Judgment

AYYANGAR,J.: (With him, S. J. Imam, K.C. Das Gupta and Raghubar Dayal JJ.) The appellants in Civil Appeal 140 of 1954 are tobaacco merchants and manufacturers of biris. They own private ware-houses licensed under r. 140 of the Excise Rules, 1944 at Gondia and other places in Madhya Pradesh.

2. On the 28th of February, 1951 a Bill was introduced in the House of the People, being Bill 13 of 1951 containing the finacial proposals of the Government of India for the fiscal year beginning the 1st of April 1951. Clause 7 of the bill made provision for the amendment of the Central Excise Act (Act 1 of 1944) by way of alteration of duties on "tobacco manufactured and unmanufactured". In particular, it provided that "unmanufactured tobacco other than flue-cured and ordinarily used otherwise than for the manufacture of cigarettes" (which included tobacco intended for manufacture into biris) should be changed to an excise duty of 8 annas per lb, and it also imposed a new duty of excise on biris varying from 6 to 9 annas per lb depending upon the weight of tobacco contained in the biris.

3. Section 3 of the Provisional Collection of Taxes Act, 1931 (Act XVI of 1931) enacted

Where a bill introduced into the Indian Parliament provided for the imposition or increase of a duty of excise the Central Government might cause to be inserted in the bill a declaration that it was expedient in the public interest that any provision of the bill relating to such imposition or increase shall have immediate effect under this Act".

A declaration under this section was made in respect of the provision for imposing the duties on tobacco under cl. 7 of the bill already adverted to. The effect of such a declaration was stated in S. 4 of Act XVI of 1931 in the following terms:-

"4. (I) A declared provision shall have the force of law immidiately on the expiry of the day on which the Bill containing it is introduced.

(2) A declared provision shall cease to hale the force of law under the provisions of this Act-

(a) when it comes into operation as an enactment, with or without amendment, or

(b) when the Central Government, in pursuance of a motion passed by Parliament, directs, by notification in the Official Gazette, that it shall cease to have the force of law, or

(c) if it has not already ceased to have the force of law under clause (a) or clause (b), then on the expiry of the sixtieth day after the day on which the Bill containing it was introduced."

4. In compliance with this law the appellants paid the excise duty at the rates imposed under cl. 7 of the bill and obtained clearance certificates in regard to the tobacco moved out from their warehouses from and after March 1, 1951. Bill 13 of 1951 was passed into law as the Indian Finance Act 1951 (Act XXIII of 1951) on April 28,1951 but as passed, changes were effected in the duty proposed in the bill, as a result of certain alterations suggested by the Select Committee. Under S. 7(1) of the Finance Act 1951 while the excise duly on biris was abandoned, the duly on unmanufactured tobacco (other than flue-cured and used in the manufacture of cigarettes) was increased to 14 annas per 16, from the rate of 3 annas per lb. in the bill, Consequential provisions were enacted in S. 7(2) of the Finance Act which lead :

"The amendments made in the Central Excise and Salt Act 1944, sub-cl. 1 shall be deemed to have effect on & from the 1st March, 1951 and accordingly:-

(a) refund shall be made of all duties collected which would not have been col1ected, if the amendment had come into force in that day, and

(b) recoveries shall be made of all duties which have not been collected but which would have been collected, if the amendment had so come into force."

5. In pursuance of S. 7(2) a demand was made upon the appellants on June 22, 1951 for the payment of the duty payable by them, after giving credit for the refund of the duty paid on biris which had been deleted by the Act. The appellants contested the legality of this deman