TaxTMI 
TaxTMI 
1978 (8) TMI 223
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...., constitutionally speaking. And there is a mystique about legalese beyond the layman's ken ! To set the record straight, we must state, right here, that no frontal attack is made on the power of the State to regulate any trade (even a trade where the turnover turns on tempting the customer to take reeling rolling trips into the realm of the jocose, belliocose, lachrymore and comatose). Resort was made to a flanking strategy of anathematising the statutory regulatory power in S. 59(f)v) and its offspring, the amended rule interdicting sales of tipay ecstasy on Tuesdays and Fridays, as too naked, unguided and arcane and, resultantly, too arbitrary and unreasonable to comport with Arts. 14 and 19. Our response at the first blush was this. Were such a plea valid, what a large communication exists between lawyer's law and judicial justice on the one hand and life's reality and sobriety on the other, unless there be something occultly unconstitutional in the impugned Section and Rule below the visibility zone of men of ordinary comprehension. We here recall the principle declared before the American Bar Association by a distinguished Federal......... Judge- William Howard Taft-in ....
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....nomics, nostics and other allied sciences, if he is to be a jurist priest in the service of justice or legal engineer of social justice.( Encyclopaedia of the Social Sciences, Vol. J-ll p. 618.) This is our perspective because, while the forensic problem is constitutional, the Constitution itself is a human document. The integral yoga of law and life once underlined, the stage is set to unfold the relevant facts and focus on the precise contentions. Several counsel have made separate submissions hut the basic note is the same with minor variations in emphasis. Why drastically regulate the drink trade ?-the Social rationale-on Brandies brief Anywhere on our human planet the sober imperative of moderating the consumption of inebriating methane substances and manacling liquor business towards that end, will meet with axiomatic acceptance. Medical, criminological and sociological testimony on a cosmic scale bears out the tragic miscellany of traumatic consequences of, shattered health and broken homes, of crime escalation with alcohol as the hidden villain or aggressively promotional anti-hero, of psychic breakdowns, insane cravings and efficiency impairment, of pathetic descent ....
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....emselves during drunken behaviour .... Although its dangers are not commonly understood or accepted by the public, ethyl alcohol can have perhaps the most serious con sequences of any mind-and-body-altering drug. It causes addiction in chronic alcoholics, who suffer consequences just as serious, if not more serious than opiate addicts. It is by far the most dangerous and the most widely used of any drug." (emphasis added). The President's Commission on Law Enforcement and Administration of Justice made the following pertinent observation: The figures show that crimes of physical violence are associated with intoxicated persons.. Thus the closest relationship between intoxication and criminal behaviour (except for public intoxication) has been established for criminal categories involving assaultive behaviour. This relationship is especially high for lower class Negroes and whites. More than likely, aggression in these groups is weakly controlled and the drinking of alcoholic beverages serves as a triggering mechanism for the external release of aggression. There are certain types of key situations located in lower class life in which alcohol is a major factor in triggering as....
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....om 64,520 to 47,027. According to Evangeline Booth, the Commander of the Salvation Army, "In New York before prohibition, the Salvation Army would collect from 1,200 to 1,300 drunkards in a single night and seek to reclaim them. Prohibition immediately reduced the gathering to 400 and the proportion of actual drunkards from 95 per cent to less than 20 per cent". And "a decrease of two thirds in the number of derelicts, coupled with a decrease in the number of drunkards almost to the Vanishing point, certainly lightened crime and charity bills. It gave many of the erstwhile drunkards new hope and a new start". So says E. E. Covert, in an interesting article on Prohibition. The ubiquity of alcohol in the United States has led to nationwide sample studies and they make startling disclosures from a criminological angle. For instance, in Washington, D.C. 76.5 % of all arrests in 1965 were for drunkenness, disorderly conduct and vagrancy, while 76.7% of the total arrests in Atlanta were for these reasons(Society, Crime and Criminal Careers by Don C. Gibbons p. 427-428.) Of the 8 million arrests in 1970 almost one-third of these were alcohol-related. Alcohol is said to affect the li....
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....ssible, I would leave the people free to choose. But then I see an enormous capitalistic organisation pushing drink under people's noses of every corner and pocketing the price while leaving me and others to pay the colossal damages, then I am prepared to smash that organisation and make it as easy for a poor man to stay sober, if he wants to as it is for his dog. Alcohol robs you of that last inch of efficiency that makes the difference between first-rate and second-rate. I don't drink beer-first, because I don't like it; and second, because my profession is one that obliges me to keep in critical training, and beer is fatal both to training and to criticism. only teetotallers can produce the best and sanest of which they are capable. Drinking is the chloroform that enables the poor to endure the painful operation of living. It is in the last degree disgraceful that a man cannot pro vide his own genuine courage and high spirits without drink. I should be utterly ashamed if my soul had shrivelled up to such an extent that I had to go out and drink a whisky. (Report of the study Team on Prohibition Vol. I P. 346.) The constitutional test of reasonableness, built in....
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....ffers to the poor, especially their dependents. Gandhiji again: "For me the drink question is one of dealing with a growing social evil against which the State is bound to (The Collected Works of Mahatma Gandhi, Vol. 66 P. 47.) The Collected Works of Mahatma Gandhi pp.29-30 provide whilst it has got the opportunity. The aim is patent. We want to wean the labouring population and the Harijans from the curse. It is a gigantic problem, and the best resources of all social workers, especially women, will be taxed to the utmost before the drink habit goes. The prohibition I have adumbrated is but the beginning (undoubtedly indispensable) of the reform. We cannot reach the drinker so long as he has the drink ship near his door to tempt him ''(l) Says Dr. Sethna in his book already referred to: "And in India, with the introduction of prohibition we find a good decline in crime. There are, however, some per sons who cannot do without liquor. Such persons even so to the extent of making illicit liquor and do not mind drinking harmful rums and spirits. The result is starvation of children at home, assaults and quarrels between husband and wife, between father and child, desertion, and ....
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....ibition. In 1949, nearly half the area of the Central Provinces and Berar got dry, and it was proposed to enforce prohibition throughout the State. In Bombay the Prohibition Bill was passed and became Act in 1949, and Bombay got dry by April 1950. The number of offences; under the Abkari Act is notoriously high. It shows the craving of some persons for liquor in spite of all good efforts of legal prohibition. The remedy lies in making prohibition successful through education (even at the school stage), suggestion reeducation. The Tek Chand Committee (Report of the Study Team on Prohibition. (2) Ibid p. 345. (Vol. l).) surveyed the civilizations from Babylon through China, Greece, Rome and India. X-rayed the religions of the world and the dharmasastras and concluded from this conspectus that alcoholism was public enemy. Between innocent first sour sip and nocent never-stop alcoholism only time is the thin partition and, inevitability the sure nexus, refined arguments to the contrary notwithstanding(2). In India, some genteel socialities have argued for the diplomatic pay-off from drinks and Nehru has negatived it: "Not only does the health of a nation suffer from this....
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....t is true, first falls upon him in his health, which the habit undermines; in his morals, which it weakens; and in the self-abasement which it creates. But as it leads to neglect of business and waste of property and general demoralization, it affects those who are immediately connected with or dependent upon him. By the general concurrence of opinion of every civilised and Christian community, there are few sources of crime and misery to society equal to the dram shop, where intoxication liquors, in small quantities, to be drunk at the time, are sold indiscriminately to all parties applying. The statistics of every State show a greater amount of crime and misery attributable to the use of ardent spirits obtained at those retail liquor saloons than to any other source. The sale of such liquors in this way has therefore, been, at all times, by the courts of every State, considered as the proper subject of legislative regulation. Not only may a licence be exacted from the keeper of the saloon before a glass of his liquors can be thus disposed of. But restrictions may be imposed as to the class of persons to whom they may be sold, and the hours of the day, and the days of the week, on....
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.... Workmen's Compensation Act of which he said: "when an eighteenth century constitution forms the charter of liberty of a twentieth century government, must its general provisions be construed and interpreted by an eighteenth century mind surrounded by eighteenth century conditions and ideals ? Clearly not. This were a command of half the race in its progress, to stretch the state upon a veritable bed of Procrustes. Where there is no express command or prohibition, but only general language of policy to be considered, the conditions prevailing at the time of its adoption must have their due weight hut the changed social, economic and governmental conditions of the time, as well as the problems which the changes have produced, must also logically enter into the consideration and become influential factors in the settlement of problems of construction and interpretation." (2) Borgnis v. The Falk Co. 147 Wisconsin Reports P. 327 at 348 et See (1911). In short, while the imperial masters were concerned about the revenues they could make from the liquor trade they were not indifferent to the social control of this business which, if left unbridled, was fraught with danger to health....
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....o the terms and conditions of a licence granted by the Collector. By sub section (2) of section 20 no distillery or brewery can be constructed or worked except under the authority and subject to the terms and conditions of a licence granted by the Financial Commissioner. Section 24 provides that no person shall have in his possession any intoxicant in excess of such quantity as the State Government declares to be the limit of retail sale, except under the authority and in accordance with the terms and conditions of a licence or permit. Subsection (4) of section 24 empowers the State Government to prohibit the posses sion of any intoxicant or restrict its possession by imposing such conditions as it may prescribe. Section 26 prohibits the sale of liquor except under the authority and subject to the terms and conditions of a licence granted in that behalf. Section 27 of the Act empowers the State Government to "lease" on such conditions and for such period as it may deem fit or retail, any country liquor or intoxicating drug within any specified local area. On such lease being granted the Collector, under sub-section (2), has to grant to the lessee a licence in the form of his lea....
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....iquor shall keep his shop closed on the seventh day of every month, on all Tuesdays upto 2 p.m. On Republic day (26th January), on Independence day (15th August), on Mahatma Gandhi's birthday (2nd October) and on such days not exceeding three in a year as may be declared by the Government in this behalf. He shall observe the following working hours. hereinafter called the licensed hours, and shall not, without the sanction of the Excise Commissioner, Punjab or other competent authority, keep his shop open outside these hours The licensed hours shall be as follows: xx xx xx After amendment 37(9). Conditions dealing with licensed hours.- Every licensee for the sale of liquor shall keep his shop closed on every Tuesday and Friday, on Republic Day (26th January), on Independence day (15th August), on Mahatma Gandhi's birthday (2nd October) and on such days not exceeding three in a year as may be declared by the Government in this behalf. He shall observe the following working hours, hereinafter called the licensed hours, and shall not, without the sanction of the Excise Commissioner, Punjab or other competent authority, keep his shop open outside these hours. The license....
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....is unreasonableness, arbitrariness and vacuum of any indicium for just exercise. Essentially, the point pressed was that S. 59(f)(v) vested an unguided, uncanalised, vague and vagarious power in the Financial Commissioner to fix any days or number of days and any hours or number of hours as his fancy or humour suggested. There were no guidelines, no indicators, no controlling points whereby the widely-worded power of the Excise Commissioner on whom Government has vested the power pursuant to Sec. 9) should be geared to a definite goal embanked by some clear-cut policy and made accountable to some relevant principle. Such a plenary power carried the pernicious potential for tyrannical exercise in its womb and would be still born, judged by our constitutional values. If the power is capable of fantastic playfulness or fanciful misuse it is unreasonable, being absolute, tested by the canons of the rule of law. And if, arguendo, it is so unreasonably wide as to imperil the enjoyment of a fundamental right it is violative of Art. 19(1)(g) and is not saved by Art. 19(6). Another facet of the same submission is that if the provision is an arbitrary armour, the power-wielder can act nepoti....
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....law by this process, may not be sufficient, if the traditional approach were to be made to striking down; but if restructuring is done and the formal process delayed, there is no reason to quash when the correction is done. Courts try to save, not to scuttle, when allegiance to the Constitution is shown. In short, Tuesdays and Fridays, so long as this rule remains (as modified in the light of the undertaking) shall be a holiday for the liquor trade in the private Or public sector throughout the State. We need hardly state that if Government goes back on this altered law the consequences may be plural and unpleasant. Of course, we do not expect, in the least, that any such apprehension will actualise. one confusion that we want to clear up is that even if S. 59 and Rule 37 were upheld in toto that does not preclude any affected party from challenging a particular executive act pursuant thereto on the ground that such an act is arbitrary, mala fide or unrelated to the purposes and the guidelines available in the Statute. If, for instance, the Financial Commissioner or the Excise Commissioner, as the case may be declares that all liquor shops shall be opened on his birthday or s....
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.... while bringing in the Tuesday-Friday forbiddance of sales, the ban on sales on the seventh of every month was entirely deleted-an oblique bonus to the liquor lobby, if we look at it sternly, an unwitting indiscretion, if we view it indulgently. The victims are the weeping wives and crying children of the workers. All power is a trust and its exercise by governments must be subject to social audit and Judas exposure. 'For whom do the constitutional bells toll ?' this court asked in an earlier judgment relating to Scheduled Castes. [1977] 1.S.C.R. 906 We hope Punjab will rectify the error and hearten the poor in the spirit of Art. 47 and not take away by the left hand what the right hand gives. We indicated these thoughts in the course of the hearing so that no one was taken by surprise. Be that as it may, the petitioner can derive no aid and comfort from our criticisms which are meant to alert the parliamentary auditors of subordinate legislation in our welfare 1 State. The Scheme and the subject matter supply the guidelines We come to the crux of the matter. Is Section 59(f)(v) 'bad for want of guidelines ? Is it over-broad or too bald ? Does it lend itself to naked, unreasonab....
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....(v)] was made by raising a consternation. The power to - fix the days and hours is so broad that the authority may fix six out of seven days or 23 out of 24 hours as 'dry' days or closed hours and thus cripple the purpose of the licence. This is an ersatz apprehension, a caricature of the provision and an assumption of power run amok. An Abkari law, as here unfolded by the scheme (chapters and Sections further amplified by the rules framed thereunder during the last 64 years) is not a Prohibition Act with a mission of total prohibition. The obvious object is a to balance temperance with tax, to condition and curtail consumption without liquidating the liquor business, to experiment with phased and progressive projects of prohibition without total ban on the alcohol trade or individual intake. The temperance movement leaves the door half-closed, not wide, ajar; the prohibition crusade banishes wholly the drinking of intoxicants. So it follows that the limited temperance guideline writ large in the Act will monitor the use of the power. Operation Temperance, leading later to the former, may be a strategy within the scope of the Abkari Act. Both may be valid but we do not go into i....
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....inuance, by any incidental inconvenience which individuals or corporations may suffer." The States have consistently held that the regulation of intoxicants is a valid exercise of its police power. The police power stands upon the basic principle that some rights must be and are surrendered or modified in entering into the social and political state as indispensible to the good government and due regulation and well being of society. In evaluating the constitutionality of a regulation within the police power, validity depends on whether the regulation is designed to accomplish a purpose within the scope of that power." Idaho Law Review, Vol. 7, 1970 p. 131. It is evident that there is close similarity in judicial thinking on the subject. This has been made further clear from several observations of this Court in its judgments and we may make a reference to a recent case, Himmatlal, and a few observations therein: "In the United States of America, operators of gambling sought the protection of the commerce clause. But the Court upheld the power of the Congress to regulate and control the same. Likewise, the pure Food Act which prohibited the importation of adulterated food ....
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....means of livelihood to its citizens and to sec that the health and strength of workers men and women, are not abused, that exploitation, normal and material, shall be extradited. In short State action defending the weakersections from social injustice and all forms of exploitation and raising the standard of living of the people, necessarily imply that economic activities, attired as trade or business or commerce, can be derecognized as trade or business. At this point, the legal culture and the public morals of a nation may merge, economic justice and taboo of traumatic trade may meet and jurisprudence may frown upon day dark and deadly dealings. The Constitutional refusal to consecrate exploitation as 'trade' in a socialist Republic like ours argues itself." A precedentral approach to the ultra vires argument. The single substantive contention has incarnated as triple constitutional infirmities. Counsel argued that the power to make rules fixing the days and hours for closing or keeping open liquor shops was wholly unguided. Three invalidatory vices flowed from this single flaw viz. (i) excessive delegation of legislative power, (ii) unreasonable restriction on the fundamental....
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....ordinate authority must do so within the frame-work of the law which makes the delegation. And such subordinate legislation has to be consistent with the law under which it is made and cannot go beyond the limits of the policy and standard laid down in the law. Provided the legislative policy is enunciated with sufficient clearness or a standard is laid down, the courts should not interfere with the discretion that undoubtedly rests with the legislature itself in determining the extent of delegation necessary in a particular case." Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills Delhi & Anr. [1968] 3 S.C.R. 251 at 261 In Vasanthlal Maganbhai Sajanwal v. The State of Bombay [1961] 2 S.C.R. 341. the same point was made: "A statute challenged on the ground of excessive delegation must therefore be subject to two tests, (1) whether it delegates essential legislative function or power and (2) WHETHER- the legislature has enunciated its policy and principle for the guidance of the delegate." Likewise, if the State can choose any day or hour for exclusion as it fancies and there are no rules to fix this discretion, plainly the provision [Sec.59(f)(v)] m....
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....the Additional Solicitor General rightly shielded the statutory provisions i question by drawing our attention to the crucial factor that the subject matter of the legislation was a deleterious substance requiring restrictions in the direction of moderation in consumption.regulation regarding the days and hours of sale and appropriateness in the matter of the location of the places of sale. If it is coal or mica or cinema, the test of reasonableness will be stricter, but if it is an intoxicant or a killer drug or a fire-arm the restrictions must be stern. When the public purpose is clear and the policing need is manifest from the nature of the business itself, the guidelines are easy to find. Shri Mahajan's reliance on the Coal Control Case A.I.R. 1954 S.C. 224 or Shri A. K. Sen's reliance on the Gold Control case A.I.R. 1970 S.C. 1453is inept. Coal and gold are as apart from whisky and toddy as cabbages are from kings. Don't we feel the difference between bread and brandy in the field of trade control ? Life speaks through Law. Counsel after counsel has pressed that there is no guideline for the exercise of the power of rule-making and the Addl. Solicitor General has turned to ....
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....of taxation, the concentration of distillation the extended adoption of the contract distillery system. The Committee suggested among other things the replacement of the then existing excise law by fresh legislation on the lines of the Madras Abkari Act. (See Dr. Pramatha Nath Banerjee: History of Indian Taxation P. 470 seq.). Reference may be made to the Taxation Enquiry Commissioner Report 1953-54 Vol. 3. At page 130 following there is a discussion of State excises. Among the major sources of revenue which are available to the State Government there is a duty on alcoholic liquors for human consumption. At page 132 of the Report it is stated that in addition to the excise duties, licence fees are charged for manufacture or sale of liquor or for tapping toddy trees etc. Similarly, several fees like permit fees, vend fees, outstill duties are also levied. Manufacture or sale of liquor is forbidden except under licences which are generally granted by auction to the highest bidders. The manufacture of country spirit is done in Government distilleries or under the direct supervision of the excise staff. All supplies are drawn from Government warehouses which ensures that the liquor ....
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....pra) . The nature of the trade is such that the State confers the right to vend liquor by farming out either in auction or on private treaty. Rental is the consideration for the privilege granted by the Government for manufacturing or vending liquor. Rental is neither a tax nor an excise duty. Rental ii the consideration for the agreement for grant of privilege by the Government." (pp. 869-871) The guide-lines. Now that we have held that the provision [Section 59(f)(v)] is valid on a consideration of the criteria controlling the wide words used therein there is a minor matter remaining to be disposed of. The extract from the Section, as will be noticed, contains a clause which runs: "and the closure of such premises on special occasions". Thus, rules may be made by the Financial Commissioner for fixing the closure of licensed premises on 'special occasion'. Shri Mahajan insisted that 'special occasions' may mean anything and may cover any occasion dictated by humour, political pressure or other ulterior considerations. It is thus a blanket power which is an unreasonable restriction on the licensee's trade. Certainly if 'special occasions' means any occasion which appeals to t....