Holding

The levy order cannot be applied to the rice stock already in possession of millers as of 30 September 1995; the exemption operates and the levy is effective only for purchases/production from 1 October 1995.

Summary

The State of Uttar Pradesh challenged the levy imposed on Sri Laxman Rice Mills under the U.P. Rice and Paddy (Levy and Regulation of Trade) Order, 1985, contending that the levy was effective from the night of 30 September/1 October 1995 and therefore covered the rice stock already held by the millers. The State argued that the exemption order, which lifted the levy for existing stock up to 30 September 1995, had not been withdrawn and should not affect the levy. The Supreme Court examined the provisions of the levy order, the exemption clause, and the communication dated 31 May 1996 indicating that the levy was lifted for the remainder of the Kharif 1994‑95 season. It held that the levy order could not legally apply to the limited stock on hand as of 30 September 1995; the exemption operated for that stock, and the levy became effective only for rice purchased or produced from 1 October 1995 onward. Consequently, the appeals were dismissed and the orders of the lower court were affirmed without costs.

Issues considered

Whether the rice stock existing with the millers on the night of 30 September/1 October 1995 is liable to levy under the U.P. Rice and Paddy (Levy and Regulation of Trade) Order, 1985.
Whether the exemption order issued prior to the levy order supersedes the levy with respect to the existing stock.

Legislation cited

Essential Commodities Act, 1955s. 3

Subjects

levyexemptionessential commoditiesrice stockU.P. Rice and Paddy Orderstatutory interpretationspecial leave petitionSupreme Court of India

Judgment

. ...

A STATE OF U.P. AND ORS. ETC.
·.
v.
SRI LAXMAN RICE MILLS AND O RS. ETC.

JANUARY 17, 1997

B [K. RAMASWAMY AND S. SAGHIR AHMAD, JJ.)

U. P. Rice and Paddy (Levy and Regulation of Trade) Order, 1985:

Clauses 3,2~evy effective from the intervening nigllt of September 30,
1995 and October 1, 1995-Exemption- Levy lifted subsequently-But exemp-
C tion order not withdrawn-Held : Levy order issued not legal for the limited
stock on hand, viz. the stock existing witlt tile rice millers as on the intervening
11iglrt of September 30, 1995 and October 1, 1995-To that extent only the
exemption would operate and the levy order would become effective in respect
of all purchases made rice produced on and from tlte day break of October
D 1, 1995.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 446 of
1997 Etc.

From the Judgment and Order dated 9.1.96 of the Allahabad High
E Court in C.M.W.P No. 507 of 1996.

Irshad Ahmad and Arvind .Kr. ShukJa for the Appellants.

Sudhir Chandra, Sunil Ambwani, Prashant Kumar, Umesh Bhagwat,
Alok Singh and V.B. Joshi for the Respondents.
F
The following Order of the Court was delivered :

Leave granted. .

We have heard learned cow1sel on both sides.
G
These appeals by special leave arise from various orders of the
Division Bench of the Allahabad High Court, made on February 27, 1996
etc. in Writ Petition No. 31392/95 etc.

The only controversy is : whether the existing stock of rice on .the
H intervening night of 30th September and 1st October 1995 was liable to levy
374
STATE v. SRI LAXMAN RlCE MlLLS 375
under the U.P. Rice and Paddy (Levy and Regulation of Trade) 9rder, A
1985. Exe rcising the power under Section 3 of the Essential Commodities
Act, with the concurrence _of the Central Governme nt, the.'a ppellant had
issued the said Order imposing levy on rice effective from the intervening
night of September 30, 1995 and October 1, 1995. This is in furtherance of
clause (3) of the Levy Order. It is contended by the le arned counsel for
B
the appellant that since the levy was effective from the aforesaid period
within the areas specified-under the order, all the ric~ mills covered are
subject to the above notification. The High Court was not right in directing
~ that the Order will be effective from Octoher 1, 1995 and that the direction
'I
that the existing stock as on the intervening night of the said dates is not
./
liable to levy is vitiated by error of law. We find no force in the contention. c
Clause 24 of the Order gives power to exempt as under :

n(l) With the concurrence of the Central Government, the State
Gov~rnment may -
D
(a) in. the public interest increase or reduc~ the percentage of levy;
\
(b) in the publi~ interest exempt any area from levy or reduce per
cent;

(c) in the public interest reduce the percentage of levy from any E
type of rice mill in any area;

(d) exempt wholly or partly from levy and variety of paddy and
rice."

It is seen that by proceedings dated May 31, 1996 the Principal F
Secretary to the Government had conveyed to all the authorities concerned
the decision of the Government, namely, "I am directed to say that levy is
lifted in U.P. from rice for rest of the Kharif 1994-95 till 30.9.1995 with
immediate effect."

Thus, it would be seen that the rice stock existing with rice millers
G
as on September 30, 1995, in other words, all purchase made/rice produced
by the rice millers upto that date, i.e., September 30, 1995 stood exempted.
While issuing the levy order, the exemption order was not withdrawn.
.. Consequently levy order issued in exercise of-clause (3) of the Order for
the Kharif Season 1995-% effective from midflight of September 30, 1995 H
376 SUPREME COURT REPORTS [1997} 1 S.C.R.
A including .the stock on hand as on that date, is not legal for the limited
stock on band, namely, the stock existing with the rice millers as on the
intervenitlg night of September 30, 1995 and October 1, 1995. To that extent
only the ·exemption would operate and the levy order would become
effective iit respect of all purchases made/rice produced on and from the
B day break of October 1, 1995.
The appeals are accordingly disposed of. No costs.

G.N. Appeals arc disposed of.