Full Judgment Text
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PETITIONER:
NARINDER CHAND HEM RAJ & ORS.
Vs.
RESPONDENT:
LT. GOVERNOR, ADMINISTRATOR, UNION TERRITORY,HIMACHAL PRADES
DATE OF JUDGMENT05/10/1971
BENCH:
HEGDE, K.S.
BENCH:
HEGDE, K.S.
GROVER, A.N.
CITATION:
1971 AIR 2399 1972 SCR (1) 940
ACT:
Sales Tax-Deputy Commissioner giving impression to bidders
at auction for licence for sale of liquor that Indian made
foreign liquor would be exempt from sales-tax-Higher bids
given as a result of such impression-Exemption not actually
given-Court cannot issue writ to State Government to make
change in law and to grant exemption-Executive cannot be
asked not to enforce a provision of law.
HEADNOTE:
Under the Punjab General Sales Tax Act, 1948, no sales tax
was payable on goods specified in the first column of
Schedule B to the Act subject to certain conditions and
exceptions. Up to August 31, 1966 Indian made foreign
liquor was in Schedule B. But on that date the Government of
Punjab in exercise of its powers conferred under proviso to
S. 5 deleted Indian made foreign liquor from Schedule B and
included the same in Schedule A which made it exigible to
sales tax. Simla was part of Punjab tiff, reorganisation of
Punjab in 1966. Simla and two other districts of the former
State of Punjab were added on to the Union Territory of
Himachal Pradesh under the Punjab Reorganisation Act, 1966.
Under the provisions of that Act the laws in force,
immediately before the appointed day namely October 1, 1966
in those districts were to continue in operation till the
appropriate legislature or competent authority altered the
same. Accordingly in Simla and other areas thus transferred
to Himachal Pradesh Indian made foreign liquor was liable to
sales tax. In the auction for sale of Indian made foreign
liquor and beer held on March 31, 1967 the appellant, a firm
of wine merchants, was the highest bidder for dealing in
liquor under L-2 licence as provided in the Punjab Liquor
Licence Rules as applicable to certain parts of the then
Union Territory of Himachal Pradesh. When the State of
Himachal Pradesh took steps against the firm for realising
sales-tax on liquor and beer sold by it the appellant firm
filed a writ petition in the High Court. It was alleged in
the petition that the Deputy Commissioner Simla, who was
also Collector of Excise and Taxation, announced at the time
of auction that no sales tax would be liable to be paid on
the sale of Indian made foreign liquor and beer.
Accordingly the appellant prayed that because of the
equities of the case the court should issue a writ,
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direction or order restraining the respondents from
enforcing the levy of sales tax on the sales of Indian made
foreign liquor at Simla. In the firm’s appeal to this Court
against the judgment of the High Court,
HELD : (i) The averments in the petition did not show that
the Deputy Commissioner gave an assurance to the bidders
that the Himachal Pradesh Government had decided to abolish
sales tax on the sale of Indian made foreign liquor. If the
statement in the writ petition was correct the Deputy
Commissioner merely gave a wrong interpretation of law. On
behalf of the respondent it had been denied that the Deputy
Commissioner had made such a representation. According to
them all that the Deputy Commissioner stated was that "the
Government was considering to abolish the tax on the line of
the Haryana Government". it further appeared from the
correspondence between the State Government and the Central
Government that the Government of Himachal Pradesh
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wanted to bring their sales tax law relating to the sale of
Indian made foreign liquor in line with the law in force in
Haryana State. Obviously, the Government of Himachal
Pradesh was of the opinion that it could not alter the law
without the concurrence of the Central Government. That
being so it was difficult to accept the contention of the
appellant hat the Deputy Commissioner had represented that
the Himachal Pradesh Government had decided to remove sales-
tax on the sale of Indian made foreign liquor. The only
thing which the Deputy Commissioner could have announced was
that the Himachal Pradesh Government was considering to
abolish the tax in question. Such a representation cannot
be considered as a condition of the auction assuming that
such a condition could be imposed orally by the Deputy
Commissioner., [943 B-H]
(ii)The power to impose tax is undoubtedly a legislative
power. That power can be exercised by the legislature
directly or subject to certain conditions, the legislature
may delegate that power to some other authority. But the
exercise of that power whether by the legislature or by its
delegate is an exercise of a legislative power. The fact
that the power was delegated to the executive does not
convert that power into an executive or administrative
power. No court can issue a mandate to a legislature to
enact a particular law. Similarly no court can direct a
subordinate legislative body to enact or not to enact a law
which it may be competent to enact. [945 F-G]
Article 265 of the Constitution lays down that no tax can be
levied and collected except by authority of law. Hence the
levy of a tax can only be done by the authority of law and
not by any executive order. Unless the executive is
specifically empowered by law to give any exemption, it
cannot say that it will not enforce the law as against a
particular person. No Court can give a direction to a
Government to refrain from enforcing a provision of law.
Under these circumstances, it must be held that the relief
asked for by the appellant cannot be granted. [945 H-946 B]
Collector of Bombay v. Municipal Corporation of the City of
Bombay and Ors., [1952] S.C.R. 443, Union of India and Ors.
v. M/s. Indo Afghan Agencies Ltd [1968] 2 S.C.R. 366,
distinguished.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1313 of
1970.
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Appeal from the judgment and order dated January 13, 1970 of
the Delhi High Court Himachal Bench in Letters Patent Appeal
No. 10 of 1969.
H. L. Sibal, Advocate-General, Punjab, N. N. Goswami and
S. N. Mukherjee, for the appellants.
V. C. Mahajan and R. N. Sachthey, for the respondents.
The Judgment of the Court was delivered by
Hegde, J. The appellant-firm are wine merchants, carrying on
business at the Mall in Simla. In the auction for sale of
the Indian made foreign liquor and beer held on March 31,
1967, the appellant was the highest bidder for dealing in
liquor under a L-2 licence as provided in the Punjab Liquor
Licence Rules as applicable to certain parts of the then
Union Territory of Himachal Pradesh. The case for the
appellant is that at the time of
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the auction, Deputy Commissioner, Simla who is also the
Collector of Excise and Taxation, announced that no sales
tax will be liable to be paid on the sale of the Indian made
foreign liquor and beer but despite this assurance the
Government has levied and collected from the appellant firm
a sum of Rs. 26,798/26 P. and further it is taking steps
against the firm for realising sales tax on the liquor and
beer sold by it. Hence it filed a writ petition in the
Delhi High Court (Himachal Pradesh Bench at Simla) seeking
various reliefs. Several contentions were taken in the writ
petition but at the time of the hearing only one of the
reliefs prayed for in the writ petition was pressed. Many
of the contentions taken in the writ petition were given up.
Hence it is not necessary for us to refer to the facts
relating to the other reliefs prayed for in the writ
petition. The appellant pleaded that in view of the
representation made by the Deputy Commissioner, it was
induced to increase its bid as a result of which the Govern-
ment had substantially benefited. The case for the
appellant is that because of the equities of the case, the
Court should issue a writ, direction or order restraining
the respondents from enforcing the levy of sales tax on the
sales of Indian made foreign liquor and beer at Simla.
In the counter-affidavit filed on behalf of the respondents,
it was denied that the Deputy Commissioner had represented
to the bidders before the auction commenced that no sales
tax was liable to be paid on the sale of Indian made foreign
liquor or beer. The case of the respondents is that all
that the Deputy Commissioner told the bidders was that the
Government was considering tile question of removing sales
tax on the sale of Indian made foreign liquor. In fact, the
Himachal Pradesh Government took a decision to remove sales
tax on sale of Indian foreign liquor but they could not
enforce that decision without approval of the Union
Government; the Union Government did not accord the approval
asked for hence the Government was not able to remove the
sales tax in respect of the sale of Indian foreign liquor.
It was urged oil behalf of the respondent that sales tax "as
imposed by law. The Government cannot refuse to implement
the mandate of the law. Any chance in the provisions of
tile Punjab General Sales Tax Act could be affected only
according to the provisions of the law in force. No Court
can issue a mandate to a legislature or to a subordinate
legislative body to make or change any law; further the
Himachal Pradesh Government is incompetent to change the law
without the approval of the Union Government which is not a
party to tile writ petition.
The first question that we have to decide is as to what was
the representation made by the Deputy Commissioner it the
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time
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of the auction. As seen earlier the parties are not agreed
on this point. The relevant allegation in the writ petition
is found in paragraph 3 thereof. It reads : .......... it
was also announced that no sales tax would be liable to be
paid on the sales of Indian made foreign liquor and
beer......
This statement does not show that the Deputy Commissioner
gave an assurance to the bidders that the Himachal Pradesh
Government had decided to abolish sales tax on the sale of
Indian made foreign liquor or beer. If the statement in the
writ petition is correct, the Deputy Commissioner merely
gave a wrong interpretation of the law. Apart from that, as
mentioned earlier, it was denied on behalf of the
respondents that the Deputy Commissioner had made such a
representation. According to them all that the Deputy
Commissioner stated at that time was that "the Government
was considering to abolish the tax on the line of Haryana
Government". Barring asserting that the Deputy Commissioner
had made a representation that "no sales tax would be
liable" on the sales of Indian made foreign liquor and beer,
the appellant has produced no material in support of that
assertion. It appears from the letter written by the
Secretary, Excise to Government of Himachal Pradesh to the
Deputy Secretary, Government of India, Ministry of Home
Affairs on June 24, 1967 and from the letter written by the
Chief Secretary to the Himachal Pradesh Government to the
Additional Secretary (U.T.) to the Government of India,
Ministry of Home Affairs on January 16, 1968 that the
Government of Himachal Pradesh wanted to bring their sales
tax law,: relating to the sale of Indian made foreign liquor
in line, with the law in force in Haryana State. But it is
clear from those letters that, the Himachal Pradesh
Government was of the opinion that it could not do so
without the concurrence of the Central Government. Whether
the Himachal Pradesh Government was competent to alter the
Sales Tax law as desired by it without the concurrence of
the Central Government, as contended on behalf of the
appellant or whether it could do so only with the
concurrence of the Central Government as contended on behalf
of the respondents, the fact remains that the Government of
Himachal Pradesh was of the opinion that it could not alter
the law without the concurrence of the Central Government.
That being so, it is difficult to accept the contention of
the appellant that the Deputy Commissioner had represented
that the Himachal Pradesh Government had decided to remove
sales tax on the sale of Indian made foreign liquor. The
only thing which the Deputy Commissioner could have
announced was that the Himachal Pradesh Government was
considering the abolition of the tax in question. The
learned single judge who
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hear the writ petition came to conclusion that "there is no
positive evidence on record to support the contention that
this announcement (that the Government of Himachal Pradesh
had decided to remove sales tax on sale of Indian made
foreign liquor) was actually made by the Collector
conducting the auction as a condition of the auction".
Before coming to this conclusion, the learned single judge
had considered all the relevant material bearing on the,
point. But the Division Bench while hearing the appeal of
the appellant did not analyse the evidence bearing on the
point nor did it consider the effect of the material before
it. It held "it is clear from the admission contained in
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paragraph 2 of the letter dated the 16th of January 1968,
that there was some announcement on the 31st of March, 1967,
when the auction was held and it was not an ambiguous
announcement. It was presumably specific to the effect that
either the Government of Himachal Pradesh had decided to
abolish the sales tax or that they were going to achieve its
abolition in respect of the merged areas." This is at best a
speculative conclusion.
Our attention has not been invited to any material on record
on the basis of which that conclusion could have been
arrived at by the Division Bench. The two letters referred
to earlier do not support that conclusion. The averment in
the writ petition, as seen earlier does not accord with the
case taken at the time of the arguments. The Government has
denied that the Deputy Commissioner had either been
authorised or he had made the representation at the time of
the auction that the Government had decided to abolish the
sales tax on sale of Indian made foreign liquor. According
to the respondents, all that, the Deputy Commissioner had
represented to the bidders was that the Government was con-
sidering the abolition of the sales-tax on sale of Indian
made foreign liquor; such a representation cannot be
considered as a condition of the auction, assuming that such
a condition can be imposed orally by the Deputy
Commissioner. Hence in our opinion the Division Bench erred
in its conclusion about the alleged representation by the
Deputy Commissioner.
This finding alone is sufficient to dismiss the appeal but
as Mr. Sibbal, learned Counsel for the appellant has
elaborately argued the question of law to which we shall
presently refer, we shall examine the same.
Simla was a part of Punjab till reorganization of Punjab in
1966. Simla and two other Districts of the former State of
Punjab were added on to the Union Territory of Himachal
Pradesh under the Punjab Reorganization Act, 1966. Under
the Provisions of that Act, the laws in force, immediately
before the appointed day namely October 1, 1966, in those
districts were to continue in
945
operation till the appropriate legislature or competent
authority altered the same. One of the laws that was in
force in those areas is the Punjab General Sales Tax Act,
1948. Section 6(1) of that Act provides :
"No tax shall be payable on the sale of goods
specified in the first column of Schedule B
subject to the conditions and exceptions, if
any, set out in the corresponding entry in the
second column thereof and no dealer shall
charge sales tax on the sale of goods which.
are declared tax free under this section."
Till August 31, 1966, Indian made foreign liquor was ill
Schedule B. But on that date the Government of Punjab in
exercise of its powers conferred under proviso to s. 5
deleted Indian made foreign liquor from Schedule B and
included the same in Schedule A to that Act. Thus the sale
of the said liquor became exigible to sales tax. This was
the law in force in Punjab when re-organization took place.
Hence Simla and other areas which were formerly parts of the
State of undivided Punjab continued to be governed by that
law even after reorganization. Our attention has not been
drawn to any provision in that Act empowering the Government
to exempt any assessee from payment of tax’ Therefore it is
clear that appellant was liable to pay the tax imposed under
the law. What the appellant really wants is I mandate from
the court to the competent authority to delete the concerned
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entry from Schedule A and include the same, in Schedule B.
We shall not go into the question whether "he Government of
Himachal Pradesh on its own authority was competent to make
the alteration in question or not. We shall assume for our
present purpose that it had such a power. The power to
impose a tax is undoubtedly a legislative power. That power
can be exercised by the legislature directly or subject to
certain conditions, the legislature may delegate that power
to some other authority. But the exercise of that power,
whether by the legislature or by its delegate is an exercise
of a legislative power. The fact that the power was
delegated to the executive does not convert that power into
an executive or administrative power. No court can issue a
mandate to a legislature to enact a particular law.
Similarly no court can direct a subordinate legislative body
to enact or not to enact a law which it may be competent to
enact. The relief as framed by the appellant in his writ
petition does not bring out the real issue calling for
determination. In reality he wants this Court to direct the
Government to delete the entry in question from Schedule A
and include the same in Schedule B. Art. 265- of the
Constitution lays down that no tax can be levied and
collected except by authority of law. Hence the levy of a
tax can only be done by the authority of law and not by any
executive
946
order unless the executive is specifically empowered by law
to give any exemption, it cannot say that it will not
enforce the law as against a particular person. No court
can give a direction to a Government to refrain from
enforcing a provision of law. Under these circumstances, we
must hold that the relief asked for by the appellant cannot
be granted.
In support of its contention, the appellant relied on two
decisions of this Court. The first is Collector of Bombay
v. Municipal Corporation of the City of Bombay and ors.(1)
The facts of that case are as follows
In 1865, the Government of Bombay called upon the predeces-
sor in title of the Corporation of Bombay to remove some
markets from a certain site and vacate it. On the
application of the then Municipal Commissioner, the
Government passed a resolution approving and authorising the
grant of another site to the Municipality for the purpose if
running a market. The resolution passed by the Government
stated further that "the Government do not consider that
any rent should be charged to the Municipality as the
markets will be like other public buildings, for the benefit
of the whole community." The Corporation gave up the sites
on which the old markets were situated and spent a sum of
over 17 lacs in erecting and maintaining markets on new
site. It continued to be in possession of the site in
question without paying any rent, openly and to the
knowledge of Government for a period of seventy years. In
1940 the Collector of Bombay, overruling the objection of
the Corporation, assessed the new site under s. 8 of the
Bombay City Land Revenue Act to land revenue rising from Rs.
7,500 to Rs. 30,000 in 50 years. The Corporation sued for a
declaration that the of assessment was ultra vires and that
it was entitled to the land for ever without payment of any
land-reservenue. The High Court of Bombay held that the
Government has lost its right to levy land revenue on the
land in question ’by of the equity arising, in favour of the
Corporation. By a majority his Court affirmed the decision
of the Bombay High Court. Therein this Court was not called
upon to issue a mandate to alter any
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law.
Section 8 of the Bombay City Land Revenue Act provide,,
.lm15
"it shall be the duty of the Collector, subject to the
orders of the Provincial Government, to fix and to levy the,
assessment for land revenue.
Where there is no right on the part of the superior holder
in limitation of the right of the Provincial Government to
assess, the assessment shall be fixed at the discretion of
the Collector subject to the control of the Provincial
Government.
(1) [1952] S.C.R. 443.
94 7
When there is a right on the part of the superior holder in
limitation of the right of the Provincial Government, in
consequence of a specific limit to assessment having been
established and preserved, the assessment shall not exceed
such specific limit."
Section 8 did not impose any land revenue. It only imposed
a duty on the Collector to fix and to levy the assessment.
Power to levy land revenue was the prerogative of the
Government. ’Me Court held that in view of the seventy
years possession of the land by the Corporation openly and
in assertion of a right to hold that land free of rent, it
had acquired an adverse title to the property though the
right acquired was a limited one. This is what the court
observed (p. 52 of the report) :
"Such possession being not referable to any
legal title it was prima facie adverse to the
legal title of the Government as owner of the
land from the very moment the predecessor in
title of the respondent Corporation took
possession of the, land under an invalid
grant. This possession was continued, openly
as of right, uninterruptedly for over 70 years
and the respondent Corporation had acquired
the limited title in it and its predecessor in
title had been prescribing during all this
period, that is to say, the right to hold the
land in perpetuity free from rent but only for
the purpose of a market in terms of the
Government resolution of 1865. The, immunity
from the liability to pay rent is just a,,
much an integral part of an in severable
incident of the title so acquired, is the
obligation to hold the land for the purposes
of market and for no other purpose."
From these observations, it is clear that in that case the
court was only considering tile relationship between a
landlord and a tenant. It was,sought to be argued in that
case that even if the Government be precluded from
enhancement- the "rent" in view of the terms of the
Government Resolution, it cannot be held to have disentitled
itself from the prerogative right to assess revenue". The
Court refused to entertain that plea as it was non raised in
the written statement, nor made the subject matter of an
issue on which the parties went to trial. Hence the ratio
of that decision has no relevance for our present purpose.
The other decision relied upon by the appellant is Union of
India and Ors. v. M/s. Indo Afghan Agencies Ltd.(1) Therein
in exercise of the powers conferred on the Government under
s. 3 of the Imports and Exports (Control) Act, 1947, the
Central
948
Government issued the Imports (Control) Order, 1955 and
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other orders setting out the policy governing the grant of
import and export licences. The Central Government also
evolved an Import Trade Policy to facilitate the mechanism
of the Act and the orders issued thereunder. The scheme was
modified from time to time by issuing fresh schemes in
respect of new commodities. In 1962, the Central Government
promulgated the Export Promotion Scheme providing incentives
to exporters of woollen-textiles and goods. It provided for
the grant to an exporter, certificates to, import raw
materials of a total amount equal to 100% of the F.O.B.
value of his exports. Clause 10 of the Scheme provided that
the Textile Commissioner could grant an import certificate
for a lesser amount if he is satisfied, after holding an
enquiry, that the declared value of the goods exported was
higher than the real value of the goods. The Scheme was
extended to exports of woollen textiles and goods to
Afghanistan. The Textile Commissioner without holding an
enquiry is required by cl. 10 of the scheme, arbitrarily
reduced the import quota of some of the exporters on the
basis of some private enquiry. One such exporter moved the
High Court for the issuance, of a writ-to the Government to
abide by the terms of the scheme. On behalf of the
Government, it was urged that the scheme contained only
administrative instructions and the Government was competent
to change the scheme depending upon the exigencies of
situation. On facts this Court came to the conclusion that
the scheme, was not changed because of any ,exigencies of
situation and the import quota of some of the exporters was
reduced on the basis of some private enquiry. Under those
circumstances this Court held that the Government was bound
by the representation that it made regarding the quota to
which the exporters were entitled under the scheme. The
ratio of that decision again cannot have any bearing on the
point under consideration. So long as that scheme was in
force, the Government was bound to implement the same. This
Court did not hold that the Government was not competent to
change the scheme. If the scheme, had statutory force, it
bound the Government as much as it bound the exporters. In
that event the Court was competent to compel, the Government
to act ,according to the scheme. If on the other hand the
scheme contained merely administrative instructions then the
Government having made the representation referred to
earlier, on the basis of which the exporters bad exported
certain goods, the Government was estopped from going back
on the representation made by it. In this case, again,
there was no question of issuing any direction to make a law
or abrogate an existing law.
For the reasons mentioned above this appeal fails. But in
the circumstances of the case. we think this is eminently a
fit
949
case where the parties should be asked to bear their own
costs both before the-High Court as well as in this Court.
There is no doubt that the Deputy Commissioner did give an
impression to the bidders that the Government was
considering the abolition of sales-tax on the sale of Indian
made foreign liquor. Relying on that information the
bidders must have given very high bids. The Government of
Himachal Pradesh tried its best to persuade the Central
Government to agree to change the law but it failed. In the
process, the appellant must have suffered financially. That
being so, we order this appeal to be dismissed but at the
same time direct the parties to bear their own costs both in
this Court as well as in the High Court.
G.C. Appeal
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dismissed.
950