1935 (12) TMI 1 - SC - Central Excise

Licensing - Fees - Imposition of - Licence - Revocation and suspension of - Power is necessarily incidental - Tobacco - Excise duty on - Confiscation and penalty - Interpretation of taxing statute - Constitution of India

Summary

Issues Involved:
1. Legislative competence of the Central Legislature under the Constitution Act of 1935.
2. Reasonableness of restrictions imposed on the petitioner's fundamental rights under Article 19(6).
3. Legality of the orders passed by the Collector of Excise and their confirmation by higher authorities.

Detailed Analysis:

1. Legislative Competence of the Central Legislature
The petitioner argued that Sections 6 and 8 of the Central Excises and Salt Act, 1944, and the corresponding rules were beyond the legislative competence of the Central Legislature. The contention was that the Act, while imposing excise duties, also regulated trade and commerce, which falls under the provincial list (Items 27 & 29 of List II). The court examined the "pith and substance" of the Act and concluded that it primarily dealt with the imposition and collection of excise duties on tobacco, falling within Item 45 of List I. The court noted that incidental encroachments into the provincial field did not render the Act ultra vires, citing precedents such as Attorney-General for Canada v. Attorney-General for British Columbia and United Provinces v. Mst. Atiqa Begum. The court emphasized that the Act's primary objective was fiscal, aimed at effective excise duty collection, and any regulatory measures were ancillary to this main purpose.

2. Reasonableness of Restrictions under Article 19(6)
The petitioner argued that the Act and the rules imposed unreasonable restrictions on his fundamental right to trade in tobacco. The court rejected this argument, stating that the Act and rules were designed to ensure effective excise duty collection, which is in the public interest. The court found that the procedures for levying penalties and confiscation were in line with natural justice principles, including the right to appeal and revision. The court held that the restrictions were reasonable and saved by Article 19(6) of the Constitution.

3. Legality of the Orders Passed by the Collector of Excise
The petitioner challenged two main orders: the confiscation of tobacco bags and the demand for a cash security deposit. The court found that the Collector acted within his powers under the Central Excise Rules. The first order involved the confiscation of tobacco bags and a penalty, which was upheld because the petitioner failed to deposit the penalty amount required for his appeal. The second order involved the demand for a cash security deposit after the petitioner's surety ceased to act. The court found that the Collector was within his rights to demand a fresh bond or additional security under Rule 140. The court dismissed the petitioner's claims of mala fide actions, noting that no such allegations were made in the petition.

Conclusion:
The court dismissed the petition, holding that the Central Excises and Salt Act, 1944, and the rules made thereunder were within the legislative competence of the Central Legislature. The restrictions imposed by the Act were deemed reasonable and in the public interest, and the orders passed by the Collector of Excise were found to be legal and within the scope of the Act and rules.