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High Court Of Delhi
UNION OF INDIA - Appellant
Versus
LACHMI NARAIN - Respondent
L.P.A. 53 of 1971
Decided On : 11/18/1971
SALES TAX - Levy of sales tax on "durries" - Validity of notification extending Bengal Finance (Sales Tax) Act, 1941 to Union Territory of Delhi - Power of Central Government to modify the Act - Whether the modification was necessary and integrated with extending the law - Whether the impugned notification suffers from the infirmity of excessive delegation of legislative powers - Whether the curtailment of the period of notice from three months to a shorter period of such duration as the Government may consider reasonable would amount to impairing the right of the general public acquired under the Bengal Act.
Fact of the Case:
The Bengal Finance (Sales Tax) Act, 1941 was extended to the Union Territory of Delhi in 1951 with certain modifications and restrictions. In 1957, the Central Government issued a notification amending the Act to reduce the period of notice required to be given before adding to, omitting from, or otherwise amending the Schedule from three months to such period as the Government may consider reasonable. The validity of this notification was challenged on the grounds that it was ultra vires the powers of the Central Government, that it was an excessive delegation of legislative powers, and that it impaired the right of the general public to be heard before the sales tax was levied.
Finding of the Court:
The Court held that the Central Government had the power to modify the Act while extending it to the Union Territory of Delhi, and that the modification in question was necessary and integrated with extending the law. The Court also held that the impugned notification did not suffer from the infirmity of excessive delegation of legislative powers, and that the curtailment of the period of notice did not impair the right of the general public to be heard before the sales tax was levied.
Issues: 1. Whether the Central Government had the power to modify the Bengal Finance (Sales Tax) Act, 1941 while extending it to the Union Territory of Delhi? 2. Whether the modification in question was necessary and integrated with extending the law? 3. Whether the impugned notification suffered from the infirmity of excessive delegation of legislative powers? 4. Whether the curtailment of the period of notice impaired the right of the general public to be heard before the sales tax was levied?
Ratio Decidendi: 1. The Central Government had the power to modify the Bengal Finance (Sales Tax) Act, 1941 while extending it to the Union Territory of Delhi because Section 2 of the Union Territories (Laws) Act, 1950 empowered the Central Government to extend enactments in force in a State to a Union Territory with such restrictions and modifications as it thought fit. 2. The modification in question was necessary and integrated with extending the law because it was necessary to empower the Central Government to add to, omit from, or otherwise amend the Schedule in order to successfully implement the policy of the Act, which was to impose a general tax on the sale of goods in the Union Territory of Delhi. 3. The impugned notification did not suffer from the infirmity of excessive delegation of legislative powers because the power entrusted to the Central Government to "add to," "omit from," or "otherwise amend" the schedule was not an abdication of legislative functions or a non-application of the Legislative mind, and the policy of the Act was implicit in the preamble of the extended Act. 4. The curtailment of the period of notice did not impair the right of the general public to be heard before the sales tax was levied because the object of providing for publication of proposals and draft rules was to invite objections and to provide reasonable opportunity of being heard to those who were likely to be affected by the tax before imposing it, and the impugned notification did not curtail the right to be heard, but only the period of notice.
Final Decision: The Court dismissed the writ petitions challenging the validity of the impugned notification.
( 1 ) THIS Letters Patent Appeal is directed against the judgment dated the 13th January, 1971, passed by Shri v. S. Deshpande, a single Judge of this Court in Civil Writ No. 574-D of 1966, whereby the learned Judge quashed notification No. S. R. O. 3908 date 7th December, 1957 and the subsequent notifications made thereafter in pursuance of the said notification.
( 2 ) SINCE a common question of law is involved in this Letters Patent Appeal and LPAs, Nos. 54 to 59 of 1971 and in writ petitions viz. Civil Writs Nos. 593 to 652 of 1971 and in Civil Writs Nos. 792 to 806 of 1971, the counsel for the parties agreed that only the Appeal and Civil Writ No. 593 of 1971 be heard as decision in these two cases will dispose of the appeals and other writ petitions. Consequently, both the Appeal and the Writ petition are being disposed of by this common judgment.
( 3 ) THERE is no dispute as to facts which have been clearly stated in the judgment of the learned Single Judge.
( 4 ) DELHI was a Part c State in 1950 . By virtue of Section 2 or the Part c States (Laws) Act, 1950, the Central Government had the power by notification in the official gazette to extend to a Part c State any enactment which was in force in a State at the date of the notification with such restrictions and modifications as the Central Government thought fit.
( 5 ) IN exercise of its powers under Section 2 of the Part c State (Laws) Act, 1950, the Central Government in 1951 by a notification No. S. R. O. 615 dated the 28th April, 1951,. extended the Bengal Finance (Sales Tax) Act, 1941, to the Union Territory of Delhi with certain restrictions and modifications as were laid down in the said notification.
( 6 ) IN sub-section (2) of Section 6 of the Bengal Act, before is was extended to the Union Territory of Delhi vide S. R. O. 615 dated the 28th April, 1951, the State Government had the power after giving by notification in the official gazette, not less than three months notice of its intention to do so. by a like notification to add to the schedule, and thereupon the schedule was to be deemed to be amended accordingly. Sub-section (1) of Section 6 envisaged that no tax shall he payable under the Act on the sale of goods specified in the first column of the schedule, subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof.
( 7 ) IT may, therefore, be noted that at the time the Bengal Act, was extended to the Union Territory of Delhi, in the original Act there was only one schedule in respect of the exempted goods which were not subject to the levy of the tax and the State Government had the power only "to add" to the schedule. In other words, the power was only to add to the list such goods that the State Government thought fit to. exempt from the levy. But while extending the Act to the Union Territory of Delhi by S. R. O. 615 dated the 28th April, 1951, power was given not only "to add" to but also to "omit from" or "otherwise amend" the Schedule.
( 8 ) SUBSEQUENTLY, however, the Bengal Act as extended to the Union Territory of Delhi was amended by amendment Act of 1956 and by virtue of section 4 of the amending Act the words "second Schedule" in both the sub-sections of section 6 of the Act were substituted for the words "schedule". Thus the effect of the amendment was that instead of one schedule, there came into being, two schedules and as such. another schedule was added to the Act by the amending Act of 1956. it may also be stated hero that earlier in 1951 by a notification No. 20-3-51/judl. (S. R. O. 1564) dated the 4th October, 1951. the words the first column of" occurring between the words "in" and "the" were omitted from sub-section (1) of section 6 of the Bengal Act and likewise for the words "in the corresponding entry in the second column thereof" occurring in the said sub-section were substitued for the word "therein".
( 9 ) THIS the amended and substituted s
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