# B. SHAMA RAO v. THE UNION TERRITORY OF PONDICllDUlY - **Citation:** [1967] 2 S.C.R. 650 - **Court:** Supreme Court of India - **Decided:** 1967-02-20 - **Case number:** Writ Petition No. 123 of 1966 - **Bench:** K. SuBBA R.Ao, J. C. Shah, J. M. Shelat, V. Bl:!AllGAVA I, G. K. Mitter - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/b-shama-rao-v-the-union-territory-of-pondicllduly-4168 - **Pages:** 23 ## Headnote Madras General Sales Tax Act (I of 1959)-Extendd to Pond/cherry by s. 2(1) of Pondicherry Gmera/ Sales. Tax Act (IO of 196S)-Dlue of commencemmt of Pondicherry Act to be ~d under s. 1(21 6y P.ondlcherry Govt.-Madras ,(ct Amended-Notification of PondU:lierry Govt. c ezlending amend~d Madras Act to Pondicherry-lf ezcaslve dele6allon. The IegiSJative assembly for the Union Territory of Pondichcrry passed the Pondichcrry General Sales Tax Act (10 of 1965) which was published on Jllne 30, 1965. Section 1(2.) of the Act provided, r}iat it would como into force on such date as the Pondicherry Government may, by notification, appoint and s 2( 1) provided that the Madras General Sales Tax Act, 1959, as in force in the State of Madras immediately before D the Commencement of the Pondicherry Ai:t, shall be extended to Pondicht!rry subj..'.:ct to certain modifications, one of which related to the consti. tution of the Appellate Tribunal. 1be Act aho enacted a Scheclulc, giving the description of goods, the point of levy and the rates of tax. The Pondicberry Government issued a notification on March 1, 1966, appoint· ing April I. 1966 as the dale of commencement. Prior to the issue of the uolification, the Madras legislature had amended the Madras Act and ., consequently it was the Madras Act as amended up to April I, 1966 • which was brought into force in Pondicherry. When the Act had come into force. the petitioner was served with a notice to register himself as a dealer and he thereupon filed a writ petition challenging the validity of the Act. After the petition was filed, the Pondicherry Legislature passed the F Pondicherry General Sales Tax (Amendment) Act, 13 of 1966. whereby s. 1 (2) of the principal Ac1 was amended 10 read that the latter Act "shall come into force on the 1st day of April 1966", it was also provided that all taxes levied or oollected and all proceedings taken and things done were to be deemed valid as if the pnncipal Act as amended had been in for~ at all material tim.,., HELD: (per Subba Rao, C.J., Shelat and Miller 11.) : G The Act of 1965 was void and still-born and could not be revived by the Amendment Act of 1966. The Pondicherry Legislature not only adopted the Madras Act as it ctood al the date when it passed the principal Act. but in effect also enacted that if the Madras legislature were to amend its Act prior to the notification of its extension to Pondicberry, it would be the amended Act that would apply. The Legislature at that stage could not anticipate that the Madras Act "'ouJd not be amended nor could it predicate what amendments \\·ould he Clature could delegate its legislative power and if so to what exleHt. The reference in that case arose because of the decision in Joti11dra11ath Gupta v. State of U.P.(4) where Section 1(3), proviso, of Bihar Act V of 1947 was held invalid on the ground that there was delegation of legislative power to the executive. As summarised by Bose J. in Raj Narain Si11gh's case(5) the reference raised the following problems:- "In each case, the Central Legislature had empowered an executive authority under its legislative control to apply (1) 9 App. Cases 117. (2) 5 I.A. 178. (3) 11951] s.c.R. 747 (4) 11949-50] F.C.R. 595. (5) 11955] S.C. R. 290. c D E r G R • J .... ' .. B c D E G H SHAMA RAO v. PONDICHERRY (She/at, J.) 655 at its discretion, laws to an area which was also under the legislative sway of the Centre. The variations occur in the type of laws which the executive authority was authorised to select and in the modifications which it was empowered to make in them. The variations were as follows: (I) Where the executive authority was permitted at its discretion, to apply without modification (save incidental changes such as name and place), the whole of any Central Act already in existence in any part of India under the legislative sway of the Centre to the new area; (2) Where the executive authority was allowed to select and apply a Provincial Act in similar circumstances; (3) Where the executive authority was permitted to select future Central laws and apply them in a similar way." The learned Attorney-General had canvassed the proposition that a plenary legislative power included in it the power of delegation. The divergence of opinion on that question was (I) as to whether the British theory of "supremacy within limits" could apply after the Constitution came into force; (2) whether the impugned legislation was delegated or conditional legislation and (3) if it was delegated legislation whether such delegation could be only of subsidiary and ancillary power. Kania C. J. and Mahajan J. (as he then was) reiterated their views expressed in Jotindranath Gupta's case(!), the learned Chief Justice holding that section 7 of the Delhi Laws Act and section 2 of the Ajmer-Merwara Act, 1947 were ultra vires to the extent that power was given thereunder to the Government to extend Acts other than the Central Acts inasmuch as to that extent the Central legislature had abdicated its function and delegated it to the executive government and Mahajan J. holding that the said sections were ultra vires (i) inasmuch as they permitted the executive to apply to Delhi and Ajmer-Merwara laws enacted by legislatures not competent to make laws for those territories and which those legislatures might make in their own legislative field, and (ii) inasmuch as they clothed the executive with coextensive legislative authority in the matter of modification of laws made by legislative bodies in India. (see pp. 794 to 797 and 938 and 946 of the report). Patanjali Sastri and Das JJ. (as they then were) took the other extreme view accepting the AttorneyGeneral's contention. Patanjali Sastri J. held that the Indian legislature enjoyed plPnary powers of legislation of the same nature and amplitude as the British Parliament and no constitutional limitation on the delegation of legislative power to a sub.ordinate unit was to be found in the Constitution Acts from 1861 to 1935 or the present Constitution and therefore it was competent for the Indian legislature to make a law delegating legislative power, both quantitatively and qualitatively, as it was for the British (I) [1949-50) F.C.R. 595. 656 5UPRBME COUllT Rl!PORTS (1967] 2 s.c.a. Parliament to do so, so long as it acted within its field. Das J. held that the principle of non-delegation of legislative powers founded either on the doctrine of separation of powers or the theory of agency has no application to the British Parliament or the legislature constituted by an Act of British Parliament, that the operation of the act performed under delegated power is directly and immediately under and by virtue of the law by which the power is delegated and its efficacy is referable to that antecedent law, that if the legislature acts within its prescribed sphere there is no limit to its power of delegation, it being for the legislature to determine how far it should seek the aid of subordinate agencies. The only limitation to such power is that the legislature may not abdicate or efface itself, that is, it may no.i, without preserving its own capacity intact create a new legislative power not constituted by the Act under which it is set up. He was also of the view that the impugned legislation could be supported as an instance of conditional legislation as held in Empress v. Burah('). Faz! Ali J. on the other hand was of the view that the legislature itself must formally discharge its primary function and not through others but that it can utilise outside agency to any extent it finds necessary to do things which it is not able to do itself or finds it inconvenient to do. He upheld the validity of the impugned laws but on the ground that the delegation was not of legislative but of ministerial power. He did not accept the contention that there was inherent in the legislative power the power to delegate the legislative function. Mukherjea J. took up an intermediate posture holding that essential legislative function consists in determination of legislative policy or of formally enacting that policy into a binding rule of c-0nduct. This poligy must be laid down in definite terms so as to guide the delegate in implementing it. If that is done the court is not concerned with its meriL~. At p. 977 of the report he laid down the principle that abdication of legislative function can be whole or partial or even with reference to a particular matter and docs not necessarily mean either the creation of a parallel legislature or total effacement and rejected the proposition that legislative power necessarily includes power of delegation. (cf observations at pages 982, 984, 985, 997 and 1000 of the report). B-Ose J. adopted what he called a pragmatic and a practical view declining to join in the juristic differences between delegated legislation and conditional legislation. So far as the Delhi Laws Act and the Ajmer-Merwara Act were concerned, he based his opinion on the decision in Empress v. Burah(') and the view therein that according to the British theory the Indian legislature under the Constitution Acts from 1861 to 1935 had plenary powers, that within its field it was as supreme as the British Parliament and could exercise its power in any manner it thought best. Therefore it coold take the assistance of outside (!) 5 I.A. 178. A B c D E F G H A B c D E F G H SHAMA RAO V. PONDICHERRY (She/at, /.) 657 agencies in exercise of its legislative power and to delegate that power to any extent possible. Regarding the C States laws, however, he thought that on the one hand the Constitution-makers had the experience before them of the aforesaid British theory and on the other the experiences of the American and other federal constitutions. On this reasoning he upheld the validity to adopt existing laws or the authority to alter even in essential features laws already in existence. (see observations at pages 1121 to 1124). Thus, amongst the five learned Judges who upheld the validity either wholly or partially, Faz! Ali, Mukherjea and Bose JJ. who tipped the balance were not whole-heartedly with Patanjali Sastri and Das JJ. who accepted the contention that power of delegation was inherent in legislative power. Even amongst these three learned Judges there was considerable variance both of opinion and reasoning. Fazl Ali J. was of the opinion that abdication was not permissible but authorisation short of it was permissible. The opinion of Mukherjea J. was that delegation of essential legislative function was not permissible and that abdication need not be total but can be partial and even in regard to a particular matter and Bose J. founded his view on the fact that the Privy Council would have decided the case in the same way as it did in the Burah's case(1) basing its decision on the theory of supremacy within limits and that that theory was presumably recognised by the Constitutionmakers. In view of the intense divergence of opinion except for their conclusion partially to uphold the validity of the said laws it is difficult to deduce any general principle which on the principle of stare decisis can be taken as binding for future cases. It is trite to say that a decision is binding not because of its conclusion but in regard to its ratio and the principle laid down therein. The utmost therefore that can be said of this decision is that the minimum on which there appears to be consensus was (i) that legislatures in India both before and after the Constitution had plenary power within their respective fields; (2) that they were never the delegates of the British Parliament; (3) that they had power t58 SUPREMlt COUllT REPOllTS [1967J 2 s.c.R. "The situation with which the respective legislatures were faced when these Acts were passed, was that there were certain State or States with no local legislature and a whole bundle of laws had to be enacted for them. It is clear that the legislature concerned, before passing the Acts, applied their mind and decided firstly, that the situation would be met by the adoption of laws applicable to the other pro· vinces inasmuch as they covered a wide range of subjects and hence the requirements of the State or States for which the laws had to be framed could not go beyond those for which laws had already been framed by the various Jegis· Jatures, and secondly, that the m11tter should be entrusted to an authority which was expected to be familiar and could ~asily make itself familiar with the needs and conditions of the State or States for which the laws were to be made. Thus, everyone of the Acts so enacted, was a complete law, because it embodied a policy, defired a standard, and directed the authority chosen to act within certain prescribed limits and not to go beyond them. Each Act was a com· plete expression of the will of the legislature to act in a particular way and of its command as to how its will should be carried out," This passage suggests that the impugned legislation was a conditional legislation as in Empress v. Rurah(I) and the power conferred on the government was ministerial and not legislative. The following observations of Mukherjea J. also indicate that he reached his conclusion from the same situation. At p. 100 l of the report he observed : "The policy behind the Delhi Laws Act seems to be that in a small area like Delhi which was constituted a sepa· rate province only recently and which had neither any local legislature of its own or was considered to be of sufficient size or importance to have one in the future, it seemed to the legislature to be quite fit and proper that the laws validly passed and in force in other parts of India should be applied to such area, subject to such restrictions and modifications as might be necessary to make the Jaw suitable to the local conditions." He too held that the impugned Acts contained a policy with sufficient precision as to furnish guidance to the executive who was to implement them. The delegation of legislative power thus W85 not uncontrolled or unguided. At page I 121 Bose J. remarked:- "Had it not been for the fact that this sort of practice was blessed by the Privy Council as far back as 1878 and has been endorsed in a series of decisions ever since, and (t) S I.A. 178. A B c D E F G H SlW4A RAO v. PONDXCHl!DY (Shriat, /.) 659 A had it not been for ihe practical .necessities of the case, I would have held all the three Acts ultra vlres". Thus it would not be incorrect to say that three of the ·learned Judges out of five who held in favour of validity did so because of the necessity of the situation. One of them held that the legis " lation was complete and the power therefore was conditional as held in Burah' s case( I) and the other held that there being a precise policy the delegation was not outside permissible limits. c I E JI' G ff We may at this stage observe that such was not the situation in Pondicherry as the Pondicherry legislature was at all material times already functioning. Indeed, it was in the purported exercise of its legislative function that it sought to extend the Madras Act. The question then is whether in extending the Madras Act · in the manner and to the extent it did under sec. (2)(1) of the Principal Act the Pondicherry legislature abdicated its legislative power in favour of the Madras legislature. It is manifest that the Assembly refused to perform its legislative function entrusted under the Act constituting it. It may be that a mere refusal may not amount to atJdication if the legislature instead of going through the full formality of legislation applies its mind to an existing statute enacted by another legislature for another jurisdiction, adopts such an Act and enacts to extend it to the territory under its jurisdiction. In doing so, it may perhaps be said that it has laid down a policy to extend such an Act and directs the executive to apply and implement such an Act. But when it not only adopts such an Act but also provides that the Act applicable to its territory shall 1 be the Act amended in future by the other legislature, there is nothing for it to predicate what the amended Act would be. Such a case wotild be clearly one of non-application of mind and one of refusal to discharge the function entrusted to it by the Instrument constituting it. . It is difficult to see how such a cas~ is not one of abdication or effacement in favour of another legislature at least in regard to that particular matter. But Mr. Setalvad contended that the validity of such legislation has been accepted in Delhi l.Aws Act's case(2) and particularly in the matter of heading No. 4 as summarised by Bose J. in Raj Narayan Singh' s case('), In respect of that heading the majority conclusion no doubt was that authorisation in favour of the executive to adopt Jaws passed by another legislature or legislatures including future Jaws would not be invalid. So far as that conclusion goes Mr. Setalvad is right. But as already stated, in arriving at that conclusion each learned Judge adopted a different reasoning. Whereas Patanjali Sastri and Das JJ. accepted the contention that the plenary legislative power includes power of (1) S LA. 178. (2) (1951) S. C. R. 747. (3) IJ95SJ 1 S. C. R. 29J. M:!Sup.Cl/67-13 6GO SUPREME COURT RBPORTS (1!167] 2 s.c.R. deler-a1 ion and held that since such a power means that the legislature can make laws in the manner it liked if it delegates that power 'hort of an abdication there can be no objection. On the other hand, Faz! Ali J. upheld the Jaws on the ground that they contained a complete and precise policy and the legislation being thus conditional the question of excessive delegation did not arise. Mukherjea J. held that abdication need not be total but can be partial and even in respect of a particular matter and if so the irn· pugned legislation would he bad. Bose J. expressed in frank language his displeasure at such legislation but accepted its validity on the ground of practice recognised ever since Burah's case (t) and thought that th.1t practice was accepted by the Constitutionmakcrs and incorpon1tcd in the concept of legislative function. There was thus no una:iimity a' regards the principles upon which those laws were upheld. All of them however appear to agree on one principle, viz., that where there is abdication or effacement the legislature concerned in truth and in fact acts contrary to the Instrument which constituted it and the statute in question would be void and still-born. Jn the present case it is clear that the Pondicherry legislature not only adopted the Madras Act as it stood at the date when it passed the Principal Act hut also enacted that if the Madras legislature were to amend its Act prior to the date when the Pondichcrry government would issue its notification it would be the amended Act which would apply. The legislature at that stage could not · anticipate that the Madras Act would not be amended nor could it predicate what amendment or amcndm~nts would be carried out or whether they would be of a sweeping character or whether they would be suitable in Pondichcrry. In point of fact the Madras Act was amended and by reason of section 2(1) read with section I (2) of the Principal Act it was the amended Act which was brought into operation in Pondicherry. The result was that the Pondicherry legislature accepted the amended Act though it was not and could not be aware what the provisions o( the amended Act would he. There was in these circumstances a total surrender in the matter of sales tax legislation by the Pondicherry Assembly in favour of the Madras legislature and for that reason we must agree with Mr. Desai that the Act was void or as is often said 'stillborn.' It was however argued that the Act cannot he sard to be stillborn as it contained certain provisions independent of the Madras Act, viz., the section which provides for the Appellate Tribunal and th~ said Schedule. But the core of a taxing statute is in the charging section and the provisions levying such a tax and defining persons who arc liable to pay such tax. If that core disappears tl)Sl.A.178. A B c D E F G H A B c D E F G H SHAMA RAO v. POND!CHE!tllY (She/at, J.) 661 the remaining provisions have no efficacy. In our view, Act 10 of 1965 was for the reasons aforesaid void· and still-born. After the petitioner filed this writ petition the Pondicherry legislature passed the Pondicherry General Sales Tax (Amendment) Act, 13 of 1966. It received the President's assent on November 2, 1966 and was published on November 7, 1966. This Act amended the principal Act in several matters. The title of the Amendment Act is the Pondicherry Sales Tax (Amendment) Act 1966 and was passed "further to amend the Pondicherry General Sales Tax Act, 1965" therein called the principal Act. The Amendment Act altered sec. I (2) of the Principal Act by sec. 2 so as to read as follows: "It shall come into force on the !st day of April 1966". Section 2(1) of the principal Act was likewise amended and instead of the words "commencement of this Act" words "!st day of April 1966" were substituted. Section 2(2) was also amended and so amended it reads as follows: "The Madras General Sales Tax Rules, 1959 and any other Rules made or issued under the· said Act and similarly in force in so far as their application is required for the purpose of effectively applying the provisions of the said Act shall also extend to and be in force in the Union territory of Pondicherry until such time rules are framed under Sec. 53 of the said Act." Section I (2) of the Amendment Act provides that the Amendment Act shall be deemed to have come into force on April I, 1966 except certain clauses which were to come into force at once. Section 5 of the Amendment Act provides that all taxes levied or collected in pursuance of the Principal Act and all acts, proceedings or things done in connection with the levy or collection of such taxes shall, for all purposes, be deemed to be and to have always been validly levied or collected, as if the principal Act as amended by the Amendment Act had been in force at all material times. The effect of the amending section 1(2) and sec. 2(1) of the principal Act was that it would come into force not by reason of the notification issued by the Government but by reason of the deeming provisions of sections 1 (2) and 2(1) of the Amendment Act. Mr. Desai's contention was that since the principal Act was ab· initio void, the Amendment Act cannot resuscitate that which wa~ still-born. In support of this contention he relied on the decisions in Deepchand v. State of U.P.(') and Mahendra/al v. State of U.P.(2} Against that contention it was submitted that assuming that the principal Act suffered from the said defect the said defect was removed by the Amendme.nt Act in as much as the Pondicherry legislature re-enacted the said Act extending the Madras Act a& (1) [1959] Supp. 2 S.C.R. 8. (2) [1963] Supp. 1 S.C.R. 912. 662 SUPIBMI COU1T UPOITS (1967] 2 s.c.R. amended up to April I, 1966 to Pondicherry. Put it differently, A the contention was that the Amendment Act was an independent legislation, that the Pondicherry Assembly has power to enact a retrospective law and has re-enacted the provisions of the principal Act extending as from April I, 1966 the Madras Act as amended upto that date. But the question is can the Amendment Act be said to be an independent re-enactment of the principal Act and has the Pondicherry legislature extended the Madras Act by this Act? If that was what the legislature intended to do it would have either repealed the principal Act or even without repealing it on the footing that it was void enacted the Amendment Act as an independent legislation extending the Madras Act retrospectively as from April 1, 1966. The Amendment Act, as is clear from its long title was passed to amend the Principal Act. That can only be on the footing that it was a valid Act and still on the statute book. Under sec. 2 what the legislature purports to do is to amend sec. I (2) of the principal Act by substituting the words "It shall come into force on the 1st day of April 1966" in place of the words "It shall come into force on such date as the Government may by notification in the Official Gazette appoint". The only result is that instead of the principal Act having been brought into force under the said notification, it is deemed to have come into force on April 1, 1966. This is done by a deeming provision as if the new clause was there from the beginning when the Act was passed. That being so, it is as if the Pondicherry legislature had extended the Madras Act together with such amendments which might be made into that Act upto April I, 1966. Since the Amendment Act was thus passed on the footing that there was in existence a valid Act, viz., the said principal Act, it is impossible to conceive that it was or intended to be an independent legislation extending thereunder the Madras Act. The Amendment Act was and was intended to be an amendment -0f the principal Act and it would be stretching the language of the Amendment Act to a breaking point to construe it as an independent legislation whereby the Madras Act was retrospectively brought into operation as from April I, 1966. That being so, and on the view that the principal Act was still-born. the attempt to revive that which was void ab initio was frustrated and such an Act could have no efficacy. In that view: the petition is allowed with costs. One hearing fee only. Bhargava, J. The petitioner, B. Shama Rao. is a merchant. carrying on the business of selling liquor in Pondicherry, and has. by this petition, challenged proceeding~ being taken against him under the Madras General Sales Tax Act. 1959 (Act I of 1959) (hereinafter referred to as "the Madras Act") as applied to Pondicherry by the Pondicherry General Sales Tax Act, 1956 (Act No. B c D I F G H A B c D ' G H • SllAMA RAO v. PONDICHERRY (Bhargava, J.) 663 I 0 ol 1965) (hereinafter referred to as "the principal Act"). Pondicherry was a French possession, but was transferred to the suzeranity of the Government of India. The de Jure transfer became effective on 16th August, 1962, when the administration of the territory vested in the Government of India. On 5th December, 1962, Parliament enacted the Pondicherry Administration Act (No. 42 of 1962) constituting it as a separate centrally-administered Ul).it. On 10th May, 1963, a Legislative Assembly was set up for Pondicherry under the Government of Union Territories Act (No. 20 of 1963). Under section 18(1) of this Act, the Legislative Assembly was given the power of making laws for the territory of Pondicherry in respect of matters enumerated in Lists II and III of the Seventh Schedule to the Constitution. In pursuance of this power, the Legislative Assembly enacted the principal Act which received the assent of the President on the 25th May, 1965. It was published in the Gazette on 30th June, 1965. Sub-s. (2) of s.l of the principal Act lays down that the Act shall· come into force on such date as the Government may, by notification in the Official Gazette, appoint. Under sub-s. (!) of s.