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1975 (2) TMI 89 - SC - VAT and Sales TaxValidity of the levy and collection of excise duty, education cess, health cess and sales tax challenged - Held that - Appeal dismissed. Section 23 provides that excise duty shall be levied on the excisable articles issued from a warehouse also thus no reason to think that a warehouse established or licensed under section 16(e) is not a warehouse within the meaning of that expression in section 23. We, therefore, think that the power to fix the rate of excise duty conferred on the Government by section 22 of the Act is valid. The dilution of parliamentary watch-dogging of delegated legislation may be deplored, but, in the compulsions and complexities of modern life, cannot be helped. We do not think that section 19 is ultra vires the powers of the legislature.
Issues Involved:
1. Levy of excise duty on a licensee for arrack purchased from government depots. 2. Validity of the delegation of power to fix excise duty rates under Section 22 of the Mysore Excise Act, 1965. 3. Validity of sales tax levied on the sale of arrack under Section 19 of the Karnataka Sales Tax Act, 1957. Issue-wise Detailed Analysis: 1. Levy of Excise Duty on a Licensee for Arrack Purchased from Government Depots: The appellant contended that excise duty could not be levied on arrack purchased from government depots as these depots did not fall under the categories where excise duty could be levied according to sections 16, 22, and 23 of the Mysore Excise Act, 1965, and the relevant rules. The High Court found that although the Act and rules did not explicitly state the collection point of excise duty, it was implicit that the duty could not be collected from the State Government but only from the licensee to whom the liquor was issued. The court clarified that the government purchases arrack from distillers and stores it in warehouses established or licensed under section 16, and any removal of arrack from these warehouses attracts excise duty. The court held that the appellant's contention lacked merit as the warehouses established or licensed under section 16(e) were indeed within the scope of section 23 for excise duty purposes. 2. Validity of the Delegation of Power to Fix Excise Duty Rates Under Section 22 of the Mysore Excise Act, 1965: The appellant argued that section 22 of the Act, which delegated the power to fix excise duty rates to the government, was an abdication of essential legislative function due to lack of guidance. The High Court, referencing the preamble of the Act, stated that the policy of the Act was to raise revenue and discourage liquor consumption by making it expensive, providing adequate guidance for rate fixation. The court cited several precedents, including Corporation of Calcutta v. Liberty Cinema and Municipal Corporation of Delhi v. Birla Cotton Spinning and Weaving Mills, to support the validity of such delegation. The court emphasized that legislative control over delegated legislation could take various forms, including the power to repeal or modify rules. Section 71 of the Act provided a check on the government's power by requiring rules to be laid before the legislature. The court concluded that section 22 did not constitute excessive delegation and was valid. 3. Validity of Sales Tax Levied on the Sale of Arrack Under Section 19 of the Karnataka Sales Tax Act, 1957: The appellant challenged the validity of section 19 of the Karnataka Sales Tax Act, 1957, arguing that it was beyond the legislative competence of the State Legislature to levy sales tax on arrack sales by the government. The court found that section 19 explicitly allowed the government to collect sales tax on goods sold by it as if it were a registered dealer, notwithstanding other provisions in the Act. The court held that the section created a clear right for the state to recover tax and an obligation on the purchaser to pay it. The court concluded that section 19 was within the legislative competence of the state and did not violate any constitutional provisions. Conclusion: The Supreme Court dismissed the appeals, affirming the High Court's decision. The court upheld the validity of the excise duty levy on arrack purchased from government depots, the delegation of power to fix excise duty rates under section 22 of the Mysore Excise Act, 1965, and the levy of sales tax on arrack sales by the government under section 19 of the Karnataka Sales Tax Act, 1957. The appeals were dismissed without any order as to costs.
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