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TMI Blog1969 (8) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, challenging the levy and collection from the manufacturers of chappals under the provisions of the Act, the Rules framed and the relevant notification issued thereunder of a duty as a result of the amendment made in Section 12 of the Act by the Rubber (Amendment) Act of 1960. A learned Single Judge dismissed the writ petition and his judgment was affirmed by a Division Bench of the High Court. 3.The contentions which have been raised are : (1) the duty sought to be imposed under Section 12 as amended being outside the ambit of Entry 84 of List I in the Seventh Schedule to the Constitution is beyond the legislative competence of the Parliament; (2) Section 12(2) suffers from the vice of excessive delegation. It confers uncontrolled and unrestricted discretion upon the Rubber Board to levy upon and collect duty of excise from either the owners of rubber producing estates or the users so called manufacturers (of rubber) without specifying the circumstances under which it should be imposed upon the one or the other nor has any guiding policy or principle been laid down in the Act for making a choice; (3) In any case, the Rules which have been framed do not satisfy the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle;" Section 4(3) "The Board shall consist of — (a) a Chairman to be appointed by the Central Government; (b) two members to represent the State of Madras, one of whom shall be a person representing rubber producing interests; (c) eight members to represent the State of Kerala, six of whom shall be persons representing the rubber producing interests, three of such six being persons representing the small growers; (d) ten members to be nominated by the Central Government of whom two shall represent the manufacturers and four labour; and (e) three members of Parliament of whom two shall be elected by the House of the People and one by the Council of States; and (f) the Rubber Production Commissioner, ex officio." Section 12(4) "For the purpose of enabling the Board to assess the amount of duty of excise levied under the section — (a) the Board shall, by notification in the Official Gazette, fix a period in respect of which assessments shall be made; and (b) without prejudice to the provisions of Section 20, every manufacturer shall furnish to the Board a return not later than fifteen days after the expiry of the period to which the return relates, stating - (i) in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te consumer, that is, its ultimate incidence will always be on the consumer. Therefore, subject always to the legislative competence of the taxing authority, the said tax can be levied at a convenient stage so long as the character of the impost, that is, it is a duty on the manufacture or production, is not lost. The method of collection does not affect the essence of the duty, but only relates to the machinery of collection for administrative convenience. Whether in a particular case the tax ceases to be in essence an excise duty, and the rational connection between the duty and the person on whom it is imposed ceased to exist, is to be decided on a fair construction of the provisions of a particular Act". The above statement of law in no way supports the argument that the excise duty cannot be collected from persons who are neither producers nor manufacturers. Its incidence certainly falls directly on the production or manufacture of goods but the method of collection will not affect the essence of the duty. In our opinion sub-section (2) of Section 12 provides for the method of collection as the excise duty can be collected either from the producers or from the manufacturers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... local body to the approval of the Government which acts as a watch-dog on the actions of the local body in this matter on behalf of the legislature. The reasonableness of the rates may be ensured by providing safeguards laying down the procedure for consulting the wishes of the local inhabitants. So long as the law has provided the method by which the local body can be controlled and there is a provision to see that reasonable rates are fixed it can be said that there is guidance in the matter of fixing the rates for local taxation; vide Wanchoo, C.J. in Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills, Delhi & Anr. - (1968) 3 SCR 251 at pp. 269-270. 8.In Section 12(2) the Parliament has made it quite clear that the Board can levy and collect the duty of excise either from the owner of a rubber estate on which the rubber is produced or from the manufacturer by whom such rubber is used. The Board has further been enjoined to do so in accordance with Rules made in this behalf. The Board, as constituted under Section 4, has to be a high powered body and among its members those representing the rubber producing interests, the small growers, the manufacturers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for a specified period of 30 days and those Rules can be subject to criticism and can be modified or even be abrogated. Thus it is not possible to hold that the Parliament has abdicated its functions in enacting Section 12(2) of the Act. 10.Learned Attorney General has relied on certain decisions of this Court according to which it can be left to the authority which has to levy and collect the tax to decide whether to collect from one category of persons or the other category where persons in both categories can be subjected to tax. In M.M. Ipoh & Ors. v. Commissioner of Income-tax, Madras - (1968) 1 SCR 65, the validity of Section 3 of the Income-tax Act, 1922 was challenged on the ground that it was violative of Article 14 of the Constitution. That section invested the taxing authority with an option to assess to tax the income collectively of the association of persons. The argument raised was that that Act set no principles and disclosed no guidance to the Income-tax Officer in exercising the option. The scheme of the Income-tax Act was considered and it was observed that the duty of the Income-tax Officer was to administer its provisions in the interest of public revenue a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter alia :- "This method of collection of the cess provided under the Act has led to considerable evasion of cess by the owners of the estates, either by evasion of registration or by failure to submit correct returns or any returns at all. There are about 26,000 estates under production in the country and most of them are small holdings. Many of them do not render returns of production to the Rubber Board and thus evade payment of duty. From October, 1947 to December, 1954, it was found that 20,608 tons of rubber escaped assessment and the Board suffered during the period a loss of Rs. 2,30,805/-. The Rubber Board estimates that under the present system there is no likelihood of more than 65 per cent. of the potential revenue being realised each year. With a view to improving the efficiency of collection, it is proposed to amend Section 12 of the Act so as to enable the cess to be collected either from the owners or the manufacturer who ultimately consumes the rubber produced in the estates. There are at present 347 registered rubber manufacturers in the country. It is felt that it would be far more easy to collect the cess from a small number of manufacturers than from about 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of accounts by an owner if he fails to furnish in time the return referred to in sub-section (4) of Section 12 or if he furnishes a defective return. The Board can, after checking the amounts and after, making such further enquiry as it may deem fit assess the amount payable under sub-section (2) of Section 12. Similar provision is made with regard to manufacturers by Rule 33B. Rule 33D, however, is material and may be reproduced :- Every manufacturer shall by demand notice sent through registered post or in such other manner as the Board may direct be intimated of the amount assessed on the quantity of rubber acquired during the periods specified in Rule 33(e). On receipt of such notice, the manfuacturer shall pay to the Board the amount specified therein either in cash at the Board's office at Kottayam or by money order or by bank draft or cheque duly crossed and payable at Kottayam to the Secretary of the Board within 30 days of the receipt of the said notice. On such demand being made, if a manufacturer fails to pay the amount within the due date, the Board may take steps to report the fact to the Central Government or the State Government concerned for recovery of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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