JUDGMENT

SINGH, J. :— These appeals are directed against the judgment and order of a Division Bench of the High Court of Madras dt. 2-8-1974, quashing the notices issued by the Deputy Commercial Tax Officer, Madras.

2. The respondents manufacture various medicinal preparations and in that process they use tincture containing alcohol. On the enforcement of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (hereinafter referred to as the Act) the respondents became liable to pay duty in accordance with Section 3 of the Act read with Schedule to the Act. They further became liable to obtain licence, but they neither paid duty nor obtained licence. The Commercial Tax Officer issued notices to the respondents in exercise of his powers under Rule 12 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 directing them to pay duty on all medicinal preparations manufactured by them after 1-6-1961. The notices were in the shape of notice of demand requiring the respondents to pay the duty which they had failed to pay in accordance with the Act and the Rules on the use of tincture in manufacturing medicinal preparations. The respondents filed writ petitions under Article 226 of the Constitution of India before the High Court of Madras challenging the notices and the proceedings initiated in pursuance thereof for the recovery of duty from the A Division Bench of the High Court allowed the writ petitions on the sole ground that Rule 12 under which the impugned notices were issued was ultra vires the Act, consequently, proceedings initiated in pursuance thereof were without jurisdiction. On these findings the writ petitions were allowed and the notices as well as the proceedings were quashed.

3. The sole question which arises for consideration in these appeals relates to the validity of Rule 12 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956. The High Court has declared the Rule ultra vires on the ground that the Act was silent on the question of levy of duty on escaped turn-over and hence Rule 12 which provides for the recovery of escaped duty was outside the purview and scope of the Act.

4. The Act was enacted to provide for the levy and collection of duty of excise on medicinal and toilet preparations containing alcohol, opium, Indian hemp or other narcotic drugs as the preamble states. Section 3 provides for levy and collection of duties. It reads as under :

"3(1). There shall be levied duties of excise, at the rates specified in the Schedule, on all dutiable goods manufactured in India.

(2) The duties aforesaid shall be leviable-

(a) where the dutiable goods are manufactured in bond. in the State in which such goods are released from a bonded warehouse for home consumption, whether such State is the State of manufacture or not;

(b) where the dutiable goods are not manufactured in bond, in the State in which such goods are manufactured.

(3) Subject to the other provisions contained in this Act, the duties aforesaid shall be collected in such manner as may be prescribed."

Excise duty is imposed by Section 3 on the manufacture of dutiable goods at the rates specified in the Schedule. Sub-section (2) indicates the stage at which the duty is to be levied. Section 3(3) provides for collection of duty. It lays down that it shall be collected in such manner as may be prescribed by Rules made under the Act. Section 3. therefore, imposes duty on the manufacture of medicinal preparations and it lays down the rates and it also indicates the stage at which the duty is to be levied. So far as collection of duty is concerned the Act leaves the same to the rule making authority. Section 19 confers power on the Central Government to make rules to carry out the purposes of the Act. The relevant provision of Section 19 is as under :

"19(l). The Central Government may, by notification in the Official Gazette, make rules to carry out the purposes of this Act.

(2) In particulars, and without prejudice to the generality