1. Manufacture of medicinal preparations — Dispute over levy of supervisory staff charges under Rule 36, 1345-F Rules, following enactment of Medicinal and Toilet Preparations (Excise Duties) Act, 1955. (Para 1 )
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1964 Supreme(SC) 92
SUPREME COURT OF INDIA
20th March, 1964
P.B. GAJENDRAGADKAR, C.J.I., K.N. WANCHOO, J.C. SHAH, N. RAJAGOPALA AYYANGAR AND S.M. SIKRI, JJ.
1. The Hyderabad Chemical and Pharmaceutical Works Ltd. (In C. A. No. 399 of 62) 2. M/s. Bright Chemicals and Pharmaceuticals (In C. A. No. 400 of 62) 3. Shettys Pharmaceuticals and Biologicals Ltd. (In C. A. No. 401 of 62) 4. M/s. Nath laboratories (In C. A. No. 402 of 62) and 5. M/s. Biological Products (Private) Ltd. (In C. A. No. 403 of 62), Appellants
Versus
The State of A.P. and another (In all the Appeals), Respondents.
Civil Appeals Nos. 399 to 403 of 1962.
Advocates appeared
M/s. K. Srinivasamurthy and Naunit Lal, Advocates, for Appellants (In all the Appeals); M/s. K. R. Chaudhuri and B. R. G. K. Achar, Advocates, for Respondents (In all the Appeals).
Advocates:
B.R.G.K.Achar, K.R.CHAUDHARY, K.SRINIVAS MURTHY, NAUNIT LAL
B.R.G.K.Achar, K.R.CHAUDHARY, K.SRINIVAS MURTHY, NAUNIT LAL
A specific repeal clause in rules framed under a central act overrides a general saving proviso in the act itself, extinguishing previous state rules that are inconsistent or specifically repealed, especially when the central legislation is a "provision to the contrary" under Article 277 of the Constitution.
Headnote:(A) Medicinal and Toilet Preparations (Excise Duties) Act, 1955 - Section 21 - Constitution of India - Article 277 and Entry 84, List I - Repeal of state rules - Whether a rule providing for reimbursement of expenses for supervisory staff under a general state excise law survives the enactment of a central act and subsequent rules specifically repealing such provisions - Central Act and its rules occupy the field regarding medicinal preparations - Specific repeal clause in the new rules overrides the general saving proviso in the Act - Rule providing for supervisory charges is not saved if the new regulatory framework covers the purpose but omits the charge. (Paras 4, 5, 6)
(B) Constitution of India - Article 277 - Taxes, duties, cesses or fees lawfully levied by a State before the commencement of the Constitution continue until provision to the contrary is made by Parliament by law. (Para 4)
Facts of the case:
Appellants, manufacturers of medicines using alcohol, were required under a state rule to bear the expenses of supervisory excise staff. Following the enactment of a central act and rules governing medicinal preparations, the appellants challenged the continued levy of these charges, arguing that the central legislation repealed the state provisions. The state contended that the rule survived as it served the general purpose of preventing the unauthorized sale of alcohol.
Findings of Court:
The court found that the central act and the rules framed thereunder specifically repealed corresponding state laws and rules. The specific repeal provision in the 1956 Rules superseded the general saving proviso in Section 21 of the Act. Since the new rules covered the supervisory functions but did not provide for the reimbursement of expenses, the old rule could not be maintained.
Issues: Whether a rule under a general state excise law requiring licensees to pay for supervisory staff survived the enactment of a central act and rules that specifically repealed corresponding state laws and rules.
Ratio Decidendi: When a central act is passed as a "provision to the contrary" under Article 277 of the Constitution, and the rules framed under that act specifically repeal all rules made under corresponding state laws, any such state rule is extinguished. A general saving proviso in the act cannot preserve a rule that is specifically repealed by the subsequent rules framed under the same act.
Result: Appeals allowed.
Legal Category Hierarchy
Table of Contents
2. Appellants contend Rule 36 was repealed by the Act; State argues Rule 36 survives as a general excise measure for alcohol supervision under the Hyderabad Abkari Act. (Para 1 , 2 )
3. The 1956 Rules specifically repeal previous rules via Rule 143, and the supervisory functions of Rule 36 are fully subsumed by the new legislative framework. (Para 4 , 5 , 6 , 7 , 8 )
4. A specific repeal clause in new rules overrides a general saving proviso in the parent Act regarding corresponding state rules. (Para 5 )
5. Appeals allowed — High Court order set aside — Writs issued in favor of appellants. (Para 8 )
6. How does Article 277 of the Constitution affect state levies after the Union Parliament enacts a contrary law?
Under Article 277, state taxes, duties, or fees lawfully levied before the Constitution continue until Parliament makes a provision to the contrary. Once Parliament enacts a law, such as the Medicinal and Toilet Preparations Act, the state can no longer levy those charges. (Para 4 )
7. Does a saving proviso in an Act preserving existing rules prevail over a specific repeal clause in the new Rules framed under that Act?
No. If the new Rules contain a specific provision repealing all rules made under corresponding laws, the old rules are repealed regardless of a general saving proviso in the parent Act. (Para 5 )
8. Can a rule survive a specific repeal if its purpose is argued to be the enforcement of a general law rather than a specific one?
No. If the primary object of the rule is covered by the new Act and Rules, it cannot be justified as surviving under a general law simply because it incidentally serves a general purpose. (Para 7 , 8 )
Judgement
WANCHOO, J. : These are five connected appeals on certificates granted by the High Court of Andhra Pradesh. They involve a common question of law and will be dealt with together. The brief facts necessary to understand the question of law raised in these appeals are these. The appellants manufacture medicines in which they have to use alcohol. Before Parliament passed the Medicinal and Toilet Preparations (Excise Duties) Act, No. 16 of 1955, (hereinafter referred to as the Act), the appellants were working under licences granted under the Hyderabad Abkari Act, No. 1 of 1316-F. Under that Act certain rule called the Medicinal Preparations and Spirituous Rules, 1345-F were framed and R. 36 thereof provided that "the expenses of the establishment for the supervision of the work shall be borne by the pharmaceutical laboratory (licensee) as per the decision of the Commissioner Excise". It appears that for the manufacture of medicines, the appellants used to be supplied with alcohol. Further the State Government posted on the bonded manufactories of the appellants certain supervisory excise staff, and R. 36 was obviously framed to re-imburse the Government for expenses incurred in that behalf. After the Act came into force from April 1, 1957, the appellants who were manufacturing medicinal preparations were governed by it and the Rules framed thereunder and took licences under the Act. The appellants then contended that as the Act had repealed all previous provisions with respect to medicinal preparations, they were no longer bound to pay the charges prescribed under R. 36 of the 1345-F Rules. Their contention was that this rule along with such provisions of the Hyderabad Abkari Act, which concerned medicinal preparations were repealed by the Act and the Rules framed thereunder. The State Government could therefore no longer ask them to pay the costs of the establishment posted at their bonded manufactories for supervision. The State Government however insisted on the payment of the charges. The appellants thereupon filed writ petitions in the High Court challenging the levy of these charges.
2. The petitions were opposed on behalf of the State and its contention was that even though the Act and the Rules framed thereunder had come into force from April 1, 1957, R. 36 of the 1345-F Rules continued and was not repealed by the Act and the Rules framed thereunder, and the State was entitled to the expenses of the supervisory staff and could realise it from the appellants.
3. The High Court held that R. 36 could not be said to have been repealed by the Act and the Rules framed thereunder and was still good law. In this connection the High Court pointed out that the Hyderabad Abkari Act was not concerned only with medicinal preparations but was a general Act dealing with excise including alcohol, and that alcohol in the ultimate analysis was liquor; therefore the State Government which supplied alcohol to the appellants for the purpose of making medicinal and toilet preparations for which no duty was paid was entitled to see that the alcohol was not used for purposes other than that for which it was supplied to the appellants. Accordingly the High Court held that R. 36 of the 1345-F Rules was designed to achieve this object, under the general law of excise contained in the Hyderabad Abkari Act, and was therefore good. In consequence the writ petitions were dismissed. The appellants then applied for certificates to appeal to this Court, which were granted; and that is how the matter has come up before us.
4. The only question that falls for consideration therefore is whether after the coming into force of the Act and the Rules, R. 36 of the 1345-F Rules can still be said to survive. There is no doubt that the Hyderabad Abkari Act was a general Act and before the Constitution came into force, R. 36 of the 1345-F Rules would be good law. Under the Constitution, however, medicinal and toilet preparations came under entry 84, List I of
