Retrospective excise levy upheld, but an unsupported demand for differential duty after warehouse clearance was quashed.

Retrospective fiscal legislation was upheld where Section 7(2) of the Finance Act, 1951 merely applied increased excise rates backward and did not change the essential character of the levy; objections based on completed transactions, unreasonableness, and Article 19 were rejected. However, collection still required authority of law, and the demand for differential excise duty on goods already cleared from the warehouse was unsupported by the governing rules or the Board's instruction. The executive demand was therefore contrary to Article 265 and was quashed under Article 226, while the retrospective provision itself remained valid.

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Issues: (i) Whether Section 7(2) of the Finance Act, 1951 was constitutionally valid as a retrospective fiscal provision. (ii) Whether the demand of differential excise duty on goods already cleared from the warehouse was authorised by law and could be quashed under Article 226.

Issue (i): Whether Section 7(2) of the Finance Act, 1951 was constitutionally valid as a retrospective fiscal provision.

Analysis: The provision merely gave retrospective effect to increased excise rates and did not alter the essential character of the levy. Retrospective fiscal legislation was held to be within legislative competence unless it infringed a constitutional limitation. The objections based on direct tax character, completed transactions, unreasonableness, and Article 19 were rejected.

Conclusion: Section 7(2) of the Finance Act, 1951 was upheld as valid.

Issue (ii): Whether the demand of differential excise duty on goods already cleared from the warehouse was authorised by law and could be quashed under Article 226.

Analysis: Although the retrospective levy was valid, collection had to be supported by authority of law. The rules then in force did not authorise a demand for duty after the goods had left the warehouse in the manner adopted by respondent No. 3, and neither the cited rules nor the Board's instruction supplied such authority. Article 226 could be invoked to prevent an executive demand made in violation of Article 265.

Conclusion: The demand was without authority of law and was quashed.

Final Conclusion: The retrospective excise provision was sustained, but the particular demand impugned in the petition was set aside for want of lawful authority.

Ratio Decidendi: A retrospective fiscal enactment may be valid, but levy and collection must each be authorised by law, and an executive demand unsupported by the governing statutory rules can be struck down under Article 226.

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