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TMI Blog1979 (4) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... nding the Punjab Excise Act, 1914 ('Act' for short), as in force in the Union Territory of Delhi ('Delhi' for short) styled as Punjab Excise (Delhi Amendment) Ordinance, 1979 ('Ordinance' for short) may be stated. Punjab Excise Act, 1914 has been extended to Delhi. While implementing the provisions of the Act, the concerned authority used to hold auction for grant of licence in Form L-10 for selling country liquor and at one such auction held on 29th March 1978 the petitioners' bids were accepted and they were granted licences in Form L- 10 for the period 1st April 1978 to 31st March 1979. The licence included a condition to sell a bottle of 750 ml. of country liquor at Rs. 15/- which was, inter alia, made up of excise duty at the rate of Rs. 10.23 and profit of licensee at the rate of Rs. 2/-. This excise duty was styled as 'still head duty' for obvious reasons. In Writ Petition No. 716/78 filed in the High Court of Delhi by certain petitioners, validity of the levy of 'still head duty' was challenged inter alia on the ground that it was nothing but countervailing duty and in the absence of manufacture of liquor in Delhi, countervailing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in List I in the Seventh Schedule. Sub- article (3) confers similar power on the Legislature of any state with respect to any of the matters enumerated in List II. Sub-article (2) confers power both on Parliament and the State Legislature to make laws with respect to any of the matters enumerated in List III (Concurrent List). Sub- article (4) reads as under:- "Parliament has power to make laws with respect to any matter for any part of the Territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List". Article 248(1) provides that Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List. In other words, residuary power of legislation is conferred on Parliament Sub-article (2) of Article 248 is material and may be extracted: "(2). Such power shall include the power of making any law imposing a tax not mentioned in either of those Lists". Entry 84 in the Union List reads as under: "84. Duties of excise on toba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enabling the Government to levy over and above excise duty a countervailing duty or special duty at such rate or rates not exceeding the rates set forth in Schedule IA which was also added by the Ordinance. The contention is that Entry 51 in the State List enables the State Legislature to levy duty of excise or countervailing duty on alcoholic liquors for human consumption and that the almost corresponding Entry 84 of the Union List denies power to Parliament to levy duty of excise on alcoholic liquors for human consumption. Proceeding further it was said that initially countervailing duty was levied on the country liquor imported in Delhi and when it was found that as country liquor was not manufactured in Delhi countervailing duty could not be levied upon it, an attempt was made to levy the same duty by a camouflage of changing the name and that in pith and substance the Ordinance levies countervailing duty which Parliament had no power to levy particularly because country liquor on which duty is levied is not manufactured in Delhi. It is an admitted position that country liquor, the subject-matter of impost, is not manufactured in Delhi. It is again an admitted position that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ountry liquor is not manufactured in Delhi, the Parliament could not under Entry 51 of the State List levy either excise or countervailing duty on it. Merely because Parliament could not levy countervailing duty on country liquor imported into Delhi because country liquor is not manufactured in Delhi, it does not exhaust the power of Parliament to levy some other duty on the import of liquor if it is otherwise constitutionally permissible. It was, however, said that Entry 51 in State List being a specific entry providing for levy of duty either on manufacture or import of country liquor and there being no other specific entry enabling to levy special duty it is inconceivable that the framers of the Constitution should have left some such levy on the import of country liquor in respect of Delhi under residuary entry. In other words, it was said that where there is a specific entry the legislation must squarely fall within the entry and correspondingly is must be assumed that it would not be covered by the residuary entry. In fact the argument went so far that before resort could be had to the residuary Entry 97 the Court in its exploration to ascertain under which Entry the legisla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not included in a State because the power to legislate takes within its sweep matters included in all the three Lists and added to it is the residuary power on matters not specifically included in any entry in any of the three Lists. It was, however, said that the observations in Dhillon's case (supra) are no more good law in view of the opinion of Judges constituting majority in His Holiness Kesavananda Bharati Sripadagalavaru v. State of Kerala(1). The controversy in Kesavananda Bharati's case was about the power of the Parliament to amend the Constitution and a contention being the spill over from I.C. Golaknath v. State of Punjab(2) was that apart from Article 368, Entry 97 of List I would confer power on Parliament to amend the Constitution. After pointing out that when all the three Lists were exhaustively drawn up it is difficult to believe that an important power would be kept hidden in Entry 97 of the Union List leaving to the off chance of the courts locating that power in that entry, it was said that if a subject of legislation was present to the minds of the framers of the Constitution, it could not have been left to be found by the Courts in the residuary powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, List I and it would not be proper to unduly circumscribe, corrode or whittle down this power by saying that subject of legislation was present to the mind of the framers of the Constitution because apparently it falls in one of the entries in List II and thereby deny power to legislate under Entry 97. The history of freedom struggle demonstrates in unequivocal terms the importance of residuary power of legislation being conferred on Parliament. Therefore, the scope and ambit of Entry 97 need not be whittled down or circumscribed by a process of interpretation. In any case majority decision in Dhillon's case (supra) is neither overruled not departed from in Kesavananda's case (supra). Accordingly, once the power of Parliament to legislate on a topic is not expressly taken away by any constitutional provision, it remains intact under Entry 97 of List I. Undoubtedly, excise and countervailing duties on alcoholic liquors for human consumption were within the contemplation of the framers of the Constitution. That is a specific topic of legislation in List II. It does not exhaust all conceivable levy that can be legitimately imposed on such items if otherwise they could be le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that it is a colourable legislation or a mere camouflage. Undoubtedly initially countervailing duty was levied but it was found that as country liquor was not manufactured in Delhi legally it was impermissible to levy countervailing duty. This is admitted in the Preamble of the Ordinance itself. It was a constitutional error to have levied such a duty and the same was pointed out. Now, if the very duty could be levied under the power which is available it can never be said that it is a colourable exercise of power or that the new impost is a camouflage for the old one. What is colourable legislation was explained by this Court in K. C. Gajapati Narayan Deo v. State of Orissa,(2) and it was re-affirmed in Maharana Shri Jayvant Singhji Ranmal Singhji etc. v. State of Gujarat.(3) This Court said that the idea conveyed by the expression "colourable legislation" is that although apparently a legislature in passing a statute purported to act within the limits of its powers, yet in substance and in reality it transgressed those powers, the transgression being veiled by what appears, on proper examination, to be a more pretence or disguise. Applying this test it is difficult t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that the subsequent legislation would be merely a colourable legislation or a camouflage to re-enact the invalidated previous legislation. In passing it was mentioned that there is inherent evidence to show that the fresh impost was nothing but the invalidated countervailing duty under a guise of different nomenclature. It was said that special duty can be levied under the Act amended by the Ordinance only on the import of any 'excisable article' being an article on which countervailing duty as is mentioned in Entry 51 of List, 2, Seventh Schedule to the Constitution is not imposable on the ground merely that such article is not being manufactured or produced in the territory to which the Act is extended. Reference was then made to the definition of 'excisable article' in s. 3 of the Act. Excisable article has been defined to mean (a) an alcoholic liquor for human consumption, or (b) any intoxicating drug, (c) spirit, the last being added by the impugned Ordinance. Apart from the definition, it was urged that excisable article in common parlance or by judicial interpretation has been understood to mean article on which excise is levied, or leviable. Proceeding fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and indeed without such vesting there can be no effective regulation of various forms of activities in relation to intoxicants. In reaching this conclusion the Court took note of an important observation made in the State of Bombay v. R. M. D. Chamarbaugwala,(1) which may be extracted as under: "We find it difficult to persuade ourselves that gambling was ever intended to form any part of this ancient country's trade, commerce or intercourse to be declared as free under Art. 301. It is not our purpose nor is it necessary for us in deciding this case to attempt an exhaustive definition of the word 'trade', 'business', or 'intercourse'. We are, however, clearly of opinion that whatever else may or may not be regarded as falling within the meaning of these words, gambling cannot certainly be taken as one of them. We are convinced and satisfied that the real purpose of Arts. 19(1)(g) and 301 could not possibly have been to guarantee or declare the freedom of gambling. Gambling activities from their very nature and in essence are extra-commercium although the external forms, formalities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edom of inter-State trade and commerce guaranteed by Article 301. This challenge was upheld by the majority decision observing that- "the notification levying duty at the enhanced rate is purely a fiscal measure and cannot be said to be a reasonable restriction on the freedom of trade in the public interest... Without entering upon an exhaustive categorisation of what may be deemed "required in the public interest", it may be, said that restrictions which may validly be imposed under Art. 304(b) are those which seek to protect public health, safety, morals and property within the territory". Since Kalyani Stores case (supra) judicial opinion on the vexed question of right to carry on trade or business in intoxicating drinks has undergone a sea change culminating into Har Shankar's case (supra) which again is a decision of 5 Judges Constitution Bench of this Court. Unfortunately the judgment in Kalyani Stores case is not referred to in Har Shankar's case. However, the undisputed position that now emerges is that there is no fundamental right to do trade or business in intoxicants. Once that latter pronouncement is unambiguous and incontrovertible a regulatory measure imposin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e without stress or distress. Indeed, even collection of revenue was intertwined with orderly milieu; and these twin objects are reflected in the scheme and provisions of the Act". The present levy under the amended provisions of the Act in its application to Delhi could certainly be said to be one enacted both with the object of regulating the trade or business in intoxicants and with a view to realising the goal fixed in Article 47 of the Constitution Therefore, one can look upon this measure both as a fiscal measure and the one safeguarding public health and even public morals because it is well recognised that liquor trade is instinct with injury to individual and community and has serious side-effects recognised everywhere in every age. [Not to control alcohol business is to abdicate the right to rule for the good of the people] [see P. N. Kaushal's case (supra)]. In this very breath it was, however, contended that if this Ordinance was promulgated with a view to advancing the policy of prohibition enunciated in Art. 47 it could only be prospective and not retrospective because one cannot introduce prohibition retrospectively. This argument overlooks the twin objects soug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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