1979 (4) TMI 156 - SC - Central Excise

Whether Parliament had the power to impose special duty on the import of country liquor in Delhi? Held that - if excise or countervailing duty could be levied on country liquor manufactured or imported into Delhi, albeit other conditions for the levy of such duty being fulfilled, Parliament would not lack competence to levy the same only because levy of such duty on alcoholic liquors for human consumption is within the competence of a State. Merely because Parliament could not levy countervailing duty on country liquor imported into Delhi because country liquor is not manufactured in Delhi, it does not exhaust the power of Parliament to levy some other duty on the import of liquor if it is otherwise constitutionally permissible. The present levy under the amended provisions of the Act in its application to Delhi could certainly be said to be one enacted both with the object of regulating the trade or business in intoxicants and with a view to realising the goal fixed in Article 47 of the Constitution Therefore, one can look upon this measure both as a fiscal measure and the one safeguarding public health and even public morals because it is well recognised that liquor trade is instinct with injury to individual and community and has serious side-effects recognised everywhere in every age. Therefore, there is no substance in the contention that the retrospectivity of the Ordinance is illegal and invalid. Appeal dismissed.

Issues Involved:
1. Competence of Parliament to enact legislation imposing special duty on the import of country liquor in Delhi.
2. Legislative competence under Article 246 and Article 248 of the Constitution.
3. Interpretation of Entries in Union and State Lists.
4. Allegation of colorable legislation.
5. Impact on inter-State trade and commerce under Article 301.
6. Fundamental right to trade or business in liquor under Article 19(1)(g).
7. Retrospective application of the Ordinance.

Issue-wise Detailed Analysis:

1. Competence of Parliament to Enact Legislation Imposing Special Duty on the Import of Country Liquor in Delhi:
The judgment primarily revolves around the competence of Parliament to enact legislation imposing special duty on the import of country liquor in Delhi. The court examined whether Parliament had the power to impose such a duty under the Constitution, specifically considering the provisions of Article 123, which allows the President to issue an Ordinance co-extensive with the legislative power of Parliament.

2. Legislative Competence under Article 246 and Article 248 of the Constitution:
The court reiterated that Article 246(1) confers exclusive power on Parliament to make laws with respect to matters enumerated in List I (Union List) in the Seventh Schedule, while Article 246(3) confers power on State Legislatures for matters in List II (State List). Article 246(4) allows Parliament to legislate for any part of India not included in a State. Article 248(1) grants Parliament exclusive power to make laws on matters not enumerated in the Concurrent List or State List, with Article 248(2) including the power to impose taxes not mentioned in either of those Lists.

3. Interpretation of Entries in Union and State Lists:
The court analyzed various Entries in the Union and State Lists, particularly Entry 84 (Union List) and Entry 51 (State List), which pertain to excise duties on alcoholic liquors. It was argued that Entry 51 allows State Legislatures to levy excise or countervailing duties on alcoholic liquors for human consumption, and that the corresponding Entry 84 in the Union List denies Parliament the power to levy such duties. However, the court held that Parliament's power to legislate for Delhi (a Union Territory) is unabridged by the entries in the State List due to the combined operation of Articles 246(4), 248(1) & (2), and Entry 97 (Union List).

4. Allegation of Colorable Legislation:
The petitioners contended that the Ordinance was a colorable legislation, essentially reintroducing countervailing duty under a different nomenclature. The court rejected this argument, stating that if a legislative power is traceable to the Constitution, it cannot be struck down merely because a previous attempt was invalidated. The court emphasized that the new impost was not a camouflage but a valid exercise of legislative power.

5. Impact on Inter-State Trade and Commerce under Article 301:
The court addressed the contention that the special duty imposed unreasonable restrictions on the freedom of inter-State trade and commerce guaranteed by Article 301. The court referred to previous decisions, including Har Shankar v. Dy. Excise & Taxation Commissioner, which held that there is no fundamental right to trade or business in intoxicants. The court concluded that the special duty served the public interest by restraining the use of liquor and promoting public health and morals, and therefore did not violate Article 301.

6. Fundamental Right to Trade or Business in Liquor under Article 19(1)(g):
The petitioners argued that the special duty infringed their fundamental right to trade or business in liquor under Article 19(1)(g). The court reiterated that there is no fundamental right to trade or business in intoxicants, as established in Har Shankar's case and P. N. Kaushal v. Union of India. Consequently, any regulatory measure imposing a tax on liquor could not be challenged on the ground of unreasonableness or lack of public interest.

7. Retrospective Application of the Ordinance:
The petitioners contended that the retrospective application of the Ordinance was illegal and invalid. The court rejected this argument, stating that retrospective validation of imposts has been recognized in several decisions, including Prithvi Cotton Mills Ltd. v. Broach Borough Municipality. The court held that the retrospective application was permissible to achieve the twin objectives of validating an invalidated impost and safeguarding public health and morals.

Conclusion:
The Supreme Court dismissed the petitions, upholding the validity of the Ordinance and the special duty imposed on the import of country liquor in Delhi. The court found that Parliament had the legislative competence to enact the Ordinance, and the impost did not violate constitutional provisions related to inter-State trade, commerce, or fundamental rights. The retrospective application of the Ordinance was also deemed valid.

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