1962 (4) TMI 121 - SC - Customs

Summary

Issues Involved:
1. Validity of Customs Duty Levied on Charcoal Export
2. Legislative Competence of the State Council and Board of Regency
3. Application of Rajasthan Ordinance (No. 16 of 1949) to Sirohi

Issue-wise Detailed Analysis:

1. Validity of Customs Duty Levied on Charcoal Export
The appellant, Firm Ghulam Hussain Haji Yakoob & Sons, challenged the validity of the customs duty levied on the export of charcoal by the Controller of Sirohi. The appellant argued that the order levying the duty was invalid and ultra vires, asserting that the customs duty on charcoal export was not prescribed in the Sirohi Customs Act of 1944. The Act specified that customs duties could only be levied on goods mentioned in the Tariff at the rates specified therein. Since charcoal was not included in the list of commodities liable for export duty, the appellant contended that the levy was unauthorized.

2. Legislative Competence of the State Council and Board of Regency
The respondent, the State of Rajasthan, argued that the duty was validly levied by a resolution passed by the State Council and approved by Her Highness Shri Rajmata Saheba. The High Court upheld this view, but the Supreme Court found this interpretation erroneous. The Court held that while the State Council could reach decisions on new taxation, final orders had to be passed by the Ruler, or in this case, the Board of Regency, which was the legitimate authority during the Ruler's minority. The Court emphasized that the Board of Regency alone had the legislative authority to impose such duties, and the approval by Shri Rajmata Saheba, without formal consultation with the Board, was insufficient. Therefore, the customs duty levied on charcoal export was invalid as it lacked proper legislative sanction.

3. Application of Rajasthan Ordinance (No. 16 of 1949) to Sirohi
The respondent also argued that the duty could be sustained under the Rajasthan Ordinance (No. 16 of 1949), which authorized the Government to issue revised tariffs. However, the Supreme Court noted that this Ordinance came into force on August 4, 1949, and applied to Rajasthan as it was then constituted. Since Sirohi became part of Rajasthan only on January 25, 1950, the Ordinance did not apply to Sirohi at the relevant time. The Court further clarified that the laws applicable to Rajasthan prior to the merger could only be extended to Sirohi through appropriate legislation, which was not done in this case. Consequently, the respondent could not rely on the Rajasthan Ordinance to justify the customs duty on charcoal export.

Conclusion:
The Supreme Court allowed the appeal, declaring that the appellant was not liable to pay the customs duty in question. The orders passed by the Deputy Commissioner, Customs & Excise, and the Minister of Excise & Taxation, as well as the demand notice issued by the Collector, were quashed. The appellant was entitled to costs throughout.

Final Judgment:
Appeal allowed.