TMI Blog1959 (8) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of the contract, toddy and sendhi were to be sold in the Secunderubad abkari limits in certain places. These petitioners were allotted for tapping toddy and sendhi trees situated in several districts of the quondam Hyderabad State including those which were merged in the States of Bombay and Mysore. They were also given necessary permits to import and transport to the depots situated within the municipal limits of Secunderabad. They started business on 1st October 1956 and the toddy and sendhi were carried in lorries to their depots from the place of tapping in various districts. When these articles reached the octroi barriers erected at the entrance to the Hyderabad municipality, they were slopped and asked, to pay octroi duty. The petitioners questioned the power of the municipality to levy octroi but, as the authorities concerned insisted on payment, they are alleged to have paid it under protest as the goods could not be moved without complying with the demand. It is said that subsequently representations were made both to the municipality and Excise officials in that behalf but without any effect. The Minister in charge of Revenue Department also seems to have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l beverages. In exercise of the powers conferred by Section 585 read with Section 197 of the said Act, a draft of the Hyderabad and Secunderabad Octroi Rules was published on 28-7-1956 for the information of persons likely to be affected and it was intimated therein that the draft would be taken for consideration after the 27tli of August 1956 and objections thereto were invited. Alter the expiry of the period, this draft was confirmed and rules were made conformably to the provisions of the Act and Schedule H of the Act. It may be noted that there is no variation even in the rates of levy. By another notification issued on 17-8-1956, the rules were to come into operation from 1st September 1956. That also appended a list of articles that were subject to octroi duty. Under the heading 'edible', a number of articles are enumerated, item (n) being fruit juice and beverages . It was decided by the Municipality as far back as July 1956, there should be a single agency for the collection of octroi for both Hyderabad and Secundrabad and one cordon for both cities as octroi limit for collection. This received the approval of the Government. 6. The question arose as to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the passage of commodities either within or outside State limits. The underlying idea of this Article is the preservation of the commercial unity of the country. 10. Article 302 authorises the Parliament to impose restrictions upon this freedom of trade between the State and another or within any part of the territory of India it so required in public interest. Article 303 prohibits discrimination being made between one State and another by virtue of any entry relating to trade and commerce in any of the lists in the seventh schedule. Such discriminatory measures could be passed, if it was necessary for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. Section 304 is another such enabling measure. 11. Now the question that calls for decision here is whether the levy of octroi duty is a restriction within the ambit of Clause (b) of that Article. It is urged that it operates as a restriction within the purview of Clause (b) of that Article and, consequently, the proviso is attracted to it. For this position, reliance is placed on a judgment of the Rajasthan High Court in Surajmal Baj v. State of Rajasthan. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forth. Free dinner generally means free of expense, and sometimes a meal open to any one who comes, subject, however, to his condition or behaviour not being objectionable. Free trade means, in ordinary parlance, freedom from tariffs. Free in Section 92 cannot be limited to freedom in the last mentioned sense. There may at first sight appear to be some plausibility in that idea, because of the starting point in time specified in the section, because of the sections which surround Section 92 and because the proviso to Section 92 relates to customs duties. But it is clear that much more is included in the term, customs duties and other like matters constitute a merely pecuniary burden; there may be different and perhaps more drastic ways of interfering with freedom, as by restriction Or partial or complete prohibition of passing into or out of the State. Their Lordships remarked that the word 'absolutely' did not add really anything to the word 'free' but was merely employed rhetorically perhaps with the object of excluding the risk of partial or veiled infringements. 13. It is the passage extracted above that was regarded as strengthening the opinion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... infringed only when a legislative act resulted in restricting trade, commerce or intercourse directly and immediately. Referring to the observations of Lord Porter in Commonwealth of Australia v. Bank of New South Wales 1950 AC 235, the Chief Justice of India said: His Lordship deduced two general propositions from the decided cases namely (1) that regulation of trade, commerce and intercourse among the States was compatible with absolute freedom and (2) that Section 92 was violated only when a legislative or executive act operated to restrict trade, commerce and intercourse directly and immediately as distinct from creating some indirect or consequential impediment which might fairly be regarded as remote. The problem whether an enactment was regulatory or something more or whether a restriction was direct or only remote or only incidental involved. His Lordship pointed out not so much legal as political, social or economic considerations. 15. It may be mentioned here that Section 92 of the Commonwealth of Australia Constitution Act is similar to Article 301 of the Constitution. 16. In Atma Ram Budhia v. State of Bihar AIR 1952 Pat 358, a Special Bench of the Patna High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the impugned Act. 20. Another Bench of the same Court in Parameswaran v. Sub Magistrate Koothattukulam, AIR1958Ker52 had laid down that the Travancore-Cochin Vehicles Taxation Act had not in anyway interfered with the freedom of trade, commerce and intercourse, since it was only a fiscal enactment coming under Entry 57 of List II of the Seventh Schedule, and as such it did not require the prior sanction of the President. 21. The effect of Guruviah Naidu v. State of Madras 1957 2 M L.J. 469 : (AIR 1958 Mad 158) is also the same. See also Emperor v. Munna Lal AIR 1942 All 156. 22. It is clear from the several decided cases that taxation does not cause interference with the right guaranteed under Article 304 of the Constitution and it is not a restriction within the scope of Clause (b). A taxing measure, which deals directly with the imposition of tax on goods and does not profess to lay any restriction on trade or commerce is not governed by Article 304(h). For these reasons, we express our respectful dissent from MANU/RH/0080/1954. 23. It looks to us that Article 304 has drawn a distinction between a tax measure imposing certain restrictions and other kinds of leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er therein. It is in solving that problem that the following remarks relied on by the learned counsel for the petitioners were made by Venkatarama Ayyar J, one of the Judges constituting the Bench; As already pointed out, there is a difference between profession tax and Income Tax. The power of levying a tax on income is absolute and if the legislature chooses to levy a tax of fifteen annas in the rupee on that income, courts will have no jurisdiction to declare it unconstitutional on the ground that it is unreasonable. But a right to carry on business is a fundamental right protected by the Constitution and it stands to reason that a tax on such a right should not be such as to destroy it--as for example--a professional tax equal or nearly equal to the income earned in the previous year. It might well be contended that there is in such cases a limitation on the powers of taxation, implicit in the Constitution itself, that it should not be exercised in such a manner as to take away with one hand what has been given by the other. If this is the correct position, it will follow that, while the levy of Income Tax cannot be questioned On the ground that it is so unreasonable and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd being conducive to the complete accomplishment of the object were equally constitutional and, therefore, the State of Maryland was restrained from exercising any power which in its nature might be incompatible with and repugnant to the constitutional laws of the Union. It was laid down that the States had no power 'by taxation or otherwise' to retard, impede, burden or in any manner control the operations of the constitutional laws enacted by the Congress to carry into effect the powers vested in the national Government. In the result the law passed by the legislature of Maryland imposing a tax on the Bank of the United Status was struck down as unconstitutional and void. The position here docs not resemble that envisaged in (1857) 4 Law Ed. 579 as the question of any repugnancy between the State Laws and Union Laws does not arise here. Nor did a controversy involved in this enquiry present itself before the Supreme Court. 26. Even on the assumption that Article 304(b) takes in legislation of the kind involved in this enquiry, we do not think that the Act is open to attack on the ground of non-compliance with the proviso. Under the proviso, bills dealing with subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that case. Said their Lordships earlier : We have thus indicated only the points that could be raised and the possible views that could be taken but as we have said already, we do not desire to express any final opinion on these points as it is unnecessary for purposes of the present case, Thus, it is plain that no final opinion was expressed by the Supreme Court in that case. 28. Subsequently, the Supreme Court in 1957 SCJ 607 at p. 623: ((S) AIR 1907 SC 699 at p. 712) decided that Article 255 saves an enactment despite non-fulfilment of the condition laid down by the proviso. The following remarks contain the principle in that regard: It is conceded that the bill which became Act XXX of 1952 and amended the 1948 Act in the manner hereinbefore stated was introduced in the legislature of the State without the previous sanction of the President and consequently the condition precedent to the validity of the resulting Act as laid down in the proviso had not been complied with, but it is submitted, we think correctly that the defect was cured under Article 255, by the assent given subsequently by the President to the impugned Act. 29. The rule stated in Balmukun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is a part of the statute has made provision for all these matters and there is nothing new in these rules. To say that the rules made under an Act should also comply with the proviso to Article 304(b) is to incorporate something into it, which is not warranted by the language of the Article. Thus, there is no force in this submission either. 31. The next point that requires consideration is whether this Act is within the legislative competence of the erstwhile Hyderabad State. What is maintained on behalf of the petitioners is that entry 52 of list II clothes the State Legislature with power to pass laws authorising the imposition, of tax on the entry of goods into a local area for consumption, use or sale therein, while the impugned enactment enables the Municipality to levy cesses. This argument is based on the definition of, octroi duty in Section 2(37) of the Act, which reads: Octroi means a cess levied on goods at the time of their entry into the limits of a City for purposes of consumption, use or sale therein. Octroi duty being only a cess could not come within the sweep of entry 52, continues the learned counsel. He seeks to gather support for the theory that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in Commissioner of Hindu Religious Endowments v. Lakshmindra Thirtha Swamiar 1954 SCJ 335 at p, 358: (AIR 1954 SC 283 at p. 295). This is what Mukherjee J. says: Article 277 also mentions taxes, cesses and fees separately. It is not clear, however, whether the word 'tax' as used in Article 285 has not been used in the wider sense as including all other impositions like cesses and fees; and that at least seems to be the implication of Clause 28 of Article 266 which defines taxation as including the imposition of any tax or impost, whether general, local or special. It seems to us that though levying of fees is only a particular form of the exercise of the taxing power of the State, our Constitution has placed fees under a separate category for purposes of legislation and at the end of each one of the three legislative lists, it has given a power to the particular legislature to legislate on the imposition of fees in respect to every one of the items dealt with in the list itself. 36. It may be mentioned that entry 49 in list II of the relevant schedule of the Government of India Act refers to this form of taxation as a cess on the entry of goods into a local area f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government of India Act, which is the same as the present item 52 and that such, a levy could not be regarded as an excise duty. 40. In Murli Manohar v. State of Uttar Pradesh, (S) AIR1957All159 , the validity of a cess or tax imposed by the State Government on sugar cane entering the premises of sugar factories in Uttar Pradesh was assailed on grounds, inter alia, that it was beyond the competence of the State Legislature, the reason offered in support of this ground being that a cess of that nature was an excise duty within the meaning of entry 45 of list I of the Seventh Schedule to the Government of India Act, which is in the same terms as entry 48 of the Union List. This argument was negatived on the ground that it was not an excise duty on sugar. 41. Nor is the submission that a measure like the impugned Act, falls within the scope of items 41 and 42 of List I admissible. Those two entries deal with topics regulating matters indicated in them. These entries do not confer any power on the Union Parliament to make laws for the imposition of taxes. The aim and object of those two entries is altogether different from that of entry 52 of List II. As already pointed out in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cter of an enforceable order creating a right in the petitioners to compel Government to direct the Municipality to cancel the levy or itself to meet the burden. We do not fancy how such an alleged endorsement could have any of the results that are ascribed to it. On their own showing, no order was communicated by the Government to the petitioners exempting them from the payment of octroi duty, which means that no effect was given to that opinion for some reason or other. That implies that the endorsement was in the nature of an opinion by a Minister and would not have the postulate of a decision with regard to their rights. 43. There are also other difficulties in the way of giving weight to this contention. Article 166 of the Constitution recites that all executive actions of the Government of a State shall be expressed to be taken in the name of the Governor. Clause 2 of that Article says: Orders and other instruments made and executed in the name of the Governor shall be authenticated in such manner as may be specified in rules to be made by the Governor and the validity of an order or instrument which is so authenticated shall not be called in question on the ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which the Finance Department has not concurred, may be proceeded with unless a decision to that effect has been taken by the Council of Ministers. 46. Rules 11, 13 and 14 are also important and they are set out hereunder: (11) Without prejudice to the provisions of Rule 5, the Minister in charge of a department shall be primarily responsible for tendering to the Rajpramukh advice as to the disposal of the business appertaining to that department. (13) All orders or instruments made or executed by order or on behalf of Government shall be expressed to be made by or by order of the Rajpramukh. (14) Save in cases where an officer has been specifically empowered to sign an order or instrument of the Government of Hyderabad every such order or instrument shall be signed by either a Secretary, an additional Secretary, a Joint Secretary, a Deputy Secretary, an Under Secretary or an Assistant Secretary to the Government of Hyderabad and such signatures shall be deemed to be the proper authentication of such order or instrument. 47. If the matter is considered in the light of these rules, it is abundantly clear that the order in question could not be issued by the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not become an order of Government and could not be operated. 49. This opinion is shared by Rajagopalan and Rajagopala Ayyengar JJ. in Messrs. Poineer Motors Ltd. v. Majeed Mirania Motor Service, AIR1957Mad48 . There learned Judges decided that the decision by a Minister in the exercise of revisional powers conferred by Section 64A of the Motor Vehicles Act as it stood prior to Act 39 of 1944 but not communicated to the parties would not amount to an order of the Government and it acquired that quality only when it was embodied in a formal order issued in the form as laid down by Article 166. 50. The following observations occurring at p. 442 (of Mud LJ): (at p. 57 of AIR) are quite apposite in this context: The order of the Minister is not final, for another Minister may call for the file and bring up the matter before the Council, for he is entitled to do so, as every Minister assumes responsibility for that order. Again, the Secretary might disagree with that order and have the matter brought up for reconsideration by the Minister...the Governor may call for the file and have the matter brought up before the Council of Ministers. All these matters might take place befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ruling relied on by Sri Subbarayudu for the proposition that an order to be effectual need not be communicated viz., Dattatreya v. State of Bombay, 1952CriLJ955 is not relevant here. In that case, the legality of an order of detention under the Preventive Detention Act was contested, inter alia, on the ground that there was no valid order of confirmation and that a confidential communication from the Home Department could not be regarded as an order under Section 11(1) of the Act. The objection raised on behalf of the detenu was overruled on the ground that the order was not a nullity even though it has not been expressed to be made in the name of the Governor. It cannot be overlooked that, in that case, the order under Section 11(1) purporting to be that of the Government of Bombay was signed by an officer, who was competent to sign according to the rules framed by the Governor. The only infirmity was that it did not issue in the name of the Governor. It was pointed out that Article 166(1) of the Constitution was confined to cases where the executive action is required to be expressed in the shape of a formal order or notification or any other instrument. That ruling could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... myra and date trees to be tapped, the toddy or sendhi does not become the property of the Government. By selling contracts in public auction for the sale of liquor, the Government merely realises the abkari revenue but has no proprietary right in the toddy or sendhi. Government merely confers a right on the contractor by the issue of a licence to sell toddy or sendhi at a particular place. It is for the grant of this licence or privilege that the rentals are paid. The Government does not acquire any right in the toddy or sendhi extracted from the palmyra or date trees and their position cannot be equated to that of the owners of the toddy or sendhi. Indisputably, the Government is not entitled to the sale proceeds. They surely belong to the contractors who pay the rentals, the tree tax, remuneration to the tappers and the transport charges and who appropriate the realisations to themselves. The various sections of the Abkari Act or the Land Revenue Act to which our attention was drawn do not either individually or cumulatively establish the proposition that ownership in the goods is in the Government. If the proprietorship of the toddy and sendhi vest's in the Government, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation is a place outside the Municipal limits of Hyderabad and Secunderabad will not be liable to octroi duty and if cess has already been paid, it will have to be refunded. We are assured by the learned counsel For the Municipality that in all cases where such collections were made they will be refunded to the contractors if the authorities concerned are approached and if it is proved that in any case the toddy or sendhi was not sold within the limits of Hyderabad or Secunderabad. 59. Another contention pressed upon us is that it was not within the competence of the Hyderabad Municipality to collect octori duty on goods meant lor consumption in Secunderabad Municipality, ii at all it is only that Municipality in which the commodity has to be sold that could legitimately make such an impost. 60. This argument overlooks the existence of Section 100 of the Act which so far as it is relevant for this inquiry says: * * * The Corporation may from time to time with the sanction of the Government enter into an agreement with a local authority or with a combination of local authorities for the levy of octori or toll or any other tax by the Corporation on behalf of the bodies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given in Chambers Dictionary is a liquor for drinking, a mixture of cider and water, a drink. In our judgment it does not admit of such doubt that beverage embraces within its connotation toddy and sendhi. 62. The various passages in the judgment of the Supreme Court in State of Bombay v. Balsara 1951 SCJ 478 at p. 490: (AIR 1951 SC 318 at p. 325) clearly indicate that that expression includes toddy and sendhi. At p. 489 (of SCJ): (at p. 325 of AIR) Fad Ali J., who spoke for the Court said this: Thus, according to the Dictionary, the word 'liquor' may have a general meaning in the sense at a liquid, or it may have a special meaning, which is the third meaning assigned to it in the extract quoted above, viz., a drink or beverage produced by fermentation or distillation. The latter is undoubtedly the popular and most widely accepted meaning, and the basic idea of beverage seems rather prominently to run through the main provisions of the various Acts of this country as well as of America and England relating to intoxicating liquor, to which our attention is drawn. But, at the same time, on a reference to these very Acts, it is difficult to hold that they deal exclusiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcising his own judgment. It is in this context that the Supreme Court remarked. This was hardly a satisfactory way of dealing with the matter. If the Assistant Commissioner had been dealing with the same he could have by all means given in the assessment order which he made his reasons for doing so and these reasons would have been open to scrutiny in further proceedings taken by the appellants either by way of appeal or otherwise. The procedure adopted was to say the least unfair and was calculated to undermine the confidence of the public in the impartial and fair administration of the Sales Tax Department concerned. We do not think that that has any analogy here. In that case, the judgment was that of the assessing authority, namely, the Commercial Tax Officer and he had to apply his mind to the facts of the case and arrive at a conclusion. Contrary to his own conviction he had merely accepted the opinion of the Assistant Commissioner and had not given satisfactory reasons therefor. The position here is altogether different, Here the Government merely clarified the matter. Apart from that, under Section 677 of the Act, the Government has ample authority to call ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icipality also expressed his inability to afford us any basis for this purpose. It is true that the Government may fix the sale price on some basis. They might take into account the approximate cost of the commodity in the shape in which it is to be sold and also the reasonable rate of profit for the renters. But we have no information in that behalf. If the renters were aggrieved by the method adopted by the Municipality in that respect, they would have requested the authorities concerned to call for particulars and make the assessment on the basis of that information or, at any rate, they could have approached the Government for that purpose. 67. Be that as it may, in such cases, a remedy is provided under Section 282 of the Act. It says: (1) Subject to the provisions hereinafter contained, appeals against any rateable value or tax fixed or charged under this Act shall be heard and determined by the Judge. The expression 'Judge.' is defined in Section 2(27) of the Act as, in the City of Hyderabad the first Judge of the Court of Small Causes and in the city of Secunderabad the District Judge and shall include a Sub-Judge to whom such Judge may transfer in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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