9911796707
TMI Blog1965 (9) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... March 31, 1961 duty was levied on "foreign liquor" imported by the appellants at the rate fixed in the notification issued in 1937. On March 31, 1961 In exercisc of the powers conferred by s. 90 of the Bihar & Orissa. Excise Act 2 of 1915 the Board of Revenue enhanced the duty with effect from April 1, 1961 in respect of "foreign liquors' from Rs. 40/- to Rs. 70/- per L.P. Gallon, and also raised duty in respect of other excisable articles. The licence held by the was :In due course renewed from April 1, 1961 to March 31, 1962. On November 14, 1961 the Sub-Inspector of Excise, Panposh called upon the appellants to pay the difference at the rate of Rs. 30/per L.P. Gallon in respect of the stocks of liquor found in the shop of the appellants on April 1, 1961 and to pay duty at the rate of Rs. 70/- per L.P. Gallon in respect of fresh stocks received after April 1, 1961. The appellants challenged the legality of this levy by a petition under Art. 226 of the Constitution filed before the High Court of Orissa. The appellants contented inter alia that the State could levy under s. 27 of the Bihar and Orissa Act duty on excisable articles produced or manufactured in the State and a counter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in this appeal. Power of the Legislature to legislate for imposition of duties on excisable articles manufactured within the State and to impose countervailing duties upon excisable articles imported into the State is not denied. It is said however that the expression "countervailing duty" means a duty levied on similar articles imported from outside the State, with a view to equalise the burden of taxation on articles produced or manufactured within the State and articles imported, and a countervailing duty on imported articles cannot be levied by the State unless articles similar to those imported are produced or manufactured in the State and an excise duty is levied thereon. The High Court has observed in its judgment that it was admitted that the rate of duty on liquor produced in Orissa levied by the State Government was identical with the countervailing duty required to be paid on imported foreign liquor. Counsel for the appellants says that it was not admitted by the appellants that at the material time foreign liquor was manufactured or produced within the State of Orissa. The High Court has apparently not stated that "foreign liquor" was manufactured within the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, be accepted that countervailing duties can only be levied if similar goods are actually produced or manufactured in the State on which excise duties are being levied. But the Bihar and Orissa Act 2 of 191.5 was enacted by the appropriate legislature in 1915 and by virtue of Art. 372 of the Constitution it was a law in force and continues to remain in force until altered, repeated or amended by a competent legislature or by a competent authority, and therefore countervailing duty on imported foreign liquor could be levied by the State Government as it was levied before the Constitution, unless there is something to tile contrary to be found therein. It is admitted that the Government of Orissa continued to levy a duty of Rs. 40 per L.P. Gallon under Act 2 of 1915 even after Constitution came into force. By the notification of 1961 the duty was enhanced from Rs. 40 per L.P. Gallon to Rs. 70 per L.P. Gallon. Levy at the rate prescribed under the notification of 1937 in operation immediately before the Constitution remained effective until it was lawfully altered. The only contention raised in the High Court in support of the plea of invalidity of the levy in its entirety ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the levy of countervailing duty on excisable articles was contained in s. 27 supplemented by the notification issued by the Government of Orissa in 1937. By the notification dated March 31, 1961, the rate of levy was altered, and the validity of the altered rate of duty has to be adjudged in the light of the provisions of the Constitution. The validity of the imposition of the new rate of Rs. 70 per L.P. Gallon may be examined in the light of the restrictions imposed by the Constitution on the legislative power. By Art. 301 of the Constitution, subject to the other provisions of Part XIII, trade, commerce, and intercourse throughout the territory of India is to be free. By Art. 303 no power is conferred upon the State Legislature to make any law giving or to authorise the giving of, any preference to one State over another, or to make, or authorise the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. The material part of Art. 304 is as follows: "Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law-- (a) impose on goods imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edom of trade, commerce or intercourse by Art. 301 of the Constitution remains unfettered. Mr. Bindra appearing on behalf of the State of Orissa con- tended that the Legislature having empowered the State Government by s. 27 to levy duty at a rate which may be prescribed, the notification dated March 31, 1961, enhancing the tax derived its validity from the Act itself and did not amount to any law modifying the existing law. Therefore, it was said, the levy of duty at the enhanced rate was supported by the power conferred by s. 27 which was "existing law". This argument cannot, in our view, be sustained. By Art. 366 (10) unless the context otherwise requires,the expression "existing law" means any law, Ordinance order, bye law, rule or regulation passed or made before the commencement of the Constitution by any Legislature, authority or person having power to make such a law, Ordinance, order, bye-law, rule or regulation. Existing law within the, meaning of Art. 305 was therefore the provision contained in s. 27 of the Bihar & Orissa Act 2 of 1915 authorising the State Government to issue a notifi- cation imposing a duty at the rate fixed thereby and the notification issued pursuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parent statute. It is implicit in the reasoning that there was no alteration or modification of the existing law, by the resolution of the Corporation. The decision of that case turned entirely upon the interpretation of the special Provisions the like of which are not found in the Bihar & Orissa Act 2 of 1915. In the present case, it is clear that under the existing law duty had been imposed in exercise or the power contained in ss. 27, 28 and 90 of the Act and the notifications issued from time to time before the Constitution was enacted, and that law was altered by the notification dated March 31, 1961. It is not the case of the State that in exercise of any pre-existing conditional legislation, duty at enhanced rate was made leviable on foreign liquor. The sole authority for the levy of the duty at the enhanced rate is the notification of the State Government dated March 31, 1961. That notification infringes the guarantee of freedom under Art. 301, and may be saved only if it falls within the exceptions contained in Arts. 302, 303 and 304. Articles 302 and 303 are apparently not attracted and have not been relied upon, and the notification does not comply with the requireme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of clause (a) of Section 13, or (e) . . . . . . . . . . (f) any excisable article manufactured in any distillery or brewery licensed, established, authorised, or continued under this Act. Explanation- 2) . . . . . . . . . . . (3)Notwithstanding anything contained in subsection (1)-- (1)duty shall not be imposed thereunder on any article which has been imported into (India) and was liable, on such importation, to duty under the Indian Tariff Act, 1894 or the Sea Customs Act, 1878, if- (a) the duty as aforesaid has been already paid, or (b) a bond has been executed for the payment of such duty. . . . . . . . . . . . . The argument is that since foreign liquor is not manufactured in the State of Orissa and no duty of excise as such can be levied on locally manufactured foreign liquor, a countervailing duty cannot be charged on foreign liquor brought from an extra-State point in India. It is also contended that this impost offends Arts. 301, 303 and 304 of the Constitution and is a colourable piece of legislation because countervailing duties of excise can only be levied when corresponding products can be subjected to an equal or more excise duty. It is submitted that the wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or manufactured within the State on which excise duty is levied ? If the answer to this question is in the negative there is an end to all dispute for then the old law, the old notification and new notification must be above reproach. The next two questions are narrower than first. They are : (a) was the imposition and collection of the countervailing duty at Rs. 40 per London proof gallon valid and (b) is the notification enhancing the duty of excise and the countervailing duty to Rs. 70 per London proof gallon beyond the powers of the State Government ? A countervailing duty is not defined in the Act. In the Concise Oxford Dictionary "countervailing duty" is stated to be : " a countervailing duty-one put on imports that are bounty-fed to give home goods an equal chance". This brings out the true character of a countervailing duty. It is imposed to make incidence of excise duty equal. How these countervailing duties came to exist in India is a matter on which something may be said before the challenge to the legality of the imposition may be considered. The Bihar & Orissa Excise Act was passed on January 19, 1916. It was thus passed under the Government of India Act, 1915. Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present Constitution) and Entry 40 in List 11 (which corresponded to Entry 51 of List 11 of the present Constitution). When the Government of India Act 1935 was passed it was possible for the first time to impose countervailing duties. The intention was that taxation in the matter of excisable goods should be uniform in India and one Province should not try to take advantage of another Province by exporting excise free goods, thus making them bounty. By this means duties of excise on all goods of the Same kind could be kept uniform.But the Excise Acts in India, including the Bihar and Orissa Act,were not harmonious with the constitutional provision. They made no distinction between duties of excise levied on goods produced locally and duties of excise levied on goods which were imported into or transported within the Province. They would have, after the enactment of the Government of India Act, 1935, been rendered ultra vires if the duty was unequal in such a way as to make it more on imported goods unless they were amended suitably. Instead of amending them by the ordinary legislative process which would have been cumberous and slow, recourse was taken to the power to adapt laws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made therein or, if it is so directed, shall cease to have effect." Where, therefore, the rate of duty on imported goods was more than the rate of duty on the locally produced goods the duty was protanto cut down. The Adaptation of Laws Order came into force on April 1, 1937 when Part II of the Government of India Act, 1935 commenced and the notification imposing uniform excise and countervailing duties was then issued. The same Act has continued till today and although the Government of India Act, 1935, is repealed, the scheme of division of excise duties is today the same as it was under that Act. Now the argument is that the Bihar and Orissa Act is affected by the Entries and by the fact that there is no foreign liquor manufactured in the State. Historically the Bihar & Orissa Act continued to have force and effect by the authority of the Government of India Act, 1935, the Order-in-Council and the Adaptation of Laws Order. The existence of countervailing duty was not made dependent upon the manufacture of foreign liquor in the State. The Bihar & Orissa Act which provided for countervailing duty in anticipation of the production in the State was valid because it had force and ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on issued in 1937 was also valid. The Excise Acts, as adapted, continued to be law under the Government of India Act, 1935. The present Constitution has made no change either in the distribution of legislative power or the entries and has further said in Art. 372 that all existing laws continue to be of full force and effect. The imposition of countervailing duty at Rs. 40 per London proof gallon continued to be valid. The next question is whether the original duty alone would be sustained or also the enhanced duty which was introduced in 1961. In my judgment, if the old duty it the old rate is sustainable there is no reason why the absence of production of foreign liquor in the State would make any difference to the enhancement of the duty to Rs. 70 per London proof gallon. So long as the Act is valid, and that is beyond doubt, the notification can be changed. The duty could always be made less and there is no reason why it could not be made more provided the imposition of duty on locally produced goods was not made lower. If production of foreign liquor is not a condition precedent to the validity of the Act because of historical reasons there is no bar to the validity of the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te and countervailing duties on similar liquors produced outside the State in India is already conferred by the legislative list. The Bihar & Orissa Excise Act does not stand in need of support from Art. 304(a). If Art. 301 stands in the way there is A`t. 305 which read previously : "305. Nothing in articles 301 and 303 shall affect the provisions of any existing law except in so far as the President may by order otherwise provide." The amendment of Art. 305 by the Constitution (4th Amendment) Act 1955 does not alter the net position. The President has not made any order and so Arts. 301 and 303 do not apply. Article 304(a) is an exception to Arts. 301 and 303 and is not needed here in view of the power in the State Legislature by Entry 51 of List 11. The Bihar & Orissa Act is, therefore, sustained by Arts. 305 and 372 independently of Art. 304(a). I am, therefore, of opinion that s. 27 of the Bihar and Orissa Exercise Act, 1915, was and is a valid enactment. At no time Since it was enacted, could it be challenged and it cannot be challenged today. I do not think that the law which is saved is a combination of the Act and the notification. Existing law is defined to include a law ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
