No~ SOF (Sugar)-13 (35)/64 (Part 1I)3—In exercise of the
power conferred by section 12 read with section 17 of the Finance Act,
1964 (XXXIV of 1964), the Governor of the Province concerned is pleased
to make the following rules, namely:--
title, extent and commencement.-(1) These rules may be called the West
Pakistan Sugarcane (Development) Cess Rules, 1964.
shall come into force at once.
these rules, unless the context otherwise requires, the following expressions
shall have the meanings hereby respectively assigned to them, that is
- "Act" means the Finance Act, 1964;
- "Cane", "Cane Commissioner" "Cane grower",
"crushing season” and "purchasing agent" shall
have the same meanings as respectively assigned to them in the Sugar
Factories Control Act, 1950 (ante);
- "Cess" means the sugarcane development Cess, levied under
section 12 of the Act;
- "Form" means a form appended to these rules;
- "Fund" means the Sugarcane Development Fund constituted
under rule 8;
- "Mill management" means the person or persons managing the
affairs of a sugar mill, and shall include the Manager, General Manager,
the Resident Director and the Managing Director of a sugar mill or any
other person acting on behalf of any of these;
- "prescribed" means prescribed by these rules;
- "purchasing centre", "weigh bridge" and "year"
have the same meanings as respectively assigned to them in the Sugar
Factories Control Rules, 1950 [ante);
- "Sugar Mill" means any premises, including the precincts
thereof, wherein twenty or more workers are working or were working
on any day of the preceding twelve months and in any part of which any
manufacturing process connected with the production of sugar by means
of vacuum pans is being carried on, or is ordinarily carried on, with
the aid of power;
- "Occupier of a factory” means the person who has ultimate
control over the affairs of a sugar mill; and
- "Seller" means a person selling sugarcane to a sugar mill
and includes the authorised agent of such person.
3. Time and manner
portion of the Cess payable by the seller (six paisa per maund of sugarcane)
shall be covered from the seller by the mill management while making payment
of the price of cane to him.
The mill management shall contribute to the portion of the cess recovered
from the seller under sub-rule (I), an equa1 amount, and deposit the total
amount of the cess together with the whole of the cess due in respect
of any quantity of cane obtained from the Mill's own sugar farms or from
the farm of the occupier of the factory in the nearest Government Treasury
in the manner prescribed in sub-rules (3) and (4).
The cess shall be deposited in the Government Treasury within five days
of the close of each fortnight, that is, by the fifth and twentieth of
payment into the Treasury. shall be for the full amount of the cess as
due to the Government in respect of the preceding fortnight on the entire
quantity of cane purchased by the Sugar Mill or obtained by it from its
own sugar farms or farm of the occupier of the factory during that fortnight,
irrespective of the payment of the price of cane by the mill management
or the recovery of the seller's share of the cess:
A copy of the receipted challan along with a return in form S.C.R. 1 shall
be forwarded by the mill management to the Cane Commissioner or any other
officer authorised in this behalf by the Government within seven days
from the date of deposit of the cess in the Government Treasury.
in case of non-submission of returns.-
If the return referred to in sub-rule (5) of rule 8 is not submitted or
if in the opinion of the Cane Commissioner the return is not correct and
complete and the cess has not been paid or has not been paid in full,
the Cane Commissioner shall, after giving the mill management, a reasonable
opportunity of being heard, determine the amount of the cess, and order
its payment accordingly.
Government or any other officer so authorised by the Government may call
for and examine the relevant records and accounts and such other evidence
as it may consider necessary for the purpose of determining the amount
of the cess payable under sub-rule (1),
Any mill aggrieved by the order passed under sub-rule (I) above may, within
thirty days of the order, prefer an appeal against such order to Government.
Penalty.--(1) If a sugar mill does not deposit the cess
due into the Government Treasury by the prescribed date, the Cane Commissioner
or any other officer, authorised in this behalf, may in pursuance of section
14 of the Act, impose on the management a penalty not exceeding the amount
of the tax:
that such penalty shall not be imposed without giving the mill management
an opportunity of being heard.
Any sugar mill aggrieved by an order passed under sub-rule (1) above may,
within thirty days of the order, prefer an appeal to Government.
On expiry of thirty days from the order made under sub-rule (1) or after
decision of the appeal under sub-rule (2), the mill management shall be
required by the Cane Commissioner, by a notice in form S.C.R. I., to deposit
the penalty imposed under this rule and the amount of the Cess which remains
In case of default, the amount of the cess and the penalty or such part
thereof as remains unpaid shall on a certificate to that effect by the
Cane Commissioner, be recoverable as arrears of land revenue.
petition - Default in payment of sugarcane cess by the petitioners (Sugar
Mills). Provincial Government allowed the petitioners to clear
their default in payment of Sugarcane Cess through monthly installments.
All the petitioners had faithfully performed their installments agreement
but alleged that after a bulk of the over due cess had been cleared by
the petitioners each of them had received a notice from the Cane Commissioner
demanding payment of penalty for committing default. Validity. Installment
agreement between the parties did not contain any term that waived the
charge of penalty claimed, Claim of petitioners for waiver of penalty
amount was therefore, at best, based upon the omission by the Authorities
to claim penalty at any stage prior to or at the time of concluding the
installment agreement. Right to charge penalty was not derived from the
consent of the parties but emanated from section 14, West Pakistan Finance
Act, 1964 that created the charge of penalty and R.5(1), West Pakistan
Sugarcane (Development Cess) Rules, 1964 whereby the time, manner and
procedure for collection of penalty was spelled out. Liability to pay
penalty, therefore, would survive both in the absence of the installment
agreement as well as its failure to state the petitioner's non-liability
there. Silence on the point in the installment agreement operated to preserve
the petitioner's obligation to pay such a charge rather than to extinguish
petition. Default in payment of Sugarcane Cess by Sugar Mills.--
Clearance of dues by installments by the Mills under an agreement with
the Provincial Government. Penalty for default Quantum Imposition of maximum
penalty. Once the liability of the Sugar Mills to pay for their past default
to clear Sugarcane Cess dues was determined to exist, the question that
remained was as to what quantum of penalty could be recovered from the
Mills. Cane Commissioner had discretion to impose penalty that was subject
to the maximum ceiling of the amount of tax that was in arrears. Direction
given in policy framed for imposing penalty required that pending approval
of the policy by the Provincial Government, the terms thereof were to
be adhered uniformly by the Authorities as a measure of transparency and
reasonableness. Provincial Government, in the present case; had entered
into an installment agreement with the Mills acknowledging their entitlement
for sufficient reason to pay arrears of Sugarcane Cess development in
installments. Factum of such an agreement showed that the Mills demonstrated,
within the meaning of the policy, the existence of “unavoidable
circumstances” and huge “magnitude of default” by them,
which would under the literal adherence to the rule of maximum penalty
applicable for default for a period of more than 12 months to be unreasonable.
Where the period of default exceed 12 months, policy itself gives a discretionary
margin of relief in quantum of penalty to be applied from 51% to 100%
of the Sugarcane Cess amount in arrears. Impugned order of the Authorities
showed that they had not applied their minds to the said discretionary
margin nor did they consider at all the impact of mitigating circumstances
of the case under the terms of the policy, which stood acknowledged by
the conclusion of the installment agreement. Failure by the Authorities
to consider the factors relevant to the imposition of penalty as highlighted
in the terms of the Policy and to exercise their discretion in accordance
therewith in fixing the quantum of penalty, represented a failure to exercise
jurisdiction fairly and reasonable in circumstances of the case. Liability
of the Mills to pay penalty for their default to discharge their Sugar
Cess dues could not be doubted. However, it was equally clear that the
Mills had a good case for a reduced amount of penalty to be imposed in
view of the circumstances of the case. Absence of further default in the
payment of installments might be another consideration for the Authorities
in relaxing the quantum of penalty. Each of such factors provided criteria
for the exercise of discretion by the Authorities. Important standard
to be observed by the Authorities whilst exercising the discretionary
power to levy penalty was that they must act transparently, reasonably,
fairly and uniformly and their assessment of the different criteria impinging
upon the quantum of penalty to be imposed must be based upon reasoning
and material contained on the record. High Court declared that the impugned
assessment of maximum penalty by the Authorities in the case of each Mill
uniformly was void and unlawful. Authorities were directed to conduct
fresh proceedings for the assessment of the said liability of Mills subject
to Mills' depositing 25% of their respective amounts of Sugarcane Cess
in default. Mills should also file applications before the Cane Commissioner
providing grounds having reference to the terms of Policy for remission
in the quantum of penalty payable by them to be determined by the Cane
Commissioner in the range between the amount of their down payment to
the ceiling fixed by the Policy. Such applications by the Mills shall
be disposed of in the light of principles noted in the present judgment
after giving an opportunity of fair hearing to the Mills.
6. Keeping of
Book or Accounts.--Each Sugar Mill shall keep a separate account
containing the following particulars:-
amount of cess recoverable from each seller.
date of recovery of the amount of the cess referred to in clause (I).
quantity supplied by each seller in respect of which the cess has been
mill management share of the cess in respect of the cane purchased.
quantity of cane obtained from the mill's own sugar from the farms of
the occupiers of the factory.
amount of cess payable by the mill management in respect of the sugarcane
referred to in clause 5.
amount and the date of the deposits made into the Government Treasury
on account of the cess.
of Audit Accounts.-- The accounts of the Sugar Mills both in
respect of purchases of sugarcane and collection of cess in respect thereof
from sellers and credits by the 'mills from their own funds and deposit
into the Government Treasury, shall be subject to inspection and audit
by the Government Auditors or any other officer authorised in this behalf
There shall be constituted a Fund to be known as the Sugarcane Development
proceeds .of the cess, after deduction of such expenses of the collection
thereof as may be directed by the Government shall be credited into the
Fund shall be utilized by Government for:--
Special maintenances and development of roads and special plant protection
services in the areas comprising the Mill Zones; and
such other activities directed towards the development of sugarcane productions,
as may be approved Government.
Fund shall be operated upon by Government Dr such officer or authority
under Government as may be authorised in this behalf by Government by
an order in writing.