ISSUE:
- Whether the Govt. of Andhra Pradesh was justified in refusing exemption from tax to sugar factories by adopting a policy to grant exemption only to cooperative sector sugar factories?
RAMA SUGAR INDUSTRIES V. STATE OF ANDHRA PRADESH
Rama Sugar Industries v. State of Andhra Pradesh, 1974 AIR 1745
RULE:
- A public authority with statutory discretion can adopt general rules or policies to guide its discretion, provided such rules are legally relevant to its powers and consistent with the enabling legislation’s purpose.
- While exercising statutory discretion, authorities must not shut their ears to applications or completely disable themselves from considering individual cases on merit.
- The policy or classification adopted by an authority must have a rational nexus to the object of the law and cannot be arbitrary.
FACTS:
- Several sugar factories in Andhra Pradesh applied for tax exemption under the law after substantial expansion.
- The government adopted a policy to grant exemption only to cooperative sector sugar factories.
- The government rejected applications from non-cooperative sector factories citing this policy.
- The affected factories challenged this decision arguing it was discriminatory and the government had fettered its discretion.
HELD:
- The Court held that the government was justified in treating cooperative sugar factories as a distinct category since sugarcane growers have been the object of particular consideration.
- The government’s policy was not a blanket refusal but a considered decision based on relevant factors including financial position and industry conditions.
- The government had examined each application on merits despite having a policy preference for cooperative sector.
- The policy decision was valid as it was based on considerations relevant to the subject matter.
- Appeal was dismissed with costs.