Full Judgment Text
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PETITIONER:
SATPAL & CO. ETC.
Vs.
RESPONDENT:
LT. GOVERNOR OF DELHI AND ORS.
DATE OF JUDGMENT12/04/1979
BENCH:
DESAI, D.A.
BENCH:
DESAI, D.A.
SEN, A.P. (J)
CITATION:
1979 AIR 1550 1979 SCR (3) 651
1979 SCC (4) 232
CITATOR INFO :
RF 1981 SC 774 (5)
ACT:
Punjab Excise (Delhi Amendment) Ordinance, 1979
empowering the Government under the Punjab Excise Act, to
levy "special duty" on the import of country liquor into
Delhi and the Delhi Fiscal Duty Order, 1979 levying "special
duty"-Validity of.
Powers of Parliament to legislate exclusively for Union
Territory of Delhi, a part of the Territory of India not
included in a State-Constitution of India Articles 246 to
248 and Entry 97 of the Union List.
Right to trade in intoxicants-Whether a fundamental
right-Constitution of India Article 14, 19(1)(g) and 301.
Retrospective Legislation is valid in case of
intoxicants-Constitution of India Art. 47.
HEADNOTE:
While implementing the provisions of the Punjab Excise
Act, 1914 as in force in the Union Territory of Delhi, the
concerned authority used to hold auction for grant of
licence in Form L-10 for selling country liquor and at one
such auction held on 29th March 1978, the petitioners’ bids
were accepted and they were granted licences in Form L-10
for the period 1st April 1978 to 31st March 1979. The
licence included a condition to sell a bottle of 750 ml. of
country liquor at Rs. 15/- which was inter alia made up at
excise duty (styled as still-head duty) at the rate of Rs.
10.23 and profit of licensee at the rate of Rs. 2/-. In W.P.
716/78, validity of the levy of ’still head duty’ was
challenged by certain petitioners inter alia on the ground
that it was nothing but countervailing duty and in the
absence of manufacture of liquor in Delhi, countervailing
duty on the import of liquor cannot be constitutionally
levied. This contention found favour with a learned single
judge of the Delhi High Court and a number of Letters Patent
Appeals were filed against that Judgment.
During the pendency of these appeals President of India
promulgated an Ordinance purporting to amend the Punjab
Excise Act, 1914, styled as Punjab Excise (Delhi Amendment)
Ordinance, 1979 with retrospective effect, conferring power
on the Government under the provisions of the Act to levy
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’special duty’ on the import of country liquor in Delhi at
rates not exceeding that set out in Schedule I-A which was
introduced in the Act by the Ordinance.
Pursuant to the Ordinance amending the Principal Act,
the Delhi Fiscal Duty Order, 1979 was issued levying special
duty at the rates set out in the order on import of country
liquor into Delhi. Some of the petitioners questioned the
validity generally of the Ordinance and specifically of the
impost of special duty in Civil Writ No. 16/79. A Division
Bench of the Delhi High Court heard the Letters Patent
Appeals and the Writ Petition No. 116/79 and by a common
judgment held the ordinance as well as the impost of the
special duty thereunder valid, dismissed the Writ Petition
and allowed the Letters Patent Appeals.
652
Dismissing the special leave petitions, the Court
^
HELD: 1. Scheme underlying distribution of Legislative
power in Part XI Chapter I and especially Articles 246 and
248 is that except the matters specifically enumerated in
List II (State List) in the Seventh Schedule, Parliament’s
plenary power to legislate extends to all conceivable
matters which can be topic of legislation, and even this
limitation on its power vanishes when Parliament legislates
for part of the territory of India not included in a State.
The three dimensional picture becomes complete, viz. (i) to
select topic for legislation (ii) enactment of legislation
on the topic and (iii) to impose tax in respect of such
subject matter of legislation by reference to Art. 248 which
confers power to make any law with respect to any matter not
enumerated in Lists II and III including the power to impose
tax not mentioned in either of those lists. Under Art. 246
(4) Parliament has power to make laws with respect to any
matter for any part of the territory of India, not included
in a State notwithstanding that such matter is a matter
enumerated in the State List. Power of Parliament thus to
legislate with respect to any matter for Delhi, territory
not included in a State is unabridged or unfettered by the
entries in the State List. Further residuary power of
legislation including the power to levy tax is conferred on
Parliament by the combined operation of Articles 246(4),
248(1) and (2) and Entry 97 in the Union List. That power is
untrammelled by the limitations prescribed by Article 246(2)
and (3) and Entry 51 of State List and is plenary and
absolute subject only to such restrictions as imposed by the
Constitution. [659 G-H, 660 A-C]
Mithan Lal v. State of Delhi, [1959] SCR 445 @ 451;
referred to.
2. While legislating for the Union Territories the
Parliament unhampered by Articles 246(2) and (3) but
enriched by Article 248(1) and (2) could legislate on any of
the topics either in the List I and III or in List II or in
exercise of the residuary power under Entry 97. There is
nothing in the Constitution to prevent Parliament from
combining its powers under one or other Entry with its power
under Entry 97. Parliament can rely on the powers under
specified Entries I to 96 List I and supplement them with
the powers under Entry 97 List I and Article 24 or even the
powers under Entries in the concurrent list. There is no
dearth of legislative competence of Parliament to enact
legislation for a territory not included in a State because
the power to legislate takes within its sweep matters
included in all the three lists and added to it is the
residuary power on matters not specifically included in any
entry in any of the three lists. [661 D-G]
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If exercise or countervailing duty could be levied on
country liquor manufactured or imported into Delhi,
Parliament would not lack competence to levy the same only
because levy of such duty on alcoholic liquors for human
consumption is within the competence of a State. As country
liquor is not manufactured in Delhi, the Parliament could
not under Entry 51 of the State List levy either excise or
countervailing duty on it. Merely because Parliament could
not levy countervailing duty on country liquor imported into
Delhi because country liquor is not manufactured in Delhi it
does not exhaust the power of Parliament to levy some other
duty on the import of liquor if it is otherwise
constitutionally permissible. [660 D-F]
Union of India v. H. S. Dhillon, [1972] 2 SCR 33;
followed.
653
3. With the advancement of society, expanding horizons
of scientific and technical knowledge, probe into the
mystery of creation, it is impossible to conceive that every
imaginable head of legislation within human comprehension
and within the foreseeable future could have been within the
contemplation of the founding fathers and was, therefore,
specifically enumerated in one or the other of the three
Lists, meaning thereby that three Lists were exhaustive of
Governmental action and activity. Demands of welfare State,
hopes and aspirations and expectations in a developing
society and the complex world situation with inter-
dependence and hostility amongst nations may necessitate
legislation on some such topics that even for visionary they
could not have been within the contemplation of the founding
fathers. Complex modern governmental administration in a
federal set up providing distribution of legislative power
coupled with power of judicial review may raise such
situations that a subject of legislation may not squarely
fall in any specific entry in List I or II. Simultaneously
on correct appraisal it may not be covered by any entry in
List II though apparently or on a superficial view it may be
covered by an entry in List II. In such a situation
Parliament would have power to legislate on the subject in
exercise of residuary power under Entry 97, List I and it
would not be proper to unduly circumscribe, corrode or
whittle down this power by a process of interpretation by
saying that subject of legislation was present to the mind
of the framers of the Constitution because apparently it
falls in one of the entries in List II and thereby deny
power to legislate under Entry 97. The history of freedom
struggle demonstrates in unequivocal terms the importance of
residuary power of legislation being conferred on
Parliament. Accordingly, once the power of Parliament to
legislate on a topic is not expressly taken away by any
constitutional provision, it remains intact under Entry 97
of List I. [662 G-H, 663 A-D]
Undoubtedly excise and countervailing duties on
alcoholic liquors for human consumption were within the
contemplation of the framers of the Constitution. That is a
specific topic of legislation in List II. It does not
exhaust a conceivable levy that can be legitimately imposed
on such items if otherwise they could be legally imposed on
such items by reference to constitutional power to levy the
same. And Entry 97 is a complete answer to the contention.
[663 D-E]
His Holiness Kesavananda Bharati Sripadagalavaru v.
State of Kerala, [1973] Suppl. S.C.R. 1; explained and
discussed.
I. C. Golaknath v. State of Punjab, [1967] 2 SCR 672;
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referred to.
Union of India v. H. S. Dhillon, [1972] 2 SCR 33,
affirmed.
4. Terminal tax is entirely different from the special
duty sought to be imposed by the impugned Ordinance. The
impost is on entry of country liquor into Delhi to be
recovered by the Delhi Administration for its own use. Delhi
Administration and Delhi Municipal Administration are
entirely different, and, therefore, it cannot be said that
Entry 52 excludes the power of the Parliament to levy tax on
import of country liquor in Delhi. [663 F-G]
5. If on the same subject the legislature chooses to
levy tax twice over there is no inherent invalidity in the
fiscal adventure. More so when Special Duty levied by
Parliament and the terminal tax imposed by the Municipal
Administration on the import of liquor in Delhi can be
traced to independent source of power. [664 A-B]
654
Avinder Singh and Ors. v. State of Punjab and Ors.
[1979] 1 SCR 845; followed.
6. The idea conveyed by the expression "colourable
legislation" is that although apparently a legislature in
passing a statute purported to be within the limits of its
powers, yet in substance and in reality it transgressed
those powers, the transgression being veiled by what
appears, on proper examination, to be a mere pretence or
disguise. Applying this test it is difficult to say that the
impugned impost is either a camouflage or a colourable
legislation. [664 G-H]
Merely because a statute was found to be invalid on the
ground of legislative competence that does not permanently
inhibit the legislature from re-enacting the statute if the
power to enact the same is properly traced and established.
In such a situation it would not be correct to say that the
subsequent legislation would be merely a colourable
legislation or a camouflage to re-enact the invalidated
previous legislation. [665 E-F]
K. C. Gajapati Narayan Deo v. State of Orissa, [1954]
SCR 1, Maharana Sri Jayvant Singhji Ranmal Singhji etc. v.
State of Gujarat, [1962] Suppl. 2 SCR 411 @ 440, Patel
Gordhandas Hargovindas v. Municipal Commissioner, Ahmedabad,
[1964] 2 SCR 608, Prithvi Cotton Mills Ltd. and Ors. v.
Broach Borough Municipality and Ors., [1970] 1 SCR 388;
referred to.
7. The expression ’excisable article’ which alone can
be the subject matter of levy special duty is merely
descriptive of the goods subject to change. It is only an
identifying mark, a tag, which would attract special duty.
If liquor was manufactured in Delhi it would be an excisable
article. It is that article on which, if manufactured in
Delhi excise duty could be levied which when imported would
provide the taxing event for the levy of special duty
because in the absence of manufacture in Delhi
countervailing duty cannot be imposed upon it. The
expression is used for identifying the subject-matter of
impost and nothing more need be read into it. [666D-E]
8. There is no fundamental right to do trade or
business in intoxicants. The State under its regulatory
powers, has right to prohibit absolutely every form of
activity in relation to intoxicants its manufacture,
storage, export import, sale and possession. In all their
manifestations these rights are vested in the State and
indeed without such vesting there can be no effective
regulation of various forms of activities in relation to
intoxicants. [666 H, 667 A]
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If there is no fundamental right to carry on trade or
business in liquor, there is no question of its abridgement
by any restriction which can be styled as unreasonable. The
State under its regulatory power has a right to control or
even to prohibit absolutely every form of activity in
relation to intoxicants apart from anything else, its import
too. This power of control is question of society’s right to
self-protection and it rests upon the right of the State to
act for the health, moral and welfare of the people. Liquor
traffic is a source of pauperism and crime. Such an impost,
therefore, is one in the public interest for preserving
public health and public moral and is not one as infringing
the interstate freedom of trade and commerce. All taxes are
imposed in public interest. [667 F-H, 668 A-B]
In the instant case the Preamble to the impugned
Ordinance clearly recites that the special duty on the
importation of country liquor into Delhi an endeavour
towards bringing about prohibition of consumption of
alcoholic drinks, and,
655
therefore, it is a step in the direction of safeguarding
public health and with a view to realising the goal fixed in
Article 47 of the Constitution. It is a fiscal measure and
the one safeguarding public health and even public morals
because it is well recognised that liquor trade is instinct
with injury to individual and community and has serious
side-effects recognized everywhere in every age. Not to
control alcohol business is to abdicate the right to rule
for the good of the people. [669 B, G-H, 670 A]
Har Shanker and Ors. etc. v. Dy. Excise and Taxation
Commissioner and Ors. [1975] 3 SCR 254, State of Bombay v.
R.M.D. Chamarbaughwala,[1957] SCR 874; P. N. Kaushal and
Ors. v. Union of India and Ors., [1978] 3 SCC 558; applied.
Crowley v. Christansen, 54 Law Ed. 620; quoted with
approval.
P. N. Kaushal and Ors. v. Union of India and Ors.,
[1979] 1 SCR 122; referred to.
9. There is no substance in the contention that the
retrospectivity of the Ordinance is illegal and invalid. The
argument overlooks the twin objects sought to be achieved by
the measure namely, validating an import which was found to
be invalid on the ground that it was countervailing duty
which could not have been legitimately imposed and also the
object to safeguard public health and public moral [670 B-D]
Prithvi Cotton Mills Ltd. and Anr. v. Broach Borough
Municipality and Ors., [1970] 1 SCR 388; applied.
10. The altruistic grievance of the petitioner by proxy
for consumers strikes as hollow because even with the impost
the petitioners’ profit of Rs. 2/- per bottle is guaranteed
and they are in no way adversely affected by the impost
because the levy is passed on to consumers, except for the
detention of their money for a day or two when they pay in
advance while taking the bottles from the Warehouse and
recovers it when they sell the bottle and this detention of
their money for a period of two days is a triviality and is
a part of any business. [670 E-F]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Special Leave Petitions
(Civil) Nos. 2585-2594/79.
From the Judgment and Order dated 9-3-1979 of the Delhi
High Court in Civil Writ Petition Nos. 116-122 and 135-
137/79.
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V. S. Desai (In SLP 2585), L. N. Sinha (In SLP. 2586),
L. M. Singhvi (In SLP 2587), P.P. Rao (In SLP 2588), R. C.
Verma, Y. K. Sabharwal, D. P. Mukherjee, (In SLP 2589-94)
and A. K. Ganguli (In all the S.L.Ps.) for the Petitioners.
Soli J. Sorabjee, Addl. Sol. Genl. R. K. Bhatt and R.
N. Sachthey for the Respondent.
656
The Order of the Court was delivered by
DESAI, J. Law touching manufacture, import, use or
consumption of liquor (as understood in common parlance) is
recently vigorously assailed with almost afflicted
sentimentalism that even though we have dismissed this batch
of Special Leave Petitions on 23rd March, 1979, in fairness
to petitioners on whose behalf all possible contentions that
can be formulated by research and dialectics were advanced
with eloquence and devoid of inebriation likely to be caused
by the subject-matter of dispute, we propose shortly to
state our reasons for dismissal of the petitions.
To illumine the contours of controversy events
preceding the promulgation of the Ordinance amending the
Punjab Excise Act, 1914 (’Act’ for short), as in force in
the Union Territory of Delhi (’Delhi’ for short) styled as
Punjab Excise (Delhi Amendment) Ordinance, 1979 (’Ordinance’
for short) may be stated. Punjab Excise Act, 1914 has been
extended to Delhi. While implementing the provisions of the
Act, the concerned authority used to hold auction for grant
of licence in Form L-10 for selling country liquor and at
one such auction held on 29th March 1978 the petitioners’
bids were accepted and they were granted licences in Form L-
10 for the period 1st April 1978 to 31st March 1979. The
licence included a condition to sell a bottle of 750 ml. of
country liquor at Rs. 15/- which was, inter alia, made up of
excise duty at the rate of Rs. 10.23 and profit of licensee
at the rate of Rs. 2/-. This excise duty was styled as
’still head duty’ for obvious reasons. In Writ Petition No.
716/78 filed in the High Court of Delhi by certain
petitioners, validity of the levy of ’still head duty’ was
challenged inter alia on the ground that it was nothing but
countervailing duty and in the absence of manufacture of
liquor in Delhi, countervailing duty on the import of liquor
cannot be constitutionally levied. This contention found
favour with a learned single Judge of the Delhi High Court
and a number of Letters Patent Appeals were filed against
that judgment which were pending in the High Court. In the
mean time on 20th January 1979 the President of India,
promulgated the Ordinance purporting to amend the Punjab
Excise Act with retrospective effect and conferring power on
the Government under the provisions of the Act to levy
special duty on the import of country liquor in Delhi at
rates not exceeding that set out in Schedule I-A which was
introduced in the Act by the Ordinance Pursuant to the
Ordinance amending the principal Act, the Delhi Fiscal Duty
Order, 1979, was issued levying special duty at the rates
set out in the order on import of country liquor into Delhi.
Some of the petitioners questioned the validity generally of
the Ordinance and specifically of the import of special duty
in Civil Writ No. 116/79. A Division Bench of the Delhi
657
High Court heard the Letters Patent Appeals against the
judgment of the learned single Judge of the Delhi High Court
as well as the aforementioned writ petition and by a common
judgment held the Ordinance as well as the impost thereunder
valid and dismissed the writ petition and allowed the
Letters Patent Appeals setting aside the judgment of the
learned single Judge. This bunch of petitions is filed
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against the judgment of the Delhi High Court in Civil Writ
No. 116/79 and allied writ petitions and the Letters Patent
Appeals.
The cardinal question around which the various facts of
controversy rotates turns upon the competence of Parliament
to enact legislation under challenge which would directly
impinge upon the competence of the President to issue the
impugned Ordinance. Article 123 of the Constitution enables
the President to issue an Ordinance in the circumstances
thereunder mentioned and the power to issue Ordinance is co-
extensive with the legislative power of Parliament vide
Article 123(3). The question, therefore, is whether
Parliament had the power to impose special duty on the
import of country liquor in Delhi.
In order to avoid the slightest confusion it must be
reiterated that the power of Parliament to legislate for
Delhi is in question. Article 246(1) confers exclusive power
on Parliament to make laws with respect to any of the
matters enumerated in List I in the Seventh Schedule. Sub-
article (3) confers similar power on the Legislature of any
state with respect to any of the matters enumerated in List
II. Sub-article (2) confers power both on Parliament and the
State Legislature to make laws with respect to any of the
matters enumerated in List III (Concurrent List). Sub-
article (4) reads as under:-
"Parliament has power to make laws with respect to
any matter for any part of the Territory of India not
included in a State notwithstanding that such matter is
a matter enumerated in the State List".
Article 248(1) provides that Parliament has exclusive power
to make any law with respect to any matter not enumerated in
the Concurrent List or State List. In other words, residuary
power of legislation is conferred on Parliament Sub-article
(2) of Article 248 is material and may be extracted:
"(2). Such power shall include the power of making
any law imposing a tax not mentioned in either of those
Lists".
658
Entry 84 in the Union List reads as under:
"84. Duties of excise on tobacco and other goods
manufactured or produced in India except:-
(a) alcoholic liquors for human consumption;
(b) opium, Indian hemp and other narcotic drugs
and narcotics,
but including medicinal and toilet preparations
containing alcohol or any substance included in sub-
paragraph (b) of this entry".
Entry 97 of the Union List reads as under:
"97. Any other matter not enumerated in List II or
List III including any tax not mentioned in either of
those Lists".
Entry 51 in the State List reads as under:
"51. Duties of excise on the following goods
manufactured or produced in the State and
countervailing duties at the same of lower rates on
similar goods manufactured or produced elsewhere in
India:
(a) alcoholic liquors for human consumption;
(b) opium, Indian hemp and other narcotic drugs
and narcotics;
but not including medicinal and toilet preparations
containing alcohol or any substance included in sub-
paragraph (b) of this entry".
Entry 52 is as under:
"52. Taxes on the entry of goods into a local area
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for consumption, use or sale therein".
The relevant provisions of the impugned Ordinance may
also be extracted for convenience of reference. The
Ordinance in its Preamble states that by reason of certain
excisable articles not being manufactured or produced in
Delhi, one such being country liquor, countervailing duty is
not leviable on such articles which are imported into Delhi,
and proceeds to define duty in clause 5(a) of s. 3 as under:
"(5a). "duty" means the excise duty or
countervailing duty or, as the case may be, special
duty;"
659
Clause (c) was added to clause (6) of s. 3 specifying the
words "any spirit". Clause (18a) was added specifying
thereunder the definition of ’special duty’ which reads as
under:
"(18A). "Special duty" means a tax on the import
of any excisable article being an article on which
countervailing duty as in mentioned in entry 51 of List
II in the Seventh Schedule to the Constitution is not
imposable on the ground merely that such article is not
being manufactured or produced in the territory to
which this Act extends".
Section 31 was amended enabling the Government to levy over
and above excise duty a countervailing duty or special duty
at such rate or rates not exceeding the rates set forth in
Schedule IA which was also added by the Ordinance.
The contention is that Entry 51 in the State List
enables the State Legislature to levy duty of excise or
countervailing duty on alcoholic liquors for human
consumption and that the almost corresponding Entry 84 of
the Union List denies power to Parliament to levy duty of
excise on alcoholic liquors for human consumption.
Proceeding further it was said that initially countervailing
duty was levied on the country liquor imported in Delhi and
when it was found that as country liquor was not
manufactured in Delhi countervailing duty could not be
levied upon it, an attempt was made to levy the same duty by
a camouflage of changing the name and that in pith and
substance the Ordinance levies countervailing duty which
Parliament had no power to levy particularly because country
liquor on which duty is levied is not manufactured in Delhi.
It is an admitted position that country liquor, the
subject-matter of impost, is not manufactured in Delhi. It
is again an admitted position that as country liquor is not
manufactured in Delhi, countervailing duty as is commonly
understood could not be levied upon its import in Delhi. The
question is: does that exhaust the power of Parliament to
levy a duty on the import of country liquor into Delhi ?
Scheme underlying distribution of legislative powers in
Part XI, Chapter I and especially Articles 246 and 248 is
that except the matters specifically enumerated in List II
(State List) in the Seventh Schedule, Parliament’s plenary
power to legislate extends to all conceivable matters which
can be topic of legislation, and even this limitation on its
power vanishes when Parliament legislates for part of the
territory of India not included in a State. The three
dimensional picture becomes complete, viz., (i) to select
topic for legislation; (ii) enactment of legislation on the
topic; and (iii) to impose tax in respect
660
of such subject-matter of legislation, by reference to Art.
248 which confers power to make any law with respect to any
matter not enumerated in Lists II and III including the
power to impose tax not mentioned in either of those Lists.
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Under Article 246(4) Parliament has power to make laws with
respect to any matter for any part of the territory of India
not included in a State notwithstanding that such matter is
a matter enumerated in the State List. Power of Parliament
thus to legislate with respect to any matter for Delhi,
territory not included in a State, is unabridged or
unfettered by the entries in the State List. Further,
residuary power of legislation including the power to levy
tax is conferred on Parliament by the combined operation of
Articles 246(4), 248(1) & (2) and Entry 97 in the Union
List. That power is untramelled by the limitations
prescribed by Articles 246(2) and (3) and Entry 51 of State
List and is plenary and absolute subject only to such
restrictions as are imposed by the Constitution and we find
none such which is material to the present question (vide
Mithan Lal v. State of Delhi) (1).
Accordingly, if excise or countervailing duty could be
levied on country liquor manufactured or imported into
Delhi, albeit other conditions for the levy of such duty
being fulfilled, Parliament would not lack competence to
levy the same only because levy of such duty on alcoholic
liquors for human consumption is within the competence of a
State. But it must be confessed that as country liquor is
not manufactured in Delhi, the Parliament could not under
Entry 51 of the State List levy either excise or
countervailing duty on it. Merely because Parliament could
not levy countervailing duty on country liquor imported into
Delhi because country liquor is not manufactured in Delhi,
it does not exhaust the power of Parliament to levy some
other duty on the import of liquor if it is otherwise
constitutionally permissible.
It was, however, said that Entry 51 in State List being
a specific entry providing for levy of duty either on
manufacture or import of country liquor and there being no
other specific entry enabling to levy special duty it is
inconceivable that the framers of the Constitution should
have left some such levy on the import of country liquor in
respect of Delhi under residuary entry. In other words, it
was said that where there is a specific entry the
legislation must squarely fall within the entry and
correspondingly is must be assumed that it would not be
covered by the residuary entry. In fact the argument went so
far that before resort could be had to the residuary Entry
97 the Court in
661
its exploration to ascertain under which Entry the
legislation falls, must proceed from the beginning and in
its journey till Entry 97 if it falls somewhere, removing
the camouflage under which the legislation is sought to be
taken out from the specific entry, it would not be proper to
say that the legislation is covered by the residuary entry.
Whenever legislative competence is in question attempt of
the Courts is to find out whether the legislation squarely
falls in one or the other entry. If a particular legislation
is covered by any specific entry well and good. If it does
not, the second question would be: is it beyond the
legislative competence of Parliament ? In undertaking this
exercise it is quite often known that a legislation may be
covered by more than one entry because an analysis has shown
that the entries are overlapping. If the legislation may
fall in one entry partly and part of it may be covered by
the residuary entry, the legislation would none-the-less be
immune from the attack on the ground of legislative
competence. This was the approach adopted by a 7 Judges
Bench of this Court in Union of India v. H. S. Dhillon(1)
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wherein while examining the constitutional validity of the
amended Wealth Tax Act which included the capital value of
agricultural land for the purpose of computing net wealth,
the controversy was whether the impugned Act was a law with
respect to entry, including Entry 49 in the List II or was
it one under Entry 86 read with Entry 97 or Entry 97 itself
of the List I. Repelling the contention of legislative
incompetence this Court held that there is nothing in the
Constitution to prevent Parliament from combining its powers
under one or other Entry with its power under Entry 97. The
terse observation is that this Court knows no principle
which debars Parliament from relying on the powers under the
specified entries 1 to 96, List I and supplement them with
the powers under Entry 97, List I and Article 248 or even
the powers under entries in the Concurrent List. This
authoritative pronouncement would answer the contention that
while legislating for the Union Territories the Parliament
unhampered by Articles 246(2) and (3) but enriched by
Article 248(1) and (2) could legislate on any of the topics
either in the List I or in List II or in exercise of the
residuary power under Entry 97. There is thus no dearth of
legislative competence of Parliament to enact legislation
for a territory not included in a State because the power to
legislate takes within its sweep matters included in all the
three Lists and added to it is the residuary power on
matters not specifically included in any entry in any of the
three Lists.
It was, however, said that the observations in
Dhillon’s case (supra) are no more good law in view of the
opinion of Judges constituting
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majority in His Holiness Kesavananda Bharati Sripadagalavaru
v. State of Kerala(1). The controversy in Kesavananda
Bharati’s case was about the power of the Parliament to
amend the Constitution and a contention being the spill over
from I.C. Golaknath v. State of Punjab(2) was that apart
from Article 368, Entry 97 of List I would confer power on
Parliament to amend the Constitution. After pointing out
that when all the three Lists were exhaustively drawn up it
is difficult to believe that an important power would be
kept hidden in Entry 97 of the Union List leaving to the off
chance of the courts locating that power in that entry, it
was said that if a subject of legislation was present to the
minds of the framers of the Constitution, it could not have
been left to be found by the Courts in the residuary powers.
Mr. Seervai’s commentary at p. 1264 on Constitutional Law of
India, 2nd Edn., was pressed into service wherein it is
observed that a fortiori if a subject of legislative power
was prominently present to the minds of the framers of our
Constitution, they would not have left it to be found by
Courts in the residuary power. Proceeding ahead it was
submitted that while enacting Entry 51 in List II the
subject of levying duty on import of alcoholic liquor was
present to the minds of the framers of the Constitution and,
therefore, it is futile to search that power in the
residuary Entry. The observations in Kesavananda’s case
(supra) have to be kept in focus in the context of the
controversy whether Article 368 confers specific power of
amendment of the Constitution and it was sought to be
brushed aside by saying that it merely provided procedure
for amendment of the Constitution and, therefore, the power
for amendment must be located in the residuary Entry 97 of
the Union List. The position here is materially different.
With the advancement of society, expanding horizons of
scientific and technical knowledge, probe into the mystery
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of creation, it is impossible to conceive that every
imaginable head of legislation within human comprehension
and within the foreseeable future could have been within the
contemplation of the founding fathers and was, therefore,
specifically enumerated in one or the other of three Lists,
meaning thereby that three Lists were exhaustive of
Governmental action and activity. Demands of welfare State,
hopes and aspirations and expectations in a developing
society and the complex world situation with inter-
dependence and hostility amongst nations may necessitate
legislation on some such topics that even for visionary they
could not have within the contemplation of the founding
fathers. Complex modern governmental administration in a
federal set up pro-
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viding distribution of legislative powers coupled with power
of judicial review may raise such situations that a subject
of legislation may not squarely fall in any specific entry
in List I or III. Simultaneously on correct appraisal it may
not be covered by any entry in List II though apparently or
on a superficial view it may be covered by an entry in List
II. In such a situation Parliament would have power to
legislate on the subject in exercise of residuary power
under Entry 97, List I and it would not be proper to unduly
circumscribe, corrode or whittle down this power by saying
that subject of legislation was present to the mind of the
framers of the Constitution because apparently it falls in
one of the entries in List II and thereby deny power to
legislate under Entry 97. The history of freedom struggle
demonstrates in unequivocal terms the importance of
residuary power of legislation being conferred on
Parliament. Therefore, the scope and ambit of Entry 97 need
not be whittled down or circumscribed by a process of
interpretation. In any case majority decision in Dhillon’s
case (supra) is neither overruled not departed from in
Kesavananda’s case (supra). Accordingly, once the power of
Parliament to legislate on a topic is not expressly taken
away by any constitutional provision, it remains intact
under Entry 97 of List I.
Undoubtedly, excise and countervailing duties on
alcoholic liquors for human consumption were within the
contemplation of the framers of the Constitution. That is a
specific topic of legislation in List II. It does not
exhaust all conceivable levy that can be legitimately
imposed on such items if otherwise they could be legally
levied by reference to constitutional power to levy the
same. And Entry 97 is a complete answer to the contention.
It was incidentally urged that Entry 52 in the State
List which enables the levying of taxes on entry of goods in
local area for consumption, use or sale therein was also
within the contemplation of the founding fathers and that
power under Entry 52 having been exercised by the Delhi
Municipal Administration in the form of terminal tax the
same cannot be arrogated by Parliament to itself. Terminal
tax is entirely different from the special duty sought to be
imposed by the impugned Ordinance. The impost is on entry of
country liquor into Delhi to be recovered by the Delhi
Administration for its own use. Delhi Administration and
Delhi Municipal Administration are entirely different, and
therefore, it cannot be said that Entry 52 excludes the
power of the Parliament to levy tax on import of country
liquor in Delhi.
Incidentally, the argument is that the taxing event
being the import of liquor in Delhi it is exposed to double
taxation, namely, the special
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664
duty levied by Parliament and the terminal tax imposed by
the Municipal Administration and that is impermissible. This
has merely to be mentioned to be rejected in view of the
decision of this Court in Avinder Singh & Ors. v. State of
Punjab & Ors.,(1) wherein it was observed that if on the
same subject the legislature chooses to levy tax twice over
there is no inherent invalidity in the fiscal adventure save
wherever prohibitions exist.
It was next contended that what is sought to be done by
the impugned Ordinance is to circumvent the decision of the
learned single Judge of the High Court which invalidated the
levy of countervailing duty and that at best it is a
colourable legislation and that in pith and substance it is
re-introduction of countervailing duty under a different
nomenclature and hence unsustainable. If by a legislation
tax is sought to be imposed in exercise of certain
legislative power which under judicial review is found to be
wanting, it does not prohibit the legislature from
exercising the same power if it can be traced to provisions
of the Constitution. Merely because an incorrect exercise of
legislative power under a misconception of power itself is
once invalidated that very legislative power if it is
traceable to provisions in the Constitution cannot be struck
down on the ground that it is a colourable legislation or a
mere camouflage. Undoubtedly initially countervailing duty
was levied but it was found that as country liquor was not
manufactured in Delhi legally it was impermissible to levy
countervailing duty. This is admitted in the Preamble of the
Ordinance itself. It was a constitutional error to have
levied such a duty and the same was pointed out. Now, if the
very duty could be levied under the power which is available
it can never be said that it is a colourable exercise of
power or that the new impost is a camouflage for the old
one. What is colourable legislation was explained by this
Court in K. C. Gajapati Narayan Deo v. State of Orissa,(2)
and it was re-affirmed in Maharana Shri Jayvant Singhji
Ranmal Singhji etc. v. State of Gujarat.(3) This Court said
that the idea conveyed by the expression "colourable
legislation" is that although apparently a legislature in
passing a statute purported to act within the limits of its
powers, yet in substance and in reality it transgressed
those powers, the transgression being veiled by what
appears, on proper examination, to be a more pretence or
disguise. Applying this test it is difficult to say that the
impugned impost is either a camouflage or a colourable
legislation. Conditions for levy of countervailing duty may
not be satisfied. That
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does not debar the Parliament from levying tax on import of
country liquor if it has otherwise power to do so. It would
be too trite a saying that if countervailing duty cannot be
imposed there would be no power to impose duty in any form
on the import of country liquor into a territory where that
country liquor is not manufactured. In fact, where
particular pre-requisites for levying a tax are not
satisfied and it is so pointed out by a Court of law, the
legislature would not lack power to levy that tax if it
could be traced to the provisions of the Constitution. In
such a situation Legislature has power to set at naught the
judgment of the court by resort to appropriate power. This
is well settled by the decision of this Court in Patel
Gordhandas Hargovindas v. Municipal Commissioner,
Ahmedabad,(1) where the word ’rate’ as used in Bombay
Municipal Boroughs Act, 1925, came up for interpretation and
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it was held that it can be imposed on the annual letting
value of the property but not on the capital value of the
property. The legislature stepped in by enacting Gujarat
Imposition of Tax by Municipalities (Validation) Act, 1963,
providing in s. 3 thereof assessment and collection of rate
on lands and buildings on the basis of capital value or a
percentage of the capital value and declaring the past levy
to be valid by further providing that tax on lands and
buildings may be imposed either on the basis of annual
letting value or on the basis of capital value. When the
amending and validating Act was questioned Prithvi Cotton
Mills Ltd. & Anr. v. Broach Borough Municipality & Ors.,(2)
this Court observed that the legislature exercised its
undoubted powers of redefining ’rate’ so as to equate it to
a tax on capital value and convert the tax purported to be
collected as a ’rate’ into a tax on lands and buildings, and
thus got rid of the judgment in Patel Gordhandas’s case,
(supra). It would thus follow that merely because a statute
was found to be invalid on the ground of legislative
competence that does not permanently inhibit the Legislature
from re-enacting the statute if the power to enact the same
is properly traced and established. In such a situation it
would not be correct to say that the subsequent legislation
would be merely a colourable legislation or a camouflage to
re-enact the invalidated previous legislation.
In passing it was mentioned that there is inherent
evidence to show that the fresh impost was nothing but the
invalidated countervailing duty under a guise of different
nomenclature. It was said that special duty can be levied
under the Act amended by the Ordinance only on the import of
any ’excisable article’ being an article on which
countervailing duty as is mentioned in Entry 51 of List, 2,
Seventh Schedule to the Constitution is not imposable on the
ground merely that such
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article is not being manufactured or produced in the
territory to which the Act is extended. Reference was then
made to the definition of ’excisable article’ in s. 3 of the
Act. Excisable article has been defined to mean (a) an
alcoholic liquor for human consumption, or (b) any
intoxicating drug, (c) spirit, the last being added by the
impugned Ordinance. Apart from the definition, it was urged
that excisable article in common parlance or by judicial
interpretation has been understood to mean article on which
excise is levied, or leviable. Proceeding further it was
said that as country liquor was not manufactured in Delhi,
excise could not be levied on it not countervailing duty
could be imposed on its import though that very liquor where
manufactured may be an excisable article in that area. It
was, therefore, said that subject-matter of impost being an
excisable article, meaning if manufactured in Delhi excise
could be levied on it, the special duty is nothing but
invalidated countervailing duty on excisable article. There
is no merit in this submission because the expression
’excisable article’ which alone can be the subject-matter of
levy of special duty is merely descriptive of the goods
subject to charge. It is only an identifying mark, a tag,
which would attract special duty. If liquor was manufactured
in Delhi it would be an excisable article. It is that
article on which, if manufactured in Delhi, excise could be
levied which when imported would provide the taxing event
for the levy of special duty because in the absence of
manufacture in Delhi countervailing duty cannot be imposed
upon it. The expression is used for identifying the subject-
matter of impost and nothing more need be read into it.
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The next important contention was that this impost
imposed unreasonable restrictions on the freedom of inter-
State trade, commerce and intercourse guaranteed by Article
301 or the freedom to carry on trade or business in liquor
is a fundamental right under Article 19(1) being not in
public interest, the enactment is constitutionally invalid.
That raises the oft repeated vexed question whether right to
carry on trade or business in liquor is a fundamental right
under Article 19 (1) (g) and that same considerations would
apply for acting under Article 301. This question has
cropped up before the Court at regular intervals but it
would be sufficient to take note of two decisions to dispose
of the contention. In Har Shankar & Ors. etc. v. Dy. Excise
& Taxation Commissioner & Ors.(1) after referring to Crowley
v. Christansen,(2) and several cases of this Court it was in
terms stated that there is no fundamental right to do trade
or business in intoxicants. The State
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under its regulatory powers, has right to prohibit
absolutely every form of activity in relation to
intoxicants-its manufacture, storage, export, import, sale
and possession. In all their manifestations, these rights
are vested in the State and indeed without such vesting
there can be no effective regulation of various forms of
activities in relation to intoxicants. In reaching this
conclusion the Court took note of an important observation
made in the State of Bombay v. R. M. D. Chamarbaugwala,(1)
which may be extracted as under:
"We find it difficult to persuade ourselves that
gambling was ever intended to form any part of this
ancient country’s trade, commerce or intercourse to be
declared as free under Art. 301. It is not our purpose
nor is it necessary for us in deciding this case to
attempt an exhaustive definition of the word ’trade’,
’business’, or ’intercourse’. We are, however, clearly
of opinion that whatever else may or may not be
regarded as falling within the meaning of these words,
gambling cannot certainly be taken as one of them. We
are convinced and satisfied that the real purpose of
Arts. 19(1)(g) and 301 could not possibly have been to
guarantee or declare the freedom of gambling. Gambling
activities from their very nature and in essence are
extra-commercium although the external forms,
formalities and instruments of trade may be employed
and they are not protected either by Art. 19(1) (g) or
Art. 301 of our Constitution".
After extracting these observations this Court observed in
Har Shankar’s case (supra) that the reasons mentioned by
Das, C. J. for holding that there can be no fundamental
right to do trade or business in an activity like gambling
apply with equal force to the alleged right to trade in
liquor and those reasons may not be brushed aside by
restricting them to gambling operations.
Recently, in P. N. Kaushal & Ors., v. Union of India &
Ors.,(2) after an exhaustive review of all previous
decisions, this conclusion was affirmed that there is no
fundamental right to trade or business in nauseous drinks
which includes liquor. If there is no fundamental right to
carry on trade or business in liquor, there is no question
of its abridgement by any restriction which can be styled as
unreasonable. In fact, as stated in Har Shankar’s case,
(supra) the State under its regulatory power has a right to
control or even to prohibit absolutely every form of
activity in relation to intoxicants apart from anything
else, its import
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668
too. This power of control is question of society’s right to
self protection and it rests upon the right of the State to
act for the health, moral and welfare of the people. Liquor
traffic is a source of pauperism and crime. In this
background it is now too late in the day to entertain an
argument that imposition of tax on the import of liquor
which serves the double purpose of restraining its use by
making it costly and prohibiting its use on the ground that
it trenches upon the manufacturers slowly and gradually to
restrict its manufacture directly impinging upon its
unrestricted consumption. Such an impost, therefore, can be
said to be one in the public interest for preserving public
health and public morals and cannot be said to be one as
infringing the inter-State freedom of trade and commerce.
Mr. Rao, who appeared for some of the petitioners
specifically submitted that this question is no more res-
integra in view of the decision of a Constitution Bench of
this Court in Kalyani Stores v. The State of Orissa &
Ors.(1) In that case the validity of a Notification
enhancing the duty on the import of foreign liquors from Rs.
40/- to Rs. 70/- per L.P. Gallon was questioned on the
ground that it interferes with freedom of inter-State trade
and commerce guaranteed by Article 301. This challenge was
upheld by the majority decision observing that-
"the notification levying duty at the enhanced
rate is purely a fiscal measure and cannot be said to
be a reasonable restriction on the freedom of trade in
the public interest... Without entering upon an
exhaustive categorisation of what may be deemed
"required in the public interest", it may be, said that
restrictions which may validly be imposed under Art.
304(b) are those which seek to protect public health,
safety, morals and property within the territory".
Since Kalyani Stores case (supra) judicial opinion on the
vexed question of right to carry on trade or business in
intoxicating drinks has undergone a sea change culminating
into Har Shankar’s case (supra) which again is a decision of
5 Judges Constitution Bench of this Court. Unfortunately the
judgment in Kalyani Stores case is not referred to in Har
Shankar’s case. However, the undisputed position that now
emerges is that there is no fundamental right to do trade or
business in intoxicants. Once that latter pronouncement is
unambiguous and incontrovertible a regulatory measure
imposing a tax cannot be questioned on the ground of
unreasonableness or want to public interest because one must
not lose sight of the well accepted legal proposition that
all taxes are imposed in public interest. Even apart from
this, the majority judgment in Kalyani Stores case (supra)
clearly recognises the test of
669
reasonable restrictions to be judged in the light of the
purpose for which the restriction is imposed, i.e. as may be
required in the public interest and restrictions that may
validly be imposed under Article 304(b) are those which seek
to protect public health, safety, morals and property within
the territory. The Preamble to the impugned Ordinance
clearly recites that the special duty on the importation of
country liquor into Delhi is an endeavour towards bringing
about prohibition of consumption of alcoholic drinks, and,
therefore, it is a step in the direction of safeguarding
public health.
Incidentally, however, it was stated that when the
Minister piloted the Bill replacing the Ordinance it was in
terms said that the Act replacing the Ordinance was purely a
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fiscal measure and had nothing to do with the prohibition.
In the same breath it was stated that the Government was
committed to total prohibition and would sincerely try to
achieve this objective. Opinion of the Minister would be
hardly relevant in examining the object and purpose behind
enacting a certain legislation. Provision in Punjab Excise
Act, 1914, conferring power on the State to direct closure
of liquor shops on certain days in a week, month or year was
challenged as one not of a regulatory character but
introduced with the avowed object of enforcing prohibition
and a contention was raised that way back in 1914 the then
rulers could not have thought of enforcing prohibition
through the provisions of the Punjab Act which was
specifically enacted for the purpose of collecting revenue
from liquor vendors and indirectly from liquor consumers.
This Court in P. N. Kaushal’s case (supra) while repelling
this contention observed as under:-
"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, morals, public order and
the flow of life without stress or distress. Indeed,
even collection of revenue was intertwined with orderly
milieu; and these twin objects are reflected in the
scheme and provisions of the Act".
The present levy under the amended provisions of the Act in
its application to Delhi could certainly be said to be one
enacted both with the object of regulating the trade or
business in intoxicants and with a view to realising the
goal fixed in Article 47 of the Constitution Therefore, one
can look upon this measure both as a fiscal measure and the
one safeguarding public health and even public morals
because it is
670
well recognised that liquor trade is instinct with injury to
individual and community and has serious side-effects
recognised everywhere in every age. [Not to control alcohol
business is to abdicate the right to rule for the good of
the people] [see P. N. Kaushal’s case (supra)].
In this very breath it was, however, contended that if
this Ordinance was promulgated with a view to advancing the
policy of prohibition enunciated in Art. 47 it could only be
prospective and not retrospective because one cannot
introduce prohibition retrospectively. This argument
overlooks the twin objects sought to be achieved by the
measure, namely, validating an import which was found to be
invalid on the ground that it was countervailing duty which
could not have been legitimately imposed, and also a measure
to safeguard public health and public morals. These twin
objects underlying the measure would clearly permit its
being retrospective because retrospective validation of
impost has been recognised in a number of decisions (see
Prithvi Cotton Mills case) (supra). Therefore, there is no
substance in the contention that the retrospectivity of the
Ordinance is illegal and invalid.
Having given the matter our anxious consideration not
swayed in any manner by moral, religious, ethical or
extraneous preachers’ considerations the altruistic
grievance of the petitioners by proxy for consumers strikes
as hollow because even with the impost the petitioners’
profit of Rs. 2/- per bottle is guaranteed and they are in
no way adversely affected by the impost because the levy is
passed on to consumers. For years the impugned levy was paid
as countervailing duty. Then a loophole appeared which is
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sought to be plugged by a valid legislation. And even with
this turmoil the licensee in L-10 Form having country liquor
vend is assured of this profit of Rs. 2/- per bottle. The
entire impost is passed on to the shoulder of consumers
except for the detention of his money for a day or two when
he pays in advance while taking the bottles from the
Warehouse and recovers it when he sells the bottle and this
detention of his money for a period of two days is a
triviality which need not detain any one. It is a part of
any business. Therefore, we see no substance in these
petitions.
V.D.K. Petitions dismissed.
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