TaxTMI 
TaxTMI 
TaxTMI 
1959 (12) TMI 39
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....n June 15, 1954, the Collector, Central Excise, issued a notice to the petitioner to show cause why a penalty should not be imposed on him for the contravention of Rules 151(C)and 226 of the Central Excise Rules, 1944, and why the bags of kandi should not be confiscatted. The petitioner showed cause, the Collector heard the petitioner who had also filed written arguments. Finding the charges against the petitioner proved, the Collector ordered confiscation of the bags of kandi, imposed a fine of Rs. 150 and the duty leviable thereon in lieu of confiscation. He further imposed a penalty of Rs. 2,000 under rr. 151(C) and 226 of the Central Excise Rules. The appeal taken to the Central Board of Revenue was dismissed as the petitioner refused to deposit the penalty of Rs. 2,000 and a revision to the Central Board of Revenue was also dismissed for the same reason. This is one of the orders which is challenged by the petitioner. On July 29, 1954, the Collector called upon the petitioner to produce another surety as the previous surety Mohammad Satar was not prepared to act as such. The petitioner states that he thereupon furnished two bonds in Form B-4 and B-5 for Rs. 7,000 and Rs. 10,0....
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....Constitution Act of 1935; (2) even if they were within the legislative competence they impose excessive and unreasonable restraint on the fundamental right of the petitioner to trade in tobacco and they were not in the interest of the general public and therefore were not saved by Art. 19(6); (3) orders passed were ultra vires the Act and the Rules made thereunder. Before we proceed to consider the arguments raised on behalf of the petitioner, it is necessary to examine the scheme of the Act. Its scope as given in the preamble is:- "to consolidate and amend the law relating to central-duties of excise on goods manufactured or produced in British India and to salt." Section-2 of the Act gives the definitions. Chapter 11 provides for levy and collection of duty. The two main sections, i.e., 6 and 8 fall under this Chapter. Section 6 provides for certain operations to be subject to licences and when quoted it runs as follows: S. 6 " The Central Government may, by notification in the official Gazette, provide that, from such date as may be specified in the notification, no person shall, except under the authority and in accordance with the terms and conditions of a licence granted ....
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....rvation of Mahajan, C.J., in Cooverjee B. Bharucha v. The Excise Commissioner and The Chief Commissioner Ajmer & Ors. ([1954] S.C.R. 873, 877, 882.): " The pith and substance of the regulation is that it raises excise revenue by imposing duties on liquor and intoxicating drugs by different methods and it also regulates the import, export, transport, manufacture, sale and possession of intoxicating liquors." But that case did not raise the question of legislative competence ; the point for decision was whether the statute there impugned, infringed the right to carry on trade in liquor and also whether the auction money was a fee or a tax. It was in that connection that the observation above quoted was made. It was also argued that if the purpose and object of the Act is levying of duty of excise then it could not provide for regulation of trade and reliance was placed on King v. Barger (1908) 6 C.L.R. 41 where by a majority it was held that the question in substance was not an exercise of the power of taxation and if it was, the statute would be invalid as being in contravention of S. 55 'of the Constitution Act of Australia. The minority, however, was of the opinion that the....
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....he Central List it is not deemed to come within an entry in the Provincial list even though "the classes of subjects looked at singly overlap in many respects". It is within the competence of the Central legislature to provide for matters which may otherwise fall within the competence of the Provincial legislature if they are necessarily incidental to effective legislation by the Central legislature on a subject of legislation expressly within its power. Attorney-General for Canada v. Attorney-General,' for British Columbia ([1930] A.C. 111, 118.); Attorney-General for Canada v. Attorney-General for Quebec ([1947] A.C. 33, 43). In Gallagher v. Lynn ([1937] A.C. 863) it was held that if the true nature and character of an Act is to protect the health of the inhabitants then even though it may incidentally affect trade, it is not enacted " in respect of " trade. Moreover it is a fundamental principle of constitutional law that everything necessary to the exercise, of a power is included in the grant of the power. Edward Mills Co. Ltd. v. The State of Ajmer ([1955] 1 S.C.R. 735, 749). The item which falls for consideration in the present case is No. 45 of List 1 which is as follow....
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....rs. v. Bank of Commerce Ltd. ([1947] L.R. 74 I.A. 23, 41) and this Court did in State of Rajasihan v. G. Chawla (A.I.R. 1959 S.C. 544) that this passage correctly describes the ground on which the rule is founded and in our opinion it is a correct method of interpreting the words of the various items in the Lists read with s. 100 of the Constitution Act. Hidayatullah, J., in State of Rajasthan v. G. Chawla(A.I.R. 1959 S.C. 544) said at p. 546 :- " It is equally well-settled that the power to legislate on a topic of legislation carries with it the power to legislate on an ancillary matter which can be said to be reasonably included in the power given." We now proceed to determine the true nature and character or the pith and substance of the Act. It is a fiscal measure to levy and realise duty on tobacco. The method of realising duty must be left to the wisdom of the legislature taking each individual trade and its peculiarities and difficulties which arise in that matter. Various provisions of the Act and the Rules show that the authorities are on the track of the movement of tobacco from the time it is grown to the time it is manufactured and sold in the market and the various p....
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....n problems unfettered by a priori legal categories which often derive from the exercise of legislative power in the same constitutional writ " was quoted with approval by Venkatarama Aiyar, J., and if it is only a fee, its constitutionality cannot be challenged because of item 69 relating to fees on matters in List 1. Counsel for the petitioner relied upon r. 181. This rule may have an indirect effect of depriving an owner of a bonded warehouse from the privilege of keeping such a warehouse but that does not mean that the object and purpose of the Act is not imposition, collection and realisation of duty of excise. This rule is a means of making the realisation of duty effective and necessarily incidental to effectual legislation for collection of duties. Attorney-General for Canada v. Attorney-General for British Columbia . Looking at the scheme of the Act, its object and purpose, its true nature and character and the pith and substance the conclusion is inevitable that the Act was within the legislative competence of the Central legislature and although there may be certain matters otherwise within the legislative competence of the provincial legislature they are necessarily inci....