Shivdayal, J.

By this petition under Article 226 of the Constitution of India the Petitioner seeks a writ of mandamus directing the State of Madhya Pradesh and the Excise authorities and the Collector, Gwalior, not to enforce the notice of demand (Annexure 2) issued by the Collector.

In an auction of country liquor shops the Petitioner being the highest bidder, got a group of five shops situate at Gwalior for the period 1969-70 (from April 1, 1969 to March 31, 1970). One of the terms of the sale memo was that the contractor would have to lift a prescribed minimum quantity of liquor and pay duty or consolidated duty at the prevalent rate, otherwise he would have to pay duty on the quantity short of the minimum prescribed. In accordance with this condition the District Excise Officer, Gwalior, issued a notice of demand for Rs. 2,90,502.76 P. as arrears of land revenue and threatened to recover the amount as such. The Petitioner challenges this notice of demand and contends that the demand is not authorised by law.

The Petitioner's contention is that the demand notice is ultra vires because duty on liquor not lifted by the contractor is not authorised by law.

An excise licensee has to pay (i) the prescribed licence fee, which licence gives the licensee privilege of selling liquor in a shop; (ii) the price of liquor which he purchases from the State Government, and (iii) excise duty on the liquor so purchased by him. What has been demanded in this case under the impugned notice of demand is a fourth item, i. e. duty on liquor not lifted by the contractor who was bound to lift under the conditions prescribing minimum quantity. The question is whether the State Government is authorised to levy duty on liquor which the contractor did not lift. Sections 25 and 26 do not authorise levying of such duty. Under Section 26 duty may be levied on quantity of materials used but not on the quantity of materials not lifted. Nor Section 62 of the Excise Act, which confers rule making power, empowers the State Government to levy duty on liquor which a contractor does not lift. Therefore, it must be said that the levying of duty on liquor not lifted by a contractor is not authorised by law. Any rule made by the State Government which authorises levying of such duty is also ultra vires as it is in transgression of the power conferred by the statute.

This position of the law is settled in Bimal Chand Banerjee v. State of M. P. 1971 MPLJ 168 : 1970 JLJ 902 (SC) and Jagannath Prasad v. State of M. P. (Civil Appeal No. 308 of 1970 which appeals were decided by their Lordships of the Supreme Court by a common judgment dated August 19, 19701 on a consideration of Sections 25, 27, 62 (1) and 62 (2) (d) and (h) of the Excise Act. Their Lordships held:-

Neither Section 25 or Section 27 or Section 62(1) or Clauses (d) and (h) of section 62 (2) empower the rule making authority viz. the State Government to levy tax on excisable articles which have not been either imported, exported, transported, manufactured, cultivated or collected under any licence granted under Section 13 or manufactured in any distillery established or any distillery or brewery licenced under the Act.......... The rule making authority has not been conferred with any power to levy duty on any articles which do not fall within the scope of Section 25........ Quite clearly the State Government purported to levy duty on liquor which the contractors failed to lift. In so doing it was attempting to exercise a power which it did not possess.

No tax can be imposed by any bye-law or rule or regulation unless the statute under which the subordinate legislation is made specially authorises the imposition even if it is assumed that the power to tax can be delegated to the executive. The basis of the statutory power conferred by the statute cannot be transgressed by the rule making authority. A rule making authority has no plenary power. It has to act within the limits of the power granted to it.

In tha