# M. K. P APIAH & SONS v. THE EXCISE COMMISSIONER & ANR

- **Citation:** [1975] 3 S.C.R. 607
- **Court:** Supreme Court of India
- **Decided:** 1975-02-20
- **Case number:** Civil Appeals Nos. 1883 to A B c 1886 of 1969
- **Bench:** K. K. Mathew, V. R. Kiushn.\ Iyer, P. K. Goswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-k-p-apiah-sons-v-the-excise-commissioner-anr-6456
- **Pages:** 9

## Headnote

.Mvsore Excise Act, 1965, Sections 16, 22 and 23 read with Mysore Excise
(D1.ml/ery and W~rehouse) Rules, 1967 and with Mysore Excise (Excise Duties)
Rules, 1968-Excise duty. levv of-Removal of arrack fi·o111 Govemment 1v,1reho11scs after the purchase of the same, ij attracts liability to pay excise duty.
Mvsore ~·xcise Act, 1965, Secs. 22 and 71- Dc/egotion of power to fi.t
rates o.f excise duty I~ G?vemment by making rules-Legislarure, if has abdicated Its essen11a/ leu1s/at1re functwn-Rule-making power, whether
provides
the necessary check.
Karna/aka Sales Tax Act. 1957. Secs. 2, 5' and 19-Levy uf sales tax upon
sale of arrack mnde by Government tn licensces-lmPositi011 of liability
to
sales tax, if covered by Entry 54, List fl, Schedule Vil of the Constitution.
.
'fh~ ~ppellan~. an exci~e contractor secured the privilege of vending arrack
m retail m certain taluks in the State of Karnataka tor a period of 18 months
beginning from 28-12-1967 and ending on 30-6-69.
He purchased arrack from
the Government at a tirice of 17 paise per litre and the Government collected
besides the sale price of arrack, excise duty, health cess and
education cess.
Thti Government also collected sales tax on the sale price of arrack, on excise
duty, on health cess and on education cess tor the period from 28-12-1967 to
31-1-1968 and made similar demands for the month of February, 1968
also.·
The app6llant and other excise contractors filed writ petitions in the High Court
at Karnataka challenging the validity of the levy and collection of exci'e Cluty,
educatio11 cess. health ctss and sales tax. The High Court accepted some of
the contentions of the appellant, granted him reliefs on that basis but rejected
the other prayers.
The appellant has filed these appeals on the basis of certificates granted by the High Court against the order.
ft was contended for the appellant (i) that no excise duty can be levied on
a licensee in respect of the quantity of arrack purchased by him from Govern·
ment depots, (ii) that the. power to fix the rate of excise duty conferred under
s. 22 of the Mvsore Excise Act of 1965 on the Government was bad for the
reason that it was an abdication by the state legislature of its essential legislative
ft~nction and (iii) that no sales tax could be levied on the price for sale of
arrack since s. 19 of the Mysore Sales Tax Act, 19 57 under which the tax was
levied was beyond the legislative competence of the state le~islaturc.
Rejecting the contentions and dismissing the appeals,
HELD : (i) It is clear from the return filed before the High Court that the
Government ourchases arrack from the distillers and keeps it in the warehouses
eatablished or licensed under s. 16 and that any removal of arrack after the
purchase of the same will attract the liability to pay excise duty. Section
23
provides that excise duty shall be levied on the excisable article issued from a
warehouse also. It cannot be said that a warehouse established or licensed
under S. 16(e) is not warehouse within the meaning of that expression in s. 23.
[609G:610A]
(ii) The High Court held that the preamble of the A~t w~uld sen:e as
a
guidance to fix the rates of ·excise duty.
It cannot be said with certainty that
the preamble of the Act gives any guidance for fixing the rate of excise duty.
But that does not mean that the legislature here has no control over the delegate.
In this case, s. 71 of the Act whi~h provides .for the rule-makine power
imposes the necessary check upon the wide power g1ven to the Government to
fix the rate. The laying of rules before the legislature provides control
ov~r
delegated legislation. Again the legislature may also retain its control over_ 111
delegate by exercising its power of repeal The power to fix the rate of excise
duty conferred on the Government by s. 22 is valid.
[610E-F; 614E·Pl
608
SUPREME COURT REPORTS
[1975] 3 S.C.R.
Corporatio11 of C11lq11ta & Anr. v. Liberty Ci11e111a, [1965] 2. S.C.R.
477,
lla1wrsi D1is v. Slate of

## Text

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607
M. K. P APIAH & SONS
v.
THE EXCISE COMMISSIONER & ANR.
February 20, 1975
[K. K. MATHEW, V. R. KIUSHN.\ IYER AND P. K. GOSWAMI, JJ.J
.Mvsore Excise Act, 1965, Sections 16, 22 and 23 read with Mysore Excise
(D1.ml/ery and W~rehouse) Rules, 1967 and with Mysore Excise (Excise Duties)
Rules, 1968-Excise duty. levv of-Removal of arrack fi·o111 Govemment 1v,1reho11scs after the purchase of the same, ij attracts liability to pay excise duty.
Mvsore ~·xcise Act, 1965, Secs. 22 and 71- Dc/egotion of power to fi.t
rates o.f excise duty I~ G?vemment by making rules-Legislarure, if has abdicated Its essen11a/ leu1s/at1re functwn-Rule-making power, whether
provides
the necessary check.
Karna/aka Sales Tax Act. 1957. Secs. 2, 5' and 19-Levy uf sales tax upon
sale of arrack mnde by Government tn licensces-lmPositi011 of liability
to
sales tax, if covered by Entry 54, List fl, Schedule Vil of the Constitution.
.
'fh~ ~ppellan~. an exci~e contractor secured the privilege of vending arrack
m retail m certain taluks in the State of Karnataka tor a period of 18 months
beginning from 28-12-1967 and ending on 30-6-69.
He purchased arrack from
the Government at a tirice of 17 paise per litre and the Government collected
besides the sale price of arrack, excise duty, health cess and
education cess.
Thti Government also collected sales tax on the sale price of arrack, on excise
duty, on health cess and on education cess tor the period from 28-12-1967 to
31-1-1968 and made similar demands for the month of February, 1968
also.·
The app6llant and other excise contractors filed writ petitions in the High Court
at Karnataka challenging the validity of the levy and collection of exci'e Cluty,
educatio11 cess. health ctss and sales tax. The High Court accepted some of
the contentions of the appellant, granted him reliefs on that basis but rejected
the other prayers.
The appellant has filed these appeals on the basis of certificates granted by the High Court against the order.
ft was contended for the appellant (i) that no excise duty can be levied on
a licensee in respect of the quantity of arrack purchased by him from Govern·
ment depots, (ii) that the. power to fix the rate of excise duty conferred under
s. 22 of the Mvsore Excise Act of 1965 on the Government was bad for the
reason that it was an abdication by the state legislature of its essential legislative
ft~nction and (iii) that no sales tax could be levied on the price for sale of
arrack since s. 19 of the Mysore Sales Tax Act, 19 57 under which the tax was
levied was beyond the legislative competence of the state le~islaturc.
Rejecting the contentions and dismissing the appeals,
HELD : (i) It is clear from the return filed before the High Court that the
Government ourchases arrack from the distillers and keeps it in the warehouses
eatablished or licensed under s. 16 and that any removal of arrack after the
purchase of the same will attract the liability to pay excise duty. Section
23
provides that excise duty shall be levied on the excisable article issued from a
warehouse also. It cannot be said that a warehouse established or licensed
under S. 16(e) is not warehouse within the meaning of that expression in s. 23.
[609G:610A]
(ii) The High Court held that the preamble of the A~t w~uld sen:e as
a
guidance to fix the rates of ·excise duty.
It cannot be said with certainty that
the preamble of the Act gives any guidance for fixing the rate of excise duty.
But that does not mean that the legislature here has no control over the delegate.
In this case, s. 71 of the Act whi~h provides .for the rule-makine power
imposes the necessary check upon the wide power g1ven to the Government to
fix the rate. The laying of rules before the legislature provides control
ov~r
delegated legislation. Again the legislature may also retain its control over_ 111
delegate by exercising its power of repeal The power to fix the rate of excise
duty conferred on the Government by s. 22 is valid.
[610E-F; 614E·Pl
608
SUPREME COURT REPORTS
[1975] 3 S.C.R.
Corporatio11 of C11lq11ta & Anr. v. Liberty Ci11e111a, [1965] 2. S.C.R.
477,
lla1wrsi D1is v. Slate of Madhya Pradesh, [1959] S.C.R. 427, Municipal Board,
l1ap11r v. Ragli11rn1dra Kripal, [ 196n] l S.C.R. 1950, Deri Dm~i Gopa/ K,·is/ia11
v. S/'ale of P11njab, [1967] 3 S.C.R. 557, Municipal Corporatio11 of Delhi
v.
Bir/a Cotton Spinning and Wearing Mills, [1968] 3 S.C.R.
251,
Sita
Ram
Bislia111bhar Dayal v. State of z'.J.I'. [1972] 2 S.C.R. 141, Mi11ister of Health v.
r:1c Kim;, [ 193 I] A.C. 524, lnxtit11tt of P111en1 Agents '" Joseph. Lockivovd.
l:894] A.C. 347 <znd Cobb & Co. v. Kropp, [1967] 1 A.C. 141 (P.C.), refo1rred
to.
(iii) Section 19 of tbc. Kar.11:1taka Sulcs Tax Act, 1957. makes it clear that
notwithstanring anything containe,i in this Act of 1957, the Government :;hall
in respect 01 any sale of goods effected by it be entitled to collect by way of tax
;my amount which u rci;:istcrcd dcakr e!Tecting such sale would
have
been
entitled to collect bv way of tnx under the Act. The section is clear that the
(]ovc·rnmcnt could collect th~ tax on the sule made by it as if it were n rcgis·
tcrcd dealer, notwithstunding unything contained in s. 2 or s. S.
The i;ection
ll,clf creates a ri11ht in the State to recover and an obli~ntion on the purchaser
from the State to iiny the umount.
Any imposition of liability or obligu:tion
·in respect of sale or purchase of goods will lie covered by Entry S4 of Lint II
of tbe Seventh Schedule of the C<institution. Section 19 i" therefore, not 11/tru
l'ires the powers of the legislature. [615A·CJ
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos.
1883
to
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1886 of 1969.
o
From the judgment & Order dated the 12th July,
1968 of ·ihe
Mysore High Court in W.P. Nos. 949, 955, 956 and 958 of 1968.
K. Srinivasan and Vineet Kumar, for the appellants.
Ii. B. Datar (ln C.A. No. 1883/69) and M. Veerappa, for· thl'
respcmdents.
The Judgment of the Court was delivered by
MATHEW, J.
The appellant was an excise contractor.
He secured the privilege of vending arrack in retail in certain taluks in the State
of Karnataka for a period of 18 months beginning from. 28-12-1967
and ending on 30-6-1969.
He purchased arrack from the Government at a price of 17 paise per litre and the Government collected
besides the sale price of arrack, excise duty, health cess and education
cess.
The Government also collected sales tax on the sale price of
arrack, on excise duty, on health cess and on education cess for the
period from 28-12-1967 to 31-1-1968 and made similar demands for
the month of February, 1968 also.
The appellant and other excise
contractors filed writ petitions in the High Court of Karnatak:a cballenging the validity of the levy and collection of excise duty, education
cess, health cess and sales tax.
The High Court accepted some of the
conte:ntions of the appellant, granted him reliefs on that basis but
rejected the other prayers.
The appellant has filed these appeals or
the basis of certificates granted by the High Court against the order.
The contentions raised by counsel for the appellant before this
Court were : that no excise duty can be levied on J licensee in respi::ct
of the quantity of arrack purchased by him from Government depots,
that the power to fix the rate of excise duty conferred under s. 22 of
the Mvsore Excise Act of 1965 on the Government was bad for the
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M. K. PAPIAH v. EXCISE COMMR. (Mathew, J.)
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rca?on .that it w.as an abdication by the state lcgi~laturc of its essential
lcgislat1ve function and that no 8ales tax could be levied on the price
for sale of arrack since s. 19 of the Mysore Sales Tax Act 1957 under
whi1=h the tax was levied was beyond the legislative comp~tcncc of the
state legislature.
Section 22 of the Mysore Excise Act, 1965 (hereinafter rdcrred
to as 'the Act') provides for levy of excise duty at such rate or rates as
the government may prescribe on excisable articles manufactured or
produced in the State under any licence 'or permit granted under the
Act.
Section 23 of the Act deals with the method of levying excise
duties.
The first contention of the appellant was that sections I 6, 22 and
23 of the Act read with Mysore Excise (Distillery and Warehouse)
Rules, 1967 and with Mysore Excise (Excise Duties) Rules,
1968.
enables levy of excise duty only when arrack is issued from a distillery
or warehouse or other place of storage established or licensed under
the Act and since the government depot from which
he purchased
arrack. does not come under the above category, no excise duty can
be levied.
The High Court found that though sections 22 and 23 o~ t~1e Act
and Rule 2 of the Mysore Excise (Excise Duties) Rules, 1968, do not
expressly state that excise duty levied at the stage of issue of liquor
from the government depot should be collected from the issuer or from
the person to whom it is issued, it is obvious that excise duty . cannot
be collected from the State Government which issues liquor from its
depots and that the only person from whom it can be collected is the
licensee, to whom the State Government issues liquor from its depots.
The material portion of s. 16 of the Act provides that the Excise
Commissioner may, with the previous sanction of the State Government, establish or license a warehouse wherein intoxicants may be
deposited and kept without payment of duty and that without the
sanction of the State Govcrnmc;;~ no i111oxicant shall be removed from
any distillery, brewery, warehouse or other place of storage established
or licensed under the Act unless the duty, if any imposed under the
Act has been paid or a bond has been executed for tl,le payment thereof.
It is clear from the return filed before the High Court that thl'
Government purchase arrack from the distillers and keeps it in
the
warehouse established or licensed under s. 16 and that any removal
of arrack after the purchase of the same will attract theliability to pay
excise duty shall be levied on the excisable article issued from a ware
Excise Commissioner who is competent to establish or license a warehouse wherein intoxicants may be deposited and kept under clause ( e)
ot s. 16 and therefore it is not a warehouse established or licensed b"·
the State Government.
-
We see no force in this contention. Section 23
provides
that
excise duty shall be levied on ihe excisable article issued from a ware-
610
SUPREME COURT REPORTS
[1975] 3 s.c.R ..
house also.
We sec no reason to think that a warehouse established
1.1r licensed under s. 16 ( e) is not warehouse within tbe meaning: of
that exprll$Sion in s. 23,
!'he second contention raised by the appellant was that s. 22 of the
Act provides for delegation of the power to fix the rates bf excise duty
co the Government by making rules and since no guidance has been
furnished to the government by the Act for fixing the rate there was
abdication of essential legislative function by the legislature and therefor,e the section is bad.
'fhe High Court after referring to th..: preamble of the Act said
that it was the policy of the Act both to raise revenue and to discourage con:iUmption of liquor by making the price -0f liauor s.uffic1e11tly high, and that that would serve as a guidance to fix the rates
of excise duty, that the rates fixed will be such ·as would keep the
balance between these somewhat conflicting objects so as to serve the
purpose of each. The Court further said that if the rate of excise duty
is too low, not 'only will the revenue f~om excise duties suffer but also
there will be increase in the consumption of liquor; but if the rate of
excise duty on liquor is too high, it is likely to encourage the production and consumption of iJlicit liquor and consequently the control and
regulation of liquor as well as the revenue from excise duty may be
affected advers1~ly. The Court therefore held that the need to arrive
at such rates of: excise duty as will Sl"rve the twin objects of the policy
underlying the Act operates as guidance for determination of the rates
of e:xcise duty.
We are not certain whether the preamble of the Act gives any
guidance tor fixing the rate of excise duty. But that does not mean
that the legislature here has no control over the delegate. The le:gislative "nntrol over delegated legislation may take many forms.
In Corporation of Calcutta & A.nr. v. Liberty Cinema(I), the validity of s. 548(2) of the Calcutta Municipal Act, 1951, which empowered the Corporation to levy fees "at such rates as may from time
to time be fixed by the Corporation" was challenged on the ground of
exa~sive delegation as it provided no guidance for the fixation,. of the
amount. The majority upheld the provision relying on the decision
in Banarsi Das v. State of Madhya Pradesh(2) holding that the fixation of rates of tax not being an essential legislative function, could be
validly delegated to a non-legislative body. but observed that when it
was Jeft to such a body, the legislature must provide guidance for such
fixation.
The Court found the guidance in the monetary needs of the
Corporation for carrying out the functions entrnstl'-d to it under the
Act. .
In Municipal Board, Hapur v. Raghuvendra Kripal(3 ) the validity
of the U;P. Municipalities Act, 1916, was involved. The Act had
empowered the municipalities to fix the rate of tax and after having
enurnetated the kinds of taxes to be levied, prescribed an elabor·ate
(ll [l965J 2, S.C.R. 477.
(2) [1959] S.C.R. 42'7.
.
(3) [1966) I S.C.R. 950
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procedure for such a levy and .also provided for the sanction of the
Govemm~nt. · Section 13 5 ( 3) of the Act raised a conclusive preswnption that the procedure prescribed had been gone througb. on a .certain·
notification being' issued by the Government in that ~egard. This
provision, it was contended, was ultra vires because there was
an
abdication of essential legislative functions by the legislature with respect to the imposition of tax ina~much as the. State Government . was
given the pow~r to condone the breaches of the Act and to set at
naught the Act itself.
This, it was contended, was an indirect exempting or dispensing power.
Hidayatullah, J. speaking for the majority,
said that regard being had to the democratic set up of the municipalities which need the proceeds of these taxes for their own administration, it is prop.:r to leave to these municipalities the power to impose
and collect these taxes.
He further said that apart from the fact that
the Board was representative body of the local population on whom
the tax was levied, there were other safeguards by way of checks a.nd
controls by Government which could veto the action of the Board in
case it did not carry out the mandate of the legislature.
·
I.n Devi Dass Gopal Krishnan v. State of Pun;ab( 1) the question
was whether s. 5 of the East· Punjab General Sales Tax Act,
1948;
which empowered the State Government to fix sales tax at such rates
as it thought fit was bad. The Court struck down the section on the
ground that the legislature did notlay down any policy or guidance to
the executive in the matter of fixation of rates. Subba Rao,
C.J.,
speaking for the Court, pointed out that the needs of the State and
the purposes cif the Act would not provide sufficient guidance for the
fixation of rates of tax. He pointed out the danger inherent in the·
process of delegation :
"An overburdened 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 vague and general terms; it may Ii>t set down
any standard for the guidance of the executive;
it
may
confer an arbitrary power on the executive to change or
modify the policy laid down by it without reserving for itself
any control over subordinate [egislatio11. This self ·effacement
of legislative power in favour of another agency either in
whole or in part is beyond the permissible limits of delegation."
·
In Municipal Corporaiion of Delhi v. Birla Cotton Spinning and
Weaving Mills( 2), the main question was about the constitutionality
of delegation of taxing powers to municipal corporations. The Delhi
Municipal Corpo~ation Act (66 of 1957) bys. 113(2) had \m}powered the CorporaM.on to levy certain optional taxes.
Under
s. 150,
power was given to the Corporation to define the maximum rate of
tax to be levied, the classes of persons and the description of articles
and property tp be taxed, the systems of assessment to be adopted
(I) [l967]3;S.C.R. 557.
(2) [1968] 3, S.C.R. 251.
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SUPREME COURT REPORTS
[19751 3 s.c.R.
and the exemptions, if any, to be granted. The. majority
of the
court held the cklcgation to ho valid. Wanchoo, C .J. observed tbat
there were sutlicient guidance, checks and saf,guards in t11c Act which
prevented excessive dckgation.
The learned Chief Justice observed
that statements in certain cases to tho effect that th, power to
fix
rates cf taxes is 1101.· an essential legislative fUnctioh \Vere too broad
and that •·tl1c natur~ of th~ body to \vhich dclcg~tion is n1atl.; is also
:t factor to be taken into consideration in dctcrminin~ whether there
is suftieicnt guidance in the matt·.::r of dl.!Icgation··.
.r\ccording to the
learned Chief Jmticc, the fact that dclc~ation was
made
to
an
dected body responsible to the people including those· who paid taxes
provid1:d, a grci1t check on the eleci.ed councillors imposing unrcason-
:1blc rates cf tax.
He then said :
"The guidance may take the form of providing maximum
rates of tax up to which a local body may be givon the discretion to nlakc its choi:.:c-, or it n1,uy take the form of providing for consuLation with the people o( the local area and
then fixing
th~ rati:s after such consultation.
It may alsO.
take the form of subjecting the rate to be fixed by the local
body to the approval of Government which acts as a wntchdog on the actiqns of the local body in this
matter
on
behalf cf the legislature.
There may be other ways in which
guidance may be provided.'"
·In Sita Ram· Bishambhar D,ayal v. State of U.P.( 1} s. 3-D(ll
of the U. P. Sales Tax Act, 1948, had provided for levying
taxes
at such rates as may be prescribed by the State
Government not
exceeding the 171aximum prescribed therein.
Hegdc, J., in speaking
fnr the. Court, observed : ·
'"However much one might deplore the "New Despotism'·
of the execmive, the very complexity of the modern society
arid Th:.! demand it makes on its Government have set
in.
motion forces which have made it absolutely necessary for
the Lcgh:Iatures to entrust more and more po\v<=ts to the
executive.
Text hook doctrines evolved in the 19th centurv
have become out of date."
-
In this case, we think that s. 71 of the Act which provides for
the rule-making power imposes the necessary check upon -the wide
power given to the government to fix the rate.
Sub,secli"DD, { 4) of
that section provides :
"Every rule made under this section shall be'.(;~:μ((. ijs
soon as may be after it is made, before each Hi:w9e of _t!)e
State Legislature while it is in sessii:ln for a totμ'I~pef/Od- of
thirty days which may be comprised in _one .se~ji6ii ,o.r. in
two or more successive sessions and if befcmi.the_,'\'Xpiry,.<~ •. ·
the session in which it is so laid or the sessTon ·immodia~Y,:
follo\ving, both Hous::s agree in nlaking any modification in·.
the rule (it?) shall thereafter have effect 9nly ih -such modified
form
or
be
of no cffcci;· ns. · the_ ~:1<c may
(I) [19721 2, S.C.R. 141.
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be; so however that any such modification or annulment
shall be without prejudice to the validity of anything previously done under that rule."
The appellant submitted that
s. 71(4)
does
not provide a
guara~tcc for legis'ativc control
over
d7legated
legislation.
The
~trgu1n~nt \Vi.IS that the rules would come into forcz as soon as they
arc framed and that the power of the legislature to annul the rules
subsequcntl1y cannot be rcgard·'d as sufficient contrc,l over delegated
legislation.
Thal laying of rules b'forc the legislature is control over delegated
Jcgisb:ion is implied in the speech of Lord Thankerton in the House
of Lords in Minisrer of llealt!z v. The King(') where he said:
"'ln this case, as in similar cases that have .cOme before
tho courts, Parliament· has delegated its legislative function
to u Minist·or of the. Crown, but in this case Parliament has
retained no specific control over the exercise of the function
by tho Minister, such as a condition that the order should
be '.aid before Parliam2nt and might be annulled by a resolution of either House within a limited period."
In filsiitute of Patent
Agellts v. Joseph
Lockwood(')
Lord·
\Vatson said :
'The Legislature retained so far a check that it required
that the regulations which they framed should be laid upon
the wbk of both Houses; and of course these regulations
could have been annulled by an unfavourable . resolution
upon a nlo:ion made in either House.''
Jn Banard Schewartz's "An fntroduction to American Administrative Law·• it is stated :
"In Britain, Parliamentary control over delegated legislation is exercised through the· various forms of 'iaying'
prescribed in enabling Acts.· Through them, the legislature
is enab!cd at least in theory to exercise a continuing supervision ovzr administrz:tive rules and regulations.''
·
.As D~an Landis pointed out, the English techniques for laying
the ruks before the Houses have several virtues. "For one thing, they
bring the !e~i>lativc into close and constant contact with the administrative .'T').
Th·: legislature may also retain its control over its
delegate by
exercising its power of repeJl. This was the basis on which the Privy
Co1.111cil in Ct'!.'1:1
c~ Ci>. v. Kron,.?("')
upf1e~d ih..:-
v;.1lidi:v of delegatin~ of t:1cp0\v~r to fix rates to the Commissioner of Transport
in
th:It
c: 1 s=.~. The
qu~stion there \Vas
\Vh~th~r ·the Queensland -Leizishtur,: h:d legishtive authority uhdcr the impugned Acts to invest
the Cornn1i!'~io~~~-f~r Transport \vith pJWe~ to
impose
and
levy
(I) [1931] A.C. 5'.!4.
(2) [1894] A.C. 347.
('3) see Landis, .. The Administrative Process ... 77 (1938~
. (4) [1967] l,A.C. 141 (P.C.).
.
SUPR,E:t.lE COUllT REPORTS
[197~] 3 s.c.11..
licence and permit fees. It was not dispute<l; ~fore the~ Lordships ~t
fees imposed are to be regarded as constitutmg taxlltion. Accordingly, it was contended that the legislature had abdicated its exc.lusive
power of levying taxation. The Privy Council held that Queensland
Legislature was entitled to use any agent or machinery that it considered appropriate for carrying out the object and the purposes of
the Acts and to use the Commissioner for Transpoit as its instrument to fix and recover the licence and permit fees,
provided it
preserved its own capacity intact and retained perfect control over
him; that as it could at any time repeal the legislation and
withdraw such authority and discretion as it bad vested in him, it had not
assiblled, transferred or abrogated its sovereign power to levy taxes,
nor had it renounced or abdicated its responsibilities in favour of a
new1y created legislative authority and that, accordingly, the two Acts
were valid.· Lord Morris of Borth-y-Gest said :
'~What they (the legislature) created by the passing of
the Tram:port Acts could not reasonably be described as a
new legislative power or separate legislative body armed with
general legislative authority (see R. v. Burah, (1878), 3
A. C. 889). Nor did the Queensland :μgislature 'create
and endow with its own capacity a new legislative power not
created by the Act to which it owes its own existence' (5ee
In re the Initiative 011d Refere11dum Act ( 1919) A.C. 945
at 945)."
The point to be emphasized-and this is rather crucial-is the
:.tatcment of their Lordships that the legislature preserved its capacity
intact and retained perfect control over the Commissioner for Transport inasmuch as it could at any time repeal the legislation and withdraw the autlwrity and discretion it had vested in him, and, therefore,
the legislature did UQt abdicate its functions.
-
We, therefore, think that the power to fix the rate of excise duty
cornferred Qil the government by s. 22 of the Act is valid. The dilution
Qf P,UI'liameIJitary watch-dogging of delegated
legislation
may
be
deplored but, m the compulsions and complexities of modern life,
cannot be helped.
The last contention raised by the appellant was
that s. 19 of the Karnataka Sales Tax Act, 1957 is invalid as it pur·
ports to levy sales tax upon the sale of arrack made by the Government · to licensees. The appellant submitted that the
definition
of
"dealer' in s. 2 of the Act excludes the Government of Mysore and
that by virtue of the provisions in s. 5(3) of that Act, no tax could
be :levied on the sale of arrack by government to the appellant. We
sec no merit in this contention. Section 19 of the Act reads:
"19. State Government entitied to collect tax as registered dealcrs.-Notwithstanding anvthing contained in this
Act the Government o:f Mysore shall, in respect of any sale
of goods e:tfected by them, be entitled to co11ect by way of
tax any amount which a registered dealer effecting such sale
would have been entitled to collect by way of tax under this
Act."
·
A
B
c
D
E
F
G
ff
c
M. K, PAPIAH v. EXCISE COMMR. (Mathew; /.)
6 15
Thi3 section makes it clear that notwithstan<llng
aI1}thina QOlltained in that Act, the Government shall in respect of. any Ille of
goods effected by it be entitled to collect by way of taX aDJ amoat
which a registered dealer effecting such sale would have been CDtided
to collect by way of tax under the Act. The section is clear thlt the
Government could collect the tax on the sale made by it as if it were
a registered dealer, not withstanding anything contained in s. 2 or
s. 5. The section itseH creates a right in the State to r.:cover and an
obligation on the purchaser from the State to pay the amount. ADY
imposition of liability or obligation in respect of. sale or purchase of
goods will be covered by Entry 54 of List Il of the Seventh Schedule
of the Constitution.
We do not think that s. 19 is ultra vires the powers of the legislature.
We therefore dismiss the appeals but make no order as to costs.
V.M.K.
Appeals dismissed.