Rounding-off levy on kerosene prices cannot create a separate fund without independent legal authority.

Fixation of the fair price of kerosene under the Essential Commodities Act and the 1993 Control Order could include only charges, rates, duties and taxes lawfully leviable from an independent legal source. The expression "charges" could not be expanded to authorise the State or district authorities to impose a fresh collection through rounding off and channel it into a separate fund for administrative or developmental expenditure. That compulsory collection was an unauthorised impost without authority of law and offended Article 265. The rounding-off levy and the fund created from it were therefore unlawful and ultra vires, and the challenge succeeded.

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Issues: Whether the State Government and district authorities could, by rounding off the price of kerosene sold under the public distribution system, collect an additional amount to create and operate a fund for strengthening the distribution system.

Analysis: The pricing power under the Essential Commodities Act, 1955 and the Kerosene (Restriction on Use and Fixation of Ceiling Price) Order, 1993 permits fixation of a fair price and inclusion only of charges, rates, duties and taxes that are otherwise lawfully leviable and identifiable from an independent legal source. The expression "charges" in the control order was read in the setting of the accompanying words "rates, duties and taxes", and could not be expanded to authorise the State, the Director or the Collectors to levy a new amount in the guise of rounding off. The collection was not a mere accounting adjustment to neutralise district-wise surplus and deficit for consumer benefit; it was used to build a separate fund under executive control for administrative and developmental expenditure. Such a levy amounted in substance to an unauthorized impost without authority of law and offended Article 265 of the Constitution of India.

Conclusion: The rounding-off levy and the fund built from it were held to be unlawful and ultra vires; the challenge succeeded in favour of the appellants.

Ratio Decidendi: An executive authority fixing the price of an essential commodity cannot, under the guise of rounding off, impose an additional compulsory collection for creating a fund, unless the impost is backed by independent authority of law.

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