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Is the legislation ultra vires because the State enters the forbidden ground by enacting on controlled industry? It is undisputed that sugar industry is a controlled industry, within the meaning of Entry 52, List I of Schedule and, therefore, the legislative power of Parliament covers enactments with respect to industries having regard to Article 246(1) of the Constitution If the impugned legislation invades Entry 52 it must be repulsed by this Court. But entry 54 in List II of the Seventh Schedule empowers the State to legislate for taxes on purchase of goods and so if the Act under consideration is attracted, in pith and substance, by this Entry legislative incompetence cannot void the Act. The primary question, which we have to pose to ourselves, is as to whether this State Purchase Tax Act is bad because it is a legislation with respect to a controlled industry, to wit, the sugar industry. What matters is not the name of the Act but its real nature, its pith and substance. The same problem demands our attention at a later stage in considering the contention that the levy under examination is, in a sense, an excise duty and not a purchase tax.

Let us examine the worth of the contention that the impugned legislation is one on a 'controlled industry' and therefore out of bounds for the State legislature.

Tika Ramji's case (supra) deals with the identical question of 'controlled industry' vis-a-vis a U.P. Legislation regulating sugarcane supply and purchase. Certain sugarcane growers of Uttar Pradesh assailed the vires of the U.P. Sugarcane (Regulations of Supply and Purchase) Act 1953. That statute reserved or assigned to sugar factories specified cane purchasing centres for the purpose. This regimentation of sugarcane growers and regulation of cane supplies to specified millers by a State enactment was attacked on the precise ground that sugar being, a 'controlled industry' any enactment effecting such industry including the regulation of supplies of raw materials thereto was taboo. The plea was dismissed as specious, and the appeals under our consideration are a fortiori case where the rejection of the contention can be more confidently made.

The learned Judge stripped the argument naked and presented it for examination:

"It was suggested that Item 52 of List I comprised not only legislation in regard to sugar industry but also in regard to sugarcane which was an essential ingredient of the industrial process of the manufacture or production of sugar and was, therefore, ancillary to it and was covered within the topic. If legislation with regard to sugarcane thus came within the exclusive province of the Central Legislature, the Provincial Legislature was not entitled to legislate upon the same . . The court was pressed to impart the widest amplitude to the topic 'industry' and take within its wings ancillary matters lie raw materials of the industry . "It was, therefore, contended that the Legislation in regard to sugarcane should be considered as ancillary to the legislation in regard to sugar industry which is a controlled industry and comprised within Entry 52 of List I....' The edifice of exclusive Parliamentary jurisdiction so built stood on shifting sands. The semantic sweep of Entry 52 did not come in the way of the State Legislature making laws on subjects within its sphere and not directly going to the heart of the industry itself. The key to the problem was furnished in Tika Ramji's case (supra). After comparing the provisions of the U.P. Act there considered, which related to the regulation of sugarcane to factories and securing its price to the grower from the occupier of the factory even by checking the accounts relating to The manufacture of sugar, The Court clinched the issue thus:
"This comparison goes to show that the impugned Act merely confined itself to the regulation of the supply and purchase of sugarcane required for use in sugar factories and did not concern itself at all with the controlling or licensing of the sugar factories, with the production or manufacture of sugar or with the trade and commerce in, and the production, supply and distribution of sugar. If that was so, there was no question whatever of its trenching upon the jurisdiction of the Centre in regard to sugar industry which was a controlled industry within Entry 52 of List I and the U.P. legislature had jurisdiction to enact the law with regard to sugarcane and had legislative competence to enact the impugned Act."