Judgment

HEGDE, J.: These appeals by certificates granted by the High Court of Madhya Pradesh raise common questions of law. Hence we propose to dispose them of by a common order.

2. The appellants herein are excise contractors. They are the successful bidders for some of the shops in Madhya Pradesh for the financial year- 1964-65. The sale memorandum on the strength of which auction was held intimated that the successful bidders will have to sell a prescribed minimum quantity of liquor in their shops and if they fail to take delivery of the prescribed minimum quantity of liquor, they will have to pay excise duty on the quantity of liquor which they failed to take delivery. On March 20, 1964 the Government in the purported exercise of its powers under cls. (d) and (h) of S. 62 of the Madhya Pradesh Excise Act, 1915 (Act II of 1915) (to be hereinafter referred to as the Act) issued the notification No. 144401089/V-SR amending the rules published on January 7, 1960. This notification prescribed that the conditions mentioned therein should be inserted in the licences to be issued to the successful bidders. At present we are only concerned with Clause 2 (C) thereof. That Clause reads:

"The minimum quantity for taking issues from the Warehouse for sale is fixed at 3213 p. litres spiced spirit and 25940 p. litres plain spirit. You shall be liable to make good every month the deficit of monthly average of the total minimum duty on or before the 10th day of each month following the month to which the deficit duty relates."

3. The appellants are challenging the validity of this notification.

4. An excise licensee in Madhya Pradesh as in other places has to meet three charges namely (1) he has to pay the prescribed licence fee for obtaining the privilege of vending liquor in a shop (2) he has to pay the price of the liquor purchased by him-generally the Government has a monopoly of liquor manufacture and (3) he has to pay excise duty on the liquor purchased by him.

5. In this case there is no dispute that the appellants had paid the prescribed licence fee, the price of the liquor purchased by them and also the duty on the liquor taken delivery of by them. The dispute centres round the duty required to be paid by them under the impugned clause in the notification of March 20, 1964 referred to earlier. The controversy is whether the said clause is valid in law.

6. The Government of Madhya Pradesh have issued demand notices on the appellants demanding the duty said to be due from them as per the impugned clause in the notification The appellants have challenged the validity of these notices as well.

7. It is contended on behalf of the appellants that excise duty is a tax. The same can be levied on the basis of a valid law. No tax can be levied on the basis of a contract nor can tax be levied by executive orders. Tax can only be levied by the legislature. Hence the fact that cl. 2 (C) in the notification of March 20, 1964 has been made a part of the licence condition is immaterial. It was contended that the question for decision is whether the Government of Madhya Pradesh was entitled to amend its rules and add the impugned clause as a part of the licence conditions.

8. The scheme. of the Act is similar to the scheme of other excise Acts in this country. In the Act Excise Duty and "countervailing duty" have been defined (in S. 2 (6-A) ) as meaning any such excise duty or countervailing duty, as the case may be, as is mentioned in entry 51 of list II in the Seventh Schedule to the Constitution, which entry reads:

"Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India:

(a) alcoholic liquors for human consumption;

(b) opium, Indian hemp and other narcotic drugs and narcotics;

but not including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry."

9. In view o