TMI Blog2013 (6) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... re, unable to agree with the aforesaid submission of the petitioner. On the merits of the case, as petitioner submitted that except the down loaded form prescribed by the Commissioner the goods were moving along with all necessary documents. The department has neither raised nor doubted the genuineness of other documents which were being carried by the driver of the vehicle at the time of interception of the goods. The goods were booked at Ballabhgarh, Faridabad (State of Haryana) to BHEL, a Government of India Enterprizes. The details of the consignor and consignee were not found to be incorrect. The goods were not meant for consumption, use or sale by the public at large. The submission is that there was no intention to evade the payment of tax in the State of U.P. A perusal of the impugned order would show that the goods were intercepted and security for their release was demanded only on the ground that it did not accompany with the down loaded transit pass. Except the above default everything was found in order. Even in the case of Sodhi Transport (1986 (3) TMI 303 - SUPREME COURT OF INDIA) as also in the circular issued by the Commissioner it has been laid down that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter was carried unsuccessfully before the Commercial Tax Tribunal, NOIDA. The case of the petitioner is that section 52 of the U.P. Value Added Tax Act (herein after referred to as the Act) as it now exists, does not require the carrying of any such declaration form issued by the Commissioner, Commercial Tax, U.P. In other words, any such form prescribed by the the Commissioner, Commercial Tax, U.P. is illegal as the the Commissioner, Commercial Tax, U.P. is not authorized under the said Act or Rules to prescribe any such form. Such form could be prescribed by State Government through Rules and it could not delegate the power to the Commissioner. The prescription of form by the Commissioner suffers with the vice of excess delegation of power by the State Government who being the delegatee cannot further delegate its power to the the Commissioner, Commercial Tax, U.P. By means of the above writ petition, the following reliefs have been sought for:- (i) to issue a writ, order or direction in the nature of certiorari, quashing the Rule-58 of the U.P. Value Added Tax Rules in so far as it authorized the Commissioner, Commercial Tax, U.P., Lucknow to prescribe documents and pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the Commissioner, Commercial Tax, U.P. has exceeded in its power to prescribe a transit declaration form which must accompany with the goods passing through the State of U.P. coming from and going outside the State of U.P., in view of the scheme of the Act? In other words, the prescription of such form by the Commissioner amounts to further delegation of power by the State Government, the delegatee, to the Commissioner. 2. Whether the theory that when a thing is required to be done in a particular manner, should be done in that manner or not at all is attracted to the controversy on hand? 3. Whether the impugned orders passed by the authorities below including the Commercial Tax Tribunal on merits is sustainable? POINT No.1 The Court was taken through the various sections including the definition clauses and the rules framed thereunder of the Act. Reference was made to the following provisions:- Section 2(j) "document" means any matter expressed or described upon any substance by means of letters, figures or marks, or by more than one of those means, intended to be used, or which may be used for the purpose of recording that matter and includes-- (i) an electroni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut such previous publication. (4) All rules made under this section shall be published in the Gazette and upon such publication shall have effect immediately as if enacted in this Act. Rules:- 2(m) "Form" means a form appended to these rules, Rule-4 Authorities under the Act--(1) Authorities mentioned in column (2) shall be under the superintendence and administrative control of the authorities mentioned in column (3) of the table below:- Sl. No. Authorities Superintendence and control 1 2 3 (1) Chairman of Settlement Commission, President Tribunal and Commissioner The State Government (2) Members of Tribunal President of Tribunal (3) Member of Settlement Commission Chairman of Settlement Commission (4) Registrar of Tribunal President Tribunal (5) Registrar of Settlement Commission Chairman of Settlement Commission, (6) Special Commissioner, Additional Commissioner and Joint Commissioner and all other Officers Commissioner (2) The Settlement Commission, President of Tribunal at Commissioner sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time by the Commissioner from the Website of the Commercial Tax Department of the Government of Uttar Pradesh: (2) For taking print outs, A4 size paper will be used. (3) Expression "Web Site of the Commercial Tax Department of Government of Uttar Pradesh" refers the World Wide Web having domain "up.nic.in" and with address "http://comtax.up.nic.in" The main thrust of the argument of petitioner is that section 52 is a provision with regard to the goods passing through the State of U.P. It provides that when a vehicle coming from any place outside the State and bound for any other place outside the State carrying on the goods referable to section 52(1) passes through the State of U.P., the driver or the person in charge of such vehicle shall carry such documents as may be prescribed, failing which a rebuttal presumption that the goods carried thereby have been sold or meant for sale in the State of U.P. shall be available to the department. The submission is that in the light of the section 52 the State Government had issued a form No. XLIII. The said form is referable to Rule 58 (1) of the U.P. VAT Rules, 2008. It is useful to point out that the present section 52 has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries of State and also for inspection of the goods while in transit was challenged. Upholding the validity, the Apex Court held that section 28 authorises the State Government to establish check posts and barriers if so desired with a view to prevent the evasion of tax or the other dues payable by a person under the provisions of the U.P. Sales Tax Act is valid as the provisions are just machinery provisions. They do not levy and charge by themselves. The relevant paragraph is '8' which is reproduced below :- "8. Now the impugned provisions are just machinery provisions. They do not levy any charge by themselves. They are enacted to ensure that there is no evasion of tax. As already observed, the Act is traceable to Entry 54 in List II of the Seventh Schedule to the Constitution which reads thus : 54, Taxes on the sale or purchase of goods other than news papers subject to the provisions of Entry 92-A of List I*'. it is well-settled that when the Legislature has the power to make a law with respect to any subject it has all the ancillary and incidental powers to make the law effective. Taxation laws usually consist of three parts--charging provisions, machinery provisions, and pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main part of the argument of the petitioner's counsel with regard to the applicability of the phrase "Delegatus Non Potest Delegare" here. The submission is that the power to make Rules to carry out the purpose of the Act under section 79 has been entrusted to the State Government. By making a reference to clause (f) of section 79 (2), the submission is that it is the State Government who can prescribe the forms to be adopted in the proceeding under this Act and no one else. The power has been delegated under the aforesaid provisions to the State Government and therefore, the State Government cannot authorise the Commissioner to prescribe form even for carrying out the purposes of the Act. He has relied upon certain decisions to buttress his argument that a person to whom the power has been delegated cannot delegate the said power to some other person. Reference has been made to the following cases:- 1. Bharat Sanchar Nigam Limited and another Vs. BPL Mobile Cellular Limited and others, 2008 (13) SCC 597. 2. M. Chandru Vs. The Member Secretary, Chennai Metropolitan Development Authority, decided on 17th February, 2009 (para-19) 3. Sahni Silk Mills (P) Ltd. and another Vs. Em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At the same time, threats inherent in conferring wide powers on executive are equally grave. It is, therefore, of utmost importance that there should be proper control on exercise of legislative power by the executive. Such safeguards should operate at two levels: 1. when legislature is delegating such power in favour of the executive; and 2. there should be "control mechanism" so that the power is not abused by the executive. As to 1, we have seen in this lecture that before conferring legislative power on the executive, the legislature must lay down policy and perform essential legislative functions. If it is not done, conferment of power will be bad. But even where delegation is legal and lawful, there should be "control mechanism" to ensure proper exercise of power by the executive. In the next lecture (Lecture V), we will deal with the aspect of "controls and safeguards" so as to prevent administrative agencies from abusing this power." In the light of above, the scheme of the Act and rules framed thereunder, and the object to be achieved be examined. Section 79 of the Act confers power on the State Government to make the rules to carry out the purposes of the Act. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the reference to it in the order dated the 5th December, 1947, would be an immaterial redundancy and could not affect the validity of the latter order. The seizure of the company's sugar must, therefore, be regarded as duly authorised and lawful, and the appellant by ob- structing its removal, committed an offence under section 186 of the Indian Penal Code even on the stricter construc- tion placed on that provision by the Calcutta High Court. 9. The view we have expressed above receives support from the decision of the Privy Council in Sibnath Banerjee's case(1). Section 2(1) of the Defence of India Act, 1939, as amended by section 2 of the Defence of India (Amendment) Act, 1940, empowered the Central Government to make rules for securing the defence of British India, the public safe- ty, the maintenance of public order, etc., and sub- section (2) enacted "without prejudice to the generality of the powers conferred by sub-section (1), the rules may provide for all or any of the following matters ...... ". Among such matters was the detention of any person "reasona- bly suspected" of having acted etc. in a manner prejudicial to the public safety etc. [clause (x)]. Rule 26 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be determined by the Commissioner. The word 'document' is a comprehensive word as defined in section 2(j) of the Act to include also an electronic document including data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated micro fiche. The Commissioner, Commercial Tax in exercise of its power under sections 50/52 read with Rule 58 issued a circular in contemplation of proposed abolition of check posts and barrier by superseding earlier circulars on the subject. Paragraph-5 is the relevant paragraph which is reproduced below:- The above quoted paragraph states that the vehicles carrying goods passing through the State of U.P. shall carry a form which can be down loaded from the website of the department. The said form shall be valid for a period of four days. The petitioner's submission is that the Commissioner in view of the form no.43 prescribed by the State Government could not have prescribed any other form and prescribing of any other form amounts to sub delegation of power by the State Government. The argument is attractive but has no legs to stand. It needs analysis of the two forms i.e. one f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e abused by the commissioner and for all practical purposes by prescribing the form, the commissioner has taken a step to prevent tax evasion, that is all. The majority judgement of the Apex Court in the case of Barium Chemicals Limited Vs. Company Law Board, AIR 1967 SC 295 in the observation of Justice Bachawat J. in para 36 in the back drop of the above discussion is relevant. (36). "But the maxim "delegatus non potest delegare" must not be pushed too far. The maxim does not embody a rule of law. It indicates a rule of construction of a statute or other instrument conferring an authority. Prima facie, a discretion conferred by a statute on any authority is intended to be exercised by that authority and by no other. But the intention may be negatived by any contrary indications in the language, scope or object of the statute. The construction that would best achieve the purpose and object of the statute should be adopted." It has been laid down that the maxim "Delegatus Non Potest Delegare" does not embody a Rule of Law. It will depend upon the construction of Statute and the intention to show whether a discretion conferred by a Statute on any authority is intended to be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt of Allahabad by rules purported to be framed under Art. 225 of the Constitution constituted an administrative committee consisting of a few judges of the court to exercise control over subordinate judiciary under Art. 235 For a discussion on Art. 235, see JAIN, INDIAN CONSTITUTIONAL LAW (1978). The question was whether this delegation to the administrative committee was permissible since Art. 235 contemplated control by the entire court and not a smaller body of judges acting as the administrative committee. The court found that no such rules could be framed under Art. 225, but it still upheld the procedure adopted by the High Court. According to he court, the very nature of the control vested in the High Court under Art. 235 makes it imperative that rules must be framed to make the exercise of control feasible, convenient and effective, that is, to prescribe the manner in which control is to be exercised. The court stated that "the power of control over the subordinate courts which is vested in the High Courts comprises such numerous matters, often involving consideration of details of the minutest nature, that if the whole High Court is required to consider every one of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt while interpreting the machinery provisions of a taxing statute to give effect to its manifest purpose having a full view of it. Wherever the intention to impose liability is clear the courts ought to have no hesitation in giving a common sense interpretation to the machinery sections so that the charge does not fail [Associated Cement Co. Ltd. v. CTO, (1981) 48 STC 466, 476, 478 (SC); Liquor Enterprises v. CTO, (1986) 62 STC 88, 98 (AP--FB). The machinery provisions should be interpreted liberally and generously so long as the principal object of the provision is not frustrated [Fertilizer Corporation of India Ltd. v. State of Bihar, (1988) 68 STC 158, 164 (SC)] In Morey v. Doud (1957) 354 US 457 Mr. Justice Frankfurter, the renowned Judge of the U.S. Supreme Court observed : "In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. The Legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct............ The uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s found wanting on trial, it is better that its defects should be demonstrated and removed by the Legislature than that the law should be aborted by judicial fiat. Such an assertion of judicial power defeats responsibility from those on whom in a democratic society it ultimately rests. Hence rather than exercise judicial review courts should ordinarily allow Legislatures to correct their own mistakes wherever possible." Similarly in his dissenting judgment in New State Ice Co. v. Liebmann (1932) 285 US 262 Mr. Justice Brandies, the renowned Judge of the U.S. Supreme Court, observed that the Government must be left free to engage in social experiments. Progress in the social sciences, even as in the physical sciences, depends on "a process of trial and error" and courts must not interfere with necessary experiments. Justice Brandeis also observed : "To stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the Nation. (see also 'The Legacy of Holmes and Brandeis' by Samuel Konefsky)." In P.T.R. Exports (Madras) Pvt. Ltd. v. Union of India . (1996) 5 SCC 268, the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the Judges have been overruled by events--all these show that self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability.'" In Prag Ice Oil Mills v. Union of India AIR 1978 SC 1296, the Supreme Court observed : "We do not think that it is the function of the court or of any court to sit in judgment over such matters of economic policy as must necessary be left to the Government of the day to decide. Many of them, as a measure of price fixation must necessarily be, are matters of prediction of ultimate results on which even experts can seriously err and doubtless differ. Courts can certainly not be expected to decide them without even the aid of experts." In Shri Sitaram Sugar Co. Ltd. v. Union of India (1990) 3 SCC 223, the Supreme Court observed : "Judicial review is not concerned with matters of economic policy. The court does not substitute its judgment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place there is no form prescribed under the U.P. Act or the U.P. Rules for filing of a certificate of tax deducted at source. Some certificates were prescribed by the Commissioner. In that connection the Court observed that it is well settled that if an act is required to be done in a particular manner, then, that act has to be performed in that manner alone and not in any other manner. The form prescribed by the Commissioner was ignored as it was not prescribed under the U.P. Act or the Rules and it was held that the claim of refund of excess tax cannot be denied on that ground alone. The said decision is not applicable to the facts of the case and is distinguishable. In the case on hand, Rule 58 itself empowers the Commissioner to determine the documents which a driver of a vehicle should carry with while passing through the State of U.P. carrying the taxable goods. The State Government had also prescribed similar form being form no.43 as per unamended section 52 of the Act. The power of Commissioner in the case on hand prescribing the document is referable to Rule 58 read with section 52. We are, therefore, unable to agree with the aforesaid submission of the learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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