TMI Blog1975 (2) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... 1969) (M. Veerappa, Advocate, with him), for the respondents. K. Srinivasan and Vineet Kumar, Advocates, for the applicants. -------------------------------------------------- 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 December 28, 1967, and ending on June 30, 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 December 28, 1967, to January 31, 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 Karnataka challenging the validity of the levy and collection of excise duty, education cess, health cess and sales tax. The High Court accepted some of the contentions of the appellant, granted him reliefs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xicants may be deposited and kept without payment of duty and that without the sanction of the State Government no intoxicant 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 the payment thereof. It is clear from the return filed before the High Court that the Government purchases arrack from the distillers and keeps it in the warehouse established or licensed under section 16 and that any removal of arrack after the purchase of the same will attract the liability to pay excise duty. The appellant, however, contended that it is only the Excise Commissioner who is competent to establish or license a warehouse wherein intoxicants may be deposited and kept under clause (e) of section 16 and, therefore, it is not a warehouse established or licensed by the State Government. We see no force in this contention. Section 23 provides that excise duty shall be levied on the excisable articles issued from a warehouse also. We see no reason to think that a warehouse established or licensed under section 16(e) is not a wareho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -legislative body, but observed that when it was left 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 entrusted to it under the Act. In Municipal Board, Hapur v. Raghuvendra Kripal [1966] 1 S.C.R. 950., 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 enumerated the kinds of taxes to be levied, prescribed an elaborate procedure for such a levy and also provided for the sanction of the Government. Section 135(3) of the Act raised a conclusive presumption that the procedure prescribed had been gone through on a certain notification being issued by the Government in that regard. 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 inasmuch as the State Government was given the power 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., spea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dopted and the exemptions, if any, to be granted. The majority of the court held the delegation to be valid. Wanchoo, C.J., observed that there were sufficient guidance, checks and safeguards in the Act which prevented excessive delegation. The learned Chief justice observed that statements in certain cases to the effect that the power to fix rates of taxes is not an essential legislative function were too broad and that "the nature of the body to which delegation is made is also a factor to be taken into consideration in determining whether there is sufficient guidance in the matter of delegation". According to the learned Chief Justice, the fact that delegation was made to an elected body responsible to the people including those who paid taxes provided a great check on the elected councillors imposing unreasonable rates of tax. He then said: "The guidance may take the form of providing maximum rates of tax up to which a local body may be given the discretion to make its choice, or it may take the form of providing for consultation with the people of the local area and then fixing the rates after such consultation. It may also take the form of subjecting the rate to be fixed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 524., where he said: "In this case, as in similar cases that have come before the courts, Parliament has delegated its legislative function to a Minister of the Crown, but in this case Parliament has retained no specific control over the exercise of the function by the Minister, such as a condition that the order should be laid before Parliament and might be annulled by a resolution of either House within a limited period." In Institute of Patent Agents v. Joseph Lockwood [1894] A.C. 347., Lord Watson said: "The legislature retained so far a check that it required that the regulations which they framed should be laid upon the table of both Houses; and of course these regulations could have been annulled by an unfavourable resolution upon a motion made in either House." In Bernard Schwartz's "An Introduction to American Administrative Law " it is stated: "In Britain, parliamentary control over delegated legislation is exercised through the various forms of 'laying' prescribed in enabling Acts. Through them, the legislature is enabled at least in theory to exercise a continuing supervision over administrative rules and regulations." As Dean Land is pointed out, the Eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt inasmuch as it could at any time repeal the legislation and withdraw the authority and discretion it had vested in him, and, therefore, the legislature did not abdicate its functions. We, therefore, think that the power to fix the rate of excise duty conferred on the Government by section 22 of the Act is valid. The dilution of parliamentary watch-dogging of delegated legislation may be deplored, but, in the compulsions and complexities of modern life, cannot be helped. The last contention raised by the appellant was that section 19 of the Karnataka Sales Tax Act, 1957, is invalid as it purports to levy sales tax upon the sale of arrack made by the Government to licensees. The appellant submitted that the definition of "dealer" in section 2 of that Act excludes the Government of Mysore and that by virtue of the provisions in section 5(3) of that Act, no tax could be levied on the sale of arrack by Government to the appellant. We see no merit in this contention. Section 19 of the Act reads: "19. State Government entitled to collect tax as registered dealers.- Notwithstanding anything contained in this Act, the Government of Mysore shall, in respect of any sale of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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