Full Judgment Text
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PETITIONER:
LACHMI NARAIN ETC. ETC.
Vs.
RESPONDENT:
UNION OF INDIA & ORS.
DATE OF JUDGMENT25/11/1975
BENCH:
SARKARIA, RANJIT SINGH
BENCH:
SARKARIA, RANJIT SINGH
CHANDRACHUD, Y.V.
GUPTA, A.C.
CITATION:
1976 AIR 714 1976 SCR (2) 785
1976 SCC (2) 953
CITATOR INFO :
D 1980 SC1866 (11)
D 1990 SC 560 (31,32,33)
RF 1991 SC1117 (11)
ACT:
Union Territories (Laws) Act, 1950, s. 2-Bengal Finance
(Sales Tax) Act, 1941, extended to Delhi with certain
modification by 1951-Notification-Notification more than 6
Years later inserting further modification of the Bengal Act
in the 1951 Notification-Validity-Section 6(2) of the Bengal
Act requiring 3 months notice before withdrawing exemption
from tax-If mandatory-If period of notice could be curtailed
by Central Government by Notification-Legislation by
reference, when can be inferred-Government, if can take
advantage of its lapse-General Clauses Act (10 of 1897),
s. 21, applicability.
HEADNOTE:
Section 2 of the Part 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 it, with such restrictions and modifications as it thinks
fit, any enactment in force in a Part A State. In 1951, the
Central Government, in exercise of this power, extended by a
Notification the Bengal Finance (Sales Tax) Act, 1941, to
the then Part State of Delhi with certain modifications in
s. 6. The section, after such extension with modifications,
provided:
6(1) No tax shall be payable under this Act on the
sale of goods specified in the first column
of the Schedule subject to the conditions
etc: and
(2) The State Government [Amended as Central
Government in 1956] after giving by
notification in the official gazette not less
than 3 months notice of its intention to do
so, may by like notification add to or omit
from or otherwise amend the Schedule and
thereupon the Schedule shall he amended
accordingly
A modified Schedule of goods exempted from tax under s.
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6 was also substituted for the original Schedule in the
Bengal Act, by the Notification.
After the passing of the States Reorganisation Act,
1956, the Part States (Laws) Act became Union Territories
(Laws) Act, 1950. with necessary adaptations.
In 1957, the Central Government issued a Notification
in purported exercise of the powers under s. 2 of the 1950-
Act, amending the 1951-Notification. By the 1957-
Notification an additional modification of s. 6 of the
Bengal Act was introduced in the 1951-Notification, namely
the words "such previous notice as it considers reasonable"
were substituted for the words "not less than 3 months’
notice" in s. 6(2).
In 1959, Parliament passed the Bengal (Sales Tax)
(Delhi Amendment) Act, 1959, making some amendments in
various sections of the Bengal Act but left s. 6 untouched.
By various notifications, exemption from sales tax was
granted to several commodities. but subsequently, the
exemption was withdrawn by other notifications after giving
notice of less than 3 months.
Dealers in those commodities, who were aggrieved by the
withdrawal of the exemption, challenged the validity of’ the
withdrawal. The High Court dismissed their petitions. On the
main ground that Parliament, while enacting the Amending Act
of 1959, had put its seal of approval to the curtailed
period of notice in s. 6(2) and as such, it should be taken
to have keen provided by Parliament itself in the Bengal
Act.
786
Allowing the appeals to this Court,
^
HELD: The 1957-Notification purporting to substitute
the words "such previous notice as it considers reasonable"
for the words ’not less than 3 months’ notice" in s. 6(2) of
the Bengal Act, is beyond the powers of the Central
Government, conferred on it, by s. 2 of the Union
Territories (Laws) Act, 1950; and in consequence, the
various notifications, in so far as they with drew
exemptions from tax with respect to the several commodities,
are invalid and ineffective, as the exemption was withdrawn
without complying with the mandatory requirement of not less
than 3 months’ notice enjoined by the section. [808-D-E]
(1) (a) The primary power bestowed by s. 2 of the Union
Territories (Laws) Act, 1950, on the Central Government is
one of extension, that is, bringing into operation and
effect, in a Union Territory, an enactment already in force
in a State. The discretion conferred by the section to make
"restrictions and modifications" in the enactment sought to
be extended, is not a separate and independent power, which
can be exercised apart from the power of extension, but is
an integral constituent of the power of extension. This is
made clear by the use of the preposition "with" one meaning
of which (which accords with the context) is "part of the
same whole". [801 E-F]
(b) There are 3 limits on the power given by s. 2. (i)
The power exhausts itself on extension of the enactment. It
can be exercised only once, simultaneously with the
extension of the enactment, but cannot be exercised
repeatedly or subsequently to such extension. (ii) The power
cannot be used for a purpose other than that of extension.
In the exercise of the 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 necessary for, or ancillary and subservient to
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the purpose of extension, are not permissible. And. Only
such modifications can be legitimately necessary for such
purpose, as are required to adjust, adapt, and make the
enactment suitable to the peculiar local conditions of the
Union Territory for carrying it into operation and effect.
(iii) The words "restrictions and modifications" do not
cover such alterations as involve a change in any essential
feature of the enactment or the legislative policy built
into it. [801G-H, 802A]
(c) If the words "such restrictions and modifications
as it thinks fit" are given the wide construction of giving
an unfettered power of amending and modifying the enactment
sought to be extended, as contended by the respondent, the
validity of the section itself becomes vulnerable on account
of the vice of excessive delegation. Moreover. such a
construction would be repugnant to the context and content
of the section, read as a whole. [802 B-C]
Rajnarain Singh v. The Chairman Patna Administration
Committee Patna [1955] 1 S.C.R. 291 and Re: Delhi Laws Act,
[1951] S.C.R. 747, referred to.
(2) The 1957-Notification transgresses these limits in
two respects :
(a) The power has not been exercised contemporaneously
with the extension or for the purposes of the extension of
the Bengal Act to Delhi but 6.6 years thereafter. The power
of extension with restrictions and modifications had
exhausted itself when the Bengal Act was extended to Delhi
with some alterations by the 1951-Notification. [802D-E]
The power given under s. 2 of the 1950-Act, cannot be
equated to the "Henry VIII clause" of the Acts of the
British Parliament because while the power under s. 2 can be
exercised only once when the Act is extended, the power
under a "Henry VIII clause" can be invoked, if there is
nothing contrary in the clause, more than once on the
arising of a difficulty when the Act is operative [802F-H]
Observations of Fazal Ali, J. at p. 850 in Re: Delhi
Laws Act case explained.
787
(b) The alteration sought to be introduced in s. 6(2)
by the 1957-Notification goes beyond the scope of the
"restrictions and modifications" permissible under s. 2 of
the 1950-Act, because, it purports to change the essential
features of s. 6(2) and the legislative policy inherent
therein. [803F]
Section 6(2) before the issue of the 1957-Notification,
requiring the Government to give "not less than 3 months’
notice" of its intention to add to or omit from or otherwise
amend the Schedule to the 1950-Act, embodies a
determination of legislative policy and its formulation as
an absolute rule of’ conduct could be diluted, changed or
amended only by the legislature, in the exercise of its
essential legislative function, which could not be delegated
to the Government. [803G-804E, F, G]
(i) The language of the sub-section as it stood is
emphatically prohibitive and it commands the Government in
unambiguous negative terms that the period of the requisite
notice must not be less than 3 months, showing that the
provision was mandatory and not directory. [804-A-B]
(ii) The scheme of the Bengal Act is that the tax is to
be quantified and assessed on the quarterly turnover. and
the period of not less than 3 months, notice conforms to the
scheme and ensures that the imposition of a new tax of
exemption does not cause dislocation or inconvenience either
to the dealer or the Revenue. [804B]
(iii) By fixing the period at not less than 3 months,
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purchasers on whom the incidence of tax really falls have
adequate notice of taxable items. [804-C]
(iv) Dealers and others likely to be affected by an
amendment of the Schedule get sufficient time to make
representations and adjust their affairs. [804-D]
The span of notice was thus the essence of the
legislative mandate. The necessity of notice and the span of
notice both are integral to the scheme of the provision and
it cannot be split up into essential and non-essential
components, the whole of it being mandatory. [804-E-F]
Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur,
[1965] 1 S.C.R. 970, distinguished.
(3)(a) Pt. Benarsi Das Bhanot v. State of Madhya
Pradesh [1959] 2 S.C.R. 427 does not assist the respondent.
That was a case where the contention that 5. 6(2) of the
C.P. & Bihar Sales Tax Act, 1947, was invalid on the ground
of excessive delegation, was rejected, by the Court. In the
present case, it is the validity of a Notification purported
to be issued under s. 2 of the 1950-Act that is impeached as
beyond the powers of modification conferred by the section.
[804H, 805A]
(b) In the present case, the Central Government did not
directly amend s. 6(2). More than 6 years after the
extension of the Act by the 1951-Notification, it amended
the sub-section indirectly by amending the 1951-
Notification. But on the extension of the Act to Delhi, the
1951-Notification had exhausted its purpose, and the
purported amendment, through the medium of such a "dead"
Notification is an exercise in utility. Further, an
amendment which was not directly permissible could not be
done indirectly. [805-B, C]
(4) The High Court was in error in holding that
Parliament had validated or re-enacted referentially, with
retroactive effect, what was sought to be done by the 1957-
Notification when it passed the Amending Act, 1959. [807C]
The Amending Act leaves s. 6(2) untouched. It does not
even indirectly refer to the 1957-Notification or the
amendment purportedly made by it in s. 6(2). Nor does it re-
enact or validate what was sought to be achieved by that
notification. No indication of referential incorporation or
validation of the 1957-Notification or the amendment sought
to be made by it, is available either in the Preamble or in
any other provision of the Amending Act. Parliament despite
its presumed awareness of the 1957-Notification, has said
nothing in the Amending Act indicating that it has in any
manner incorporated, re-enacted or
788
validated the 1957-Notification or the amendment sought to
be made thereby, while passing the Amending Act, 1959. [805-
E-F, 807-B-C]
Krishna Chandra v. Union of India, A.I.R. 1975 S.C.
1389, referred to,
(5) A mere amendment of an Act by a competent
legislature does not amount to re-enactment of the parent
Act. [807D]
Venkatarao Esajirao Limberkar’s case [1970] 1 S.C.R.
317, explained.
(6) The respondent cannot contend that if the
withdrawal of exemption without giving 3 months" notice was
illegal, then the grant of exemption without giving 3
months’ notice was also void. [808-A]
(a) Some of the goods were granted exemption by the
1951-Notification itself and, hence, there is no question of
giving notice for giving those exemptions. [807-G]
(b) The validity of the notifications granting
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exemptions after the extension of the Act to Delhi is not in
issue in the writ petitions. and whether or not the
requisite notice was given before granting exemption is a
question of fact depending on evidence. [807G]
(c) To allow the respondent to take such a plea would
be violative of the fundamental principle of natural
justice, according to which a party cannot be allowed to
take advantage of his own lapse or wrong. [807--H]
(7) The respondent cannot also rely on s. 21 of the
General Clauses Act, because, the source of the power to
amend the Schedule to the 1950-Act. is s. 6(2) of the Bengal
Act and not s. 21 of the General Clauses Act, and the power
has to be exercised within the limits of s. 6(2) and for the
purpose for which it we conferred. [808-B]
Gopichand v. Delhi Administration, [1959] Suppl. 2
S.C.R. 87, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2221-
2225, and 2524 of 1972.
From the Judgment and orders dated the 18-11-71, 29-3-
1972 and 5-2-1972 of the Delhi High Court in L.P. No. 53/71
and Civil Writ Petitions Nos. 612, 640, 643 and 649/71,
281/72 and 1052 of 1971 respectively.
A.K. Sen, Sarjoo Prasad Balram Senghal and C. P. Lal
for the Appellants in CAs 2221-2225/72
B. Sen, S.P. Nayar and M.N. Shroff for Respondents 2-3,
(In CAs. 2221-2225/72) for Respondents 1-4 in. C.A. 1801).
S.V. Gupte, Mrs. Leila Sait and U. K. Kaithan for
Interveners (In CAs. 2221-2225/72) and Appellants (In CAs.
2524/72).
M. C. Bhandare, Sardar Bahadur Saharya, B. N. Kirpal
and V. B. Saharya for the Appellant in CA 1801/72.
The Judgment of the Court was delivered by
SARKARIA, J. Whether the Notification No. SRO-2908,
dated December 7, 1957 issued by the Central Government in
purported exercise of its powers under s. 2 of the Union
Territories (Laws)
789
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 States (Laws) Act, 1950,
empowered the Central Government to extend by notification
in the official Gazette to any Part 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 the 28th April 1951,
extended to the then Part 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 amend the Schedule" shall
be substituted "
For the Schedule of the Bengal Act, this Notification
substituted a modified Schedule of goods exempted under s.
6. The relevant items in the modified Schedule were as
follows:
"8. Fruits, fresh and dried (except when sold in
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sealed containers).
11. Pepper, tamarind and chillies.
14. Turmeric.
16. Ghee.
17. Cloth of such description as may from time to
time be specified by notification in the
Gazette costing less per yard than Rs. 3/- or
such other sum as may be specified. .
21A. Knitting wool."
Section 6 of the Bengal Act after its extension to
Delhi, as modified by the said Notification, reads thus :
"6(1)No tax shall be payable under this Act on the
sale of goods specified in the first column
of the Schedule subject to the conditions and
exceptions if any set out in the
corresponding entry in the second column
thereof.
(2) The State Government after giving by
Notification in the official Gazette not less
than 3 months’ notice of its intention so to
do may by like notification
790
add to or omit from or otherwise amend the
Schedule and thereupon the Schedule shall be
deemed to be amended accordingly." (emphasis
supplied)
By a Notification, dated 1-1-1951, in sub-section (1)
of s. 6, the words "the first column of" were omitted and
for the words "in the corresponding entry in the second
column thereof" the word "therein" was substituted.
By a notification country liquor was included in the
Schedule as item No. 40 of exempted goods with effect from
19 1 1952.
On 1-11-1956, as a result of the coming into force of
the States Reorganization Act, 1956, and the Constitution
(Seventh Amendment) Act, 1956, Part States were abolished.
Part State of Delhi became a Union Territory and the Delhi
Legislative Assembly, was also abolished. In 1956, Part
State (Laws) Act, 1950 (hereinafter referred to as Laws Act)
also became me Union Territories (Laws) Act, 1950, with
necessary adaptations.
On 1-12-1956, Parliament passed the Bengal Finance
(Sales-Tax) (Delhi Amendment) Act 1956 which introduced
amendments in different sections of the Bengal Act as
applicable to Delhi. It made only two changes in s. 6
Firstly, the word ’Schedule’, wherever it occurred, was
replaced by the words "Second Schedule". Secondly the words
"Central Government" were substituted for the words "State
Government".
On December 7, 1951, in the Gazette of India
Extraordinary there appeared a notifications 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 (6), after sub-item (a), the
following sub-item shall be inserted, namely :-
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"(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 7-12-1957, is me
subject of primary challenge in these appeals (hereinafter
it will be referred to as the impugned notification).
791
Item 17 in the Second Schedule of the Bengal Act was
amended with effect from December 14, 1957 by Notification
No. SRO 3958, as under :
"17. All varieties of cotton, woollen, rayon or
artificial silk fabric but not including real silk
fabrics".
"Conditions subject to which tax shall not be
payable:
In respect of tobacco-cotton fabrics, rayon or
artificial silk fabrics and woollen fabrics as defined
in item 9, 12, 12A, 12B at the First Schedule to the
Central Excises and Salt Act, 1944 (I of 1944) included
in entries (a) and (c) above, no tax under the Bengal
Finance (Sales Tax) Act 1941, shall be payable in the
Union Territory of Delhi only if additional duties of
excise have been levied on them under the Additional
Duties of Excise (Goods of Special Importance) Act
1957".
The aforesaid condition was withdrawn by Notification
No. GSR 203, dated 1-4-1958.
By Notification No. GSR 202, dated 1-4-1958, the
Central Government withdrew the exemption of country liquor
from tax by omitting item No. 40 from the Second Schedule.
By Notification No. GSR 1076 dated 19-9-1959, the
Central Government withdrew the exemption from tax of Items,
8, 11, 14 and 21A by omitting them from the Second Schedule
with effect from 1-10-1959.
On 1-10-1959, the Bengal. (Sales-Tax Delhi Amendment)
Act, 1959 (Act XX of 1959) came into force whereby
Parliament made some amendments in different sections of the
Bengal Act but left s. 6 untouched.
By a Notification No. GSR 964 dated 16-6-1966, notice
was given that item 17 of the Second Schedule would be
substituted with effect from 1-7-1966, as follows:
"Item-17-All varieties, cotton, woollen, nylon,
rayon, pure silk or artificial silk fabrics but
excluding Durries, Druggets and carpets".
The proposed amendment was given effect to from 1-7-
1966, by Notification No. GSR 1061 dated 29-6-66. One result
of this amendment was that exemption of Durries from tax was
withdrawn, while, such exemption was among others, extended
to ’pure-silk’.
By a Notification GSR 1038, dated 14-7-1970, notice was
given that item 17 in the Second Schedule would be
substituted with effect from 1-8-1970, as follows:
"17. All varieties of cotton fabrics, rayon, or
artificial silk fabrics and woollen fabrics but not
including Durries, Druggets and carpets".
792
Such substitution of item 17 was made with effect from
1-8-70 by Notification GSR 1119 dated 31-7-1970. 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 29-6-1966 whereby exemption of Durries from
sales-tax was withdrawn.
The appellants in Civil Appeals 2222, 2223 and 2225 of
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1972 deal in knitting wool. Their cause of action arose when
exemption of knitting wool was withdrawn by Notification
dated 19-9-1959, w.e.f. 1-10-1959. The appellants in Civil
Appeals 2524 of 1972 deal inter alia in pure silk. They are
aggrieved by Notification, dated 31-7-1970 by which
exemption of ’pure-silk’ was withdrawn w.e.f. 1-8-1970.
The appellants in Civil Appeal No. 2224 of 1972 is a
Kiryana dealer. He feels aggrieved by the Notification dated
19-9-1959 whereby items 8, 11 and 14 were deleted from the
Second Schedule with effect from 1-10-1959.
The appellants in Civil Appeal No. 1801 of 1972 are
licensed vendors of country liquor. They feel adversely
affected by Notification GSR 1076, dated 19-9-1959 whereby
exemption of country liquor from tax was withdrawn with
effect from 1-10-1959.
Several writ petitions were filed in the High Court to
question the validity of the Government action withdrawing
the exemptions with notice far less than three months. A
learned Judge of the High Court allowed eight of these
petitions by a common judgment recorded in Civil Writ 574-D
of 1966, Lachmi Narain v. Union of India and others. Against
that judgment, the Revenue carried appeals under Clause 10
of the. Delhi High Court Act, 1966, to a Bench of the High
Court. In the meanwhile more writ petitions (C. Ws. 593 to
652, 792 to 806 of 1971) were instituted in which the same
question was involved. The Division Bench, by a common
judgment, allowed the appeals and dismissed the writ
petitions.
The writ petitioners have now come in appeal to this
Court on the basis of a certificate granted by the High
Court under Article 133 (1) (a) and (c) of the Constitution.
In the High Court the validity of the withdrawal of the
exemptions was challenged on these grounds :
(I) The power given by s. 2 of the Laws Act to
the Central Government to extend enactments
in force in a State to a Union Territory with
such restrictions and modifications as it
thinks fit, could be exercised only to make
such modifications in the enactment as were
necessary in view of the peculiar local
conditions. The modification in s. 6(2) of
the BengaI Act made by SRO 3908, dated
793
7-10-1957, was not necessitated by this
reason. It was therefore, ultra vires s. 2 of
the Laws Act;
(2) Such a modification could be made only once
when the Bengal Act was extended to Delhi in
1951. No modification could be made after
such extension.
(3) The modification could not change the policy
of the legislature reflected in the Bengal
Act. The impugned modification was contrary
to it, and
(4) The modifications giving notice to withdraw
the exemptions and the notifications issued
pursuant thereto withdrawing the exemptions
from sales-tax with respect to Durries, Ghee,
(and other items relevant to these petitions)
were void as the statutory notice of not less
than three months as required by s. 6(2)
prior to its modification by the impugned
notification of 7th December, 1957 had not
been given.
Finding on all the four grounds in favour of the writ
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petitioners, lie learned Single Judge declared "that the
purported modification of S. 6(2) of the Bengal Finance
(Sales-Tax) Act 1941 by the Government of India’s
notification No. SRO 3908, dated 7th December, 1957, was
ineffective and s. 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 GSR 964, dated 16-6-
1966 and GSR 1061 dated 29-6-1966 because they were not in
compliance with the requirement of s. 6(2) of the Bengal
Act.
The contentions canvassed before the learned 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
s. 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 reasoning with the summary remark-"from the
extracts quoted by the learned Single Judge from the
judgment of the Supreme Court in Re: Delhi Laws Act and from
the Judgment in Rajnarain Singh v. The Chairman Patna
Administration Committee Patna and Anr. the principle
deduced by the learned Judge does not appear to follow. We
are therefore not inclined, as at present advised to support
the above observations". The Bench however hastened to add :
"However, since the matter was not argued at great
length and the appellants’ Counsel rested his
submissions on the other aspects of the case, we would
not like to express
794
any definite opinion on the question as to whether the
power of making any modifications or restrictions in
the Act can only be exercised at the time of extending
the Act and that it cannot be done subsequently by the
Central Government in exercise of its power."
Seeking support from the observations of this Court in
Raza Buland Sugar Co. Ltd. v. Municipal Board, Rampur,(1)
the Bench held that what is mandatory in s. 6(2) is the
requirement as to the giving of reasonable notice of the
Government’s intention t(! amend the second Schedule, for
the information of the public, and that "no special
significance or sanctity is attached to the span of time of
three months provided in subsection (2) of s. 6." The Bench
found that since the withdrawals of the exemptions in
question, had been made after reasonable notice, the same
were not invalid.
However, the main ground on which the decision of the
Bench rests is that the infirmity, if any, in the impugned
notification dated 7-12-1957, had been cured and rectified
when "Parliament while enacting the Amendment Act, 1959 (Act
No. ’70 of 1959) put its seal of approval to the curtailed
period of notice. As such the curtailed period of notice
shall be taken to have been provided by Parliament on the
ratio of Supreme Court’s decision in Venkatrao Esajirao
limberkar’s case".
Apart from the grounds taken in their writ petitions,
the learned Counsel for the appellants have tried to raise
before us another ground under the garb of what they styled.
as merely an additional argument". They now seek to
challenge the vires of the Notification SRO 615, dated the
28th April, 1951 in so far as it relates to the insertion in
sub-section (2) of s. 6 of that Act, between the words "add
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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
s. 2 of the Laws Act. The point sought to be made out is
that if the insertion made by the Notification dated 28-4-
1951, in sec. 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 s. 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, learned Counsel for the Revenue.
We are not inclined to permit the appellants to add to
the list of impugned Notifications, now in section appeal.
In their writ petitions, the appellants did not challenge
the validity of the Notification dated 28-4-51. They never
raised this point before the learned
795
Single Judge. Of course, before the appellate Bench, an
argument was addressed on this point, but it does not appear
to have been pressed. The Bench noted:
"In the present appeal, the Bengal Act as extended
by SRO 615, dated the 28th April 1951, did not suffer
from any infirmity. It is conceded by the learned
Counsel for the respondent that the Central
Government at the time it extended e the Bengal Act,
was competent to introduce such modification and
restrictions as it thought fit."
The certificate under Art. 133 of the Constitution was
neither sought, nor granted on any ground touching the
validity of the Notification, dated 28-4-1951. In the face
of all this, it is now too late for the appellants to commit
a volte face. Accordingly, we decline to entertain this new
ground of challenge.
The learned Counsel for the parties have, more or less,
reiterated the same contentions which they had advanced in
the High Court.
On behalf of the appellants, it is contended that the
power of modification conferred on the Central Government by
s. 2 of the Laws Act is not an unfettered power of delegated
legislation but a subsidiary power conferred for the limited
purpose of extension and application to a Union Territory,
an enactment in force in a State. It is maintained that only
such modifications are permissible in the exercise of that
power which are necessary to adapt and adjust such enactment
to local conditions.
According to Shri Ashok Sen, the power given by s. 2 is
a power of conditional legislation which is different from
the power of delegated legislation. It is submitted that it
is not a recurring power; it exhausts itself on extension,
and in no case this power can be used to change the basic
scheme and structure of the enactment or the legislative
policy ingrained in it. The submission is that the impugned
notification, dated 7-12-1957, is bad because it has been
issued more than 61 years after the extension of Bengal Act,
and it attempts to change the re- rquirement of s. 6(2) as
to "not less than three months notice" which P is the
essence of the whole provision.
Reference has been made to this Court’s opinion in Re:
Delhi Laws Act (supra) and the decision in Raj Narain Singh
case (supra).
Shri Ashok Sen further submits that by the amending Act
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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 s. 6 of the Bengal Act. It is stressed that the
amending Act of 1959, did not touch s. 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
s. 6(2) of the Bengal Act.
796
According to Counsel, the policy underlying s. 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 Delhi.
Bengal, it is pointed out, is a big, far-flung State while
the Territory of Delhi is a small, compact area and
therefore, it would not be necessary or unreasonable to give
a notice of less than three months for every amendment of
the Schedule. Reliance has been placed on this Court’s
dictum in Raza Buland Sugar Co.’s case (supra). It is argued
that the power to add or omit from the Second Schedule
conferred on the Government is in consonance with the
accepted practice of the Legislature; that it is usual for
the legislature to leave a discretion to the executive to
determine details relating to the working of taxation laws,
such as the selection of persons on whom the tax is to be
levied or rates at which it is to be charged in respect of
different classes of goods and the like. Reference has been
made to the observations of this Court in Pt. Benarsi Das
Bhanot v. State of Madhya Pradesh in the context of s. 6(2)
of the Central Provinces and Berar Sales Tax Act 1947.
Shri B. Sen further contends that the power of
modification given by s. 2 of the Laws Act, does not exhaust
itself on first exercise; it can be exercised even
subsequently if through oversight or otherwise, at the time
of extension of the enactment the Central Government fails
to adapt or modify certain provisions of the extended
enactment for bringing it in accord with local conditions.
In this connection support has been sought from the
observations of Fazal Ali J. at p. 850 of the Report in Re:
Delhi Laws Act (supra). Our attention has also been invited
to s. 21 of the General Clauses Act which according to
Counsel, gives power to the Central Government to add to,
amend, vary or rescind any notification etc. if the power to
do so does not run counter to the policy of the legislature
or affect any change in its essential features.
Learned Counsel has further tried to support the
reasoning of the appellate Bench of the High Court, that
whatever infirmity may have existed in the impugned
notification and the modification made there by in s. 6(2),
it was rectified and cured by Parliament when it passed the
Amendment Act 20 of 1959. It is urged that the Bengal Act
together with the modifications made by notifications, dated
28-4-51, and 7-12-1957, must have been before Parliament
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-
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Tax) Act, 1941, as in force in the Union Territory of
Delhi," and also to the words "as in forcer in the Union
Territory of Delhi" in s. 2 of the amending Act. :Reference
has been made to this Court’s decisions in Venkatrao
Esajirao’s case (supra), and Gwalior Rayon Silk Mfg. (Wvg.)
Co. Ltd. The Assistant Commissioner of Sales-tax and ors.
797
An alternative argument advanced by Shri B. Sen is that
if in s. 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 o 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 the Second Schedule, it could not be treated
mandatory in one situation and directory in another. If it
was mandatory then compliance with it would be absolutely
necessary both for granting an exemption and withdrawing an
exemption from tax. In this view of the matter, according to
Shri B. Sen, the withdrawal of the exemption through the
impugned notification was a mere formality; the
notifications simply declared the withdrawal of something
which did not exist in the eye of law. Appellants cannot
therefore have any cause of grievance if the invalid and
still-born exemptions were withdrawn by the questioned
notifications.
In reply to this last argument, learned Counsel for the
appellants submit that this ground of defence was not
pleaded by the Revenue in its affidavit before the learned
Single Judge. This, according to the Counsel, was a question
of fact which required evidence for its determination, and
was therefore required to be pleaded. Since the Respondents
did not do so, they should not have been allowed to take it
for the first time at the time of arguments. Even otherwise-
proceeds the argument-the Respondents are not competent to
take this stand which is violative of the basic canon of
natural justice, according to which no party can be allowed
to take advantage of its own wrong. It is stressed that the
object of the requirement of not less than three months’
notice, was to afford an opportunity to persons likely to be
adversely affected to raise objections against the proposed
withdrawal or curtailment of an exemption from tax. That
being the case, only the persons aggrieved could have the
necessary locus standi to complain of a non-compliance with
this requirement.
In Re: Delhi Laws (supra) this Court inter alia
examined the constitutional validity of s. 2 of the Laws Act
in the light of general principles relating to the nature,
scope and limits of delegated legislation.
Section 2 as it then stood, was as follows:
"The Central Government may, by notification in
the official Gazette, extend to any Part State (other
than Coorg and the Andaman and Nicobar Islands) 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 at the date of the
notification and provision may be made in any enactment
so extended for the repeal or amendments of any
corresponding law (other than a Central Act) which is
for the time being applicable to that Part State."
The Court by a majority held that the first part of
this section which empowers the Central Government to extend
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to any Part State or to any part of such State with such
modifications and restrictions as it
798
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 State, for
repeal or amendment of any law (other than a Central Act)
which is for the time being applicable to that Part State,
is ultra vires. Consequent upon this opinion, the latter
part of the section was deleted by s. 3 of the Repealing and
Amending Act, 195 (Act XLVIlI of 1952) with effect from
2-8-1951.
The majority opinion in upholding the validity of the
first portion of s. 2 of the Laws Act drew a good deal from
the observations of the Privy Council in Queen v. Burah
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 violates no express condition
or restrictions by which that power is limited..
it is not for any court of justice to enquire
further or to enlarge constructively those
conditions and restrictions".
x x x
"Where plenary powers of legislation exist as to
particular subjects, whether in an Imperial or in
a Provincial Legislature, they may (in their
Lordships judgment) be well exercised, either
absolutely or conditionally. Legislation
conditional on the use of particular powers, or on
the exercise of a limited discretion, entrusted by
the legislature to persons in whom it places
confidence, is no uncommon thing; and, in any
circumstances it may be highly convenient."
(emphasis supplies)
Before proceeding further, it will be proper to say a
few words in regard to the argument that the power conferred
by s. 2 of the Laws Act is a power of conditional
legislation and not a power of delegated legislation. In our
opinion, no useful purpose will be served to pursue this
line of argument because the distinction propounded between
the two categories of legislative powers makes no
difference, in principle. In either case, the person to whom
the power is entrusted can do nothing beyond the limits
which circumscribe the power; he has to act-to use the words
of Lord Selborne-"within the general scope of the
affirmative words which give the power" and without
violating any "express conditions or restrictions by which
that power is limited". There is no magic in a name. Whether
you call it the power of "conditional legislation" as Privy
Council called it in Burah’s case (supra) or ’ancillary
legislation’ as the Federal Court termed it in Choitram v.
Commissioner of Income-tax, Bihar or ’subsidiary
legislation’ as Kania C.J. styled, it or whether you
camouflage it under the veiling name of ’administrative or
quasi-legislative power’-as Professor Cushman and other
authorities have done it-necessary for
799
bringing into operation and effect an enactment, the fact
remains that it has a content, howsoever small and
restricted of the law making power itself. There is ample
authority in support of the proposition that the power to
extend and carry into operation an enactment with necessary
modifications and adaptations is in truth and reality in the
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nature of a power of delegated legislation. In Re: Delhi
Laws Act (supra) S.R. Das J. said that on strict analysis it
was "nothing but a delegation of a fractional legislative
power". Anglin J. in Grays case 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 Dignams case.
Prof. Kennedy (vide his treatise ’Constitution of Canada’,
2nd Edn. p. 463), is also of 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 is considers reasonable" for the
words "not less than three months notice" in s. 6(2) by the
impugned notification dated 7th December, 1957, was in
excess of the power of ’modification’ conferred on the
Central Government by s. 2 of the Laws Act.
This question has to be answered in the light of the
principles enunciated by this Court in Re: Delhi Laws Act
relating to the nature and scope of this power.
Out of the majority who upheld the validity of this
provision of s. 2 of the Laws Act, with which we are
concerned, Fazal Ali J. explained the scope of the words
"much modifications as it thinks fit" in s. 2, thus:
"These are not unfamiliar words and they are often used
by careful draftsmen to enable laws which are
applicable to one place or object to be so adapted as
to apply to another. The power of introducing necessary
restrictions and modifications is incidental to the
power to apply or adapt the law, and in the context in
which the provision as to modification occurs it cannot
bear the sinister sense attributed to it. The
modifications are to be made within the framework of
the Act and they cannot be such as to affect its
identity or structure or the essential purposes to be
served by it. The power to modify certainly involves a
discretion to make suitable changes, but it would be
useless to give an authority the power to adapt a law
without giving it the power to make suitable changes."
Vivian Bose J. also observed in a similar strain, at p.
1124;
800
"The power to "restrict and modify" does not import the
power to make essential changes. It is confined to
alterations of a minor character such as are necessary
to make an Act intended for one area applicable to
another and to bring it into harmony with laws already
in being in the State, or to delete portions which are
meant solely for another area. To alter the essential
character of an Act or to change it in material
particulars is to legislate, and that, namely, the
power to legislate, all authorities are agreed, cannot
be delegated by a legislature which is not unfettered."
Mukherjea J. was of the view that the "essential
legislative function" which consists in the determination or
choosing of the legislative policy and of formally enacting
that policy into a "binding rule of conduct" cannot be
delegated. Dealing with the construction of the words
"restrictions" and "modification" in the Laws Act, the
learned Judge said" at pages 1004-10O6:
"The word "restrictions" .. connotes limitation
imposed on a particular provision so as to restrain its
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application or limit its scope, it does not by any
means involve any change in the principle. It seems to
me that in the context and used alongwith 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 true 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 s. 7 of the Delhi Laws Act
(which is almost identical with the present s. 2, Laws
Act) means and signifies changes of such character as
are necessary to make the statute which is sought to be
extended able 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 supplied).
S.R. Das J. (as he then was) delineated the scope of
the power of "modification" given under s. 7 of the Delhi
Laws Act, 1912 (for short the Delhi Act) at p. 1089 as
follows:
"It may well be argued that the intention of section 7
of the Delhi Laws Act was that the permissible
modifications were to be such as would, after
modification, leave the general character of the
enactment intact. One of the meanings of the word
"modify" is given in the oxford Dictionary Vol. I, page
1269 as "to alter without radical transformation". If
this meaning is given to the word "modification" in
section 7 of the Delhi Laws Act. then the modifications
contemplated
801
thereby were nothing more than adaptations which were
included in the expressions mutatis mutandis and the
"restrictions, limitations or proviso" mentioned in the
several instances of conditional legislation referred
to by the Privy Council (in Burah’s case)."
(emphasis supplied & parenthesis added)
It is to be noted that the language of s.7 of the Delhi
Act was substantially the same as that of the first portion
of s. 2 of the Part C State Laws Act, as it then stood. What
Das J. said about the scope of "restrictions and
modifications" in the context of s. 7 of the Delhi Act
substantially applies to the ambit and meaning of these
words occurring in s. 2 of the Laws Act.
Again, in Rajnarainsingh’s case (supra), Vivian Bose J.
speaking for the Court, summed up the majority view in
regard to the nature and scope of delegated legislation in
Re: Delhi Laws (supra), thus:
"In our opinion the majority view was that an executive
authority can be authorised to modify either existing
or future laws but not in any essential feature.
Exactly what constitutes an essential feature cannot be
enunciated in general terms, and there was some
divergence of view about this in the former case, but
this much is clear from the opinions set out above: it
cannot include a change of policy".
Bearing in mind the principles and the scope and
meaning of the expression "restrictions and modifications"
explained in Delhi Laws Act, let us now have a close look at
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s. 2. It will be clear that the primary power bestowed by
the section on the Central Government, is one of extension,
that is, bringing into operation and effect, in a Union
Territory, an enactment already in force in a State. The
discretion conferred by the Section to make ’restrictions
and modifications’ in the enactment sought to be extended,
is not a separate and independent power. It is an integral
constituent of the powers 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 s. 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 necessary for, or ancillary and subservient to
the purpose
802
of extension, are not permissible. And, only such
"modifications" can be legitimately necessary for such
purpose as are required to adjust, adapt and make the
enactment suitable to the peculiar local conditions of the
Union Territory for carrying it into operation and effect.
In the context of the section, the words "restrictions and
modifications" do not cover such alterations as involve a
change in any essential feature, of the enactment or the
legislative policy built into it. This is the third
dimension of the limits that circumscribe the power.
It is true that the word "such restrictions and
modifications as it thinks fit", if construed literally and
in isolation, appear to give unfettered power of amending
and modifying the enactment sought to be extended. Such a
wide construction must be eschewed lest the very validity of
the section becomes vulnerable on account of the vice of
excessive delegation. Moreover, such a construction would be
repugnant to the context and the content of the section,
read as a whole, and the statutory limits and conditions
attaching to the exercise of the power. We must, therefore,
confine the scope of the words "restrictions and
modifications" to alterations of such a character which keep
the inbuilt policy, essence and substance of the enactment
sought to be extended, intact, and introduce only such
peripheral or insubstantial changes which are appropriate
and necessary to adapt and adjust it to the local conditions
of the Union Territory.
The impugned notification, dated 7-12-1957,
transgresses the limits which circumscribe the scope and
exercise of the power conferred by s. 2 of the Laws Act, at
least, in two respects.
Firstly, the power has not been exercised
contemporaneously with the extension or for the purposes of
the extension of the Bengal Act to Delhi. The power given by
s. 2 of the Laws Act had exhausted itself when the Bengal
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Act was extended, with some alterations, to Delhi by
Notification dated 28-4-1951. The impugned notification has
been issued on 7-12-1957, more than 6 1/2-years after the
extension.
There is nothing in the opinion of this Court rendered
in Re: Delhi Laws Act (supra) to support Mr. B. Sen’s
contention that the power given by s. 2 could be validly
exercised within one year after the extension. What appears
in the opinion of Fazl Ali J. 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:
803
".... 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 upto the essential.
It can only be essential for the limited purpose of
bringing an Act into operation and it should
accordingly be in most precise language restricted to
those purely machinery arrangements vitally requisite
for that purpose; and the clause should always contain
a maximum time-limit of one year after which the power
should lapse".
It may be seen that the time-limit of one year within
which the power under a Henry VIII Clause should be
exercisable, was only a recommendation, and is not an
inherent attribute of such power. In one sense, the power of
extension-cum-modification given under s. 2 of the Laws Act
and the power of modification and adaptation conferred under
a usual ’Henry VIII Clause,’ are kindred powers of
fractional legislation, delegated by the legislature within
narrow circumscribed limits. But there is one significant
difference between the two. While the power under s. 2 can
be exercised only once when the Act is extended, that under
a ’Henry VIII Clause’ can be invoked, if there is nothing to
the contrary in the clause-more than once, on the arising of
a difficulty when the Act is operative. That is to say, the
power under such a Clause can be exercised whenever a
difficulty arises in the working of the Act after its
enforcement, subject of course to the time-limit, if any,
for its exercise specified in the statute.
Thus, anything said in Re: Delhi Laws Act (supra), in
regard to the time-limit for the exercise of power under a
’Henry VIII Clause’, does not hold good in the case of the
power given by s. 2 of the Laws Act. Fazl Ali J., did not
say anything indicating that the power in question can be
exercised within one year of the extension. On the contrary,
the learned Judge expressed in unequivocal terms, at page
849:
"Once the Act became operative any defect in its
provision cannot be removed until amending legislation
is passed."
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Secondly, the alteration sought to be introduced by
this Notification (7-12-1957) in s. 6(2), goes beyond the
scope of the ’restrictions and modifications’ permissible
under s. 2 of the Laws Act; it purports to change the
essential features of sub-s. (2) of s. 6. and the
legislative policy inherent therein.
Section 6(2), as it stood immediately before the
impugned notification, requires the State Government to give
by Notification in the Official Gazette "not less than 3
months notice" of its intention to add to or omit from or
otherwise amend the 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
804
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.
523-24). Here the language of sub-section (2) of s. 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 and assessed on the quarterly turnover. The
period of not less than three months notice conforms to that
scheme and is intended to ensure that imposition of a new
burden or exemption from tax causes least dislocation and
inconvenience to the dealer in collecting the tax for the
Government, keeping accounts and filing a proper return, and
to the Revenue in assessing and collecting the same. Another
object of this provision is that the public at large and the
purchasers on whom the incidence of the tax really falls,
should have adequate notice of taxable items. The third
object seems to be that the dealers and others likely to be
affected by an amendment of the Second Schedule may get
sufficient time and opportunity for making representations,
objections or suggestions in respect of the intended
amendment. The dealers have also been ensured adequate time
to arrange their sales adjust their affairs and to get
themselves registered or get their licenses amended and
brought in accord with the new imposition or exemption.
Taking into consideration all these matters, the
legislature has in its judgment solemnly incorporated in the
statute, fixed the period of the requisite notice as "not
less than three months" and willed this obligation to be
absolute. The span of notice was thus the essence of the
legislative mandate. The necessity of notice and the span of
notice both are integral to the scheme of the provision. The
sub-section cannot therefore be split up into essential and
non-essential components, the whole of it being mandatory.
The rule in Raza Buland Sugar Co.’s case (supra) has
therefore no application.
Thus section 6(2) embodies a determination of
legislative policy and its formulation as an absolute rule
of conduct which could be diluted, changed or amended only
by the legislature in the exercise of its essential
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legislative function which could not, as held in Re: Delhi
Laws Act (supra) and Rajnarainsingh’s case (supra) be
delegated to the Government.
For these reasons we are of opinion that the learned
single Judge of the High Court was right in holding that the
impugned notification was outside the authority of the
Central Government as a delegate under s. 2 of the Laws Act.
Before proceeding further, we may mention here in
passing that the point for decision in Benarsi Das Bhanot’s
case (supra) relied on by the Division Bench of the High
Court, was different from the one
805
before us. There, the constitutional validity of s. 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 s. 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 s. 6(2). Perhaps it was not sure of
its competence to do so more than 6 1/2 years after the
extension of Bengal Act to Delhi. It therefore chose to
amend s. 6(2) indirectly through the amendment of its
earlier notification dated 28-4-51, 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 s. 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 smuggled in through the back-door.
We now turn to the main ground on which the judgment of
the appellate Bench of the High Court rests. The question
is, was the invalidity from which the impugned notification,
dated 7-12-1957, suffered cured by the Amendment Act of 1959
? The Bench seems to think that by passing this Amendment
Act, Parliament had put its seal of approval on the Bengal
Act as it stood extended and amended by the Notifications of
1957 and 1957.
We find no basis for this surmise. This Amendment Act
leaves s. 6(2) untouched; it does not even indirectly, refer
to the impugned notification or the amendment purportedly
made by it in s. 6(2). Nor does it re-enact or validate what
was sought to be achieved by the impugned Notification. No
indication of referential incorporation or validation of the
impugned notification or the amendment sought to be made by
it, is available either in the preamble or in any other
provision of the Amendment Act.
In Krishna Chandra v. Union of India,(1) relied upon by
the learned Counsel for the Respondents, the central issue
for consideration was, whether R. 20(2) framed by the Bihar
Government under s. 15 of the Mines and Minerals (Regulation
and Development) Act, 1957 and the second proviso to s.
10(2) of the Bihar Land Reforms Act, 1950 were
constitutionally valid. By the combined operation of these
statutory provisions, the petitioners therein were called
upon to pay certain rent and royalties in respect of mining
operations. Those demands were challenged in Baijnath Kedia
v. State of Bihar(2) wherein this Court held that the Bihar
legislature had no jurisdiction to enact the second proviso
to s. 10(2) of the Bihar Act because s. 15 of the Central
Act, read with s. 2 thereof, had appropriated the whole
field relating to mining minerals for Parliamentary
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legislation. The upshot of that decision was, that the
action taken by the
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Bihar Government in modifying the terms and conditions of
the leases which were in existence anterior to the Rules and
the levy sought to be made on the strength of the amended
Bihar Act and Rule, were unsustainable. Thereupon the State
persuaded Parliament to enact the Validation Act of 1969
with a view to remove the road-blocks which resulted in the
decision in Kedia’s case (supra). Section 2 of the
Validation Act runs thus:
"Validation 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 before the Court was, whether a
statute or a rule earlier declared by the Court to be
unconstitutional or otherwise invalid can be retroactive
through fresh validating legislation enacted by the
competent legislature. Answering this question in the
affirmative, this Court, speaking through Krishna Iyer, J.
observed:
"where Parliament having power to enact on a topic
actually legislates within its competence but, as an
abbreviation of drafting, borrows into the statute by
reference the words of a State Act not qua State Act
but as a convenient shorthand, as against a longhand
writing of all the sections into the Central Act, such
legislation stands or falls on Parliament’s legislative
power, vis-a-vis the subject viz., mines and minerals.
The distinction between the two legal lines may
sometimes be fine but always is real.
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If Parliament has the power to legislative on the
topic, it can make an Act on the topic by any drafting
means, including by referential legislation."
"Taking a total view of the circumstances of the
Validation Act Parliament did more than simply validate
an invalid law passed by the Bihar Legislature but did
reenact it with retrospective effect in its own right
adding an amending Central Act to the statute book."
The position in the instant case is entirely different.
Here, Parliament despite its presumed awareness of the
impugned Notification, has said nothing in the Amending Act
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of 1959, indicating that it (Parliament) has by ’longhand’
or ’shorthand’ method incorporated, re-enacted or validated
the impugned notification or the amendment sought to be made
thereby, while passing the Amendment Act, 1959. The
appellate Bench was therefore in error in holding that
Parliament had validated or re-enacted referentially with
retrospective effect what was sought to be done by the
impugned notification, when it passed the Amending Act,
1959.
The High Court has tried with the aid of this Court’s
decision in Venkatrao v. State of Bombay (supra) to spell
out the proposition that mere amendment of an Act by a
competent legislature, amounts to re-enactment of the parent
Act. We find nothing in this Court’s decision in Venkatrao’s
case which warrants the enunciation of such a sweeping rule.
All that was decided in Venkatrao’s case was that the assent
given by the President to the Amending Act would be deemed
to be an assent accorded to the parent Act, also. The
decision in Venkatrao’s case 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 28-4-
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
notifications, was a question of fact depending on evidence.
Thirdly, to allow the Respondents to take their stand on
such a plea would be violative of the fundamental principle
of natural justice, according to which, a party cannot be
allowed to take advantage of its own lapse or wrong. The
statute
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has imposed a peremptory duty on the Government to issue
notice of not less than three months, of its intention to
amend the Second Schedule. It therefore cannot be allowed to
urge that since it had disobeyed this mandate on an earlier
occasion when it granted the exemptions it can withdraw the
exemptions in the same unlawful mode. Two wrongs never make
a right.
Nor could the Respondents derive any authority or
validity from s. 21 of the General Clauses Act, for the
notifications withdrawing the exemptions. The source from
which the power to amend the Second Schedule, comes is s.
6(2) of the Bengal Act and not s. 21 of the General Clauses
Act. Section 21, as pointed out by this Court in Gopichand
v. Delhi Administration(1) embodies only a rule of
construction and the nature and extent of its application
must be governed by the relevant statute which confers the
power to issue the notification. The power therefore had to
be exercised within the limits circumscribed by s. 6(2) and
for the purpose for which it was conferred.
For all the foregoing reasons, we are of opinion that
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the impugned notification, dated 7-12-1957, purporting to
substitute the words "such previous notice as it considers
reasonable" for the words "not less than three months
notice" in s. 6(2) of the Bengal Act is beyond the powers of
the Central Government, conferred on it by s. 2 of the Laws
Act. In consequence, the notification dated 1-4-1958, 19-9-
1959, 29-6-1966 and 31-7-1970 in so far as they withdrew the
exemptions from tax in the case of Durries, pure silk,
country liquor, kirayana articles etc. were withdrawn
without complying with the mandatory requirement of not less
than three months notice enjoined by s. 6(2) of the Bengal
Act, are also invalid and ineffective.
In the result we allow these appeals, set aside the
judgment of the appellate Bench of the High Court and
declare the Notification dated 7-12-1957, and the subsequent
notifications in so far as they withdrew the exemptions from
tax, mentioned above, to be unconstitutional. In the
circumstances of the case, we leave the parties to bear
their own costs.
V.P.S. Appeals allowed.
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