# Vodafone South Limited v. State Of U.P. & Ors

- **Citation:** (2016) 8 ILRA 305
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2016-08-24
- **Bench:** Sudhir Agarwal, Dr. Kaushal Jayendra Thaker
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/vodafone-south-limited-v-state-of-u-p-ors-44248
- **Pages:** 13

## Text

8 All. Vodafone South Limited Vs State Of U.P. & Ors.
305
(2016) 8 ILRA 305
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 24.08.2016

BEFORE

THE HON'BLE SUDHIR AGARWAL, J.
THE HON'BLE DR. KAUSHAL JAYENDRA THAKER, J.

Writ Tax No.- 622 Of 2015
&
Connected With Other Cases

Vodafone South Limited ...Petitioner
Versus
State Of U.P. & Ors. ...Respondents

Counsel for Petitioner:
Ashish Mishra,S.D. Singh

Counsel for Respondents:
C.S.C., Rahul Sahai
Held

When a subsequent set of rules (Rules, 2009) supersedes earlier rules (Rules, 2005), and the subsequent
rules are later declared ultra vires, the earlier rules do not automatically revive.
Supersession of earlier rules is an independent legislative act; even if the new rules are struck down, the
earlier rules remain extinguished unless expressly revived.
The doctrine of revival applies only in limited situations, such as:
Where legislation is void due to lack of legislative competence, or
Constitutional amendments being struck down.
It does not apply where delegated legislation is invalidated due to procedural irregularities.
Where a rule is substituted or repealed, it ceases to exist; striking down the substituting rule does not
revive the earlier rule.
Since Rules, 2009 were struck down for non-compliance with mandatory procedure (and not lack of
competence), the doctrine of "still-born" does not apply, and hence no revival of Rules, 2005 occurs.
Consequently, no valid rules existed for levy of advertisement tax for the relevant period; therefore, the
demand raised is without jurisdiction and illegal.
The action of authorities in assuming automatic revival of Rules, 2005 is a manifest legal error.
All impugned demand notices are quashed, and any recovered amount must be refunded.

CASE LAW CITED

Anurag Bansal vs. State of U.P. (2011 (5) ADJ 879) - Rules, 2009 declared ultra vires.
Supreme Court Advocates-on-Record Association vs. Union of India (2016 (5) SCC 1)
N.P.V. Sundara vs. State of Andhra Pradesh (AIR 1958 SC 468)
Sagir Ahmad vs. State of U.P. (AIR 1954 SC 728)
Deep Chand vs. State of U.P. (AIR 1958 SC 648)
Mahendra Lal Jaini vs. State of U.P. (AIR 1963 SC 1019)
306 INDIAN LAW REPORTS ALLAHABAD SERIES

Firm A.T.B. Mehtab Majid & Co. vs. State of Madras (AIR 1963 SC 928)
B.N. Tiwari vs. Union of India (AIR 1965 SC 1430)
T. Devadasan vs. Union of India (AIR 1964 SC 179)
Indian Express Newspaper (Bombay) Pvt. Ltd. vs. Union of India
West U.P. Sugar Mills Association vs. State of U.P. (2002 (2) SCC 645)
Koteswar Vittal Kamath vs. K. Rangappa Baliga & Co. (1969 (1) SCC 255)
Bhagat Ram Sharma vs. Union of India (1988 (Supp.) SCC 30)
India Tobacco Co. Ltd. vs. CTO (1975 (3) SCC 512)
Rakesh vs. Dr. JT (2005 (12) SC 1)

(Delivered by Hon'ble Sudhir Agarwal, J.
&
Hon'ble Dr. Kaushal Jayendra Thaker, J.)

1. Heard Sri S.D. Singh, learned Senior Advocate for petitioners and learned Standing
Counsel as well as Sri Rahul Sahai, Advocate for respondents.

2. All these writ petitions involve comm on questions of law and fact and, therefore, as
agreed by learned counsel for the parties, have been heard together and are being decided by this
common judgment.

3. Demand of advertisement tax in accordance with Agra Nagar Nigam (Samachar Patro
Me Prakashit Vigyapano Par Kar Ka Nirdharan Karna Aur Use Vasool Karna) Niyamawali, 2005
(hereinafter referred to as the "Rules, 2005") published in U.P. Gazette dated 10.09.2005 and came
into force on 01.04.2005 has been challenged on the ground that no such rules were in existence in
the year of demand, i.e., 2010-11 and, therefore, demand of advertisement tax under Rules, 2005 is
wholly without jurisdiction and illegal.

4. All the petitioners are Companies engaged in providing telecommunication service.
They are Licensed Service Providers in State of U.P. by virtue of licence granted by Government of
India, Ministry of Communications and IT, Department of Telecommunication under the
provisions of Indian Telegraph Act, 1885 (hereinafter referred to as the "Act, 1885"). They have
been authorized to set up and operate "Unified Access Services" (hereinafter referred to as the
"UAS") in the licensed service area.

5. Nagar Nigam, Agra (hereinafter referred to as the "NNA") in purported exercise of
powers under Sections 192, 219, 540(1), 550, 227, 172(2), (Ja) and 544 of U.P. Municipal
Corporation Act, 1959 (hereinafter referred to as the "Act, 1959") framed bye-laws/ Rules 2005 for
imposing tax on advertisement, in the manner other than publication in newspapers, within
territorial jurisdiction of NNA. Rules, 2005 contemplated a licence for the purpose of such
advertisement and rate of tax payable by such person.

6. Subsequently, a new set of Rules, namely, U.P. Municipal Corporation (Assessment and
Collection of Tax On Advertisement) Rules, 2009 (hereinafter referred to as the "Rules, 2009")
8 All. Vodafone South Limited Vs State Of U.P. & Ors.
307
have been framed applicable to every Municipal Corporation in State of U.P. and aforesaid Rules
clearly provide that same are being promulgated in supersession of all the previous rules and orders
issued in this behalf. These Rules were published in notification dated 24.12.2009 and came into
effect from the date of their publication in gazette. It is admitted case of the parties that on
promulgation of Rules, 2009, the Rules, 2005 stood superseded.

7. Pursuant thereto NNA issued a demand notice dated 18.11.2010 for the year 2010-11
demanding advertisement tax to the tune of Rs. 5327666/- (in Writ Petition No. 622 of 2015),
which was objected by petitioners in Writ Petition No. 139 of 2011. The Court vide judgment dated
29.01.2011 directed NNA to decide objections filed by petitioners. One of the objection taken by
petitioners is that Rules, 2009 were challenged being ultra vires of Act, 1959 as also Article
19(1)(a) and 19(1)(g) of the Constitution in various writ petitions led by Misc. Bench No. 3336 of
2010 (Anurag Bansal and others Vs. State of U.P. and others). A Full Bench of this Court in its
judgment reported in 2011(5) ADJ 879 has upheld the contention and declares Rules, 2009 as ultra
vires of Act, 1959 and has struck down the same.

8. Petitioners thus contended that since Rules, 2009 have been declared ultra vires, no new
Rules have been framed and earlier Rules, 2005 having already superseded by Rules, 2009, will not
revive, hence no advertisement tax is payable by them.

9. Respondent-Nagar Nigam, however, by means of orders impugned in writ petitions have
decided representation and rejecting same have taken the view that after striking down of Rules,
2009 liability to pay advertisement tax would fall back upon Rules, 2005 which would stand revive
and, therefore, petitioners are liable to pay advertisement tax accordingly.

10. The only question which has been argued before us is that, Rules, 2005 after having
been superseded and repealed by Rules, 2009 would not revive after Rules, 2009 are declared ultra
vires and, therefore, any demand of advertisement tax for the period of 2010-11 and subsequent
thereto would be illegal and without jurisdiction.

11. The stand of respondents in counter affidavit is very clear that after Rules, 2009 have
been declared ultra vires, superseded Rules, 2005 would automatically revive. Stand taken by NNA
in para 19 of counter affidavit filed in leading writ petition i.e. Writ Petition No. 622 of 2015 is
reproduced as under:

"19. That the averments made in paragraph no. 24 of the writ petition are not
admitted. In reply it is submitted that upon the super session of the Rules of 2005, by the Rules of
2009 and upon adjudication of the rules of 2009 as being utra vires, the Rules of 2005 stood
automatically revived and thus there is no infirmity in the impugned proceedings." (emphasis
added)

12. Basic facts are not disputed. Earlier, rules framed were applicable only to NNA for levy
of advertisement tax. Subsequently State Government framed a general set of Rules applicable to
308 INDIAN LAW REPORTS ALLAHABAD SERIES

all Municipal Corporations governed by Act, 1959. Rules, 2009 were published in supersession of
all previous rules and orders issued in this behalf. Operative part of Rules, 2009, reads as under:

"In exercise of powers under section 227 read with section 192 and 219, sub-section
(1) of section 540 and section 550 of the Uttar Pradesh Municipal Corporation Act, 1959 (Uttar
Pradesh Act No. II of 1959) and section 21 of the Uttar Pradesh General Clause Act (Act No. 1 of
1904) and in super session of all the previous rules and orders issued in this behalf, the
Governor, after considering the objections and suggestions received in pursuance of order
published in Government notification no- 561/IX-9-2008-49Ja/2001, dated February 27, 2008
required by sub-section (2) of section 540 of the said Act of 1959, is pleased to make the following
rules:" (emphasis added)

13. Rules, 2009 have been promulgated in a way that firstly rule framing authority has
declared that notification dated 24.10.2009 is being issued in exercise of powers under Section 227
read with 192, 219, 540(1) and 550 of Act, 1959 and Section 21 of U.P. General Clauses Act, 1904
(hereinafter referred to as the "Act, 1904") and in supersession of all the previous rules and orders
issued in this behalf. Second part of notification says that Governor after considering objections
and suggestions received in pursuance of order published in Government notification dated
27.02.2008 as required by Section 540(2) of Act, 1959 is pleaded to make following rules, i.e.,
Rules, 2009. Thus by first part Rule framing authority has superseded all existing rules and orders
issued in reference to provisions, namely, Sections 227, 192, 219, 540(1) and 550 of Act, 1959 read
with Rule 21 of Act, 1904 and by subsequent part, Rules, 2009 have been promulgated.

14. It is not the case of respondents that power exercised by Rule framing authority with
regard to supersession of earlier rules was bad or even this part has been nullified by any
subsequent judgment of this Court.

15. Earlier validity of Rules, 2009 was upheld in Taj Advertising and others Vs. State of
U.P. and others, 2010(4) ALJ 293. In another set of petitions filed at Lucknow Bench led by
Misc. Bench No. 3336 of 2010 (Anurag Bansal and others Vs. State of U.P. and others),
Division Bench disagreeing with the view taken in Taj Advertising (supra), formulated following
questions and referred matter to Larger Bench:

"(1) Whether the State Government had legislative competence to frame the Rules,
2009?

(2)Whether the State Government in any case could have framed 'Rules' in general
for all the municipal corporations, that too without taking recourse to Section 206 of the Act?

(3)Whether delegation of power could be made under the Rules framed by the State
Government to the Central Government?
8 All. Vodafone South Limited Vs State Of U.P. & Ors.
309
(4)Whether the licence for putting hoardings/advertisements on public properties,
owned by private owners, can be given by public auction ?

(5)Whether the impugned rules are ultra vires to the provisions of Articles 14,
19(1) (a) and 19(1)(g) of the Constitution of India?

(6)Whether the Rules, 2009 are invalid, they having been framed without following
the provisions of Sections 199 to 203 of the Act?

(7)Whether the provisions of the Rules, 2009, such as- requiring the owner of the
building, where the advertisement is to be set up, to give an undertaking that in the event of default
by the advertising company/firm to pay the tax, the owner of the building concerned would pay the
tax, etc. can be said to be unreasonable and unfair to be adhered to and are liable to be struck
down?

(8)Whether vesting of all the powers (as discussed in this order in relation to
putting of hoardings and as given under the Rules, 2009) on private properties, in special areas
etc. and in 'no hoarding zones' into the sole authority of the Municipal Commissioner, that too with
no guidelines and without providing any superior forum of appeal/revision against his decision,
suffers from the vice of excessive delegation and in any case absolutely arbitrary and
unreasonable?"

16. Full Bench, however, decided to deliberate only questions no. 1, 2, 6 and 7 and
answered the same as under:

"(1) State Government has got legislative competence to frame rules but subject to
fulfilment of necessary conditions and procedure prescribed under Chapter IX of the Act (supra).

(2) Government could not have framed impugned rules for all the Municipal
Corporations without taking recourse of not only Section 206 of the Act but other statutory
provisions contained in Chapter IX of the Act.

(6) Impugned Rules 2009 is invalid and ultra vires to the Act being framed without
following the provisions of Sections 199 to 203 of the Act and other statutory provisions discussed
in the body of judgment (supra).

(7) Provision contained in the Rule 2009 requiring the owner of building to face
penal consequences is invalid and violative of Section 195 of the Act."

17. Now the question is, "whether in view of aforesaid decision can it be said that Rules,
2005, stood superseded by Rules, 2009 would revive after striking down of Rules, 2009 by Full
Bench in Anurag Bansal (supra), authorising NNA to charge advertisement tax from petitioners
under Rules, 2005".
310 INDIAN LAW REPORTS ALLAHABAD SERIES

18. Validity/ vires of statutory provisions normally examined in different ways and on
different grounds. When an amendment is made to the provisions of Constitution, the only scope
available to examine the same is, whether the same alters basic features of Constitution or not.
Validity of a Principal Legislation made by Parliament or State Legislature is normally assailable
on the ground of legislative competence or violation of constitutional provisions. Scope of
challenge to delegated legislation namely, rules, regulations- bye-laws etc is much wider. Validity
thereof can also be challenged on the ground that same are inconsistent with the provisions of
Statute under which they have been framed or that mandatory procedure prescribed in statute for
making delegated legislation has not been followed.

19. Effect of declaring any legislation as ultra vires or bad for any other reason is also
different and depends upon various factors. An amendment to constitutional provision if declares
ultra vires as it alters any element of basic feature of Constitution, it is considered to be a patent
want jurisdiction on the part of Parliament which would have no effect on the law earlier to such
legislation and, therefore, subsequent legislation if struck down would result in revival of earlier
provision as if the earlier provision was never altered or repealed or substituted etc. A Constitution
Bench recently has expressed this view in Supreme Court Advocates-on-Record Association
and another Vs. Union of India, 2016(5) SCC 1. In the majority judgment rendered by Hon'ble
Jagdish Singh Khehar, J. (for Himself and on behalf of Justice Madan B. Lokur, Justice Kurian
Joseph and Justice Adarsh Kumar Goel), Court considered this aspect in paras 408 to 415 holding,
when amended provision postulating a different provision is set aside, the original process of
selection and appointment under unamended provision would revive.

20. When a principal legislation or delegated legislation is struck down being violative of
fundamental rights or want of legislation, it is void ab initio. Sometimes when legislation is in the
teeth of prohibition under Constitution, the Courts have evolved doctrine of "still-born". In N.P.V.
Sundara Vs. State of Andhra Pradesh AIR 1958 SC 468 doctrine of "still-born" piece of
legislation was considered and it was held:

"If a law is on a field not within the domain of the legislature, it is absolutely null
and void, and a subsequent cession of that field to the legislature will not have the effect to
breathing life into what was a still-born piece of legislation and a fresh legislation on the subject
would be requisite. But if the law is in respect of a matter assigned to the legislature but its
provisions disregard constitutional prohibitions, though the law would be unenforceable by
reason of those prohibitions, when once they are removed, the law will become effective without
re-enactment." (emphasis added)

21. A slight different controversy arose in Sagir Ahmad Vs. The State of U.P. & Ors
AIR 1954 SC 728. Therein U.P. State Transport Act, 1951 was promulgated enabling State
Government to run Stage Carriage Service to the exclusion of others. Pursuant thereto State
Government made a declaration extending aforesaid Act to a particular area and framed a scheme
for operation of Stage Carriage Service on certain routes to the exclusion of others. Article 19(1)(g)
conferred power upon a citizen to carry on business and there was no power under Constitution
8 All. Vodafone South Limited Vs State Of U.P. & Ors.
311
available to State to deny such fundamental right to a citizen by engaging itself to carry on any
trade or business. An amendment was made vide Constitution (First) Amendment Act, 1951.
Thereunder State became entitled to carry on any trade or business either by itself or through
corporation owned or controlled by it to the exclusion of private citizens wholly or in part. State
sought to protect its enactment authorizing itself to run Stage Carriage Service to exclusion of
others on the basis of aforesaid amendment of Constitution. The question raised before Court was,
whether Constitution (First) Amendment Act could be invoked to validate earlier legislation. Court
held that U.P. State Transport Act, 1951 when enacted was unconstitutional, therefore, it was "stillborn". It could not have been vitalized by subsequent amendment of Constitution removing
constitutional objection and must be re-enacted. Hon'ble Mukherjea, J. speaking for Court, referred
to Prof. Cooley in his work on "Constitutional Limitations" (Vol. I page 384) and said:

"a statute void for unconstitutionality is dead and cannot be vitalised by a
subsequent amendment of the Constitution removing the constitutional objection but must be reenacted".

22. Court not only quoted aforesaid passage from Prof. Cooley but also said that this is a
sound law and, therefore, gave it a legal recognition binding upon all in this country.

23. This view was reiterated in Deep Chand Vs. The State of U.P. & Ors. AIR 1958 SC
648 where Court said that a plain reading of Article 13(2) indicates, without any reasonable doubt,
that prohibition goes to the root of the matter and limits State's power to make law; the law made
inspite of prohibition is a "still-born" law.

24. Again another Constitution bench in Mahendra Lal Jaini Vs. State of U.P. AIR 1963
SC 1019 reiterated the above view in para 22 of report. It says:

"...it must be held that unlike a law covered by Art. 13(1) which was valid when
made, the law made in contravention of the prohibition contained in Art. 13(2) is a still-born law
either wholly or partially depending upon the extent of the contravention. Such a law is dead from
the beginning and there can be no question of its revival under the doctrine of eclipse."

(emphasis added)

25. This has been followed in Rakesh Vs. Dr. JT 2005 (12) SC 1.

26. In the present case power of State to make Rules under Act, 1959 was not doubted by
Court in Anurag Bansal (supra) but for disregard of procedural provisions, imposition of
advertisement tax by State Government by Rules, 2009 was held invalid. Thus Rules, 2009 were
struck down since procedure to make Rule which was mandatory, not followed. To our mind it is
not a case where doctrine of "still-born" would be attracted. Rules, 2009 have not been struck down
for want of legislative competence but they have been held invalid for the reason that mandatory
procedure prescribed in statute has not been followed and, therefore, here doctrine of "still-born"
312 INDIAN LAW REPORTS ALLAHABAD SERIES

and consequences if such a law is made, would not apply but here is a case where a subordinate
legislation has been found invalid for want of observance of certain mandatory procedure
prescribed in statute. In these circumstances, it has to be examined whether subsequent delegated
legislation when held invalid or struck down, would result in revival of earlier subordinate
legislation which was already superseded by subsequent legislation.

27. In this regard we find that first decision available to us is Firm A. T. B. Mehtab Majid
and Co. v. State of Madras AIR 1963 SC 928. Therein validity of Rule 16 of Madras General
Sales Tax (Turnover and Assessment) Rules, 1939 as substituted w.e.f. 01.04.1955 was challenged.
Court held that it is discriminatory and also contravenes Article 304-A of the Constitution. An
argument was raised that if amended rules is invalid old Rule 16 would revive. The Court in para
24 of the judgment said:

"24. It has been urged for the respondent that if the impugned rule be held to be
invalid, old r. 16 gets revived and that the tax assessed on the petitioner will be good. We do not
agree. Once the old rule has been substituted by the new rule, it ceases to exist and it does not
automatically get revived when the new rule is held to be invalid."

28. Again a similar issued came up for consideration before another Constitution Bench in
B.N. Tiwari Vs. Union of India and others AIR 1965 SC 1430. Therein Ministry of Home
Affairs made a provision vide resolution dated 13.09.1950 providing reservation for Scheduled
Caste and Schedule Tribe at 12.5 percent and 5 percent respectively. There was no provision for
carry forward. It was added by a supplementary instruction issued in 1952 providing that if suitable
reserved category candidates are not available in one recruitment the unfilled vacancies shall be
carried forward in next recruitment but still some vacancies remained unfilled they would be
treated unreserved. This carry forward rule was amended by Government in 1955 to further carry
forward unfilled vacancies without any provision for lapse, i.e., for treating vacancies unreserved.
Result of substitution of provision by 1955 Rule was that paras 5(3) and 5(4) of 1952 Rule cease to
exist. This rule of carry forward made in 1955 was challenged in T. Devadasan vs The Union Of
India and another, AIR 1964 SC 179 on the ground that it is unconstitutional. The Court struck
down carry forward rule of 1955.

29. In B.N. Tiwari (supra) petitioner argued before Supreme Court that carry forward rule
of 1955 was struck down and 1952 rule having already ceased to exist by substitution of 1955 Rule,
hence there was no carry forward rule either of 1952 or 1955. In alternative it was argued that if
1952 Carry Forward Rule still continue, that is also arbitrary. Court considered three questions as
under:

(1) Whether Carry Forward Rule of 1952 can still be said to exist?

(2) Whether Carry Forward Rule of 1952 if it is still exist is bad for the same reason
as the Carry Forward Rule of 1955 in the light of judgment in T. Devadasan (supra).
8 All. Vodafone South Limited Vs State Of U.P. & Ors.
313

(3) Whether petitioner-B.N. Tiwari would be entitled to appointment even if Carry
Forward Rule, 1952 does not exist?

30. Answering first question, Court said that in T. Devadasan (supra) Carry Forward Rule
as modified in 1955 was declared invalid. Court did not say that it will result in revival of 1952
Rule. Further declaration of 1955 Rule as invalid would not mean that the Court said that 1952
Rule must be deemed to exist or revived because of declaration of 1955 Rule as invalid. Court held:

"The carry forward rule of 1952 was substituted by the carry forward rule of 1955.
On this substitution the carry forward rule of 1952 clearly ,Ceased 'to exist because its place was
taken by the carry forward rule of 1955. Thus by promulgating the new carry forward rule in 1915,
the government of India itself cancelled the carry forward rule,of 1952. When therefore this Court
struck down the carry forward rule as modified in 1955 that did not mean that the carry forward
rule of 1952 which had already ceased to exist, because the Government of India itself cancelled it
and had substituted a modified rule in 1955 in its place, could revive. We are therefore of opinion
that after the judgment of this Court in Devadasan's case there is no carry forward rule at all,
for the carry forward rule of 1955 was struck down by this Court while the carry forward rule of
1952 had ceased to exist when the Government of India substituted the carry forward rule of
1955 in its place." (emphasis added)

31. It also held that in view of above answer to first question the second question, whether
1952 Rule is also invalid, need not to answer. We are not concerned with third question and the
issue raised in these writ petitions, in our view, is covered by the answer given by Supreme Court
to first question in B.N. Tiwari (supra).

32. Again a similar question arose in Indian Express Newspaper (Bom) Pvt. Ltd. and
others vs. Union of India and others, 1986(159) ITC 856. Government of India had issued a
notification dated 15.07.1977 under which total exemption was granted. It was substituted by
notification dated 01.03.1981. Subsequent notification dated 01.03.1981 was challenged and struck
down. The question arose, whether after striking down notification dated 01.03.1981, earlier
notification would revive. Court held that on striking down of subsequent notification repealed
notification would not revive.

33. The judgments in Firm A. T. B. Mehtab Majid (supra) and B.N. Tiwari (supra)
came up for consideration before a three Judge Bench in West Uttar Pradesh Sugar Mills
Association and others Vs. State of U.P. and others, 2002(2) SCC 645. Therein Rule 49 of U.P.
Sugarcane (Regulation of Supply and Purchase) Rules, 1954 was substituted by U.P. Sugarcane
(Regulation of Supply and Purchase) (Amendment) Rules, 1992. Rule 1(2) of notification dated
24.04.1992 which caused said amendment clearly provides that amendment Rules, 1992 shall
remain in force w.e.f. 01.10.1991 to 30.09.1992. Therefore, effect of amendment of rules was only
one year. However, Rule 2 whereby amendment was caused, said that for the rules setup in Column
1, rules set out in Column 2 shall be substituted. After 30.09.1992, Cane Commissioner issued a
circular that now old Rule 49 has revived. This was challenged and argument was raised that old
314 INDIAN LAW REPORTS ALLAHABAD SERIES

Rule 49 having already been substituted without, any reservation, it would not revive after
amended rule also become inoperative after 30.09.1992. Court considered the question, once old
rule has been deleted, repealed or substituted by new rule, whether old rule would revive when
substituted rule cease to be operative and it was answered in negative. However, in para 15 of
judgment, Court said, that it would have been a different case where a subsequent law which
modified earlier low held to be void. In such case, earlier law shall be deemed to have never been
modified or repealed and, therefore, continued to be in force. Where it is found that legislature
lacked competence to enact a law, still amends existing law and subsequently it is found that
legislature or the authority was denuded with the power to amend the existing law, in such a case
old law would revive and continue but where the rule framing authority has substituted a provision
without showing intention to keep the old provision alive, position would be different.

34. In Supreme Court Advocates-on-Record Association (supra) also this issue has
been considered after referring to earlier authorities on the subject, Court held, when an amendment
is brought or a new set of rule is brought by substitution or supersession by legislature the
annulment or concealment by legislature itself and if that be so earlier provision would not revive.
In para 412.4 after referring judgments in Koteswar Vittal Kamath Vs. K. Rangappa Baliga and
Co., 1969(1) SCC 255, Court observed, that, it is true that if amendment to an erstwhile legislative
enactment, envisages substitution of an existing provision, the process of substitution must be
deemed to comprise of two steps. The first step would envisage that old rule would cease to exist
and second step would envisage that new rule had taken place of the old rule. As such, even if new
rule was to be declared invalid, the first step depicted above, namely, that old rule has ceased to
exist, would remain unaltered. Court however observed that said position will not apply in the
matter considered by Constitution Bench in Supreme Court Advocates-on-Record Association
(supra) for the reason that impugned Constitutional amendment was promulgated independently of
original provisions of Constitution.

35. In para 412.7 of judgment, Court referred to its decision in Indian Express Newspaper
(Bom) Pvt. Ltd. (supra) and said that legal effect of an earlier law, later law enacted in its place
was declared invalid would not depend merely upon the use of words like "substitution" or
"supersession". It would depend on totality of circumstances and context upon which provision was
couched. Court also referred to the judgment in Bhagat Ram Sharma vs. Union of India, 1988
(Suppl.) SCC 30 to observe that an enactment purported to be an amendment has the same
qualitative effect as the repeal of existing statutory provision and said that there is no quarrel on the
said proposition. It also said that it is not considering the question of effect of an amendment or a
repeal but was faced with the case dealing with the effect of striking down of Constitutional
amendment and legislative enactment through a process of judicial review.

36. In India Tobacco Co. Ltd. vs. CTO, 1975(3) SCC 512 the effect and meaning of
repeal was considered. Court said that repeal connotes abrogation or obliteration of one statute by
another from statute book completely as if it had never been passed. When an Act is repealed, it
must be considered (except as to transactions past and closed) as if it had never existed. It said:
8 All. Vodafone South Limited Vs State Of U.P. & Ors.
315

"Repeal is not a matter of mere from but one of substance, depending upon the
intention of the Legislature. If the intention, indicated expressly or by necessary implication in the
subsequent statute, was to abrogate or wipe off the former enactment, wholly or in part, then it
would be a case of total or pro tanto repeal. If the intention was merely to modify the former
enactment by engrafting an exception or granting an exemption, or by super-adding conditions, or
by restricting, intercepting or suspending its operation, such modification would not amount to a
repeal."

37. Court further observed that broadly speaking, principal object of a repealing and
amending Act is to excise dead matter, prune off superfluities and reject clearly inconsistent
enactments.

38. If we examine the matter in present cases in the light of aforesaid discussion, we find
that Rules, 2009 made two declarations. One is an independent declaration that existing rules and
orders are superseded and second is an enactment of a set of rules by Rule framing authority.

39. Rules, 2009 dealing with liability and procedure of imposition of advertisement tax
have been struck down for the reason that tax imposed by State Government straightway without
exercising procedure provided in the Act. Rules, 2009 were framed by Government in
contravention of statutory provision contained in Act. In paras 84 and 86 of judgment in Anurag
Bansal (supra) Full Bench observed as under:

"84. ...the tax imposed by the State Government straightaway without exercising the
power conferred by the Act i.e. issuance of direction by notification in gazette to impose tax seems
to be an act of exceeding of jurisdiction. Impugned Rules have been framed by the Government in
contravention of statutory provisions (supra) contained in the Act.

86. ...government seems to have exceeded its jurisdiction while framing the rules
straightway without following the procedure provided by the Act."

40. Simultaneously in para 82 of judgment, Court further said:

"82. ..... State Government has got power under Section 205 of the Act to abolish or
modify the tax imposed by the Corporation. It does not mean that the State Government lacks
power with regard to tax matter. Power conferred on the State Government is general power which
may be exercised without affecting the statutory power provided to Corporation to impose and
regulate tax within its jurisdiction. The government may, by notification, under Section 206 of the
Act by general or special order published in official gazette, required corporations to impose any
tax mentioned in Sub-section (2) of Section 172 of the Act, not already imposed at a specified rate.
The Government may also increase, modify or vary the rate of tax in case the Corporation fails to
carry out the order."

41. In para 83, Court said:
316 INDIAN LAW REPORTS ALLAHABAD SERIES

"83- The Government may pass suitable order imposing, increasing, modifying, or
varying the tax thereupon and in such event the order of the State Government shall operate as if it
had been a resolution duly passed by the Corporation."

42. Thus the power of State Government to abolish or modify a tax imposed by
Government has validly been recognized but advertisement tax imposed by Rules, 2009 by State
Government has been struck down for not complying with Section 206 of Act, 1959 and also
without following the provisions of Sections 199 and 203 of Act, 1959. Thus aforesaid judgment in
Anurag Bansal (supra) has nowhere declared that Rules, 2009, in so far as in initial part of
notification, supersedes existing rules and orders, lacks authority and that part will not be operated.
Legislative intention is clear that existing rules and orders in respect of advertisement tax were
superseded. New set of Rules, which have been struck down, would not render revival of
supersession already done by Rule framing authority and that be so in our view Rules, 2005 shall
not revive.

43. Sri Rahul Sahai, learned counsel appearing for respondent-Nagar Nigam, when
confronted with aforesaid authorities, could not place any authority before us so as to pursue to take
a different view in the matter.

44. The authorities, therefore, committed a manifest error in proceeding to demand
advertisement tax under Rules, 2005 on the assumption that after judgment in Anurag Bansal
(supra) striking down Rules, 2009, earlier Rules, 2005 would stand revive. This is neither legally
permissible nor otherwise valid.

45. In view of above, all these writ petitions are allowed. The orders and demand notices
impugned in all these writ petitions are hereby quashed. It is held that respondents shall not be
entitled to realize any amount under orders impugned in this writ petition, which are quashed by
this judgment. If any, amount has been deposited by petitioners pursuant to impugned orders or
realized by respondents by coercive method or otherwise, same shall be refunded to petitioners
without any further delay.

46. However, we make it clear that this judgment shall not preclude Competent Rule
making authority from promulgating new set of rules in accordance with law.

47. No costs.
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8 All. Rajesh Paper Mills Vs Union Of India & Anr.
317
(2016) 8 ILRA 317
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 03.08.2016

BEFORE

THE HON'BLE SUDHIR AGARWAL, J.
THE HON'BLE KAUSHAL JAYENDRA THAKER, J.

Writ Tax No.- 718 Of 2005

Rajesh Paper Mills ...Petitioner
Versus
Union Of India & Anr. ...Respondents

Counsel for Petitioner:
B.C.Rai

Counsel for Respondents:
S.S.C.,A.S.G.I.,K.C. Sinha, R.C.Shukla, Radha Mohan Pandey

The present petition has been filed challenging the validity of Rule 8(3) of Central Excise Rules, 2002
(hereinafter referred to as 'Rules, 2002') being ultra vires of Article 14 of Constitution of India and Section
11AB of Central Excise Act, 1944 and also on the ground that same is beyond Rule making power under
Section 3 of Act, 1944.

Petitioner is a company registered under Companies Act, 1956 and is engaged in manufacturing and sale of
paper which is an excisable article, hence, petitioner is registered with Excise Department under the
provisions of Act, 1944. Petitioner paid excise duty for the period October, 2002 to February, 2005. However,
respondent-2 vide letter dated 9.12.2004 informed petitioner that during scrutiny of monthly returns
submitted by petitioner since February, 2005 there appears to be certain discrepancies showing that excise
duty was deposited beyond due date during February, 2004 to November, 2004. Consequently, petitioner was
directed to produce duty paying documents for the months of March, 2004 to November, 2004, or if, amount
was not deposited within due date, to pay interest at the rate of Rs.1,000/- per day.

It is contended by counsel for petitioner that interest has been calculated as per Rule 8(3) of Rules, 2002
which provides interest to be computed at the rate of 2% per month or Rs.1,000/- per day whichever is
higher. Charging of interest at the rate of Rs.1,000/- per day is wholly illegal, inasmuch as it raises the rate of
interest beyond maximum rate permissible under Section 11AB of Act, 1944. Therefore, same is beyond
delegated legislative authority i.e. rule framing authority and is ultra vires of Section 11AB.

Court observed that a bare reading of Section 11AB shows that rate of interest, if any, payable under Section
11AB would be such as prescribed in two Notification published in Gazette. For that purpose there is neither
any justification nor occasion to refer any Rule including Rule 8. When statute require specifically that rate of
interest shall be fixed by Central Government at such rate as notified in official gazette by way of Notification,
such rate shall prevail. Aforesaid Notification dated 12th September, 2003 partakes nature of "statutory
instrument" issued under Section 11AB, since that is the only way prescribed for fixing rate of interest in
respect of cases covered by Section 11AB. Any general provision will not cover this situation. Hence, demand