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Judgment
R. Mahadevan, J.—These Writ Appeals in W.A. Nos. 1798, 1799 and 1800 of 2011 have been filed against the common order of the
learned single Judge in W.P. Nos. 16993 and 16994 of 2007 and 24500 of 2008, wherein the Writ Petitions filed by the Authorised and
Recognised Private Diesel Outlets seeking supply of diesel on par with the Government operated outlets were allowed. The Government of Tamil
Nadu, through its Secretary of the Commercial Taxes Department, in exercise of powers conferred by sub-section (1) of Section 17, issued
G.O.Ms. No. 170, dated 29.10.2004 granting exemption in respect of tax payable under the Tamil Nadu General Sales Tax Act, 1959, on the
sale of High Speed Diesel Oil by the Public Sector Undertaking Oil Companies to the Director of Fisheries, Government of Tamil Nadu, for
distribution to the fishermen in Tamil Nadu not exceeding the quantity indicated thereunder.
As per the Government Order, Fishermen having mechanized boats were entitled to a maximum supply of fifty thousand kilo liters per annum
and fishermen having country boats fitted with diesel engines were entitled to a maximum supply of forty five thousand six hundred kilo litres per
annum. Few other conditions were imposed in the Government Order of which condition (b) and (d) are significant. Condition (b) stipulates that
the Director of Fisheries shall authorize the Public Sector Undertaking Oil Companies for supply of Diesel to fishermen of Tamil Nadu through
Diesel Bunks of Tamil Nadu Fisheries Development Corporation (TNFDC), Tamil Nadu State Fishermen Cooperative Federation (TAFCOFED)
and other private diesel bunks authorized by the Director of Fisheries. Condition (d) stipulates that the Director of Fisheries shall issue a
declaration for the purchase of Diesel for distribution to Fishermen of Tamil Nadu to the Public Sector Undertaking Oil Companies every month.
On the very same day, i.e. on 29.10.2004, in consonance with the earlier Government Order, the Government of Tamil Nadu represented by its
Secretary of the Animal Husbandry and Fisheries Department, issued G.O.Ms. No. 130 reiterating the intention of the Government to exempt the
tax on sale of High Speed Diesel Oil to be supplied to the fishermen through 36 diesel bunks run by the TNFDC, TAPCOFED and other private
diesel bunks already approved by the Government. It was also indicated in paragraph 4 that considering the welfare of the fishermen, the number
of diesel bunks will be increased whenever necessary. The other conditions imposed were that sales tax shall be exempted on sale of High Speed
Diesel Oil not exceeding 10,000 litres per mechanized boat for the year in case of 5,000 mechanised boats operating for marine fishing in the State
(with maximum limit of 50,000 kilo litres for the whole year) and 3,000 litres per motorised traditional boat running on diesel per year in case of
15,200 motorised traditional boats in the State (with maximum limit of 45,600 kilo litres for the whole year).
In both the Government Orders, no restriction on the quantity of supply of diesel to the Government outlets and authorised private outlets was
imposed.
Subsequently, the Director of Fisheries in the form of letter gave instructions fixing quota for November, 2004 as under:
Mechanized Fishing Boats - 6000 kilo litres
Country Crafts with Diesel Engines - 3800 kilo litres
The Oil Companies were directed to follow the procedure and raise indents in the Form prescribed in the letter.
Since the Government had decided to extend the tax exemption of sale of Diesel to fishermen from authorised Private Outlets, a Committee was
formed under the directions of the Director of Fisheries. The officials from the Department/TNFDC/TAFCOFED were appointed to select the
suitable authorised dealers to supply the Sales Tax exempted diesel to Mechanised Boat/Traditional Craft under the Schemes.
The Committee selected 15 areas and recorded that 3 areas one at Ramanathapuram, one at Tuticorin and one at Cuddalore were not
considered necessary at present. No specific finding as to why it was not necessary was recorded. Since the Officials forming part of the
Committee were from the Fisheries, TNFDC and TAFCOFED, they went beyond the scope of the reference and recommended that first priority
would be given to TNFDC and TAFCOFED in the proposed new places and that private bunks selected will not be allotted more than 10% of
the total quota eligible for that area.
Further, the Committee also stated that the selection of private outlets will be purely on temporary basis and will be valid for a period of one
year only and the allotment of private diesel outlet under this scheme is subject to termination whenever TNFDC and TAFCOFED desire to open
new bunks in that area. While concluding the Committee observed that additional places will be considered within the limits prescribed in the
Government Order as per the norms fixed at above after studying the above proposed bunks for a reasonable period and the local needs.
The Writ Petitioners are private operators from Mallipattinam Thanjavur District, Thonithurai Road, Nagapattinam and Mandapam Ramanad
District and they filed Writ Petitions seeking equal supply on par with the outlets operated by TNFDC and TAFCOFED alleging that the indent
raised to their outlets were falling short of the demand and alleged that the actions of the second appellant is arbitrary, discriminatory and the same
is against Article 14 and 19 of the Constitution of India. In addition, the writ petitioner has also demanded that his supply be increased from 36 KL
to 400 KL. The Writ Petitioners have also alleged that though higher indent was issued to the outlets operated by TNFDC and TAFCOFED, the
demand from the outlets are less and therefore the allotted but non-utilized diesel is carried forward to the next month. The Writ Petitioners also
culled out the figures of supply and sale by way of Tabular column for illustrating their case. The Writ Petitioners also alleged that the fishermen,
who are the ultimate beneficiary are being affected as the petitioners are unable to supply to the needy fishermen, because of the discriminatory
actions and restrictions of the second appellant, which is contrary to the Government Orders issued.
The petitioners have sent many representations to increase the allotment. However, since no reply was received, they had filed the Writ
Petitions seeking a direction to treat them on par with Government operated outlets and increase the quantity of supply.
A common counter was filed on behalf of the second and third appellants alleging that to increase the income of both the organisations
TNFDC and TAFCOFED and as it is easy to monitor the sales and accounts of the above said organisations, the Government had taken a
decision to allot more quota for these outlets. The appellants also contended that it is false to state that the above Government organisations are
unable to supply to the needy fishermen, the allotment of diesel to all authorised outlets have been increased from 24 KL to 36 KL and that the
restrictions imposed are not discriminatory and are only policy decision taken by the government and therefore cannot be interfered with.
Considering the facts, the relevant Government Orders, the instructions in the Form of Memo and Letters and the arguments of the learned
counsels appearing for the Writ Petitioners and the respondents, the learned single Judge by a common order dated 15.06.2010, allowed the claim
of the Writ Petitioners holding that the ultimate beneficiary of the Government Orders are the fishermen and therefore the actions of the second and
third appellants amount to discrimination, and restrictions that are not contemplated under the Governments Orders cannot be imposed. The
learned single Judge directed the authorities concerned to supply the demanded quantity without discrimination if the petitioners satisfy the
requirements for supply and raise an indent for supply of diesel exempted from sales tax. As against the same, the present Writ Appeals have been
preferred.
We have heard the learned Advocate General appearing for the appellants, the learned Additional Advocate General appearing for TNFDC,
the learned Senior Counsel appearing for the Authorised Private Dealers and the learned counsel for the TNFDC and learned counsel for the Oil
Corporation.
The learned Advocate General and the Additional Advocate General assailing the common order of the learned single Judge argued that the
judgment of the Hon''ble Apex Court was not rightly appreciated, and that the Government was empowered to impose any restriction. The learned
Advocate General submitted that the supply would depend on the area where the bunk is located, and that, the findings of the Committee in
proceedings dated 12.05.2005 was to ensure that the sale of the tax exempted diesel reaches the actual fishermen. The learned Advocate General
also contended that when the sale is effected by the outlets operated by TNFDC and TAFCOFED, it would yield more revenue to the
Government run Society, which cater the needs of the fishermen and such a restriction would only prevent black market supply of diesel as the
private operators are permitted to sell diesel to private parties at higher rate without exemption.
The learned Advocate General placing reliance upon the judgment reported in Krishnan Kakkanth Vs. Government of Kerala and ohters,
argued that the Hon''ble Apex Court in similar circumstances held that the condition imposed on farmers opting to avail financial assistance under a
Government Scheme should purchase pumpsets from Government approved dealers would not violate Article 19(1)(g) of the Constitution of India
and any policy framed by the Government in this regard would be outside the scope of judicial review. Such restrictions would not amount to
discrimination violating the fundamental right guaranteed under Article 14. The learned Advocate General relied upon paragraphs 27, 29, 35 and
37 of the judgment and argued that the decision to restrict the supply of diesel to private authorised dealers is not arbitrary and discriminatory. In
Paragraphs 27, 29, 35 and 37, it is held thus:
The reasonableness of restriction is to be determined in an objective manner and from the standpoint of the interests of general public and not
from the standpoint of the interests of the persons upon whom the restrictions are imposed or upon abstract consideration. A restriction cannot be
said to be unreasonable merely because in a given case, it operates harshly and even if the persons affected be petty traders ( Mohd. Hanif
Quareshi and Others Vs. The State of Bihar, ). In determining the infringement of the right guaranteed under Article 19(1), the nature of right
alleged to have been infringed, the underlying purpose of the restriction imposed, the extent and urgency of the evil sought to be remedied thereby,
the disproportion of the imposition, the prevailing conditions at the time, enter into judicial verdict ( Laxmi Khandsari and Others Vs. State of U.P.
and Others, ; D.K. Trivedi and Sons and Others Vs. State of Gujarat and Others, and Harakchand Ratanchand Banthia and Others Vs. Union of
India (UOI) and Others, ).
It may be indicated that where a right is conferred on a particular individual or group of individuals to the exclusion of others, the
reasonableness of restrictions has to be determined with reference to the circumstances relating to the trade or business in question. Canalisation of
a particular business in favour of specified individual has been held reasonable by this Court where vital interests of the community are concerned
or when the business affects the economy of the country ( The Parbhani Transport Co-operative Society Ltd. Vs. The Regional Transport
Authority, Aurangabad and Others, ; Shree Meenakshi Mills Ltd. Vs. Union of India (UOI), and LaLa Hari Chand Sarda Vs. Mizo District
Council and Another, ).
In our view, the impugned circular does not offend Article 14 of the Constitution. The direction contained in the said circular cannot be held to
be vitiated being arbitrary, capricious or unreasonable. The impugned circular specifically mentions that in order to implement the schemes
introduced by the Government for streamlining specific roles and responsibilities of different agencies involved, the directions contained in the
circular have been given. It has been placed on record that it was brought to the notice of the Agricultural Department of the State Government
that false invoices had been issued by dealers without effecting actual sales with a view to draw loans, subsidies and other financial benefits from
the Government. Reports were published in newspapers about widespread manipulation and irregularities in the activities of various dealers in
pumpsets. It is also not in dispute that RAIDCO is the only Government-controlled Cooperative Society in the State of which eighty per cent
capital was subscribed by the Government. The other approved dealer KAICO is also a Cooperative Society involved in dealership of pumpsets.
If the state Government on consideration of such facts and circumstances and to ensure genuine sale of pumpsets at proper price with effective
after-sales service has felt that farmers covered by financial assistance scheme should be fastened with an obligation to purchase pumpsets only
from approved dealers in a region where according to State Government there is a felt need of purchase from such approved dealers, it cannot be
held that such action of the State Government lies in its ipse dixit, without being informed by any reason.
The contention that the impugned circular suffers from hostile discrimination meted out to the farmers in the northern region of the State
covered by the financial assistance under the governmental schemes, by fastening such assistance with an obligation to purchase pumpsets only
from the two approved dealers, cannot be accepted in the facts of the case. The reasons for fastening the farmers of northern region with the
obligation to purchase pumpsets from the said two dealers have been indicated by Mr. Bhat and Mr. Gupta and, in our view, it cannot be held that
such reasoning suffers from lack of objectivity. The law is well settled that even in the matter of grant of largesse, award of job contracts etc, the
Government is permitted to depart from the general norms set down by it, in favour of a particular group of persons, by subjecting such persons
with different standard or norm, if such departure is not arbitrary but based on some valid principle which in itself is not irrational, unreasonable or
discriminatory ( Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, ).
Learned Additional Advocate General appearing on behalf of the TNFDC placing reliance upon the judgment reported in Flemingo (DFS)
Private Ltd. Vs. State of Kerala and Others, argued that private dealers cannot seek an exemption on par with Government Agency, as the profit
in case of private dealership goes to private dealers and in case of Government Agency goes to the Government.
The learned Senior Counsel appearing for the Authorised Private Dealers submitted that the above judgments cannot be made applicable to
the present facts as the right to seek exemption from sales tax on sale of diesel to fishermen has been granted to private authorised dealers on par
with government outlets in the Government orders. The judgments would be applicable only if such right was not conferred in the Government
orders and if the private dealers seek exemption to the sales made by them to fishermen.
In the present case, by G.O.Ms. No. 170 and G.O.Ms. No. 130, the Government has granted exemption from tax on sale of diesel to
fishermen though outlets run by TNFDC, TAFCOFED and Authorised Private Dealers. There is no differentiation in the Government Order. The
beneficiary under the Government Orders is the fishermen. If no exemption is granted, they have to purchase diesel at a higher rate. In both the
Government Orders referred above, the exemption was also made applicable to Authorised Private Dealers. Therefore, any restriction at the point
of supply can only be termed as arbitrary.
Again in 2005, G.O. (D) No. 110, Animal Husbandry and Fisheries Department was issued, wherein the Government had considered the
need to grant exemption from sales tax to sale of diesel to fishermen by opening new outlets and even there no such restriction was contemplated.
When the Government has not imposed any restriction in the Government Orders, the Committee has no right to give such findings that too without
any reasoning. The Committee was only authorised to identify the private outlets which can be permitted to sell diesel to fishermen with tax
exemption. However, it has gone beyond the scope of reference and imposed the conditions which according to us is arbitrary, as the Committee
restricted supply in favour of TNFDC and TAFCOFED outlets.
No doubt, as held by the Hon''ble Apex Court, the scope of judicial review in the matters of policy decision is limited. However, when there is
colourable exercise of power under the guise of reasonable restriction, this Court under Article 226 of the Constitution of India can very well
interfere. For a classification to be reasonable, the conditions under which the classification is made must be different. When the conditions that
apply to different parties are one and the same, any restriction on one party can only be termed as arbitrary and erroneous.
Further, in the judgments cited, the facts are completely different. There, no right was created in favour of the petitioner therein under the
concerned Government Orders/Circulars. On the contrary, in the case on hand, the Government Orders conferred a right on the authorised private
outlets. When the object of the Government Order is to reduce the tax burden on the fishermen, the reasoning of profit going to a dealer does not
arise. Therefore the above judgments are not applicable to the present facts and circumstances of the case.
Similarly, as rightly observed by the learned single Judge, when such restrictions were not imposed by the Government Orders, under the guise
of memo/recommendations, the respondent cannot impose such restrictions. From the facts placed before us, we also see that there is more
demand in the areas where Authorised Private Dealers operate and the Government outlets are unable to sell their indented quota. Therefore, the
argument that when sale is made, the revenue goes directly to the Government Agency cannot be applicable to the present facts. Because of the
restriction imposed, the objects of the Government Orders are defeated. Not even a single case where there is misuse of the exemption in the sale
made by Authorised Private Outlets is reported before this Court. Therefore, mere apprehension cannot be the ground for imposing restrictions,
not contemplated under the Government Orders. The indent itself contains check and balance measures.
Therefore concurring with the view of the learned single Judge and keeping in mind the public interest, we hold that the actions of the appellants
are discriminatory and arbitrary and affirm the Common order dated 15.06.2010. However, we make it clear that the Government if in public
interest decides to restrict the tax exemption for sale of diesel to Government operated outlets alone, necessary modifications have to be brought
about in the Government Orders. In the result, these Writ Appeals are dismissed. No costs. Consequently, connected miscellaneous petitions are
closed.