# ti· '. LACHMI NARAIN ETC. ETC. I '«'.' : . i~: \;, - ~~ v. UNION OF INDIA & ORS

- **Citation:** [1976] 2 S.C.R. 785
- **Court:** Supreme Court of India
- **Decided:** 1975-11-25
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ti-lachmi-narain-etc-etc-i-i-v-union-of-india-ors-6553
- **Pages:** 24

## Headnote

-
•
J
785
ti· '.
LACHMI NARAIN ETC. ETC.
I '«'.'
: . i~: ....... \;,..-
~~
v.
UNION OF INDIA & ORS.
November 25, 1975
fY. V. CHANDRACHUD, R. S. SARKARIA AND A. C. GUPTA, JJ.]
:S
Union Territories (Laws) Act, 1950, s. 2-Bengal Finance (Sales Tax) Act,
1941, extended to Delhi with certain modificatidns
by
1951-NotificationNotificatlon more than 6 years later inserting further modificatio11
of
the
Bengal Act in the 1951 Notification-Validity-Section 6(2) of the Bengal Act
l'l!quiring 3 months notice before withdrawing exemption from tax-If mandardry-lf period of notice could be curtailed by Central Govunment by Noli•
fication-Leglslation by reference, when can be inferred-Government, if can
take advallfage of its /apse-General Clc!llses Act (10 of 1897), s. 21, app/ica•
bi/ity.
Section 2, of the Part C States (Laws) Act. 1950, empowered the Central
Government to extend by notification in the official gazette, to any Part C
State, or to any part of it, with such rest,rictidns and modifications as it thinks
fit, any enactment in force in a Part A State. In 1951, the Central Government,
in exercise of this power, extended by a Notification the Bengal Finance (Sales
Tax) Act, 1941, to the then Part C State of Delhi with certain modifications
in s. 6.
The section, after such extension with modifications, provided :
6(1) No tax shall be payable under this Act on the sale of goods
specified in the first column of the Schedule subject to the ccinditions etc; and
(2) The State Government [Amended as Central Government
in
c
D
· 19561 after giving by notification in the official gazette not less
~~~l~c!ti~::'~~d ;~t~: o~iti~r~~e~~iogth~~w1~ ~~e'::~Yth~Ysl~~=
E.
dule and thereupon the Schedule shall be amended accordingly
A modified Schedule of goods exempted from tax under s. 6 was also subsli·
luted for the original Schedule in the Bengal A<:t, by the Notification.
After the passing of the States Reorganisation Act, 1956, the Part C States
(Laws) Act became Union Territories (Laws) Act, 1950. with necessary adaptations.
In 1957, the Central Government issued a Notification in purported exercise
of the powers under s. 2 of the 1950-Act. amending the 1951-Notification.
By the 1957-Notification an additional modification of s. 6 of the Bengal Act
was introduced in the 1951-Notification, namely the words "such previous
notice .as it considers reasonable" were substituted for the words "not less than
3 months' 11oticc'' in s. 6(2).
In 1959, Parliament passed the Bengal (Sales Tax) (Delhi Amendment) Act,
1959, making some amendments in various secticms of the Bengal Act but teft
G
s. 6 untouched.
By various notifications. exemption from sales tax was granted to several
commodities. but subsequently, the exemption was withdrawn by other notifications after gfring notice of less than 3 mon.ths.
Dealers in those commodities, who were aggrieved by the withdrawal of the
exemption. challenged the validity of the withdrawal. The High Court dismissed their petitions, on the main ground that Parliament. while enacting
the
Amending Act of 1959, had put its seal of approval to the curtailed period of
notice in s. 6(2) and as such, it should be taken to have been provided by
Parliament itself in the Bengal Act.
fli
78 6
SUPReME COURT REPORTS
(1976) 2 S.C.R.
A
Allowing the appeals t'o this Court,
B
c
D
E
F
·G
H
HELD : The 19'57-Notification purporting to substitute the words "such
previous notice as it considers reasonable" for the words "not less than 3
months' notice" in s. 6(2) of the Bengal Act, is beyond the powers of the
Central Government, conferred on it, by s. 2 of the Union Territories (Laws)
Act, 1950; and in consequence, the various notifications, in so far as they withdrew exemptions from tax with respect to the sewral commodities, are invalid
and ineffective, as tbe exemption was withdrawn without complying with the
mandatory requirement of not less than 3 months' notice enjoined by
the
section.
[808-D-E]
(I) (a) The primary power bestowed by s

## Text

_Characters 0–39,920 of 71,461. This is a partial read: ask again with offset=39920 for what follows._

-
•
J
785
ti· '.
LACHMI NARAIN ETC. ETC.
I '«'.'
: . i~: ....... \;,..-
~~
v.
UNION OF INDIA & ORS.
November 25, 1975
fY. V. CHANDRACHUD, R. S. SARKARIA AND A. C. GUPTA, JJ.]
:S
Union Territories (Laws) Act, 1950, s. 2-Bengal Finance (Sales Tax) Act,
1941, extended to Delhi with certain modificatidns
by
1951-NotificationNotificatlon more than 6 years later inserting further modificatio11
of
the
Bengal Act in the 1951 Notification-Validity-Section 6(2) of the Bengal Act
l'l!quiring 3 months notice before withdrawing exemption from tax-If mandardry-lf period of notice could be curtailed by Central Govunment by Noli•
fication-Leglslation by reference, when can be inferred-Government, if can
take advallfage of its /apse-General Clc!llses Act (10 of 1897), s. 21, app/ica•
bi/ity.
Section 2, of the Part C States (Laws) Act. 1950, empowered the Central
Government to extend by notification in the official gazette, to any Part C
State, or to any part of it, with such rest,rictidns and modifications as it thinks
fit, any enactment in force in a Part A State. In 1951, the Central Government,
in exercise of this power, extended by a Notification the Bengal Finance (Sales
Tax) Act, 1941, to the then Part C State of Delhi with certain modifications
in s. 6.
The section, after such extension with modifications, provided :
6(1) No tax shall be payable under this Act on the sale of goods
specified in the first column of the Schedule subject to the ccinditions etc; and
(2) The State Government [Amended as Central Government
in
c
D
· 19561 after giving by notification in the official gazette not less
~~~l~c!ti~::'~~d ;~t~: o~iti~r~~e~~iogth~~w1~ ~~e'::~Yth~Ysl~~=
E.
dule and thereupon the Schedule shall be amended accordingly
A modified Schedule of goods exempted from tax under s. 6 was also subsli·
luted for the original Schedule in the Bengal A<:t, by the Notification.
After the passing of the States Reorganisation Act, 1956, the Part C States
(Laws) Act became Union Territories (Laws) Act, 1950. with necessary adaptations.
In 1957, the Central Government issued a Notification in purported exercise
of the powers under s. 2 of the 1950-Act. amending the 1951-Notification.
By the 1957-Notification an additional modification of s. 6 of the Bengal Act
was introduced in the 1951-Notification, namely the words "such previous
notice .as it considers reasonable" were substituted for the words "not less than
3 months' 11oticc'' in s. 6(2).
In 1959, Parliament passed the Bengal (Sales Tax) (Delhi Amendment) Act,
1959, making some amendments in various secticms of the Bengal Act but teft
G
s. 6 untouched.
By various notifications. exemption from sales tax was granted to several
commodities. but subsequently, the exemption was withdrawn by other notifications after gfring notice of less than 3 mon.ths.
Dealers in those commodities, who were aggrieved by the withdrawal of the
exemption. challenged the validity of the withdrawal. The High Court dismissed their petitions, on the main ground that Parliament. while enacting
the
Amending Act of 1959, had put its seal of approval to the curtailed period of
notice in s. 6(2) and as such, it should be taken to have been provided by
Parliament itself in the Bengal Act.
fli
78 6
SUPReME COURT REPORTS
(1976) 2 S.C.R.
A
Allowing the appeals t'o this Court,
B
c
D
E
F
·G
H
HELD : The 19'57-Notification purporting to substitute the words "such
previous notice as it considers reasonable" for the words "not less than 3
months' notice" in s. 6(2) of the Bengal Act, is beyond the powers of the
Central Government, conferred on it, by s. 2 of the Union Territories (Laws)
Act, 1950; and in consequence, the various notifications, in so far as they withdrew exemptions from tax with respect to the sewral commodities, are invalid
and ineffective, as tbe exemption was withdrawn without complying with the
mandatory requirement of not less than 3 months' notice enjoined by
the
section.
[808-D-E]
(I) (a) The primary power bestowed by s. 2 of the Union
Territories
(Laws) Act, 1950, on the Central Government is one of exte11sio11, that is,
bri11gi11g into operation and effect, in a Union Territory, an enactment already
in force in· a State.
The discretion conferred by the section to make "restrictions and modifications'' in the enactment sought to be extended. is not a separate and independent power, which can b'C exercised apart from the power oc
extension, but is an integral constituent of the power of extension.
This is made
clear hy the use of the preposition "with" one meaning of which (which accord;
with the'context) is "part of the same whole".
[801 E-F]
(b) •There are 3 limits on the power
giV\"!n
by s. 2.
(i) The powe'
exhausts itself on ·extension of the ena·ctment. It can be exercised only once,
simultaneously with the extension of the enactment, but .cannot be exercised
repeatedly or subsequently to such e.xtension.
(ii) The power cannot be used
for a purpose other than that of extension.
In the exercise of the power, onl~·
such restrictions and modification<; can be validly engrafted in the enactment
sought to be extended, which are necessary to bring it into operation and effect
in the Union Territory .. Modifications which are not necessary. for, or ancil·
lary and. subservient to the purpose of extension, are not permissible.
And.
only such modifications can be legitimately necessary for such purpose, as ar"
required to adjust, adapt, and make the enactment suitable to the peculiar local
conditions of the Union Territory for carrying it into operation and
effect.
(iii) The _words "restrictions and· modifications" do not cover such alteration:;
as involve a change in any essential feature of the enactment or the ]egislativ"
policy built into it.
[801G-H, 802A]
(c) If the words "such restrictions and modifications as it thinks fit" arc
given the wide construction of giving an unfettered power of amending and modify.
ing the enactment sought to be extended, as contended by the respondent, the
validity of the section itself becomes vulnerable on account of the vice o'
excessive delegation.
Moreover. such a construciion would be repugnant to
the context and content of the section, read as a whole.
[802 B-C]
Rajnarain Singh v. The Chairman Patna Administration Committee, Paille
[1955] 1 S.C.R. 291 and Re:
Delhi Laws Act, [1951] S.C.R. 7·17. referre,1
to.
(2) The 1957-Notification transgresses these limits in two respects:
(a) The power has not been exercised contemporaneously with the extension
·or for the purposes of the -,,xtension of the Bengal Act to Delhi but 6 l ycan
thereafter. The power of extension with restrictions and modifications
·had
exhausted itself when the Bengal Act was extended to Delhi with some alterations by the 195i-Notification.
[8020-E]
The power given under s. 2 of the 1950-Act, cannot be equated to th•J
"Henry VTII clame" of the Acts of the British Parliam..,nt, because while the
power under s. 2 can he
exercised only once when the Act is extended. tho:
power under a "Henry VIII Clause" can be invoked, if there ts nothing ccntrary in the clause. more than once on the arising of a difficulty when tlic Act
is opera!ire.
[802F-H]
.
Observations of Fazal Ali. J. at p. 850 in Re: De/hi Laws Act case explained.
•
t -
..
LACHMI NARAIN V. UNION
78 7
(b) The alteration sought to be i,ntro~uc_ed in s. 6(2) _by the !957-No_tificaA
tion goes beyond the scope of the · restnctions and modifications ' perm1ss1ble
under s. 2 of the 1950-Act, because, it purports to change the essential features
of s. 6(2) and the legislative policy· inherent therein. · [803F]
Section 6(2) before the issue of the 1957-Notification, requiring the Government to give "not Jess than 3 months' notice" of its intention to add to or omit
from or otherwise amend the Schedule to the l 9•50-Act, embodies a determination of legislative policy and .its formulation as an absolute rule of' conduct
could be diluted, changed or amended only by the legislatme, in the exercise
of its essential legislative function, which could not be delegated to the Government .. [803Gc804E, F, G]
(i) The language of the sub-section as it stood is emphatically prohibitive
and it commands the Government in unambiguous negative terms that the period
of the requisite notice must not be Jess than 3 months, showing that the provi·
sion was mandatory and not directory.
[804-A-BJ
B
(ii) The scheme of the Bengal Act is that the tax is to be quantified and
C
assessed on the quarterly turnover; and the period of not less· than 3 months'
notice conforms to the scheme and ensures that the imposition of a new tax or
exemption does not cause dislocation or inconvenience either to the dealer or
the Revenue.
[804B-C]
(iii) By fixing the period at not less than 3 months, purchasers on whom
the i~cidence of tax really falls have adequate notice of taxable items. [804-CJ
(iv)" Dealers and others likely to be affected bv an amendment of the ScheD
dule ~et sufficient time to make representations and adjust their affairs. [804-D]
The span of notice was thus the essence of the legislative mandate.
The
necessity of notice and the span of notice both are integral to the scheme of
the provision and it cannot be split up into essential and non-essential components, the whole of it being mandatory.
[804-E-F]
Jt.aza Buland Sugar Co. Ltd. v. Mu.11icip11/ Board, Rampur, [1965] I S.C.R.
970, distinguished.
·
(3 )(a) Pt. Benarsi Das Bhanot v. Srate of Madhya Pradesh [!959] 2 S.C.R.
,427 .. does not assist the respondent. That was a case where the contention that
s. 6(2) of the C.P. & Bihar Sales Tax Act, 1947, was invalid on the ground of
excessive delegation, was rejected by the Court. In the present case, it is the
validity of a Notification purported to be issued under s. 2 of the J 950-Act,
that is impeached as beyond the powers of modification conferred by the sec1ion.
[804H, 805A]
(b) In the present case, the Central Government did not directly amend
s. 6(2).
More than 6 years after the extension of the Act by the 1951-Notification, it amended the sub-section indirectly by amending the 1951-Notification.
But on the extension of the Act to Delhi, the 1951-Notification had
ex"hausted its purpose. and the purported amendment, through the medium of
rnch a "dead" Notification is an exercise in !'utility.
Further, an amendment
which was not directly permissible could not be done indirectly.
[805-B, Cl
E
F
G
'
(4) The High Court was in error in holding that Parliament had validated
r
or re-enacted referentially, with retroactive effect, what was sought to be done
by the 1957-Notification when it passed the Amending Act, 1959.
[807C]
The Amending Act leaves s. 6(2) untouched. It does not even indirectly
refer to the 1957-Notification or the amendment purportedly made by it in
s. 6(2). Nor does it re-enact or validate what was sought to be achieved by
that. notification. No indication of referential incorporation or validation or the
1957-Notification or the amendment sought to be made by it, is available eitl;er
in the Preamble or in any other provision of the Amending Act.
Parliament,
despite its presumed awareness of the 1957-Notification, has said nothing in the
Amending Act indicating that i~ has in any manner focorporated, re-enacted or
H
A
788
SUPREME COURT REPORTS
(1976] 2 :>.C.R.
validated the 1957-Notification or the amendment sought to be mooe thereby,
while passing the Amending Act, 1959.
[805-E-F, 807-B-C]
Krishna C/umdra v; Union of India, A.I.R. 1975 S.C. 1389, referred 10.
(5) A mere amendment of an Act by a comperent legislature does
not
,•
amount to re-enactment) of the parent Act. [807D]
B
Venkatarao Esajirao Limberkar's case [1970] 1 S.C.R. 317, explained.
(6) The respondent cannot contend that if tire withdrawal of exemPtion
'
c
D
E
without giving 3 months' notice was illegal, then tire grant of exemption With·
out giving 3 months' notice was also void.
[808-A]
(a) Some of the goods were granted exemption by the 1951-Notification
itself and, hence, there is no question of giving notice for giving those exemp-·
tions. [807-G]
(b) The validity of the notifications granting exemptions after the extension
of the Act to Delhi is not in issue in the writ petitions; and whether or not the
requisite notice was given before granting exemption is a question of fact de;pending on evidence. [807G]
( c) To allow the respondent to take such a plea would be violative
the
fundamental principle of natural justice, according to which. a party cann t be
allowed to take advantage of his own lapse or wrong. [807-H]
(7) The respondent cannot also rely on s. 21 of the General Clauses Act.
because, the source of the power to amend the Schedule to th·e 1950- ct is
s. 6{2) of the Bengal Act and not s. 21 of the General Clauses Act, an
the
power has to be exercised within the limits of s. 6(2) and for the purpos!: for
which it was conferred. [808-B-C]
Gopiclwnd v. Delhi Administrotidn, [1959] Suppl. 2 S.C.R. 87, re(erred
tg.
CNIL APPELLATE JURISDICTION :: Civil Appeals Nos. 2221-2225,
1801 and 2524 of 1972.
From the Judgment and orders dated the 18-11-71, 29-3-1972
and 5-2-1972 of the Delhi High Court in L.P. No. 53/71 and Civil
Writ Petitions Nos. 612, 640, 643 and 649 /71, 281/72 and 1052 of
F
1971 respectively.
A. K. Sen, Sarioo Prasad Ba/ram Senglwl and C. P. Lal for the
Appellants in CAs 2221-2225/72
B. Sen, S. P. Nayar. and M. N.
Shroff for
Respondents 2-3,
(In CAs. 2221-2225/72) for Respondents 1-4 in C.A. 1801).
G
S. V. Guvte, Mrs. Leila Sait and U, K. Kaithan for
Interveners
H
(In·CAs. 2221-2225/72) ~nd Appellants (In CAs. 2524/72)
M. C. Blzandare, Sardar Bahadur Saharya, B. N. Kirpal and V. B.
SaluJ(ya for the Appellant in CA 1801/72.
The Judgment of the Court was delivered by
SARKARIA, J. Whether the Notification No. SR0-2908, dated
De·ce1!1ber 7! 1957 issued by the Central Government in purported
exercise of its powers under s. 2 of the Union Territories (Laws)
•
I I
..
"\
I
• 1
LACHMI NARAIN v. UNION (Sarkaria, !.)
789
Act, 1950, is ultra vires the Central Government, is
the
prini;:ipal
A
question that arises in these appeals which will be disposed of by a
conunon judgment.
The question has arisen in these· circumstances
, ..
Section 2 of the Part C States (Laws) Act, 1950, empowered
the Central Government to extend by notification in the
Official
B
Gazette, to any Part C State, or to any part of such State, with such
restrictions and modifications as it thinks fit, oany enactment which
is in force in a Part A State. In exercise of this power, the Central
Government by a Notification No. SRO 615 dated the 28th April
1951, extended to the then Part C State of Delhi, the Bengal Finance
(Sales-Tax) Act, 1941 (for short, the Bengal Act), with, inter a:lia,
these modifications
C
"In sub-section (2) of Section 6, -
(a) ...
(b) for the words "add to the Schedule",
the words
"add to or omit or otherwise amend the Schedule" shall be
substituted."
D
For the Schedule of the Bengal Act, this Notification substituted
a modified Schedule of goods
exempted under s. 6.
The · relevant
items in the modified Schedule were as follows:
"8. Fruits, fresh and dried (except when sold in sealed
containers) .
11. Pepper, tamarind and chillies.
14. Turmeric.
16. Ghee.
17. Cloth of such description as may from time to time
E
be specified by notification in the Gazette costing less
F
per yard than Rs. 3/- or such other sum as may be
specified.
·
,,1
21A. Knitting wool."
o·-.·;r -r
Section 6 of the Bengal Act after its extension to Delhi, as modifi.ed by the said Notification, reads thus :
"6(1) No tax shall be payable under this Act on the sale
of goods specified in the first column of the Schedule
subject to the conditions and exceptions if any set
out in the corresponding entry in the second column
thereof.
(2) The State Government after giving by Notification in
the Official Gazette not less than 3 months' notice
of its iI11tention so to do may by like
notification
9-159SCI/76
G
H
A
B
c
D
F
G
H
790
SUPREME COURT REPORTS
(1976) 2 S.C.R.
add to or omit from or otherwise amend the Schedule and thereupon the Schedule shall be deemed to
be amended accordingly." (emphasis supplied)
By a Notification, dated 1-10-1951,, in sub-section (1) of s. 6,
the words "the first column of" were omitted and for the words "in
the corresponding entry in the second column thereof"
the
word
"therein" was substituted.
·
By a notification country liquor was included i.1 the Schedule as
item No. 40 of exempted goods with effect from 19-4-1952.
On 1-11-1956, as a result of the coming into force of the States
Reorganization Act, 1956, and the Conlstitutiop.
(Seventh
Amendment) Act, 1956, Part C States were abolished.
Part C State of
Delhi became a Union Territory and the Delhi Legislative Assembly,
was also abolished.
In 1956,
Part C State (Laws)
Act,
1950
(hereinafter referred to as Laws Act) also became the Union Terri·
tories (Laws) Act, 1950, with necessary adapt>ations.
On 1-12-1956, Parliament passed the Bengal Finance (Sales-Tax)
(Delhi Amendment) Act, 1956 which introduced
amendments
in
different sections of the Bengal Act as applicable to Delhi. It made
only two changes in s. 6 Firstly, the word 'Schedule', wherever
it
occurred, was replaced by the words "Second Schedule~'. Secondly,
the words "Central Government" were substituted for
the words
"State Government".
On December 7, 1951, in the Gazette of India Extraordinary
there appeared a notification, which reads as below :
"S. R. 0. 3908-In exercise of the powers conferred by
section 2 of the Union Territories (Laws) Act, 1950 (30
of 1950), the Cen~ral Government, hereby
makes
the
following amendment in the notification of the Government
of India in the Ministry of Home Affairs No. S.R.O. 615,
dated the 28th April, 1951 (extending to the Union Territory of Delhi and the Bengal Finlance (Sales Tax)
Act,
1941, subject to certain modifications) namely :-
In the said notification, in the modifications
to
the
Bengal Act aforesaid, in item 6 (relating to sub-section (2)
o.f section (6), after sub-item (a), the following sub-item
shall be inserted, D'llmely :-
~ l :-·
"(aa) for the words "not less than three months' notice,"
the words "such previous notice as it considers reasonable"
shall be substituted".
The vires of this notification dated 7-12-1957, is the subject of
primary challenge in these appeals (hereinafter it will be referred to
as the impugned notification).
I
LACHMI NARAIN v. UNION (Sarkaria, !.)
791
Item 17 in the Second Schedule of the Bengal Act was amended
with effect from December 14, 1957 by Notification No. SRO 3958,
~s under ;
·
"17. All varieties of cotton, woollen, rayon or artificial
silk fabric but not including real silk fabrics".
"Conditions subject to which tax shall not be payable :
. In respect of tobacco-cotton fabrics, rayon or artificial
silk fabrics and woollen fabrics as defined in item 9, 12,
12A, 12B at the First Schedule to the Central Excises and
Salt Act, 1944 (I of 1944) included in entries (a) and (c)
above, no tax under the Bengal Finance (Sales Tax) Act
1941, shall be payable in the Union Territory. of
Delhi
only if additional duties of excise have been leVIed on them
under the Additional Duties of Excise (Goods. of Special
Importance) Act 1957".
The aforesaid condition was withdrawn by
Notification
No.
GSR 203, dated 1-4-1958.
By Notification
No. GSR 202,
dated
1-4-1958,
the
Central Government withdrew the exemption of country liquor from tax
' by omitting item No. 40 from the Second Schedule.
By Notification No. GSR 1076 dated 19-9-1959, the Central
'Government withdrew the exemption from tax of Items, 8, 11, 14 and
21A by omitting them from the Second Schedule with
effect from
1-10-1959.
On 1-10-1959, the Bengal (Sales-Tax) (Delhi Amendment) Act,
1959 (Act XX of 1959) came into force whereby Parliament m;:de
some amendments in different sections of the Bengal Act_ but left
'5.6 untouched.
A
B
c
D
E
'r
By a Notification No. GSR 964 dated 16-6-1966,
notice was
-given that item 17 of the Second Schedule would be substituted with
F
-effect from 1-7-1966, as follows :
"Item-17-All varieties, cotton, woollen, nylon, rayon,
pure silk or artificial silk fabrics but excluding Durries,
Druggets and carpets".
·
The proposed amendment was given .effect to from 1-7-1966 by
Notification No. GSR 1061 dated 29-6-66.
One
result
of 'this
amendment was that exemption of Durries from tax was withclrnwn
while, such exemptioi1 was among others, extended to 'pure-silk'.
'
. By a ~otification GSR 1038, dated
14-7-1970,
notice was
-given that item 17 in the Second Schedule would be substituted with
effect from 1-8-1970, as follows :
. "17 .. All varieties of cotton fabrics_, rayon, or artificial
sdk fabncs and woollen · fabrics but ·not including Durries
Druggets and carpets".
'
G
H
792
SUPREME COURT REPORTS
[1976] 2 S.C.R.
A
Such substitution of item 17 was made with effect'from 1-8-70 by
Notification GSR 1119 dated 31-7-1970. One result of this notification was that the exemption of 'pure-silk' from tax was
withdrawn.
The appellants in Civil Appeal No. 2221 of 1972 are deakrs in
durries.
They feel aggrieved by the Notification GSR 1061 dated
B
29-6-1966 whereby exemption of Durries from sales-tax was with-
. drawn.
The appellants in Civil Appeals 2222, 2223 and 2225 of 1~72
deal in knitting wool.
Their cause of action arose when exemption
of knitting wool was withdrawn by Notification dated 19-9-1959,
w.e.f. 1-10-1959.
c
The appellants in Civil Appeals 2524 of 1972 deal inter alia
in pure silk. They are aggrieved by Notification, dated 31-7-1970 by
which exemption of 'pure-silk' was withdrawn w.e.f. 1-8-1970.
D
E
The appellants in Civil Appeal No. 2224 of 1972 is a Kiryana
dealer.
He feels aggrieved l;ly the Notification dated 19-9-1959
whereby items 8, ·11 and 14 were deleted from the Second Schedule
with effect from 1-10-1959.
The appellants in Civil Appeal No. 1801 of 1972 are licensed
vendors of country liquor.
They feel adversely affected by Notification GSR 1076, dated 19-9-1959 whereby
exemption of country
liquor from tax was witpdrawn with effect from 1-10-1959.
Several writ petitions were filed in the High Court to question
the validity of the Government action withdrawing the exemptions with
notice far less than three_ months.
A learned Judge of the High
Court allowed eight of these petitions by a common judgment recorded in Civil Writ 574-D of 1966, Lachmi Narain v. Union of India
and others.
Against that judgment, the Revenue
carried appeals
under Clause 10 of the Delhi High Court Act, 1966, to a Bench
of the High Court.
In the 1 meanwhile more writ petitions (C. Ws.
F
593 to 652, 792 to 806 of 1971) were instituted in which the same
question was involved.
The Division Bench, by a common f udgment,.
allowed the appeals and dismissed the writ petitions.
· The writ petitioners have now come in appeal to this Court on
1
the basis of a certificate granted by the High Court under Article 13 3
( 1) (a) and ( c) of the Constitution.
G
In the High Court the validity of the withdrawal of the exempH
tions was challenged on these grounds :
(1) The powe~ given by s.2 of the Laws Act to the
Central Government to extend enactments in force
in oa State to a Union Territory, with such restrictions and modifications as it thinks fit, could be
exercised only to make such
modifications in the
enactment as were necessary in view of the peculiar local conditions.
The modification in s. 6(2)
of the Bengal Act made by SRO 3908,,
dated
•
(2)
{3)
(4)
LACHMI NARAIN v. UNION (Sarkaria, J.)
7-10-1957, was not necessitated by this reason. It
was therefore, ultra vires s. 2 of the Laws Act;
Such a modification could be made only once when
the Bengal Act was extended to Delhi in
1~51.
No modification could be made after such extension.
The modification could not change the policy . of
the legislature reflected in the Bengal . Act.
The
impugned modification was contrary to It, and
The modifications giving notice to
withdraw the
exemptions and the notifications issued
pursuant
thereto withdrawing the exemptions from sales-tax
793
with respect to Durries,
Ghee, (and other items
relevant to these petitions) were void as the statutory notice of not less than three months as required by s. 6(2) prior to its modification by the impugned notification of 7th December, 1957, had not
been given.
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Finding on all the four grounds in favour of the writ pet~tion~rs,
the learned Single Judge declared "that the purported mod1fical!on
D
of s. 6(2) of the Bengal Finance (Sales-Tax) Act 1941
by
the
Government of India's notification No. SRO 3908, dated 7th December, 1957, was ineffective and s. 6(2) continues to be the same as
before as if it was not so modified at all."
In consequence he quashed the Government notifications GSR 964, dated 16-6-1966 and
GSR 1061 dated 29-6-1966 because they were not in compliance with
the requirement of s. 6(2) of the Bengal Act. ·
E
The contentions canvassed before the learned Single Judge were
repeated before the appellate Bench of the High Court.. The Bench
did not pointedly examine the scope of the power of modification
given to the Central Government by s.2 of the Laws Act with specific reference to the purpose for which it was conferred and its precise limitations. It did not squarely. dispel the reasoning of the learF
ned Single Judge that the power of modification is an integral part
of the power of extension and "cannot therefore be exercised except
for the purpose of the extension". It refused to accept that reasoning with the summary remark-"from the extracts quoted by the
learned Single Judge from the judgment of the Supreme Court in
Re: Delhi Laws Act(') and from the Judgment in Rajnarain Singh
v.
The Chairman Patna Administration Committee Patna and
G
anr.( 2 ) the principle deduced by the learned Judge does not appear to
follow.
We are therefore not inclined, as at present advised to support the above observations".
The .Bench however hastened
to
a<l<l :
• .
"However, since the matter was not argued at
great
length and the appellants' Counsel rested his submissions on
H
the other aspects of the case, we would not ·like to express
(1) [1951] S.C.R. 741.
(2) [1955] I S.C.R. 291.
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794
SUPREME COURT REPORTS
[1976] 2 S.C.R.
any definite opinion on the question as to whether the power
of making any modifieation_s or restrictions in the Act can
only be exercised at the time of extending the Act and that
it cannot be done subsequently by the Central Government
in exercise of its power."
Seeking support from the observations of this
Court in
Raza
Buland Sugar Co. Ltd. v. Municipal Board, Rampur,(') the Bench
held that what is mandatory in s. 6(2) is the requirement as. to the
giving of reasonable notice of the Government's intention to am~nd
the second Schedule, for the information of the public,
and
that
"no special significance or sanctity is attached to the span of time
of three months provided in sub-section (2) of s. 6."
The Bench
found that since the withdrawals of the exemptions in question, had
been made after reasonable notice, the same were not invalid.
However, the main ground on which the decision of the Bench
rests is that the infirmity, if any, in the impugned notification dated
7-12-1957, had been cured and rectified when "Parliament while
enacting the Amendment Act, 1959 (Act No. 20 of 1959)
put its
seal of approval to the curtailed pericid _of notice.
As such the curtailed period· of notice shall be taken to have been
provided
by
Parliament on the ratio of Supreme Court's decision in Venkatamo
Esajirao Limberkar's case(2 ) ".
Apart from the grounds taken in their writ petitions, the learned
Counsel for the appellants have tried to raise before us another ground
under the garb of what they styleQ as merely an additional argument".
They now seek to challenge the vires of the Notification SRO 615,
dated the 28th April, 1951 in so far as it relates to the insertion in
sub-section
(2)
of s. 6 of that Act, between the words "add to"
and "the Schedule'', of the words "or omit or otherwise amend".
It is argued that this insertion was beyond the power of modification
conferred on the Central Government by s. 2 of the Laws Act. The
point sought to be made out is that if the insertion made by
the
Notification dated 28-4-1951, in sec. 6(2) was ineffective and non
est in the eye of law, the Central Government would have no power
to "omit" anything from the exempted goods itemised in the Schedule.
It is argued that u1nder s. 6(2) sans this insertion, the Central Government was empowered only to "add to" and not "omit" from
the
exempted items enumerated in the Schedule, and consequently, the
withdrawal of the exemptions in question was ultra vires the Central
Government.
T11e entertainment of this p]ea at this stage is stoutly opposed by
Shri B. Sen, learned Counsel for the Revenue.
We are hot inclined to permit the appellants to add to the list of
impugned Notifications, now in section appeal.
In their writ petitions, the appeI!ants did not chaJlenge the validity of the Notificatioln
dated 28-4-51.
They never raised this point before
the learned
(!) [1965] 1 S.C.R. 970.
(2) [1970] I S.C.R. 317
•
•
•
'
\
"
LACHMI NARAC\f v. UNION (Sarkaria, J.)
795
Single Judge.
Of course, b1~fore the appellate Bench, _an argument
A
was addressed on this point, but it does not appear to have been ·
pressed.
The Bench noted :
"In the present appeal, the Bengal Act as ext~nded by
SRO 615, dated the 28th April 1951, did not suffer from any
infirmity. It is conceded by the learned Counsel for the respondent that the Central Government at the time it extended
the Bengal Act, was competent to introduce such modification and restrictions as it thought fit."
The certificate under Art. 133 of the Constitution was neither sought,
nor granted on any ground touching the validity of the Notification,
dated 28-4-1951. In the face of all this, it is now too late for the appellants to commit a volte face.
Accordingly, we decline to entertain
this new ground of challenge.
The learned Counsel for the parties have, more or less, reiterated
the same contentions which they had advanced in the High Court.
On behalf of the appellants, it is contended that the power of modification conferred on the Central Government by s. 2 of the Laws Act
is not an unfettered power of delegated legislation· but a subsidiary
power conferred for the limited purpose of extension and application
to a Union Territory, an enactment in force i'a a State. It is maintained that only such modifications are permissible in the exercise of
that power which are necessary to adapt and adjust such. enactment
to local conditions.
According to Shri Ashok Sen, the power given by s. 2 is a power
of conditional legislation which is different from the power of delegated
legislation. It is submitted that it is not a recurring power; it exhausts
itself on extension, and in no case this power can be used to change
the basic scheme and structure of the enactment or the legislative policy
ingrained in it.
The submission is that the impugned notification,
dated 7-12-1957, is bad because it has been issued more than 6t years
after the extension of Bengal Act, and it attempts to ·change the requirement of s. 6(2) as to "not less than three months notice" which
is the essence of the whole provision.
Reference has been made to this Cour4:'s opinion in Re : Delhi
Laws Act (supra) and the decision in Raj Narain Singh case (supra).
Shri Ashok Sen further submits that by the amending Act 20 of
1959, Parliament did not put its seal of approval on the impugned
notification or the changes sought to be made by it in s. 6 of the Bengal
Act. It is stressed that the amending Act of 1959, did not touch s. 6
at all and therefore it could not be said with any stretch of imagination,
that Parliament had referentially or impliedly incorporated or approved the purported change made by the impugned notification, in the
Bengal Act.
As against the above, Shri B. Sen, the learned Counsel for the Revenue submits that the impugned notification does not change the essential structure or the policy embodied in s. 6(2) of the Bengal Act.
B
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796
SUPREME COURT REPORTS
[1976] 2 S.C.R.
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According to Counsel, the policy und~rlying s.6(2) is that reasonable
notice of the Government's intention to adc!_ to or omit anything from
the Second Schedule must be given by publication in the Official
Gazette. It is maintained that the requirement as to "not less than
three months' notice" in the section was not a matter of policy but one
of detail or expedience; it was only directory, and the modification
made by the impugned notification did not go beyond adjusting and
B
adapting it to the local conditions of Delhi. Bengal, it is pointed out,
is a big, far-flung State while the Territory of Delhi is a small, compact
area and therefore, it would not be necessary or unreascmable to give
a notice of less than three months for every amendment of the Schedule. Reliance has been placed on this Court's dictum in Raza Buland
Sugar Co.'s case (supra). It is argued t.hat the power to add or omit
from the Second Schedule conferred on the Government is in consoC
nance with the accepted practice of the Legislature; fliat it is usual for
the legislature to leave a discretion to the executive to determine details relating to the working of taxation laws, such as the selection
of persons on whom the tax. is ·to be levied or rates at which it is to be
charged in respect of different classes of goods and the like. Reference
has been made to the observations of this Court in Pt. BenarJ·i Das
Bhanot v. State of Madhya Pradesh(') in the context of s. 6(2) of
D
the Central Provinces and Berar Sales Tax Act 194 7.
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Shri B. Sen further contends that the power of modification given
by s. 2 of the Laws Act, does not exhaust itself on first exercise; it can
be exercised evep subsequently if through oversight or otherwise,
at
the time of extension of the enactment the Central Government fails
to adapt or modify certain provisions of the extended enactment for
bringing it in accord with local conditions. In this connection support
has been sought from the observations of Fazl Ali J. at p. 850 of the
Report in Re : Delhi Laws Act. (supra).
Our attention has also
been invited to s. 21 of the General Clauses Act which according to
Counsel, gives power to the Central Government to add to, amend,
vary or rescind any notification etc. if the power to do so does not run
counter to the policy of the legislature or affect any change in its essential features.
Learned Counsel has further tried to support the reasoning of the
appellate Bench of the High Court, that whatever infirmity may have
existed in the impugned notification and the modification made thereby in s. 6(2), it was rectified and cured by Parliament when it passed
the Amendment Act 20 of 1959. It is urged that the Bengal Act together with the modifications made by notifications, dated 28-4-51,
and 7-12-1957, must have been before Parliament when it considered
and passed the Amendment Act of 1959. Our attention has been
invited to its preamble which is to the effect : "An Act further to
amend the Bengal Finance (Sales-Tax) Act, 1941, as in force in the
Union Territory of Delhi," and also to the words "as in force in the
Union Territory of D1:;lhi" in s. 2 of the amending Act. Reference has
been made to this Court's decisions in
Venkatrao Esajirao's case
(supra), and Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v. The Assistant Commissioner of Sales-tax and ors. (2).
(1) [1959] 2 S.C.R. 427.
(2) [1974] 2 S.C.R. 879-A.I.R. 1974 S.C. 1660.
f
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LACHMI NARAIN v. UNION (Sarkaria, !.)
797
An alternative argument advanced by Shri B. Sen is that if in
s. 6(2) the requirement as to "not less than three months' notice" was
mandatory and a matter of legislative policy, then the exemptions from
tax granted to Durries, pure silk etc. after the issue of the impugned
;notification must be treated nonest and void ab initio, inasmuch as
the amendments of the Second Schedule whereby those exemptions
were granted, were made without complying with the ~equi.rement. of
"not less than three months' notice". It is argued that 1f tlus reqmrement was a sine qua non for amendment of the Second Schedule, it
could not be treated mandatory in one situation and directory in another. If it was mandatory then compliance with it would he absolutely
necessary both for granting an exemption and withdrawing an exemption from tax. In this view of the matter, according to Shri B. Sen,
the withdrawal of the exemption through the impugned notification was
a mere formality; the notification? simply declared the withd,rawal of
something which did not exist in the eye of law. f\ppellants cannot
therefore have any cause of grievance if the invalid and still-born
exemptions were withdrawn by the questioned notifications.
In reply to this last argument, learned Counsel for the appellants
submit that this ground of defence was not pleaded by the Revenue in
its affidavit before the learned Single Judge.
This, according to the
Counsel, was a question of fact which requitep evidence for its determination, and was therefore required to be pleaded. ·· Since the Respondents did not do so, they should not have been allowed to take it for
the first time at the ti.me of arguments. Even otherwise--proceeds the
argument-the Respondents are not competent to take this stand which
is violative of the basic canon of natural justice, according to which no
party can be allowed to take advantage of its own wrong. It is stressed
that the object of the requirement of not less than three months' notice,
was to afford an opportunity to persons likely to be adversely affected,
to raise objections against the proposed withdraW"al or curtailment of
an exemption from tax. That being the case, only the persons aggrieved
could have the necessary locus standi to complain of a non-compliance
with this requirement.
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E
In Re: Delhi Laws (supra) this Court inter alia examined the conF
stitutional validity of s. 2 of the Laws Act in the light of general principles relating to the nature, scop~ and limits of delegated . legislation.
Section 2 as it then stood, was as follows :
"The Central Government may, by notification in the
Official Gazette, extend to any Part C State
(other than
Coorg and the Andaman and,Nicobar Islands) or to any part
of such State with &uch restrictions and modifications as it
thinks fit any enactment which is in force in a Part A State
at the date of the notification and provision may be made in
any enactment so extended for the repeal or amendments of
any corresponding law (other than a Central Act) which .is
for the time being applicable to that Part C State."
G
The Court by a majority held that the first part of this section which
H
empowers the Central Government to extend to any Part C State or to
any part of such State with such modifications and restrictions as it
798
SUPREME COURT REPORTS
[1976] 2 S.C.R.
A
t~inks fit any enactment which is in force in a Part A State, is intra
v1res, and that the latter part of this section which empowers the Central Government to make provision in any enactment extended to a
Part C S~ate '.for repeal .or amendment of any law (other than a Central
Act) ~h1ch 1s for the time being applicable to that Part C State, is
t~ltra vzrcs.
Consequent upon this opinion, the latter part of the sec-
,_..
t10n was deleted by s. 3 of the Repealing and Amending Act, 1952
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(Act XLVIJI of 1952) with effect from 2-8-1951.
The majority opinion in upholding the validity of the first portion
of s. 2 of the Laws Act drew a good deal from the observations· of the·
Privy Council in Queen v. Burah (11) wherein it was said :
"If what has been done is legislation within .