1971 (11) TMI 157 - HC - VAT and Sales Tax

Appellate Court Validates Central Govt's Power to Modify Tax Act, Dismisses Challenge

The appellate court upheld the validity of Notification No. S.R.O. 3908 dated 7th December 1957, finding that the Central Government had the power to make ... - Issues Involved:1. Validity of Notification No. S.R.O. 3908 dated 7th December 1957.2. Power of the Central Government to amend the schedule after the extension of the Bengal Finance (Sales Tax) Act, 1941, to the Union Territory of Delhi.3. Excessive delegation of legislative powers.4. Reasonableness of the notice period for amending the schedule.Detailed Analysis:1. Validity of Notification No. S.R.O. 3908 dated 7th December 1957:The primary issue was the validity of the notification that amended the Bengal Finance (Sales Tax) Act, 1941, as extended to the Union Territory of Delhi. The notification modified the requirement of giving 'not less than three months' notice' to 'such previous notice as it considers reasonable.' The learned single judge quashed this notification, holding it was ultra vires section 2 of the Union Territories (Laws) Act, 1950. The appellate court, however, found that the Central Government had the power to make such modifications when extending the Act to Delhi, and Parliament's subsequent amendment in 1959 validated the notification.2. Power of the Central Government to Amend the Schedule After Extension:The respondents argued that the Central Government's power to modify the Act was exhausted once the Act was extended to Delhi in 1951. They contended that any further amendments should be made by the Delhi State Assembly or Parliament. The appellate court disagreed, holding that section 21 of the General Clauses Act allowed the Central Government to amend, vary, or rescind any notification, provided it did not alter the essential features or policy of the legislation. The court emphasized that the power to amend the schedule was necessary to implement the Act's policy effectively.3. Excessive Delegation of Legislative Powers:The respondents claimed that the delegation of power to the Central Government to amend the schedule constituted excessive delegation of legislative authority. The appellate court referenced multiple Supreme Court decisions, including Pandit Banarsi Das Bhanot v. The State of Madhya Pradesh and Harishankar Bagla v. State of Madhya Pradesh, which upheld similar delegations as constitutional. The court concluded that the delegation in question was not excessive, as it did not involve any change of policy and was necessary for the Act's implementation.4. Reasonableness of the Notice Period for Amending the Schedule:The respondents argued that reducing the notice period from three months to a period considered reasonable by the Central Government deprived the public of their right to be heard. The appellate court evaluated whether a shorter notice period would impair the public's right to file objections. It found that the thirteen-day notice given in this case was reasonable, considering the limited area of the Union Territory of Delhi compared to Bengal. The court concluded that the modified notice period did not violate the principles of natural justice.Conclusion:The appellate court allowed the Letters Patent Appeals, reversing the learned single judge's decision. It held that the Central Government's notification and subsequent amendments were valid and did not constitute excessive delegation of legislative powers. The court also found the reduced notice period reasonable and in compliance with the law. Consequently, the Civil Writ No. 593 of 1971 and the remaining writ petitions were dismissed.