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TMI Blog1965 (9) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... 70 per London proof gallon. So long as the Act is valid, and that is beyond doubt, the notification can be changed. The duty could always be made less and there is no reason why it could not be made more provided the imposition of duty on locally produced goods was not made lower. If production of foreign liquor is not a condition precedent to the validity of the Act because of historical reasons there is no bar to the validity of the notification which takes its force from the valid Act. Appeal dismissed. - C.A. 20 OF 1964 - - - Dated:- 21-9-1965 - J.C. SHAH, P.B. GAJENDRAGADKAR, K.N. WANCHOO, M. HIDAYATULLAH AND S. M. SIKRI, JJ. For the Appellant : Santosh Chatterjee and D. V. Misra For the Respondents N. S. Bindra, and R. N. Sachthey JUDGMENT The appellants-Kalyani Stores-deal in liquor at Rourkela, District of Sundergarh in the State of Orissa. The appellants held a licence as retail vendors for "all types of foreign liquor" under the Bihar and Orissa Excise Act, 191 The expression "foreign liquor, apparently includes Ale, Beer, Port. Cider and other fermented liquors, cordials, mixtures and other preparations containing spirit, perfumed spirit and ill so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced elsewhere in India, and it was admitted that the rate of duty on liquor produced in Orissa levied by the State of Orissa was identical with the countervailing duty required to be paid on imported liquor, the impugned notification was not invalid With special leave granted by this Court, the appellants have appealed to this Court. The Bihar Orissa Excise Act 2 of 1915 was enacted with the object, amongst others, to control the import, export, transport, manufacture, possession and sale of certain kinds of liquor and intoxicating drugs. Section 27 of the Act as amended by the Adaptation Order, 1950, provides : "An excise duty or a countervailing duty, as the case may be, at such rate or rates as the State Government may direct, may be imposed, either generally or for any specified local area, on--(a) any excisable article imported, or Explanation.- The appellants submit that the levy of duty at the rate of Rs. 70/per L.P. Gallon under the notification dated March 31, 1961, is without authority of law, in that it contravenes Entry 51 List II, Sch. VII of the Constitution. The argument presented in this laconic form is founded on what is contended is the true character of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with equal force or virtue; to compensate for some- thing or serve as an equivalent of or substitute for: see Black's Law Dictionary, 4th Edn. 421. This would suggest that a countervailing duty is imposed for the purpose of counterbalancing or to avail against something with equal force or to compensate for something as an equivalent. Entry 51 in List 11 of the Seventh Schedule to the Constitution gives power to the State Legislature to impose duties of excise on alcoholic liquors for human consumption where the goods are manufactured or produced in the State. It also gives power to levy countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India. The fact that countervailing duties may be imposed at the same or lower rates suggests that they are meant to counterbalance the duties of excise imposed on goods manufactured in the State. They may be imposed at the same rate as excise duties or at a lower rate, presumably to equalise the burden after taking into account the cost of transport from the place of manufacture to the taxing State. It seems, therefore, that countervailing duties are meant to equalise the burden on alcoholic l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the appellants that the levy of duty at the rate of Rs. 70 per L.P. Callon in its entirety is invalid must therefore fail. Whether the enhancement of the levy by notification dated March 31, 1961 insofar as it enhanced the levy from Rs. 40 to Rs. 70 per L.P. Gillon infringes any constitutional probibitions may be considered. By s. 27 of Act 2 of 1915 the State Government is given the power to impose a countervailing duty at the rate or rates as the State- Government may direct. Before the Constitution, duty was imposed at the rate of Rs. 40 per L.P. Gallon on foreign liquors. The imposition remained in operation till the date on which the Constitution was brought into force, and has not been challenged in the petition. The Act merely authorised the levy of duty as may be fixed by the Government. To effectuate the power to levy the duty authorised, the rate of duty must be fixed by notification by the State Government. In 1937 the power was exercised by issuing a notification under S. 27 authorising the levy of duty at the rate of Rs. 40 per L.P. Gallon. Section 27 of the Act authorised the imposition of excise and countervailing duties : the section however did not by its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that State are subject, so, however, as not to discriminate between goods imported and goods manufactured or produced or to impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest. The notification levying duty at the enhanced rate is purely a fiscal measure and cannot be said to be a reasonable restriction on the freedom of trade in the public interest. Article 301 has declared freedom of trade, commerce and intercourse throughout the territory of India, and restriction on that freedom may only be justified if it falls within Art. 304. Reasonableness of the restriction would have to be adjudged in the light of the purpose for which the restriction is imposed, that is "as may be required in the public interest". Without entering upon an exhaustive categorization of what may be deemed "required in the public interest", it may be said that restrictions which may validly be imposed under Art. 304 (b) are those which seek- to protect public health, safety, morals and property within the territory. Exercise of the power under Art. 304(a) can only be effective if the tax or duty is imposed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lk Mills v. Bangalore Corporation A.I.R. 1962 S.C 1263. that the Legislature had laid down the powers of the Municipal Corporation to tax animals and goods, brought within the Octroi limits and had enumerated certain articles and animals in Part V of Sch. III and by class VIII read with s. 97 had authorised the Corporation to impose a tax on other articles or goods. This power in the view of the Court was granted by conditional legislation and was not liable to be Stock down on the score of excessive delegation. The question wheather the imposition of the octroi duty offended Arts. 276 and 301 was then referred to a larger Bench and the Court held in The Bangalore Woollen, Cotton and Silk's Mills Co. Ltd. Bangalore's case(1) that the combined effect of ss. 97 and 130 and Part V of Sch. III including class VIII is that the words of a general nature used by the Legislature had the same effect as if all articles were intended to be included, and the impugned octroi duty did not contravene the provisions of Arts. 276 and 301 of the Constitution. It was urged on behalf of the tax-payers that the source of the authority to levy octroi duty on cotton and wool was the resolution of the Mun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore unenforceable. The right of the State to enforce the liability against the appellants to pay duty at the rate prescribed in the earlier notification which held the field, remains however unaffected. In view of the divided success of the parties, there will be no order as to costs in this Court and the High Court. Hidayatullah, J. The appellant is a firm which deals in liquor at Rourkela in the Orissa State. It challenges in to to the imposition of a duty of excise on foreign liquor levied at first at Rs. 40 per London proof gallon and from April 1, 1961, at Rs. 70 under s. 27 of the Bihar and Orissa Excise Act, 1915. The original duty at Rs. 40 was fixed by a notification issued in 1937 and it was enhanced by a notification issued on March 31, 1961. The appellant on being asked to pay the difference in respect of stocks held in its shop filed a petition under Art. 226 of the Constitution challenging the enhancement of the duty as well is the duty at the original rate. Section 27 of the Bihar Orissa Act (Act 11 of 1915), for our purpose, reads as follows : "27. Power to impose duty on import, export, transport and manufacture- (1)An excise duty or a countervailing du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a except- (a)alcoholic liquors for human consumption ; (b)opium Indian hemp and other narcotic drugs and narcotics, but including medical and toilet preparations containing alcohol or any substance included in sub-paragraph (b) this entry. Entry 51 of List If Duties of excise on the following goods manufactured or produced in the State and countervailings 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 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. It is to be noticed that the power to levy duties of excise on alcoholic liquors for human consumption, with which we are presently concerned, is given to the States. Entry 51 goes a little further and allows the levy of countervailing duties at the same or at lower rates on similar goods manufactured or produced elsewhere in India. A duty of excise is a tax on production and as the Legislatures of the States are not authorized to legislate beyond the States such duty can only be levied in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and the levying of excise duties and license fees on or in relation to such articles, but excluding, in the case of opium, Control of cultivation, manufacture and sale for export." This may be compared with preamble to the Bihar Orissa Excise Act', 1915, as it originally stood : "Whereas it is expedient to amend and re-enact the law in the Province of Bihar and Orissa relating to the import, export, transport, manufacture, possession, and sale of certain kinds of liquor and intoxicating drugs; And whereas the previous sanction of the Governor General has been obtained, under section 5 of the Indian Councils Act, 1892, to the passing of this Act; It is hereby enacted as follows :-" The word "excise" was also given the same wide meaning in entry 16. It included not only the control of production but also the control of purchase and sale of alcoholic liquor and the levying of excise duty in relation to the articles without indicating the place of their manufacture, that is to say, that they should be manufactured within the Province. When the Government of India Act, 1935, was in the process of being drafted the White Paper proposals introduced a new scheme for division of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provided that no such law as aforesaid shall be made applicable to any Federated State by an Order in Council made under this section. In this section the expression "law" does not include an Act of Parliament, but includes any ordinance, order, bye law, rule or regulation having in British India the force of law." Thus by an Order-in-Council, which was called the Government of India (Adaptation of Indian Laws) Order, 1937 S. 27 of the Bihar Orissa Excise Act was adapted to read as we find it today. The opening words were altered to mention countervailing duties also. This adaptation was made, not only in the Bihar and Orissa Act but every Excise and Abkari Act in the rest of India and was intended to bring all Excise Acts into accord with the distribution of legislative powers is indicated in s. 293.In all those Acts, previously a duty was leviable not only on excisable goods produced in the Province but also imported from outside. The duties could be at different rates. After the Adaptation of Laws Order the duty was leviable on excisable goods but a countervailing duty at the same or lower rates was leviable on goods imported from outside. The duties of excise on imported goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of any law in force in the territory of India into accord with the provisions of this Constitution, the President may by order make such adaptations and modifications of such law, whether by way of repeal or amendment, as may be necessary or expedient, and provide that the law shall, as from such date as may be specified in the order, have effect subject to the adaptations and modifications so made, and any such adaptation or modification shall not be questioned in any court of law. (3) Nothing in clause (2) shall be deemed- (a) to empower the President to make any adaptation or modification of any law after the expiration of three years from the commencement of this Constitution; or (b)to prevent any competent Legislature or other competent authority from repealing or amending any law adapted or modified by the President under the said clause." As the Bihar and Orissa Act continues to be valid it authorises that excisable goods produced in the State will bear countervailing duty. The two duties are not the same and countervailing duties are not conditioned by the manufacture of the goods of the same kind in the State. It is not stated that duties on foreign liquor brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty on locally produced goods. I do not, therefore, find it necessary to say whether countervailing duties can only be imposed on imported articles when articles similar to those are produced or manufactured within the State on which ordinary excise duty is levied. That question I leave open because the Act being valid for other reasons, it is hardly .necessary to decide the larger issue. Finally, I find it sufficient to say that Art. 301 or 304(a) cannot come into play. These articles read: "301. Freedom of trade, commerce and intercourse. Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free." "304. Restrictions on trade, commerce and intercourse among States. Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law- (a)impose on goods imported from other States any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b). . . . . . . . . . . I fail to see what Art. 304(a) has to do with this matter. Article 304(a) imposes no ban bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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