TMI Blog2002 (5) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... t may by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. Without prejudice to the generality of such power, under clause (c) of sub-Section (2), the Central Government may by an order provide for controlling the price at which essential commodity may be bought or sold. Under Section 5, the Central Government may, by notified order, direct that the power to make orders or issue notifications under Section 3 shall, in relation to such matters and subject to such conditions, if any, as may be specified in the direction, be exercised also by such State Government or such officer or such authority subordinate to a State Government as may be specified in the direction. By Central Government Order No. 682(E) dated the 30th November, 1974, the Central Government, exercising the power conferred by Section 5, directed that the powers conferred on it by sub-Section (1) of Section 3 of the Act to make orders to provide for the matters specified in clause (c) of sub-section (2) thereof shall, in relation to all essential commodities, other than food stuffs and fertilizers, be exercisable also by a State Government. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.00 lacs are being received from each district in this account. 3. Therefore, in the interest of administration, you are required to collect the amount of rounding off savings at the level of wholesalers and deposit the same in Collector's Bank Account. The tankers and drums, required for the distribution of kerosene oil to the District Co-operative Bank's Institutions, be provided from this account. 4. The guidelines on the above mentioned subject are being issued separately containing clear instructions regarding maintaining of account. Till then please proceed with the above procedure. [emphasis supplied] In the State of Madhya Pradesh, kerosene was being distributed and made available for sale to consumers through public distribution system and by appointing fair price shops/retailers. On 27.1.99/1.2.99, the Collector, Jabalpur, exercising the powers conferred by clause 2(d)(i) of kerosene order fixing the rates of kerosene at wholesale, semi-wholesale and retail level in the Jabalpur district, as per the chart enclosed with the order, directed as under:- 2. As per practice the Wholesalers will deposit the amount of difference in the bank acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointed by the Collector at ₹ 581.20p. The price per barrel and per litre of Fair Price Shop/Retailer remains the same, i.e. ₹ 650/- and ₹ 3.25p. throughout the district. It is the difference of price per barrel between the wholesale price arrived at by taking into account permissible additions and the selling price appointed by the Collector which varies for different supply points. For example, for Sivni it is ₹ 36.53p., for Sehanpuri it is ₹ 27.13p., for Mohas it is ₹ 32.53p. and so on. On 20.8.2001 the Court directed the State of Madhya Pradesh to file a statement supported by an affidavit giving details of the amount collected under the impugned orders of the Director Food Civil Supplies and the Collectors showing how it has been utilized. On 22.11.2001, a statement has been filed supported by an affidavit dated 20.11.2001 of the Director, Food, Civil Supplies Consumer Protection, setting out details of the amount collected upto 31.7.2001. In the 45 districts of Madhya Pradesh, an amount of ₹ 50,00,61,083/- was collected. Out of this an amount of ₹ 50,000/- was spent on constructing godown at Ratlam. An amount of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the fund. (d) any other amount which is receivable under the rule. 4. The Calculation of Amount of Saving from Rounding off and Deposit.__ The calculation of amount of savings from rounding off and deposit shall be done as specified below:- (a) The Collector shall determine the price of kerosene to be distributed under Public Distribution System as directed by Government. (b) The amount of savings accruing from the sale of kerosene at the uniform consumer price shall be deposited in the fund. (c) The amount of savings shall be deposited in the fund by the wholesaler at the time of lifting kerosene from the Oil Company but not later than seven days from the lifting. 5. Bank Account. _ The amount of savings from rounding off shall be deposited in the District Central Co-operative Bank in the saving account and/or fixed deposit account in the name of the Collector. 6. Expenditure from fund. _ The amount may be spent from the fund for storage and distribution of kerosene under the Public Distribution System for the following purposes:- (1) The District Planning Committee may spent upto 80% amount received in the financial year in the distr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of new vehicles for the districts with the prior sanction of the State Government. (Seven) For encouragement and rewards upto Rs. One lakh in the year, and, (Eight) For audit expenses. 7. Maintenance of Properties. __ (1) The drums, tankers, vehicles, instruments, constructed buildings, godowns etc. purchased/constructed from the fund shall be property of the State Government. (2) The drums and tankers purchased/constructed under rule 6 shall be made available to the Bank for utilization. The Bank shall make them available to Lead and Link Societies with approval of the Collector for strengthening the kerosene oil distribution system. (3) The repairing expenses regarding tankers and drums shall be borne by the concerning society. In case of tanker and drums becoming unusable the Bank shall deposit the amount received from the sale of such articles in the Collector's Account. (4) The Bank shall keep the account of tankers and drums and get physical verification done as on 31st March and submit its report to the Collector by 15th of April. (5) The godowns constructed from the fund shall remain under the control of the Bank and Bank shall make the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... level of the Director or the Collectors serves the laudable purpose of maintaining and strengthening supply and availability of kerosene to consumers, some of them situated in far off and remote villages. It is pointed out that in appointing fair price shops or retailers preference is given to co-operative societies which are not possessed of transportation and storage facilities. The fund is utilized for making available storage tanks, drums and barrels to such outlets as do not have them. The levy of such rounding off charges is protected by the power of the State Government to add charges prescribed by the State Government or the District Collector within the meaning of clause (d) of para 2 of the kerosene order. In C.A. arising out of SLP (C) 14950 OF 1999, in the counter affidavit filed on 17.2.2000, it is stated that the amount collected by way of rounding off is only to be spent for strengthening of and ensuring proper functioning of public distribution system and to ensure adequate and continued supply of kerosene in each and every corner of the State of Madhya Pradesh. Such collection of fund commenced in May 1998. However, how and in what manner the amount shall be spent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges, rates, duties and taxes which are leviable on kerosene under the law of the State or local legislation and are, therefore, better known to the State Government or District Collectors and would be available to be added to the maximum selling price declared by the Central Government or by the State Government subject to delegation of power by the Central Government. The definition of 'declared price' cannot be so read as empowering the State Government, the Director or the District Collectors to prescribe by themselves and levy on the kerosene, any charges, rates, duties and taxes in purported exercise of power under the Control Order. In other words, the charges, rates, duties and taxes must be pre-existing or originating from a lawful source other than the provisions of the Kerosene Order and can only be quantified by the State Government or District Collector so as to be prescribed for being added to the declared maximum selling price. The term 'charges' must be read ejusdem generis taking colour from the succeeding terms rates, duties and taxes. What the State Government, the Director and the Collectors have done goes beyond the powers conferred by the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 265 of the Constitution apart from the legislative competence. It is interesting to note that in 1983, the Collector, Jabalpur based on an order passed by the Director, Food and Civil Supplies had fixed the price of kerosene at ₹ 2.02 paise per litre at which the kerosene could be sold in retail. 2 paise coins were not available because of minting thereof having been discontinued. The Collector directed the price to be fixed at ₹ 2.05 paise by rounding it off and the difference of 3 paise per litre to be deposited with the Collector to be utilized for the purpose of Samajik Suraksha (Social Security). Such rounding off was challenged in M.P. No.1944/83 Sharat Chandra Tiwari v. State of M.P. By judgment dated 2.5.1984, a Division Bench of the High Court of M.P. struck down the levy of 3 paise per litre and directed the sale price of kerosene price to be re- fixed. During the course of its judgment the High Court observed: It is, therefore, a case where the persons needing care of the State are required to contribute for financing a scheme of general welfare likely to be framed by the State. This cannot be done except by the authority of law. The only law r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed the wholesale and the retail prices as to work out deficit somewhere and surplus elsewhere but the deficit and the surplus being fully set off against each other. Any fund devised for the purpose of collecting the surplus and utilizing the amount so collected for compensating the deficit, would have enabled uniformity of fair price being maintained throughout the district or region where it was sought to be so maintained. Then the State Government could not have been accused of having brought into being a levy for its own purpose. The beneficiary would have been the consumer by availing the kerosene at a uniform fair price. But that is not what has been done. The Director and the Collector and the executive wing of the State, what they have done is to develop a local administration, levy charges for developing a fund at their own level, administered by them for running a department or system of governance. Such collection and fund has no sanctity in law and is violative of Article 265 of Constitution. For the foregoing reasons, the appeals are allowed. The impugned judgment of the High Court is set aside. The system of rounding off the price so as to build up a fund avai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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