TaxTMI 
TaxTMI 
1975 (11) TMI 101
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....------------------------------------------ The judgment of the Court was delivered by SARKARIA, J.-Whether the Notification No. SRO-3908 dated December 7, 1957, issued by the Central Government in purported exercise of its powers under section 2 of the Union Territories (Laws) Act, 1950, is ultra vires the Central Government, is the principal question that arises in these appeals which will be disposed of by a common judgment. The question has arisen in these circumstances: Section 2 of the Part C States (Laws) Act, 1950, empowered the Central Government to extend by notification in the official Gazette, to any Part C State, or to any part of such State, with such restrictions and modifications as it thinks fit, any enactment which is in force in a Part A State. In exercise of this power, the Central Government by a Notification No. SRO 615 dated April 28, 1951, extended to the then Part C State of Delhi, the Bengal Finance (Sales Tax) Act, 1941 (for short, the Bengal Act), with, inter alia, these modifications: "In sub-section (2) of section 6,- (a)............... (b) for the words 'add to the schedule', the words 'add to or omit or otherwise ame....
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....al Government" were substituted for the words "State Government" On December 7, 1957, in the Gazette of India, Extraordinary, there appeared a notification, which reads as below: "S.R.O. 3908.-In exercise of the powers conferred by section 2 of the Union Territories (Laws) Act, 1950 (30 of 1950), the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Home Affairs No. S.R.O. 615 dated the 28th April, 1951 (extending to the Union Territory of Delhi and the Bengal Finance (Sales Tax) Act, 1941, subject to certain modifications), namely: In the said notification, in the modifications to the Bengal Act aforesaid, in item 6 [relating to sub-section (2) of section 61, after sub-item (a), the following sub-item shall be inserted, namely: '(aa) for the words "not less than three months' notice", the words "such previous notice as it considers reasonable" shall be substituted.'" The vires of this notification dated December 7, 1957, is the subject of primary challenge in these appeals (hereinafter it will be referred to as the impugned notification). Item 17 in the Second Schedule of the Bengal Act was amen....
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....1970, by Notification No. GSR 1119 dated July 31, 1970. One result of this notification was that the exemption of "pure silk" from tax was withdrawn. The appellants in Civil Appeal No. 2221 of 1972 are dealers in durries. They feel aggrieved by the Notification GSR 1061 dated June 29, 1966, whereby exemption of durries from sales tax was withdrawn. The appellants in Civil Appeals Nos. 2222, 2223 and 2225 of 1972 deal in knitting wool. Their cause of action arose when exemption of knitting wool was withdrawn by notification dated September 19, 1959, w.e.f. October 1, 1959. The appellants in Civil Appeal No. 2524 of 1972 deal inter alia in pure silk. They are aggrieved by notification dated July 31, 1970, by which exemption of "pure silk" was withdrawn, w.e.f. August 1, 1970. The appellants in Civil Appeal No. 2224 of 1972 is a kirayana dealer. He feels aggrieved by the notification dated September 19, 1959, whereby items 8, 11 and 14 were deleted from the Second Schedule with effect from October 1, 1959. The appellants in Civil Appeal No. 1801 of 1972 are licensed vendors of country liquor. They feel adversely affected by Notification No. GSR 1076, dated September 19,....
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.... Finding on all the four grounds in favour of the writ petitioners, the learned single Judge declared "that the purported modification of section 6(2) of the Bengal Finance (Sales Tax) Act, 1941, by the Government of India's Notification No. S.R.O. 3908 dated December 7, 1957, was ineffective and section 6(2) continues to be the same as before as if it was not so modified at all". In consequence, he quashed the Government Notifications Nos. GSR 964 dated June 16, 1966, and GSR 1061 dated June 29, 1966, because they were not in compliance with the requirement of section 6(2) of the Bengal Act. The contentions canvassed before the leared single Judge were repeated before the appellate Bench of the High Court. The Bench did not pointedly examine the scope of the power of modification given to the Central Government by section 2 of the Laws Act with specific reference to the purpose for which it was conferred and its precise limitations. It did not squarely dispel the reasoning of the learned single Judge that the power of modification is an integral part of the power of extension and "cannot therefore be exercised except for the purpose of the extension". It refused to accept that ....
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....nsertion in sub-section (2) of section 6 of that Act, between the words "add to" and "the schedule", of the words "or omit or otherwise amend". It is argued that this insertion was beyond the power of modification conferred on the Central Government by section 2 of the Laws Act. The point sought to be made out is that if the insertion made by the notification dated April 28, 1951, in section 6(2) was ineffective and non est in the eye of law, the Central Government would have no power to "omit" anything from the exempted goods itemised in the schedule. It is argued that under section 6(2) sans this insertion, the Central Government was empowered only to "add to" and not "omit" from the exempted items enumerated in the schedule and, consequently, the withdrawal of the exemptions in question was ultra vires the Central Government. The entertainment of this plea at this stage is stoutly opposed by Shri B. Sen, the learned counsel for the revenue. We are not inclined to permit the appellants to add to the list of impugned notifications now in second appeal. In their writ petitions, the appellants did not challenge the validity of the notification dated April 28, 1951. They never ....
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....he amending Act 20 of 1959, Parliament did not put its seal of approval on the impugned notification or the changes sought to be made by it in section 6 of the Bengal Act. It is stressed that the amending Act of 1959 did not touch section 6 at all and, therefore, it could not be said, with any stretch of imagination, that Parliament had referentially or impliedly incorporated or approved the purported change made by the impugned notification in the Bengal Act. As against the above, Shri B. Sen, the learned counsel for the revenue, submits that the impugned notification does not change the essential structure or the policy embodied in section 6(2) of the Bengal Act. According to counsel, the policy underlying section 6(2) is that reasonable notice of the Government's intention to add to or omit anything from the Second Schedule must be given by publication in the official Gazette. It is maintained that the requirement as to "not less than three months' notice" in the section was not a matter of policy but one of detail or expedience; it was only directory, and the modification made by the impugned notification did not go beyond adjusting and adapting it to the local conditions of....
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....when it considered and passed the Amendment Act of 1959. Our attention has been invited to its preamble, which is to the effect: "An Act further to amend the Bengal Finance (Sales Tax) Act, 1941, as in force in the Union Territory of Delhi", and also to the words "as in force in the Union Territory of Delhi" in section 2 of the amending Act. Reference has been made to this court's decisions in Venkatrao Esqfirao's case [1970] 1 S.C.R. 317., and Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v. Assistant Commissioner of Sales Tax".[1974] 33 S.T.C. 219 (S.C.); [1974] 2 S.C.R. 879; A.I.R. 1974 S.C. 1660. An alternative argument advanced by Shri B. Sen is that if in section 6(2), the requirement as to "not less than three months' notice" was mandatory and a matter of legislative policy, then the exemptions from tax granted to durries, pure silk, etc., after the issue of the impugned notification must be treated non est and void ab initio, inasmuch as the amendments of the Second Schedule whereby those exemptions were granted, were made without complying with the requirement of "not less than three months' notice". It is argued that if this requirement was a sine qua non for amendment of th....
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.... of any corresponding law (other than a Central Act), which is for the time being applicable to that Part C State." The court by a majority held that the first part of this section which empowers the Central Government to extend to any Part C State or to any part of such State with such modifications and restrictions as it thinks fit any enactment which is in force in a Part A State, is intra vires, and that the latter part of this section which empowers the Central Government to make provision in any enactment extended to a Part C State, for repeal or amendment of any law (other than a Central Act), which is for the time being applicable to that Part C State, is ultra vires. Consequent upon this opinion, the latter part of the section was deleted by section 3 of the Repealing and Amending Act, 1952 (Act 48 of 1952), with effect from August 2, 1951. The majority opinion in upholding the validity of the first portion of section 2 of the Laws Act drew a good deal from the observations of the Privy Council in Queen v. Burah(1), wherein it was said: "If what has been done is legislation within the general scope of the affirmative words which give the power and if it vio....
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....R. 747., S.R. Das, J., said that on strict analysis it was "nothing but a delegation of a fractional legislative power". Anglin, J., in Gray's case 57 S.C.R. 150 (Canada)., regarded this what is called "conditional legislation" as "a very common instance of limited delegation". More or less to the same effect is the view taken by Evatt, J., of Australia in Dignam's case [1931] 46 C.L.R. 73. Prof. Kennedy (vide his treatise "Constitution of Canada", 2nd Edn., p. 463), is also of the opinion that "conditional" legislation "is a form of delegation". We do not want to multiply authorities nor wish to carry this academic discussion to a final conclusion because it is not necessary for solution of the problem in hand. In the instant case, the precise question with which we are faced is whether the purported substitution of the words "such previous notice as it considers reasonable" for the words "not less than three months' notice" in section 6(2) by the impugned notification dated December 7, 1957, was in excess of the power of "modification" conferred on the Central Government by section 2 of the Laws Act. This question has to be answered in the light of the principles enuncia....
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....ed along with the word restriction' the word 'modification' has been employed also in a cognate sense, and it does not involve any material or substantial alteration. The dictionary meaning of the expression 'to modify' is to 'tone down' or to soften the rigidity of the thing' or 'to make partial changes without any radical alteration'. It would be quite reasonable to hold that the word 'modification' in section 7 of the Delhi Laws Act (which is almost identical with the present section 2, Laws Act) means and signifies changes of such character as are necessary to make the statute which is sought to be extended suitable to the local conditions of the province. I do not think that the executive Government is entitled to change the whole nature or policy underlying any particular Act or to take different portions from different statutes and prepare what has been described before us as 'amalgam' of several laws ...... these things would be beyond the scope of the section itself." (emphasis Here italicised., supplied). S.R. Das, J. (as he then was), delineated the scope of the power of "modification" given under section 7 of the Delhi Laws Act, 1912 (for short, the Delhi Act), at pa....
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....ent sought to be extended, is not a separate and independent power. It is an integral constituent of the power of extension. It cannot be exercised apart from the power of extension. This is indubitably clear from the preposition "with" which immediately precedes the phrase "such restrictions and modifications" and conjoins it to the principal clause of the section which gives the power of extension. According to the Shorter Oxford Dictionary, one meaning of the word "with" (which accords here with the context), is "part of the same whole". The power given by section 2 exhausts itself on extension of the enactment; it cannot be exercised repeatedly or subsequently to such extension. It can be exercised only once, simultaneously with the extension of the enactment. This is one dimension of the statutory limits which circumscribe the power. The second is that the power cannot be used for a purpose other than that of extension. In the exercise of this power, only such "restrictions and modifications" can be validly engrafted in the enactment sought to be extended, which are necessary to bring it into operation and effect in the Union Territory. "Modifications" which are not necessa....
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....ars in the opinion of FazI Ali, L, at page 850, is merely a quotation from the report of the Committee on Minister's Powers, which considered the propriety of the legislative practice of inserting a "Removal of Difficulty Clause" in Acts of British Parliament, empowering the executive to modify the Act itself so far as necessary for bringing it into operation. This device was adversely commented upon. While some critics conceded that this device is "partly a draftsman's insurance policy, in case he has overlooked something" (e.g., Sir Thomas Carr, page 44 of his book "Concerning English Administrative Law"), others frowned upon it, and nicknamed it as "Henry VIII Clause" after the British Monarch who was a notorious personification of absolute despotism. It was in this perspective that the Committee on Minister's Powers examined this practice and recommended: "........first, that the adoption of such a clause ought on each occasion when it is, on the initiative of the Minister-in-charge of the Bill, proposed to Parliament to be justified by him up to the essential. It can only be essential for the limited purpose of bringing an Act into operation and it should accordingly be in ....
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....Second Schedule. The primary key to the problem whether a statutory provision is mandatory or directory, is the intention of the law-maker as expressed in the law itself. The reason behind the provision may be a further aid to the ascertainment of that intention. If the legislative intent is expressed clearly and strongly in imperative words, such as the use of "must" instead of "shall", that will itself be sufficient to hold the provision to be mandatory, and it will not be necessary to pursue the enquiry further. If the provision is couched in prohibitive or negative language, it can rarely be directory, the use of peremptory language in a negative form is per se indicative of the intent that the provision is to be mandatory: (Crawford, the Construction of Statutes, pp. 523-524). Here the language of sub-section (2) of section 6 is emphatically prohibitive, it commands the Government in unambiguous negative terms that the period of the requisite notice must not be less than three months. In fixing this period of notice in mandatory terms, the legislature had, it seems, taken into consideration several factors. According to the scheme of the Bengal Act, the tax is quantified....
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....fferent from the one before us. There, the constitutional validity of section 6(2) of the Central Provinces and Berar Sales Tax Act, 1947, was questioned on the ground of excessive delegation. In the instant case, the validity of section 6(2) of the Bengal Act, as such, is not being impeached. There is yet another facet of the matter. By the impugned notification, the Central Government did not directly seek to amend section 6(2). Perhaps, it was not sure of its competence to do so more than 6½ years after the extension of the Bengal Act to Delhi. It therefore chose to amend section 6(2) indirectly through the amendment of its earlier notification dated April 28, 1951, which was only a vehicle or instrument meant for extension of the Bengal Act to Delhi. On such extension, the notification had exhausted its purpose and had spent its force. It had lost its utility altogether, as an instrument for modification of the Bengal Act. Therefore, the issue of the impugned notification which purported to amend section 6(2) through the medium of a "dead" notification was an exercise in futility. In any case, an amendment which was not directly permissible could not be indirectly smu....
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....alidation of certain Bihar State laws and action taken and things done connected therewith.-(1) The laws specified in the schedule shall be and shall be deemed always to have been, as valid as if the provisions contained therein had been enacted by Parliament. (2) Notwithstanding any judgment, decree or order of any court, all actions taken, things done, rules made, notification issued or purported to have been taken, done, made or issued and rents or royalties realised under any such laws shall be deemed to have been validly taken, done, made, issued or realised, as the case may be, as if this section had been in force at all material times when such action was taken, things were done, rules were made, notifications were issued, or rents or royalties were realised, and no suit or other proceeding shall be maintained or continued in any court for the refund of rents or royalties realised under any such laws. (3) For the removal of doubts, it is hereby declared that nothing in sub- section (2) shall be construed as preventing any person from claiming refund of any rents or royalties paid by him in excess of the amount due from him under any such laws." The precise question ....
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....o the amend- ing Act would be deemed to be an assent accorded to the parent Act also. The decision in Venkatrao's case [1970] 1 S.C.R. 317., therefore does not advance the case of Shri B. Sen. Shri B. Sen's alternative argument that the notifications whereby the exemptions from tax have been withdrawn in regard to durries, pure silk, country liquor, etc., are not assailable because those exemptions were earlier granted without giving three months' notice, is manifestly unsustainable. Firstly, so far as fruits, fresh and dried (item 8), pepper, tamarind and chillies (item 11), turmeric (item 14), ghee (item 16), and knitting wool (item 21A) are concerned, they were exempted goods in the schedule of the Bengal Act, as modified and extended by the notification dated April 28, 1951, to Delhi. No question of giving notice for granting these exemptions therefore arose. Secondly, the validity of the notifications whereby exemptions were granted to pure silk, liquor, etc., after the extension of the Bengal Act to Delhi is not in issue. This plea was not set up by the respondents in their affidavits. Whether or not notice for the requisite period was given before issuing the exemption....