manufacturing programme at the time of clearance of the goods as required under Notification No. 200 of 1979.
282 In these appeals it was contended for the respondents that since the amended certificates were not produced at the time of clearance but only much later the assessee was not entitled to the concession under Notification No. 200 of 1979.
Allowing the appeals, HELD: 1.
The assessee is entitled to the concession available under Notification No. 200 of 1979.
[287B C] 2.1 The grant of concession depends on production of evidence by the importer to the Assistant Collector of Customs at the time of clearance of the components or the goods that they have a programme duly approved by the Minis try of Industry and the Industrial Adviser or Additional Industrial Adviser of the Directorate General of Technical Development of the Ministry of Industry for the manufacture of such motor vehicles or of tractors and not on the refer ence in the certificates to the notifications that can be availed of by the assessee.
[286C D; 287B] 2.2 In the instant case, the assessee had produced unequivocal evidence in the form of original set of certifi cates from DGTD at the time of clearance of the goods of the fact that the appellant held a valid industrial licence for the manufacture of agricultural tractors and that it also had an approved manufacturing programme.
That was sufficient compliance with the terms of the notification in question.
The omission of the assessee to request the DGTD to refer to the assessee 's entitlement under the 1979 notification or the omission of the DGTD to refer to the assessee 's entitle ment under the 1979 notification cannot take away the asses see 's rights.
The order of the Tribunal is, therefore, set aside.
[286F H; 287A]


judgement:
ivil Appeal Nos.
2591 2597 of 1987.
From the Judgment and Order dated 11.2.
1987 of the Andhra Pradesh High Court in Writ Appeal Nos.
1418 to 1424 of 1986.
P.A. Choudhary, T.V.S.N. Chari, Ms. Sunita Rao and Badri Nath for the Appellants.
A.K. Ganguli, C.V. Subba Rao, E. Ayyapu Reddy, G. Nara simhulu and A. Subba Rao for the Respondents.
The Judgment of the Court was delivered by SINGH, J.
These appeals are directed against the judg ment and order of a Division Bench of the High Court of Andhra Pradesh dated 11.2.1987 affirming the judgment of a learned single Judge of that Court allowing the respondents ' writ petitions made under Article 226 of the constitution and quashing the State Government 's Order dated 21.6.1985.
The respondents are oil millers and traders who carry on business in the sale and purchase of groundnut seed and groundnut seed oil which is edible.
The millers purchase groundnuts and manufacture oil in their mills thereafter they sell the same in the State and outside the State.
Similarly the traders purchase the groundnut seed and groundnut oil and sell the same in the State and outside the State of Andhra Pradesh.
The State Government issued a Circular Order dated 21.6.1985 containing directions regu lating the transport and export of groundnut seeds and oil outside the State.
The oil millers and traders were permit ted to export oil and groundnut seeds only on the condition contained in the Order according to which all millers and traders were required to deliver oil to the State Government at a fixed price in proportion of one tonne of oil for every three tonnes to be transported outside the State and simi larly a trader was required to supply to the State Govern ment one tonne of oil for every five tonnes of groundnut seeds proposed to be transported outside the State on the price fixed by the State Government.
The oil millers and traders were required to execute undertaking for complying with the directions issued by the State Government.
The Government Order warned the oil millers and 248 traders that action would be taken against them if they failed to comply with the directions of the Government.
In substance the State Government imposed compulsory levy on oil millers and traders on the transport and export of groundnut oil and seeds.
The respondents challenged the validity of the Order of the State Government by means of writ petitions before the Andhra Pradesh High Court.
A learned single Judge quashed the Order of the State Govern ment on the findings that the directions contained therein violate Articles 19(1)(g) and 301 of the Constitution.
On appeal by the State Government a Division Bench of the High Court held that the Government Order was violative of Sec tion 3(2)(f), Section 3(3) B and Section 3(5) of the Essen tial Commodities Act 1955 (hereinafter referred to as the Act) as the directions contained in the Order amounted to imposition of levy which could not be done without obtaining prior concurrence of the Central Government in terms of Section 3(2)(f) of the Act.
The Bench further held that the directions contained in the impugned Government Order are outside the power of the State Government under clause 12 of the Andhra Pradesh Scheduled Commodities Dealers (Licensing & Distribution) Order 1982.
The Division Bench did not record any finding on the question whether the Government Order violated the constitutional guarantee of free trade under Article 301 of the Constitution.
Mr. Chaudhary, learned counsel for the appellants con tended that the directions contained in the Government Memo dated 21.6.1985 were issued by the State Government in exercise of its powers under clause 12(2) of the Andhra Pradesh Scheduled Commodities Dealers (Licencing & Distribu tion) Order 1982 (hereinafter referred to as the 1982 Order) which had been made by the State Government with the prior concurrence of the Central Government in exercise of the powers conferred by Section 3 of the Act.
The impugned directions are legal and valid as the same are within the purview of 1982 Order.
Having given our anxious considera tion to the submissions made on behalf of the appellants we find no merit in these appeals.
The 1982 Order was framed by the State Government in exercise of delegated powers under Section 3(1) of the Act with the prior concurrence of the Central Government.
The Act is a central enactment providing for the control of the production, supply and distribution, trade and commerce in certain specified essential commodities.
Section 3 confers power on the Central Government to provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein if it is of opinion that it is necessary or 249 expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices.
The Central Government has the legal sanction to issue orders under the aforesaid provisions for securing the aforesaid objectives which may include control of price, regulation of production and manufacture of any essential commodity, regulation, movement, transport, sale and distribution of the essential commodities and other allied matters.
Section 5 empowers the Central Government to delegate its powers under Section 3 for issuing orders or notifications to such officers or authorities subordinate to the Central Government or to State Government or such officers or authorities subordinate to State Government as may be specified in the order in relation to such matters and subject to such condition as it may specify in the order.
The Central Government is compe tent to delegate powers to the State Government or its officers and it may further specify restrictions and condi tions for the exercise of the delegated power.
Any order issued under Section 3 of the Act is legislative in nature and is required to be notified in the official gazette under Section 3(5) of the Act.
The Central Government in the Ministry of Agriculture and Irrigation (Department of Food) issued the Notification No. GSR 800 dated 9th June 1973 delegating its powers under Section 3(1) of the Act to the State Government to make orders in respect of the matters specified in various sub clauses of sub section (2) of Section 3 in relation to foodstuffs subject to certain conditions specified therein.
The Notification is as under: "PUBLISHED IN THE GAZETTE OF INDIA (PART) II SECTION 3 SUB SECTION (i) DATED 17TH JUNE, 1978/27 JYAISTHA, 1900 (SAKA).
MINISTRY OF AGRICULTURE & IRRIGATION (DEPARTMENT OF FOOD) . . .
ORDER New Delhi, the 9th June, 1978.
G.S.R. 800 In exercise of the powers con ferred by Section 5 of the Essential Commodi ties Act, 1955 (10 of 1955), 250 and in supersession of the Order of the Gov ernment of India in the late Ministry of Agriculture, (Department of Food) No. GSR, 315(E) dated the 20th June 1972, the Central Government hereby directs that the powers conferred on it by sub section (1) of Section 3 of the said Act to make orders to provide for the matters specified in clauses (a), (b), (c), (d), (e), (f), (h), (i) and (j) of sub section 2 thereof shall, in relation to food stuffs be exercisable also by a State Govern ment subject to the conditions: (1) that such powers shall be exer cised by a State Government subject to such directions, if any, as may be issued by the Central Government in this behalf; (2) that before making an order relating to any matter specified in the said clauses (a), (c) or (f) or in regard to dis tribution of disposal of foodstuffs to places outside the State or in regard to regulation of transport of any foodstuff, under the said clause (d), the State Government shall also obtain the prior concurrence of the Central Government; and (3) that in making an order relating to any of the matters specified in the said clause (j), the State Government shall autho rise only an officer of the Government.
sd/ (K. Balakrishnan) Deputy Secretary to the Government of India.
No. 3 (Genl)(1) D & R(1) 59" By Clause (2) of the Notification the Central Government while delegating its powers under Section 3 of the Act to the State Government for issuing orders in respect of the matters specified therein, expressly placed restriction on the State Government relating to any matters specified in clauses (a), (c), (d) and (f) of sub section (2) of Section 3 of the Act to the extent that while making an order per taining to any matters specified in the aforesaid clauses the State Government shall obtain prior concurrence of the Central Government.
The Notification is manifestly clear that the Central Government did not delegate to the State Government its general power to pass any order 251 under Section 3(1) of the Act for regulating or prohibiting the production, supply and distribution of the specified essential commodities and trade and commerce therein.
On the other hand the State Government was delegated limited power to make orders in relation to foodstuffs subject to certain conditions specified in the Notification after obtaining prior sanction of the Central Government.
Any order made by the State Government regulating matters specified in clause (2) of the Notification without obtaining the prior sanction of the Central Government would be in contravention of the delegated power.
A delegate is not entitled to exercise powers in excess or in contravention of the delegated pow ers.
If any order is issued or framed in excess of the powers delegated to the authorities, such order would be illegal and void.
In the instant case the State Government in exercise of its powers conferred by Section 3 of as delegated to it by Notification GSR 800 dated 9th June, 1978 made the Andhra Pradesh Scheduled Commodities Dealers (Licencing and Distribution) Order 1982, after obtaining prior concurrence of the Central Government.
This Order seeks to regulate the sale and purchase of scheduled commodities as specified in Schedule 1 to the Order.
Edible oil seeds and edible oil are included in Schedule 1 to the Order.
Clause 3 of the Order provides that no person shall carry on business as a dealer except under and in accordance with the terms and conditions of a licence issued by the licensing authority.
Other provisions relate to the proce dure for grant, renewal, and cancellation of licence.
Clause 11 places restriction on storing of scheduled commodities, it provides for the maximum quantity which is permitted to be stored by a licence.
Clause 13 provides that the Govern ment/Commissioner/Collector may direct a dealer to convert edible oil seeds into edible oils stored or held by him.
Clause 14 provides that a licence holder transacting busi ness in purchase and sale of scheduled commodities shall not purchase commodities at prices lower than the notified procurement price from farmers.
Similarly, clause 115 pro vides that the licencee shall not sell the scheduled commod ities at a price higher than the maximum price fixed if any by the Central Government or by the State Government.
It is not necessary for the purpose of the present cases to refer to the other clauses of the Order.
There is no dispute that the provisions of the Order do not place any restriction on the movement or transport of groundnut oil seeds or oil outside the State nor the Order fixes any price for the edible oil.
It appears that a number of millers, traders were exporting.groundnut seeds and oil outside the State of Andhra Pradesh.
The State Government issued directions to the Collectors 252 and Licensing Authorities to ensure that groundnut seeds and oil produced in a District is sold within the District and in the State and the same is not permitted to be moved out of the State.
The oil millers and traders were told to ensure that the price of edible oils are maintained around Rs. 14 per k.g.
in the retail market.
By a circular letter dated 6th December, 1983 the State Government directed the licensing authorities, Collectors and other officers of the State to ensure that producers, millers and traders are not permitted to transport the groundnut seeds or oil outside the State and it further directed that the restriction imposed on movement of groundnut be removed with immediate effect so far as bona fide farmers are concerned but so far as the millers and traders were concerned movement of oil seeds and oil was subject to their agreement to supply certain quantities of groundnuts seeds and oil to the State Government at the price fixed by it.
Since there was problem of storage the millers and traders were required to give undertaking in writing that they would deliver the quanti ties due from them whenever demanded and on the basis of such undertakings they were permitted to transport three times quantity of oil for which undertaking was furnished.
The policy as set out in the Government 's Order dated 6.12.1983 was enforced for the year 198384.
For the year 1984 85 the Government took policy decision details of which were communicated to the licensing authorities, Collectors and other authorities of the State under its circular letter dated 21.6.1985.
Under the revised policy bona fide farmers were permitted to move and sell groundnut produced in their own field without any restriction anywhere in the country.
But the policy requiring the oil millers and traders to deliver to the State Civil Supply Corporation, a specified quantity of oil enabling them to transport oil and groundnut seeds outside the State was continued.
By the Government Order dated 6.12.1985 the policy adopted for the year 1984 85 was directed to be continued for the year 1985 86.
The policy decision taken by the State Government and enforced under the aforesaid circular letter placed restric tion on the transport and movement of edible oil and oil seeds and it further imposed compulsory levy requiring the millers and traders to supply oil to the State Government at the price fixed by it.
There is no doubt that these steps were taken bona fide to ensure availability of the edible oil and oil seeds for public distribution at fair price but the steps taken by the State Government were not permissible in law as the 1982 Order did not confer power on the Govern ment to place such restrictions.
Section 3(2)(d) provides for regulating by licence, permits or otherwise the storage transport, distribution, disposal, acquisition, use or con 253 sumption Of any essential commodity.
Clause (f) of Section 3(2) of the Act confers power for making an order requiting any person holding in stock or engaged in the production or in the business of buying or selling of any essential com modity to sell the whole or specified part of quantity held in or produced or received by him to the Government or to an officer or agent of the Government.
Clause (d) among other things provides for regulating transport and movement of an essential commodity while clause (f) confers power to impose compulsory levy on a person holding the essential commodity in stock by selling the same to the Government.
Section 3(3) provides that a person selling any essential commodity to the Government in compliance with the Order made with refer ence to clause (f) of sub section (2) shall be paid con trolled price if any fixed by the Government or agreed between the parties and in the absence of agreement the price payable would be at the market rate prevailing in the locality on the date of sale.
The 1982 Order which was framed by the State Government in exercise of the delegated powers does not contain any provision placing any restric tion on the transport or movement of the edible oil or oil seeds nor it provide for imposition of compulsory levy, further it does not fix any price.
The directions issued by the Government placing restriction on the movement of oil seeds and oil and imposing compulsory levy and requiting millers and traders to sell oil seeds and oil at a price fixed by it, are outside the purview of the 1982 Order.
Those directions have no sanction of law.
If the State Government was facing any problem it could have made amend ments in the 1982 Order regulating matters specified in clauses (d) and (f) of Section 3(2) of the Act after obtain ing the prior concurrence of the Central Government.
No such course was followed.
There is therefore no escape from the conclusion that the directions contained in the impugned Government Order are illegal and void as the same have been issued in exercise of and in contravention of the power delegated to the State Government under the Notification dated 9.6.1978.
Learned counsel for the appellants urged that the direc tions issued by the State Government placing restriction on the transport, movement and compulsory levy on the edible oils and oil seeds were placed with the prior concurrence of the Central Government.
We find no merit in the submission.
The State Government failed to place any material before the Court to show that the prior concurrence of the Central Government as contemplated by clause (2) of the Notification dated 9.6.1978 issued by the Government of India, was ob tained.
The State Government while issuing or making orders in respect of the essential commodities under Section 3 of the Act could make provision 254 to the extent and subject to the conditions specified in the Notification dated 9.6.1978, it had no power to make any order in respect of matters for which it had not been autho rised to exercise powers under Section 3 of the Act.
The State Government clearly transgressed the legislative au thority in issuing the directions are contained in its circular letters dated 6.12.1983 and 21.6.1985.
In fact an affidavit was filed on behalf of the Central Government stating that no concurrence of the Central Government had been obtained and the State Government had not competence to exercise powers in respect of matters specified in clauses (d) and (f) of Section 3(2) of the Act.
The purpose and object for obtaining prior concurrence is to ensure avail ability of essential commodity throughout the country.
The State Governments are not authorised to impose restrictions on the movement of the essential commodities as it would have reflection in other States both in regard to the price and in regard to the availability of the commodity for distribution.
The Central Government has the responsibility of maintaining a balance between the interest of the various States and it has to ensure the availability of essential commodities for distribution at a fair price in other States also.
All relevant aspects are necessary to be scrutinised by the Central Government in giving or refusing its concur rence not merely from the point of view of the State impos ing restrictions but beating in mind the conditions of trade and industry and the demand and supply of the concerned commodities in other States.
Unless the Central Government is satisfied that it would be in the interest of all con cerned, it may withhold concurrence for imposing restric tions on free movement of essential commodities.
It is in this context that while delegating the powers to the State Government under Section 3 of the Act for making orders in respect of the matters specified in Section 3 of the Act the Central Government placed limitations in respect of matters specified in clause (f) of Section 3(2) of the Act by pro viding that such power shall not be exercised by the State Government without obtaining its prior concurrence.
Before the learned single judge the entire correspondence which passed between the State Government and the Central Govern ment was placed and on perusal of the same the learned Single Judge recorded a positive finding that the Central Government was opposed to restrictions on export of ground nut seeds and groundnut oil.
The State Government 's direc tions requiring the millers and traders to sell groundnut oil to the State Government is a matter directly specified within the terms of Section 3(2)(f) of the Act it is there fore clear that the State Government had no authority to place any such restriction without the prior concurrence of the Central Government.
255 Learned counsel for the appellants then urged that impugned restrictions could validly be placed by the State Government in public interest in exercise of its powers under clause 12 of the 1982 Order which had been framed with the prior concurrence of the Central Government.
There is no dispute that clause 12 of the 1982 Order was framed by the State Government with the prior concurrence of the Central Government but the question is as to whether clause 12 of the 1982 Order confers any authority on the State Government to place restriction on the movement and transport of edible oil and seeds or to subject the millers and traders to compulsory levy.
Clause 12 of the Order is as under: "12. Power to issue directions: (1) The Government, the Commissioner, the Collector or the licensing authority may issue instructions or directions on all matters covered by the provisions of this order and all dealers shall comply with the same.
(2) Without prejudice to the generality of the foregoing power such directions may be issued to any dealer that all or any of the commodi ties mentioned in Schedule I to this Order may be sold to only such persons or institutions, in such quantities and at such intervals as the Commissioner, Collector, or the licensing authority may by general or special order, direct.
" Sub clause ( 1 ) of Clause 12 authorises the Government, Commissioner, Collector or the licensing authority to issue instructions and directions in matters covered by the provi sions of the 1982 Order it further provides that such direc tions shall be complied by all dealers.
The power of the authorities specified in sub clause (1) to issue instruc tions and directions is limited to the subject matter of the 1982 Order.
Such directions and instructions cannot pertain to regulate matters which are not covered or dealt with by the 1982 Order.
Sub clause (2) of Clause 12 of the Order provides that directions may be issued to any dealer to sell an essential commodity (as mentioned in Schedule 1 to the Order) only to such persons or institutions in such quanti ties as may be directed by the Commissioner, Collector or the licensing authority.
This clause regulates the sale of essential commodity to the specified persons and institu tions in such quantities as may be directed by the authori ties.
None of these two clauses confer any power on the authorities to impose levy or to fix price for the essential commodities 256 supplied to the Government.
As already noticed, restriction on transport, imposition of levy and fixation of price was not the subject matter of the 1982 Order therefore the State Government had no authority in law to issue orders in re spect of the aforesaid matters in exercise of its powers under Clause 12 of the 1982 Order.
If the submissions made on behalf of the State Government are accepted it would nullify the restrictions and limitations placed by the Notification dated 9th June 1978 delegating legislative power to the State Government.
The State Government could not impose any restriction on the export of groundnut seed or oil to outside State and further it could not issue directions for the compulsory levy at the specified price in view of the limitations placed on exercise of its powers under the Notification dated 9th June 1978.
What it could not do directly could not be permitted to be done indirectly by virtue of clause 12 of the 1982 Order.
The scope and ambit of clause 12(2) of the 1982 Order could not and did not authorise the State Government to impose the impugned restrictions.
We are therefore of the opinion that no exception can be taken to the view taken by the High Court that the impugned restrictions placed by the State Government are ultra vires of its powers.
The High Court has rightly struck down the directions issued by the State Government.
We find no merit in these appeals and the same are accordingly dismissed with costs.
N.V.K. Appeals dis missed.

summary/full:
The is a Central Enact ment providing for the control of the production, supply and distribution, trade and commerce in certain specified essen tial commodities, Section 3 of the Act confers power on the Central Government to provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein, if it is of the opinion that it is necessary or expedient so to do for maintaining or increas ing supply of any essential commodities or of securing their equal distribution and availability on fair price.
The Central Government issued the Notification No, GSR 800 dated June 9, 1978 delegating its powers under section 3(1) of the Act to the State Governments to make orders in respect of the matters specified in the various sub clauses of sub section (2) of section 3 in 244 relation to foodstuffs subject to certain conditions speci fied therein.
By clause (2) of the Notification the Central Government while delegating its powers under section 3 to the State Government for issuing orders in respect of mat ters specified therein, expressly placed restriction on the State Government relating to any matters specified in clauses (a), (c), (d) and (f) of sub section (2) of section 3 to the extent that while making an order pertaining to any of the matters specified in the said clauses, the State Government shall obtain prior concurrence of the Central Government.
The State Government of Andhra Pradesh in exercise of its powers under section 3(1) of the Act as delegated to it by the Notification GSR 800 dated June 9, 1978 made the Andhra Pradesh Scheduled Commodities Dealers (Licensing and Distribution) Order, 1982 after obtaining prior concurrence of the Central Government.
This order sought to regulate the sale and purchase of scheduled commodities as specified in schedule I to the Order.
Edible oil seeds and edible oil were included in the said Schedule.
The State Government issued a circular order dated June 21, 1985, containing directions regulating the transport and export of groundnut seeds and oil outside the State.
The oil millers and traders were permitted to export oil and groundnut seeds only on the condition that they deliver oil to the State Government at a fixed price in proportion of one tome of oil for every three tonnes to be transported outside the State.
Similar conditions were imposed in re spect of groundnut seeds.
The oil millers and traders were required to execute undertaking for complying with the directions issued by the State Government.
The respondents who were oil millers and traders carry ing on business in the sale and purchase of groundnut seed and groundnut oil which is edible challenged the validity of the 1982 Order and the 1985 Circular in writ petitions to the High Court.
A Single Judge quashed the order of the State Government on the findings that the directions con tained therein violated Articles 19(1)(g) and 301.
On appeal by the State Government a Division Bench held that the order of the government was violative of section 3(2)(f), section 3(31 B) and section 3(5) of the as the directions contained in the order amounted to imposition of levy which could not be done without obtaining the prior concurrence of the Central Government in terms of section 3(2)(f) of Act.
It further held that the directions contained in the 245 Government Order were outside the purview of the State Government under clause 12 of the Andhra Pradesh Scheduled Commodities Dealers (Licensing and Distribution) Order, 1982.
No finding was however recorded on the question wheth er the Order violated the constitutional guarantee of free trade under article 301.
In the appeals to this Court, it was contended on behalf of the appellants that the directions contained in the Government Order dated 21st June, 1985 were issued by the State Government in exercise of its powers under clause 12(2) of the Andhra Pradesh Scheduled Commodities Dealers (Licensing and Distribution) Order, 1982 which had been made by the State Government with the prior concurrence of the Central Government in exercise of powers conferred by sec tion 3 of the and that the directions were legal and valid.
Dismissing the appeals, HELD: 1.
The High Court has rightly struck down the directions issued by the State Government.
The directions contained in the Government Circular Order dated June 21, 1985 are illegal and void as the same have been issued in exercise of and in contravention of the power delegated to the State Government under the Notification No. GSR 800 dated June 9, 1978.
[256E; 253F] 2.
The 1982 Order which was framed by the State Govern ment in exercise of the delegated powers does not contain any provision placing any restriction on the transport or movement of edible oil or oil seeds nor it provides for imposition of compulsory levy further it does not fix any price.
[253C D] 3.
The directions issued by the State Government by its Circular Order dated June 21, 1985 placing restrictions on the movement of oil seeds and oil and imposing compulsory levy and requiring millers and traders to sell oil seeds and oil at a price fixed by it, are outside the purview of 1982 Order.
These directions have no sanction of law.
[253D E] 4.
If the State Government was facing any problem it could have made amendments to the 1982 Order regulating matters specified in clauses (d) and (f) of section 3(2) of the Act after obtaining prior concurrence of the Central Government.
No such course was followed.
[253E F] 246 5.
The State Government 's directions requiring the millers and traders to sell groundnut oil to the State Government is a matter directly specified within the terms of section 3(2)(f) of the Act.
The State Government had no authority to place any such restriction without the prior concurrence of the Central Government.
[254G H] 6.
The purpose and object for obtaining prior concur rence is to ensure availability of essential commodity throughout the country.
The State Governments are not autho rised to impose restrictions on the movement of the essen tial commodities as it would have reflection in other States both in regard to the price and in regard to the availabili ty of the commodity for distribution.
The Central Government has the responsibility of maintaining a balance between the interest of the various States and ensuring the availability of essential commodities for distribution at a fair price in other States also.
All relevant aspects are necessary to be scrutinised by the Central Government in giving or refusing its concurrence not merely from the point of view of the State imposing restrictions but bearing in mind the condi tions of trade and industry and the demand and supply of the concerned commodities in other States.
Unless the Central Government is satisfied that it would be in the interest of all concerned, it may withhold concurrence for imposing restrictions on free movement of essential commodities.
[254C E] 7.
A delegate is not entitled to exercise powers in excess or in contravention of the delegated powers.
If any order is issued or framed in excess of the powers delegated to the authorities, such order would be illegal and void.
[251B C] 8.
The power of the authorities specified in sub clause 1(1) of clause 12 of the Order to issue instructions and directions is limited to the subject matter of the 1982 Order.
Such directions and instructions cannot pertain to regulate matters which are not covered or dealt with by the 1982 Order.
Such directions and instructions cannot pertain to regulate matters which are not covered or dealt with by the 1982 Order.
[255F G] 9.
The State Government could not impose any restriction on the export of groundnut seed or oil to outside the State and further it could not issue directions for the compulsory levy at the specified price in view of the limitations placed on exercise of its powers under the notification dated June 9, 1978.
What it could not do directly could not be permitted to be done indirectly by virtue of clause 12 of the 1982 Order.
The scope and ambit of clause 12(2) of the 1982 Order did not authorise the State 247 Government to impose the restrictions in the Circular Order dated June 21, 1985.
[256B C]


judgement:
ivil Appeal No. 830 of 1988.
275 From the Judgment and Order Dated 7.12.1987 of the Allahabad High Court in Civil Misc.
No. Nil 1987.
A.K. Ganguli and Sunil Kumar Jain for the Appellant.
Gopal Subramanium and Ashok K. Srivastava for the Re spondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
The petitioner is a concern engaged in the business of manufacture of electric motors, pump sets and their parts.
It applied for exemption from sales tax in respect of the goods manufactured by it in terms of a noti fication issued by the State Government on 30.9.1982 under section 4A of the Uttar Pradesh Sales Tax Act, 1948 (herein after called the 'Act ').
This application was rejected by a Division Level Committee by an order dated 9.2.
1987 and a further review application was also dismissed on 27.10.1987.
Thereupon the appellant filed a writ petition which was also rejected by the High Court by a short order dated 7.12.1987.
Aggrieved by this denial of the exemption, which it claims it is entitled to, the appellant has preferred this appeal.
Section 4A of the Act reads as under: "4 A. Exemption from sales tax of certain goods for specified period (1) Notwithstanding anything co tained in section 3 or section 3 A, where the State Government is of the opinion that it is necessary so to do for increasing the produc tion of any goods or for promoting the devel opment of in any districts or parts of dis tricts in particular, it may on application or otherwise, by notification, declare that the turnover of sales in respect of such goods by the manufacturer thereof shall, during such period not exceeding seven years from the date of starting production by such manufacturer, and subject to such conditions as may be specified, be exempt from sales tax or be liable to tax at such reduced rate as it may fix.
(2)It shall be lawful for the State Government to specify in the notification under sub section (1) that the 276 exemption from, or reduction in, the rate of tax shall be admissible (a) generally in respect of all such goods manufactured subsequent to the date of such notification; or (b) in respect of such of those goods only as are manufactured in a new unit, the date of starting production whereof fails on or after the first day of October, 1982; or (c) only if the manufacturer had not discon tinued production of such goods for a period exceeding six months at a stretch in any assessment year.
Explanation For the purposes of this section (i) 'new unit ' means a factory or workshop using machinery, accessories or components not already used or acquired for use in any other factory or workshop in India but does not include any factory or workshop established on the site of an existing factory or workshop manufacturing the same goods or any addition to or extension of an existing factory or workshop; and (ii) 'date of starting production ' means the date on which any raw material required for use in the manufacture or packing of the specified goods is purchased for the first time or the date of installation of power connection, where needed, whichever is later.
In pursuance of the above section, the State Government published a scheme for the grant of exemption from sales tax to certain industrial units in the State.
The scheme, ac cording to its introduction, had been introduced "in order to encourage capital investment and establishment of new industrial units in the State".
It granted exemption to the industrial units established in certain areas of the State during the period from 1.10.1982 to 31.3.1985 and producing certain categories of goods.
It is not necessary to refer in detail to the provisions of the scheme or other conditions of exemption.
It is sufficient to say that this exemption was conferred only on units established on or after 1.10.1982 but before 31.3.1985.
The scheme also makes it clear that though it referred to units "established" this really is a reference to the date of commencement of produc tion by the industrial 277 unit.
This is also in accord with the terms of the statute and in particular sub section (2) of 4A.
The appellant 's claim to exemption has been rejected on a very short ground, namely, that it had not commenced production after 1.10.1982.
In the application filed by the appellant for exemption the appellant had mentioned that the date of actual com mencement of use of electricity for production was the 4th of December, 1982, which was also the actual date of com mencement of production.
The appellant also claimed that upto 30.9.1984 it had produced and sold electric motor parts for Rs.2,70,590.
The General Managers of the District Indus trial Centers at Deoband and Saharanpur and the Assistant Engineer of the Industrial State of Roorkee endorsed the following recommendation on the application: " . .
I have checked with the use of power and other sources that the unit started actual production from 4.12.1982 and the production made is self manufactured and is within the prescribed production capacity.
1 am fully satisfied with the facts produced by the Unit and I recommend that this unit is eligible to get exemption from sales tax/inter state sales tax . with effect from date of production commencement for 5 6 7 years under section 4 A of the Sales Tax Act vide G.O. No. 8244 Bha/18 11 231(A)Bha/39, dated 30.9.82.
" The difficulty in the appellant 's way appears to have been created by a certificate which had been produced by it before the Division Level Committee along with its applica tion.
This purported to be a certificate by a firm known as Krishna Trading Co. (in which the proprietor of the appel lant was a partner).
This certificate dated 4.12.
1981 reads as follows: "It is certified that the Trial Production of Kupla Bhatti was made today is 4.12.1981 expenses for which were incurred by our compa ny by purchasing raw material for its own ex penses under the agreement dated 15.5.1981 entered into.
M/s Janta Machine Tools was assured by the company to supply very soon all the remaining machines and installing them and making its trial production at its own ex penses.
" The Division Level Committee, while rejecting the applica tion 278 dated 9.2.1987, essentially gave only one reason for the rejection.
It was stated that the date of the alleged trial production was really the date of commencement of production and this fell prior to 1.10.1982.
As stated earlier the assessee preferred a review appli cation pointing out that the trial production could not be treated as commencement of actual production.
This review application was disposed of on 27.10.1987.
In its order the Committee observed: "On joint inquiry into the reality of your unit being conducted by the General Manager and sales tax officer of Deoband Industries Department they have reported that Shri Suresh Datt Sharma the proprietor of M/s Janta Ma chine Tools is partner of one third share in M/s Krishna Trading Company also.
No purchase of raw material was declared by M/s Krishna Trading Company in the year 198 1 82, and therefore, the certificate of trial production issued by M/s Krishna Trading Company on 4.12.
1981 is baseless and untrue.
In joint inquiry report it is also clear that your unit has purchased from M/s Krishna Trading Company Kupla etc.
of Rs.69,000 on 21.5.81, whereas M/s Krishna Trading Company have declared sale of Rs. 13,035 only in 198 1 82 as per file of the Sales Tax Department.
In the joint inquiry Report it is also mentioned that your unit got electricity on 21.11.1982 and on inquiry the unit informed that the trial production was done with the help of a generator.
Your unit could not give any certificate for purchasing or hiring a generator and now it has declared to have hired the generator for 4 5 hours from M/s Mitra Industries Deoband.
In the inquiry report it is also made clear that a unit cannot use a generator of other unit without prior permission of the electricity depart ment.
xx xx xx On the above discussion it is concluded that the unit in question wants to (get) illegal benefit of exemption from sales tax by produc ing wrong facts.
The trial production done by M/s. Krishna Trading Company on 4.12.
1981 is proved to have been done by the unit in ques tion itself and not by them.
Thus, the unit was established before l. 10.82.
The unit established before 1.10.82 is therefore not entitled to exemption from sales tax.
" 279 In our opinion, the rejection of the assessee 's applica tion proceeds on a total misconception of the facts.
The conclusion of the Division Level Committee is that produc tion was commenced by the appellant on 4.12.81 but this conclusion is based on no evidence.
It is true that the appellant produced a certificate showing that some produc tion was done on 4.12.
1981 but the appellant 's case was that this was merely a trial production.
It is not quite clear whether the District Level Committee completely doubts any trial production having taken place at all, or whether its conclusion is that there was a trial production, on 4.12.1981.
If its conclusion is the former one, it does not affect the appellant 's claim.
Assuming that the Committee has come to the conclusion that the production on 4.12.81 was conducted not by M/s Krishna Trading Company but by the appellant itself, the fact still remains that what had happened on that date was only trial production.
The mere fact that a certificate by M/s Krishna Trading is disbe lieved cannot lead to the conclusion that the assessee had produced goods on 4.12.81.
If one is to go by the definition contained in the explanation to section 4A for determining when the production started, one has to concentrate on the date of purchase of raw materials or on the date on which the electricity was brought into use for commercial produc tion.
The appellant 's claim that it had manufactured goods by 30.9.1984 is not denied.
Production had, therefore, commenced before 31.3.
There is no suggestion by the Department or the Committee, and there is no material to show that the appellant had purchased raw materials suffi cient to carry out normal commercial production at any time prior to 1.10.82.
It is an admitted fact that the assessee was able to obtain electricity for use for commercial pro duction only in November 1982.
This lends support to the appellant 's contention that the production could not have been effected by the assessee prior to that date.
In fact, this is a point on which emphasis is laid in the order dated 27.10.1987.
That being so, there is no iota of evidence or material on the basis of which the appellant 's claim that it had started production in December 1982 could have been rejected.
On the other hand, the recommendation and endorse ment of the General Manager, District Industries Centre, which has been extracted earlier, also supports the appel lant 's contention that it had started production on 4.12.1982 and this report was given after verifying the actual position on the spot.
For the reasons above mentioned we are of the opinion that the denial of the exemption to the appellant under the notification dated 30.9.82 was not justified.
The rejection of the appellant 's application in this regard is quashed and the appellant is declared entitled to the 280 exemption in terms of the notification.
We should not be understood, however, to have expressed any opinion as to the amount of exemption available to the appellant under the notification.
That will be a matter for consideration of the authorities in respect of each of the years concerned in respect of which the claim is made for exemption.
The appeal stands allowed, but in the circumstances, we make no order as to costs.
G.N. Appeal allowed.

summary/full:
The State Government in pursuance of Section 4A of the Act formulated and published a scheme for grant of exemption from Sales Tax, to encourage capital investment and estab lishment of new industrial units which were established during the period from 1.10.1982 to 31.3.1985 and producing certain categories of goods.
Though the scheme referred to units established, it actually referred to the date of commencement of production.
The appellant, a concern engaged in the business of electric motors, pump sets and their parts, applied for the exemption.
The appellant claimed that the date of actual commencement of use of electricity for production was 4th December, 1982 and that was the actual date of commencement of production.
The same was endorsed by the General Manag ers, District Industrial Centers and the Assistant Engineer concerned, while recommending the application.
But the difficulty had arisen on account of a certificate attached to the application for exemption.
It was given by a firm which had entered into an agreement with the appellant for supply of machines and installation.
According to the cer tificate, trial production commenced on 4.12.1981.
The Division Level Committee, before which the application was filed, rejected it, saying that the date of trial production was really the date of commencement of production and it fell prior to 1.10.1982.
The appellant preferred a review claiming that trial production could not be treated as commencement of actual production.
The review application was also dismissed and it was held that the unit was estab lished before 1.10.1982 and, therefore, was not entitled to the exemption.
Thereafter, the appellant filed a writ peti tion before the High Court.
It was rejected.
274 Claiming that it is entitled to the exemption, the appellant has preferred this appeal, by special leave.
Allowing the appeal, HELD: 1.1 The appellant is entitled to the exemption, in terms of the notification dated 30.9.1982.
The rejection of the application for exemption proceeds on a total misconcep tion of facts.
The conclusion that production was commenced on 4.12.1981 is not based on any evidence.
It does not affect the appellant 's claim even if there was any doubt about the trial production having taken place at all.
Wheth er trial was conducted by the other firm or the appellant itself, the fact remains that only trial production took place on 4.12.1981.
The mere fact that the certificate is disbelieved cannot lead to the conclusion that the appellant had produced the goods on 4.12.1981.
[279A D] 1.2 To go by Section 4A of the Act to determine the date of commencement of production, the date of purchase of raw material or the date on which electricity was brought into use would be relevant.
The appellant 's claim that it had manufactured goods by 30.9.1984 is not denied.
Production had, therefore, commenced before 31.3.1985.
There is no suggestion by the Department or the Committee, and there is no material to show that the appellant had purchased raw materials sufficient to carry out normal commercial produc tion at any time prior to 1.10.1982.
It is an admitted fact that the assessee was able to obtain electricity for use for commercial production only in November 1982.
This lends support to the appellant 's contention that the production could not have been effected by the assessee prior to that date.
In fact, this is a point on which emphasis is laid.
That being so, there is no iota of evidence or material on the basis of which the appellant 's claim that it had started production in December 1982 could have been rejected.
On the other hand, the recommendation and endorsement of the Gener al Manager, District Industries Centre also supports the appellant 's contention that it had started production on 4.12.1982 and this report was given after verifying the actual position on the spot.
[279D G] 2.
As regards the amount of exemption available to the appellant, it is a matter for consideration of the authori ties in respect of each of the years concerned in respect of which the claim is made for exemption.
[280B]