# A VINDER SINGH ETC v. STATE OF PUNJAB & ANR. ETC

- **Citation:** [1979] 1 S.C.R. 845
- **Court:** Supreme Court of India
- **Decided:** 1978-09-19
- **Bench:** V. R. Krishna Iyer, D. A. Desai
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/a-vinder-singh-etc-v-state-of-punjab-anr-etc-7542
- **Pages:** 28

## Headnote

Constitution of India-Articles 14, 265-Vice of excessive delegati'on-
.Absence of guidelines-What can be delegated-lnipo,sing flat rate of taxationChoice of classification in taxing statute.
Punjab Municipalities Act, I976-Sec. 90 Punjab Municipal Act, 1911Sec. 62A-Double taxation if proltibited by Art. 265.
The Municipalities of Punjab are governed by two enactments. The numerous little ones are statutory bodies created and controlled by the Ptlnjab htunicipal Act, 1911 and few large ones by the Punjab Municipal Corporation Act,
1976. For the purpose of the present petitions the provisions run on identical
terms. The State of Punjab in April, 1977 required the various municipal bodies
in the State to impose tax on the sale of Indian made foreign liquor @ Re. 1 /-
per bottle w.e.f. 20-5-1977. The Municipal authorities having failed to take
action pursuant to the directive the State of PlQljab directly issued a notification
under sec. 90(5) of the Punjab Municipal Corporation Act, 1976 and similae
provi5ion of the Municipal Act, 1911.
The petitioner challenged the constitutional validity of the said statutes and
levy on the following grounds :
1. Section 90(2) (b) of the Act suffers from the vice of excessive delegation
or legislative abdication.
2. There are no guidelines for the exercise of the wide fiscal power of the
Q:>rporation or Government which make· it too unreasonable to be salvaged by
Art. 19(5) and too arbitrary to be equal under Art. 14.
3. The Order imposing the tax itself is vitiated because :
(a) It seeks to impose the tax which is already imposed and, therefore,
violates section 90 ( 4) ;
(b) There is double taxation;
(c) It levies too heavy taxation;
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c
D
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F
( d) Picking out from the broad spectrum of luxury goods or intoxicants
G
the Indian made foreign liquor amounts to discriμiination;
(e) No opportunity of being heard was given;
(f) U<tequals are being treated equally by imposing Re. 11- per bottle
irres11ective of the type of liquer taxed, price of the liquor and
alcoholic content.
Dismissing the appeal.
H
HELD : (I) There is nothing in Art. 265 of the Constitution prohibiting
double taxation. [850 Dl
A
B
D
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846
SUPREME COURT 11.EPORTS
(1979] l s.c.R:.
Cantonment Board Poona, v. We.stern India Theatres Ltd., AIR 1954 Bom.
261 approved.
(b) The plea that flat rate of Re. II- per bottle be it on brandy or other
stronger beverage or be it Rs. 50!- or Rs. 500/- per bottle cannot be
seriously pressed. In the field of taxation many complex factors
enter the fixation and flexibility is necessary for the taxing at1tbority.
[850E-F]
Moopil Nair (K.T.) v. Stale of Kera/a, [1961] 3 SCR 77; East India Tobacco
Co. v. State of A.P., [1963] I ~CR 404 at 406; A. Haja Abdul Shakoor & Co.
v. State of MadraJ, [1964] 8 SCR 217 at 230 referred to.
(2) If the Municipal body proposed to impose a tax it is required to offer an
opportunity to the, residents of area. No such procedural fetter is to be found
under sec. 90(5) if the levy is imposed by the State Government. It is impossible
for the Court to imply invitation of objections.
'No taxation without representation' is n9t applicable to a Government controlled by an elected legislature
exercising its power of taxation. [852B, C, D]
(3) Sec. 90(4) talks of tax not already imposed. The Sales Tax imposed by
the State legislature under the Punjab General Sales Tax Act 1948 is no bar to
the present levy.
Section 90 deals with the levy of taxes for ~1unicipal Corporation. The injunction is confined to repetition of the taxes which the Municipality
has already imposed.
If the Corporation has not already imposed the -tax, the
embargo is absent. It is of no moment that some other body, including the
State Legislature has already entered the field.
The question is has the Municipal Committee or Corporation under this Act already exlacted a similar tax ?
[852F, H, 853BC]
( 4) The Founding Document of the nation has created the three great instrun1entalities and entrusted them

## Text

_Characters 0–39,944 of 72,352. This is a partial read: ask again with offset=39944 for what follows._

845
A VINDER SINGH ETC.
v.
STATE OF PUNJAB & ANR. ETC.
September 19, 1978
[V. R. KRISHNA IYER AND D. A. DESAI, JJ.]
Constitution of India-Articles 14, 265-Vice of excessive delegati'on-
.Absence of guidelines-What can be delegated-lnipo,sing flat rate of taxationChoice of classification in taxing statute.
Punjab Municipalities Act, I976-Sec. 90 Punjab Municipal Act, 1911Sec. 62A-Double taxation if proltibited by Art. 265.
The Municipalities of Punjab are governed by two enactments. The numerous little ones are statutory bodies created and controlled by the Ptlnjab htunicipal Act, 1911 and few large ones by the Punjab Municipal Corporation Act,
1976. For the purpose of the present petitions the provisions run on identical
terms. The State of Punjab in April, 1977 required the various municipal bodies
in the State to impose tax on the sale of Indian made foreign liquor @ Re. 1 /-
per bottle w.e.f. 20-5-1977. The Municipal authorities having failed to take
action pursuant to the directive the State of PlQljab directly issued a notification
under sec. 90(5) of the Punjab Municipal Corporation Act, 1976 and similae
provi5ion of the Municipal Act, 1911.
The petitioner challenged the constitutional validity of the said statutes and
levy on the following grounds :
1. Section 90(2) (b) of the Act suffers from the vice of excessive delegation
or legislative abdication.
2. There are no guidelines for the exercise of the wide fiscal power of the
Q:>rporation or Government which make· it too unreasonable to be salvaged by
Art. 19(5) and too arbitrary to be equal under Art. 14.
3. The Order imposing the tax itself is vitiated because :
(a) It seeks to impose the tax which is already imposed and, therefore,
violates section 90 ( 4) ;
(b) There is double taxation;
(c) It levies too heavy taxation;
A
c
D
E
F
( d) Picking out from the broad spectrum of luxury goods or intoxicants
G
the Indian made foreign liquor amounts to discriμiination;
(e) No opportunity of being heard was given;
(f) U<tequals are being treated equally by imposing Re. 11- per bottle
irres11ective of the type of liquer taxed, price of the liquor and
alcoholic content.
Dismissing the appeal.
H
HELD : (I) There is nothing in Art. 265 of the Constitution prohibiting
double taxation. [850 Dl
A
B
D
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F
G
846
SUPREME COURT 11.EPORTS
(1979] l s.c.R:.
Cantonment Board Poona, v. We.stern India Theatres Ltd., AIR 1954 Bom.
261 approved.
(b) The plea that flat rate of Re. II- per bottle be it on brandy or other
stronger beverage or be it Rs. 50!- or Rs. 500/- per bottle cannot be
seriously pressed. In the field of taxation many complex factors
enter the fixation and flexibility is necessary for the taxing at1tbority.
[850E-F]
Moopil Nair (K.T.) v. Stale of Kera/a, [1961] 3 SCR 77; East India Tobacco
Co. v. State of A.P., [1963] I ~CR 404 at 406; A. Haja Abdul Shakoor & Co.
v. State of MadraJ, [1964] 8 SCR 217 at 230 referred to.
(2) If the Municipal body proposed to impose a tax it is required to offer an
opportunity to the, residents of area. No such procedural fetter is to be found
under sec. 90(5) if the levy is imposed by the State Government. It is impossible
for the Court to imply invitation of objections.
'No taxation without representation' is n9t applicable to a Government controlled by an elected legislature
exercising its power of taxation. [852B, C, D]
(3) Sec. 90(4) talks of tax not already imposed. The Sales Tax imposed by
the State legislature under the Punjab General Sales Tax Act 1948 is no bar to
the present levy.
Section 90 deals with the levy of taxes for ~1unicipal Corporation. The injunction is confined to repetition of the taxes which the Municipality
has already imposed.
If the Corporation has not already imposed the -tax, the
embargo is absent. It is of no moment that some other body, including the
State Legislature has already entered the field.
The question is has the Municipal Committee or Corporation under this Act already exlacted a similar tax ?
[852F, H, 853BC]
( 4) The Founding Document of the nation has created the three great instrun1entalities and entrusted them with certain basic powers-legislative, judicative
and executive.
Abdication of these po\\.·ers by the concerned instrumentalities,
amounts to.betrayal of the constitution and it is intolerable in law.
The legislature cannot delegate the essential legislative functions.
The legislature is responsible
to
the
people
and its representative,
the
delegate
may
not
be and this is why excessive delegation have been frowned upon by constitutional
law. However, the complexities of modem administration are so
bafflingly
i•tricate nnd bristle with details, urgencies difficulties and the need for flexibility
is such that our legislature may not get off to a start if they must directly and
comprehensively handle legislative business in all their plentitude and particidarisation. Delegation of some part of legislative. power becomes a compulsive
neceilsity for viability, Of course, every delegate i!'l subject to the authority and
coatrol of the principal and exercise of delegated power can always be directed
or cancelled by the Principal. Therefore·, even if there be delegation, parliamentary control: over delegated legislation should be a living continuity as a constitutional necessity.
[853GH, 854A, B, C, D, E]
Devi Das Gopal Krishnan & Ors. v. State of Punjab & Ors., [1967] 3 SCR
557 at 565; P. N. Kai1shal etc. v. v. Union of India & Ors. [19791 1 SCR 122;
Corp. of Calcutta & Anr. v. Liberty Cinema, [1963] 2 SCR 477 referred to.
The taxes levied under the Act can be utilised only for the purpose of the
Act. There is a clear purpose contained in the provisions about the purpose and
limit of the tax. What is needed for the purpose1 of the Act by way of financial
resources may be levied by the Corporation. Beyond. that not. Moreover the
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AVINDER SINGH v. PUNJAB (Krishna Iyer, J.) .
847
iitems on which taxes may be imposed are also specified. Thus the legislature
has fixed the purpose of tho taxation, objects of the taxation and limits of the
1axation.
[856A-B]
It is too late in the day to contend that the jurisprudence of delegation of
l~islative power does not sanction parting with the power to fix the rate of taxa·
tion, g!ven indication of the legislative policy with sufficient clarity. [860 BJ
When the Government is imposing taxes for the Municipality the Government is bound to know \Vhat ought to have been done by the Municipality.
lhe
whole scheme of the statute shows that Government has an important role to
-play in the running of the municipalities. The financial control over the cor·
]location is with the State Government. [865EJ
A
B
As- between the two interpretations that which sustains the validity of law
must be preferred. [864E]
C
M. K. Papiah & So~s v. The Excise Commr. & Anr., (1975] 3 SCR 607;
~ita Ram Bis/iambhar Dayal v. State of U.P., [1972] 2 SCR 141 referred to.
ORIGINAL JURlSDICTION : Writ Petitions Nos. 4038, 4147, 4148,
-4149, 4150, 4202, 4204, 4207, 4213, 4215, 4222, 4224, 4227, 4232,
4236, 4246, 4249, 4251, 4259, 4311, 4343 & 4347 of 1978.
D
(Under Article 32 of the O:mstitution).
V. M. Tarkunde, P. H. Parekh, C. B. Singh and Mukul Mudgar for
the Petitioners in W.P. Nos. 4038 and 4244 /78.
Yogeshwar Prasad, Mrs. Rani Chhabra and Miss M. Biili for the
E
Petitioners in W.P. Nos. 4147-4150, 4207, 4232 and 4343/78.
B. R. Kapur and S. K. Sabharwal for the Petitioners in W J'. Nos.
4213, 4215, 424(;, 4249, 4311, 4224 and 4227/78.
0. P. Sharma for the Petitioners in W.P. Nos. 4222, 4259 /78.
Pramod Swarup for the Petitioner in W.P. 4347 /78.
.Shrapal Singh for the Petitioner in W.P. 4236/78.
M. P. Jha for the Petitioner in W.P. 4251/78.
F
M. C. Bhandar~ (In W.P. 4204 and 4227 /78 only) Mrs. S. Bhandare, A. N. Karkhanis and Miss Malini Poduval for R. 3 (In W.P.
G
4204, 4227/78) and for R. 3 in 4215 and for R. 3-4 in 4249/78.
G. L. Sanghi (In W.P. 4038/78 only) S. K. Mehta, K. R. Nagara/a,
P. N. Puri and G. Lal for Municipality (rr) in W.P. 4038,
4207,
4215, 4249, 4227.
Hardev Singh and R. S. Sodhi for the State of Punjab in
(W.P.
H
4038/78).
Bishamber Lal for the State of Punjab in (W. P. 4147178).
A
B
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848
SUPREME COURT REPORTS
[1979] 1 s.c.It.
Naunit Lal for Municipal Committee (R.6) in W.P. 4249 and for
r. 4 in 4227 /78.
The Judgment of the Court was delivered by
KRISHNA IYER, J.-This heavy bunch of writ petitions impeaching
the validity of a tax on foreign liquor raises a few familiar legal
riddles.
A rupee per bottle sold within every municipal town
or
city is the impugned levy, meant, according to the Punjab Goverument,
to serve the twin purposes of replenishing the resources of municipal
bodies reduced by house tax exemptions and of weaning drinkers from
overly consuming foreign liquor as a prohibitionist gesture.
To pick
the pocket of every spirituous bibber of the higher brackets by a tiny
tax may be but a feeble homage to Art. 4 7 of the Constitution, and to
finance welfare projects with this tainted tax may be queer Gandhiana.
The will to enforce 'dry' sob.riety in society and to abolish massive
human squalout by fleecing the fat few, is made o~ sterner stuff, maybe.
But matters of means and ends, of policy and morality, are largely for
the legislature and validity is the province of the court. We let slip
the observation only because, from a certain angle, these dual grounds
make odd companions and add to the credibility gap, although
our
focus is solely on the legality of the levy.
It is better to begin with the story of the tax under challenge. The
petitioners are all licensees to trade in foreign liquor including Indian
made foreign liquor.
They are either wholesalers or retailers and
pay excise duty and other fees and taxes including 5ales tax under the
general sales tax law which imposes a levy of 10 per cent, on sales of
foreign liquor.
There are also octroi levies of I 0 per cent, and educational tax of 2 per c~nt, and these add up to a considerable burden;
but the commodity taxed is foreign liquor, Indian made or other, whose
consumer usually belon~ to the well to do sectors.
The municipalities of Pun~jab are governed by two enactments. The
numerous little ones are statutory bodies created and controlled
by
the Punjab Municipal Act, 1911 and the few large ones by the Punjab
Municipal Corporation Act, 1976 (the Act, for brevity, hereafter}.
For our purposes, the provisions run on identical terms and so we
will take up the latter statute which compresses into one section a
plurality of sections in the former, and set out the common scheme
to study the critical issues raised.
Arguments have been addressed
only on this basis.
The immediate facts which have launched the litigative ~ocket need
to be narrated now to get a hang of the core questions in their correct
perspective.
The State of Punjab, in April 1977, under its statutory
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AVINDER SINGH v. PUNJAB (Krishna Iyer, l.)
849
power [s. 90(4)] required the various municipal bodies in the State
to impose a tax on the sale et al, of foreign liquor at the rate of Re. I/-
per bottle with effect from May 20, 1977.
The municipal authorities
having tarried too long or totally failed to take action pursuant to thia
directive, the State directly entered the fiscal arena and issued a Notification under s. 90(5) dated May 31, 1977, which reads thus :
"Whereas the Government of Punjab, in exercise of the
powers conferred by sub-section ( 4) of section 90 of the "
Punjab Municipal Corporation Act, 1063-A-PSLG·77 /12170,
dated 11th April, 1977, required of the Muuicipal Corporation of Ludhiana in Punjab to impose tax on the sale of
"Indian made Foreign Liquor" at the rate of rupee one per
bottle, by the 20th M~y, 1977.
2. And Whereas, the Municipal Corporation of Ludhiana
bas failed to carry out the aforesaid order of the Punjab Government within the stipulated period.
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3. Now, therefore, in exercise of the powers conferred
D
by sub-section ( 5) of s,cction 90 of the Punjab Municipal Corporation Act, 1976, the President of India is pleased to
impose/modify the tax on the sale of "Indian made Foreign
Liquor" within the Municipal Corporation of Ludhiana at the
rate of rupee one per bottle.
The tax shall come intd force
with effect from 1st Ju~ 1977.
E
L. S. BINDRA
Joint Secretary to Govt. Punjab
Local Government Department"
This notification, issued under s. 90(5) read with s. 90(;!)(b) of
the Act, was later modifiecj marginally but survives substantially. The
F
petitioners (licensees) challenge its vires both as contrary to the statutory provision (s. 90) and as violative of the Constitution.
The triple
shapes of the fatal constitutional pathology are that (a) s. 90 (2J(b)
of the Act suffers from the vice of excessive delegation or legislative
abdication; (b) there are no guidelines for the exercise of the vagari--
ously wide fiscal power of the corporation or Government which malce
G
it too unreasonable to be salvaged by Art. 19(5) and too arbitrary to
be 'equal' under Art. 14; and ( c) the order itself is vitiated by multiple
infirmities.
The principal invalidatory charge, based on the Act, is
that s. 90( 4) interdicts any tax 'already imposed'. The present tax
is
on sales and there is, under the general sale's tax law, already a like levy
on sales of foreign liquo'r in the State, and so the second fiscal venture n
is beyond Government's power.
We have to consider these grounds
of attack on the notification which are the emphatic submissions of
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850
SUPREME COURT REPORTS
[1979] 1 s.C.R.
Shri Tarkunde who led the arguments.
There are more subsidiary
submissions urged by other counsel on a lower key, though, but we
have to deal with them too in due course.
Briefly, they are (a) that
in picking out for taxation, from the broad spectrum of luxury goods
or intoxicants, foreign liquor alone, discrimination has been practised,
(b) that even assuming that Government can exercise the power
of
the municipal body, it may not do so without adhering to the procedural fairness implied in the Explanation to s. 90(2) applicable
te>
municipal bodies and ( c) that unequals are being treated equally be-
-cause the tax of Re. 1/- bottle at a flat rate disregards germane
considerations like the price of the liquor or the degree of alcoholic
content.
A feeble plea that the tax is bad because of the vice of
double taxation and is unreasonable because there are heavy prior
levies was also voiced.
Some of these contentions hardly merit consideration, but have been mentioned out of courtesy to counsel.
The
last one, for instance, deserves the least attention.
There is nothing
in Art. 265 of the Constitution ·from which cine can •pin out the constitutional vice called double taxation.
(Bad economics may be good
law and vice versa). Dealing with a somewhat similar argument, the
Bombay High Court gave short shrift to it in Western India Theatres(').
Some undeserving contentiO'!ls die hard, rather survive after death.
The only epitaph we may inscribe is : Rest in peace and don't be
re-born !
If on the same subject-matter the legislature chooses to
levy tax twice over there is no inherent invalidity in the fiscal adventure
save where other prohibitions exist.
Likewise, the plea that a flat rate of Re. 1/- per bottle, be it brandy
or other stronger beverage or be It Rs. 501- or Rs. 500 /- per bottle,
cannot be seriously pressed.
In the field of taxation many complex
F
factors enter the fixation and flexibility is necessary for the
taxing
authority to make a reasonably good job of it.
Moopil Nair's case(')
does not discredit as unconstitutional anathema all flat rates of taxation.
Maybe, in marginal cases where the virtual impact of irrationally uniform impost on the same subject is glaringly discriminatory, expropriatory and beyond legislative competence, different considerations may
G
arise; but to condemn into invalidity a tax because it is levied at a
conveniently flat rate having regard to the commodity or service which
has a high range of prices and the minimal effect on the overall price,
its easy means of collection a11d a variety of other pragmatic variables,
is an absurdity, especially because in fiscal matters large liberality must
_be extended to the Government having regard to the plurality of criteria
H / (1) Cantonment Board Poona v. Western India Theatres Ltd., A. I. R. 1954 Born.
261.
(2) Moopil Nair (K. T.) v. Sta1<0f Kera/a [19611 3 S. C. R. 77.
1
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AVINDER SINGH v. PUNJAB (Krishna Iyer, J.)
851
which have to go into the fiscal success of the measure.
Of course,
despite this forensic generosity, if there is patent discrimination in the
sense of treating dissimilar things similarly or vice-versa, the court may
treat the tax as suspect and scrutinise its vires m(lre closely.
In the
present case, intoxicating liquids falling in the well-known category
of foreign liquors form one class and a flat minimal rate of Re. l /-per
bottle has no constitutional stigma of inequality.
It is so easy
to
conceive of innumerable taxes imposed in this manner in the daily
governance of the country that illustrations are unnnecessary. As excisable articles go, foreign liquor is a distinct category and absence
of
micro-classification within the broad genus does not attract the argnment of inequality.
Likewise, picking and choosing within limits is
ineYitablc in taxation. The correct law is found in East India Tobacco
Co.(')
"It is not in dispute that taxation laws must also pass the test
of Art 14.
That has been laid down recently by this Court
in Moopil Nair v. The State of Kera/a.
But in deciding
whether a taxation law is discriminatdry or not it is necessary
to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that a ~tatute is not
open to attack on the ground that it taxes some persons
or
objects and not others.
It is only when within the range of
its selection, the law operates unequally, and that cannot be
justified ou the basis of any valid classification, that it would
be violative of Art. 14.
The following statement of the law
in Willis on "Constitutional Law" page 587, would correctly
represent the position with reference to taxing statutes under
our Constitution :-
"A State does not have to tax everything in order
to
tax something. It is allowed to pick and choose districts,
objects, persons, methods and even rates for taxation if it
aoes so reasonably ........ The Supreme Court has been
practical and has permitted a very wide latitude in classification for taxation."
(See also Abdul Shakoor & Co. case)(').
The foreign liquor levy
does not fail on this score.
Shri Yogeshwar Prasad urged that s. 90(2) obligated the municiA
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pal body to offer an opportunity to the residents of the city to file
objections to the tax proposed and consider them before
finalising
H
(I) [1963](1) S. C.R. 404 at409.
(2) [1964] (8) S. C.R. 217 at 230.
A
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852
SUPREME COURT REPORTS
[1979] 1 s.c.R.
the impost.
This fair procedure must attach to the exercise of the
power even under s. 90(5) ;. and since that has not been done the
impugned notification must fail.
It is clear from s. 90
that
the
scheme is that if the municipal corporation wishes to impose a tax
under s. 90(2) it must go through the due process indicated in the
Proviso and secure Government's approval. But if Government is to
exercise its power under ·s. 90(5) no such procedural fetter is found in
the Section.
Maybe, that power is different from procedure for its
exercise; but unless the statute insists, it is impossible for the court to
imply invitation of objections and con·sideration thereof from the residents. For this simple reason, there is no merit in the submission.
Whether the failure to hear before fixing a tax has a lethal effect upon
the fiscal power of the Government under s. 90(5) also is of little
moment although urged by ·the same counsel. May be, it is desirable
that the State acquaints itself with the actual sentiments of the denizens
of the local area before imposing tax on them. But it is not inherent in
the constitutional requirements for the exercise of the State's power
of taxation that objections should be called for and considered.
'No
taxation without representation' is a slogan With a different dimens<on
and has nothing to do with a levy by a government controlled by an
elected legislature exercising its power of taxation.
We are unable
to accede to the contention that representations from the residents not
having been invited the taxation notification is bad in l\aw.
What is
wholesome is different from what is imperative.
Indeed, we are left with the two major arguments addressed by
Shri Tarkunde and echoed or endorsed by other counsel. Even here,
we may dispose of the submission based on the wording in s. 90( 4),
namely, that taxing power under section can be exercised in respect
of a particular impost only if that species of tax is "not already imposed".
TI1e power under s. 90 ( 4) is permissible only if the tax is new
and not already imposed.
The petitioner's argument is that the tax
is on sales and is clearly a sales tax.
There is already a sales tax
on foreign liquor at the rate of 10 per cent, under the Punjab General Sales Tax Act, 1948. So the present rupee tax is a second round
in breach of the forbiddance in s. 90(4). Simple enough, if the
expression 'not already imposed' in s. 90(4) is a ban on further tax
whatever the statute; but if the tabQo is not on the typology of the
tax but limited to the specific statute the contention is specious. And
it takes little reflection to· hold the latter to correct view.
We must
remember the statutory setting and the placement of the provision.
S. 90 occurs in Chaper VIII headed 'Taxation'. · That Section primj
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AV!NDER SINGH v. PUNJAB (Krishna Iyer, !.)
853
mily empowers municipal corporations to
levy taxes.
S.
90(1)
specifies a number of items many of which are taxed also at State
level, e.g. lands, vehicles.
S. 90(2) is so widely worded that many
taxes covered by it would already have been occupied field at
the
State or even Central level.
The municipal body may not have any
index of taxes already imposed by other bodies and they me many.
S. 90 would then be a precarious power, often an exercise in futility
and frequently a litigative trap.
No. That is not the meaning of the
prohibition ·not already imposed'.
The Government exercises the
power of the corporation under s. 90(5) and cannot enter what is
forbidden ground for the latter.
And what is forbidden is that the
municipal body shall not repeat the same tax, if it has imposed that
tax earlier under that Act.
The injltnction is plain and is confined
to repetition of those taxes which the municipality has already imposed. If the Corporation has not already imposed the tax proposed,
the embargo is absent. It is of no 'moment that some other body, including the State Legislature, has already entered the field. The question is : has the municipal committee or co.rporation, under this Act.
already exacted a similar tax? If it has, the second exercise is anathema.
Nobody has a case that the corporation has earlier
taxed
foreign liquor under this Act.
Therefore. the submission has
no
substance and we reject it.
The sole surviving ground of invalidation pressed by
the
petitioners which deserves serious examination is what we have
outlined right at the outset, viz., that on the face of s. 90(2), (3), (4)
and (5) read together, unconstitutionality is writ large, in the sense
of naked and uncanalised power with every essential legislative function surrendered to the humour and hubris of the State Executive .
If this charge be true the consequence is in no doubt. The vice of
unreasonableness and arbitrariness are manifestations of the same vice
as has been pointed out in P. N. Kaushal etc.(').
An examination of excessive delegation of legislative power takes
us to the scheme of the Act and insight into the dynamics of municipal administration.
Certain fundamentals must be remembered in
this context and then the text of the provision understood in the
constitutional perspective.
The Founding Document of the nation
has created the three great instrumentalities and entrusted them with
certain basic powers-legislative, judicative and executive.
Abdication of these powers by the concerned instrumentalities, it is axiomatic, amounts to betrayal of the Constitution itself and it is intolerable in law.
This means that the legislature cannot self-efface
its
(I) P. N. Kaushal etc. v. Union of India & Ors. [t979] l SCR 122.
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personality and make over, in terms plenary, the essential legislative
functions.
The legislatnre is responsible and
responsive
to
the
people and its representatives, the delegate may not be and that is
why excessive delegation and legislative hara kiri have been frowned
upon by constitutional law.
This is a trite
proposition but the
complexities of modem administration are so bafflingly intricate and
bristle with details,- urgencies, difficulties and need for flexibility that
our massive legislatures may not get off to a start if they must directly and comprehensively handle legislative business in all their plenitude, proliferation and particularisation.
Delegation of some
part
of legislative power becomes a compulsive necessity for viability. Jf
the 500-odd parliamentaiians are to focus on every minuscule
of
legislative
detail
leaving nothing to
subordinate
agencies
the
annual output may be both unsatisfactory and negligible. The Lawmaking is not a turnkey project, ready-made in all detail and once
this situation is grasped the dynamics of delegation easily
follow.
Thus, we reach the second constitutional rule that the essenti~Is of
legislative functions shall not be delegated but the inessentials, however numerous and significant they be, may well be made over to
appropriate agencies. Of course, every delegate is
subject to the
authority and control of the principal and
exercise
of
delegated
power can always be directed, corrected or cancelled by the principal. Therefore, the third principle that emerges is that even if there
be delegation, parliamenta.ry control over delegated legislation should
be a living continuity as a constitutional necessity.
Within these
triple principles, Operation Delegation is at once expedient, exigent
and even essential if the legislative process is not to get stuck up
or bogged down or come to a grinding halt with a few complicated
bills.
It is apt to excerpt here an
oft-quoted
observation
from
Vasantlal Maganbhai Sanjanwala affirmed in Devi Das Gopal Kri<hnan
& Ors(') :
"The Constitution confers a power and imposes a dnty o'I
the legislature to make laws. The essential legislative functio'
is the determination of the Iegi'slative policy and its formulation as a rule of conduct.
Obviously it cannot abdicate its
functions in favour of another. But in view of the multifarious activities of a welfare State, it cannot presumably work
out all the details to suit the varying aspects of a complex
situation.
It must necessarily delegate the working out of
details to the executive or any other agency. But there is a
danger inherent in such a process of delegation.
An over
(I) Devi Das Gopa/ Krishnan & Ors. v. State of P1mjab & Ors. [1967] l S. C.R. 557
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855
burdened legislature or one controlled by a powerful executive may unduly overstep the limits of delegation. It may not
lay down any policy at all; it may declare its policy in vagne
and general terms; it may not set down any standard for the
guidance of the executive; it may confer an arbitrary power
on the execuitive to change or modify the policy laid down
by it without reserving for itself any control over subordinate
legislation. This self effacement of legislative power in favour
of another agency either in whole or in part is beyond the
permissible limits of delegation. It is for a Couri to hold
on a fair, generous and liberal construction of an impugned
statute whether the legislature exceeded such limits. But the
said liberal construction should not be
carried
by the
Courts to the extent of always trying to discover a dormant or latent legislative policy to sustain an arbitrary power
conferred on executive authorities. It is the duty of the
Court to strike down without any hesitation any arbitrary
power conferred on the executive by the legislature."
Such being the basics, accepted by precedential profusion of this
Court, we have to examine whether any essential legislative function
has been transplanted into the hands of Government or corporation by
the Act, whether the delegation itself is an entrtistment of overbroad
power, so unguided that the delegate may run amok and do what is
arbitrary, unreasonable and violative of Articles 14 and 19 of the
Constitution. Taxation is exaction and even expropriation and, therefore, the right to property is in peril when a fiscal measure is afoot.
Article 10 comes into play when law is made for purposes of taxation
and that law must comply with Part III. Arbitrariness must be
excluded in the law, for, if power is arbitrary it is potential inequality
and Art. 14 is fatally allergic to inequality before the law.
These generalities take us to the particularities of the present case.
Slrri Tarkunde turned the forensic fusillade on the total absence of
guidance and regulation anywhere in the statute, expressly or implicitly,
and on a true construction, according to him, a blanket power has been
vested by s. 90 on the corporation and, indubitably, on the Government.
The jurisprudence of delegation of legislative power, as
earlier
mentioned, has been the subject matter of this Court''s pronouncement..
In the absence of the rate of taxation being indicated by the Legi~lature,
Shri Tarkunde and other counsel appearing on either side drew ou~
attention to Liberty Cinema,(!) the land-mark case on the point.
The
later decisions have affirmed the principle in Liberty Cinema.
But
(1) Corporation ofCalcurta and Anr. v. liberty Cinema [1963] 2 S. C.R. 477.
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before we enter into a fuller discussion we may concretize the specific
contention urged by counsel for the petitioners.
Section 90(1) sets
out certain items for taxation by the corporation.
The taxes so levied
are to be utilised for the purposes of the Act.
Therefore, there is a
clear directive contained in the provision about the purpose and limit
of the tax.
What is needed for the purposes of the Act by way of
financial .resources may be levied by the corporation. Beyond that, no.
If the corporation has a fancy for spending money on purposes unconnected with the Act and seeks to levy a tax for the fulfihnent of such
extra-statutory objects the mis-adventure must fail.
Moreover,
the
items on which taxes may be imposed are also specified. Thus, the
legislature has fixed the
purpose of the taxation, the objects of the
taxation and the limits of the taxation.
In short, s. 90( 1) is a textbook illustration of valid delegation by the legislature.
The offending area i"s approached as we move down to sub-section
( 2) (b) which enables the co.rporation "to levy any other tax which
the State Legislature has power to impose under the
Constitution".
The fiscal area is obviously specious and so the question directly arises
whether this over-broad provision accords with or exceeds the principles
of delegation. Sub-section ( 3) leaves the rates of levy to be specified
by the Government aud the legislature, argue petitioners' counsel, has
given no indication of the minima or the maxima of such rates.
Can
such non-fixation of at least the maximum rate of taxation be upheld
or does it enable the delegate to usurp the essential functions of the
legislature? When we proceed further to sub-section (5), the Government is clothed with the power to notify the tax which the corporation
shall levy and, in exe.rcising this power, not even the wholesome obligation of receiving representations and con"sidering objections, contained in the Proviso to s. 90(2), is present. Can such untrammdlcd
power, liberated from local pressures and intimate appreciation of
municipal needs, be sanctioned as within the deligible ambit? These
are the substantial grounds of attack which we have tu consider
[pre~ently.,
Back to the Liberty Cinema case (supra), Sarkar, J. who spoke
for the majority overruled the contention that the levy in question was
a fee and held that it ,·was a tax and addressed himself to the question
of excessive delegation of legislative functions to the municipal corpllration "because it left it entirely to the latter to fix the amount of the
tax and provided no guidance for that purpose".
While what constitutes an essential feature cannot be delineated in
detail it certainly cannot include a change of policy. The legislatur.:
is the master of legislative policy and if the delegate is free to switch
policy it may be usurpatiol'l of legislative power itself.
So we have
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AVINDER SINGH v. PUNJAB (Krishna Iyer, J.)
857
11
to investigate whether the policy of legislation has been indicated ·suffiA
ciently or even change of policy has been left to the sweet will and
pleasure of the delegate in this case.
We a.re clearly of the view that there is fixation of the policy of the
legislation in the matter of taxation, as a close study of s. 90 reveals;
and exceeding that policy will invalidate the action of the delegate.
What is that policy ? The levy of the taxe's shall be only for the purposes of the Act. Diversion for other purposes is illegal.
Exactions
beyond the requirements for the fulfilment of the purposes of the Act
are also invalid. Like ins. 90(1), s. 90(2) also contains the words of
limitation 'for the purposes of this Acf and that limiting factor governs
sub-sections (3), (4) and (5). Sub-section (3) vests nothing new
beyond sub-sections (1) and (2). Sub-section (4) does not authorise
the government to direct the corporation to impose any tax falling
outside sub-section (!) or sub-section (2).
Sub-section (5) also is
subject to a similar circumscription because the Government cannot
issue an order to impose a tax outside the limitation of sub-section (I)
or sub-section (2). Thus, the impugned provision contains a severe
restriction that the taxation leviable by the corporation, or by the
Government acting for the corporation, shall be geared wholly to the
goals of the Act. The fiscal policy of s. 90 is manifest. No tax under
guise of s. 90(2) (b) can be charged if the purposes of the Act do not
require o.r sanction it. The expression "purposes of this Act" is pregnant with meaning. It sets a ceiling on the total quantum that may be
collected.
It canalises the objects for which the fiscal levies may be
spent. It brings into focus the functions, obligatory or optional, of the
municipal bodies and the raising of resources necessary for discharging
those functions-nothing more, nothing else.
In Liberty Cinema (supra) it was contended that the rate of tax
was an essential feature of legi'slation and if the power to fix it were
abandoned it amounted to abdication of legislative power.
After an
exhaustive examination of the judgments of this Court, Sarkar, J.
reached the conclusion that there was clear authority "that the fixing of
rates may be left to the non-legislative body". The matter does not
end here, since the delegate may under guise of this freedom tyrannise
and exact exorbitant 'sums which the legislat11re would hardly
have
intended. If this possibility exists and there is no guideline given to
the non-legislative body in the matter of fixation of rates, the result may
be a frustration of the legislative object itself.
For this reason, the
Court in the Liberty Cinema (supra) case observed as axiomatic:
"No doubt when the power to fix rates of taxes is left to
another body, the legislature must provide guidance for such
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fixation.
The question then is, was such guidance provided
in the Act? We first wish to observe that the validity of the
guidance cannot be tested by a rigid uniform rule; that must
depend on the object of the Act giving power to fix the rate.
It is said that the delegation of power to fix the rates of
taxes authorised for
meeting the needs of the delegate
to be valid, must provide the maximum rate that can be fixed,
or lay down rules indicating that maximum. We are unable
to see how the specification of the maximum rate supplies any
guidance as to how the amount of the tax which no doubt
has to be below the maximum, is to be fixed. Provision for
such maximum only sets out a limit of the rate to be imposed
and a limit is only a limit and not a guidance.
It seems to us that there are various decisions of this·Court
which support the proposition that for a statutory provision
for raising revenue for the purposes of the delegate, as the
section now under consideration is, the needs of the taxing
body for carrying out its functions under the statute for which
alone the taxing power was conferred on it, may afford sufficient guidance to make the power to fix the rate of tax valid."
(Pp. 493-494)
In the W"-l'tern India Theatres case (supra) the power given to the
corporation (of the city of Poona), in terms very wide, to levy "any
other tax" came to be considered from the point of view of abdication
of legislative function.
The negation of this argument was based on
the key words of limitation contained therein, namely, "for the purposes of the Act" and it was held "that this permits sufficient guidance
for the impo'sition of the tax."
In Devi Das Gopal Krishnan & Ors. (supra) this Court again considered a similar contention. The crucial passage in the judgment of
Sarkar, J. was there extracted with approval by Subba Rao, C.J. :
"It (the Municipal Corporation) has to perform various
statutory functions. It is often given power to decide when
and in what manner the fnnctions are to performed. For all
this it needs money and its needs will vary from time to time,
with the prevailing exigencies. Its power to collect tax, howeve•, is necessarily limited by the expenses required to discharge those functions. It has, therefore, where rates
have
not been specified in the statute, to fix such rates as may be
necessary to meet its needs. That, we think, would be sufficient guidance to make the exercise of its power to fix the rates
valid."
(Pp. 562-563)
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In the Municipal Corporation of Delhi(':)
case, the proposition
that where the power conferred on the corporation was not unguided,
although widely worded, it could not be said to amount to excessive
delegation, was upheld.
Delegation coupled with a policy direction
is good. Counsel emphasised that the court had made a significant distinction between the local body with limited functions like a municipality and Government :
"The needs of the State are unlimited and the purposes
for which the State exists are also unlimited.
The result of
making delegation of a tax like sales tax to the State Government mean·s a power to fix the tax without any limit even if
the needs and purposes of the State are to be taken into
account. On the other hand, in the case of a municipality,
however large may be the amount required by it for its purposes it cannot be unlimited, for the amount that a municipallity can spend is limited by the purposes for which it is created.
A municipality cannot spend anything for any purposes other
than those specified in the Act which creates it. Therefore
in the case of a municipal body, however large may be its
needs.