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TMI Blog1959 (4) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ch as cotton, tobacco and turmeric. As the petitioner's business place is situated within the notified area, the market committee of Coimbatore would be entitled to collect certain fees and cesses for which provision has been made under the Act, the rules and the bylaws. Under S. 11(1) of the Act the petitioner would be bound to pay a cess, provided for therein. On 11-6-1957, the first respondent issued a notice, calling upon the petitioner to render accounts for the purchase of groundnut between 23-11-1955 and 30-6-1957, and to pay cess on the quantity purchased in accordance with the rates fixed by the rules and regulations aforesaid. The case for the petitioner is that the demand for the cess could not be held to be under the authority of law, and that, therefore, a direction of this Court is necessary to prohibit the first respondent from levying or collecting the cess. (3) The Act was passed on the 25th July 1933 with a view to provide satisfactory conditions for the growers of commercial crops to sell their produce to the best advantage. It was intended to regulate buying and selling of commercial crops by providing suitable and regulated markets, eliminating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttee to enforce the provisions of the Act and the rules and bylaws in such notified area. It is also the duty of the market committee to establish such number of markets and provide for such facilities as the State Government may from time to time direct for the purchase and sale of the commercial crop or crops concerned. Section 11(1) authorised the market committee, subject to such rules as may be made in this behalf, to levy a fee on the notified commercial crop or crops bought and sold in the notified area at such rates as the State Government may determine, and till such rates are determined the rates mentioned in the specified schedule to the Act are to be adopted. Section 12 enacts that all moneys received by a market committee shall be paid into a fund to be called the market committee Fund , that all expenditure incurred by the market committee under or for purposes of the Act shall be defrayed out of the said fund, and that any surplus remaining after such expenditure has been met shall be invested in such manner as may be prescribed by rules. The other provisions in the section enable the market committee to pay the staff employed by the State Government for givin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was valid. They struck down R. 37 which required buyers and sellers to register their names with the market committee and execute agreements in such form the committee may prescribe as invalid in so far as it prohibited persons whose names had not been registered as buyers and sellers from carrying on the business in the notified area. They also held that the provisions of the Act, under Ss. 11 and 11-A and R. 28(1) and (3) providing for the levy of fees on the notified commercial crops bought and sold in the notified area at such rates as it might determine, were not repugnant to Art. 286(2) of the Constitution, but that the amounts collected were taxes and not mere licence fees, they being in the nature of a sales-tax. The levy under R. 28(3) and S. 11-A being for service rendered, it was held to be valid. In so far as the decision upheld the validity of the enactment, an appeal was filed to the Supreme Court. The judgment of the Supreme Court was , where it was held that the impugned provisions of the Act constituted only reasonable restrictions on the citizens' right to do business, and that therefore, they were valid. (6) After the decision in , the State Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 30-6-1957. The demand was purported to be made under R. 28 and bylaw 23, in their unamended form. As I stated at the beginning the notice of demand was on 11-7-1957, sometime prior to the notification by the Government fixing the rates. It will be seen that for that period there had been no determination of the fee by the Government and no notification was made in regard to the same. (8) The validity of the demand has been contested on behalf of the petitioner. Mr. M. K. Nambiar, the learned counsel for the petitioner, urged substantially three contentions. (1) The amendment of S. 11(1) under which what was originally levied and sought to be collected as a fee was made a tax, was a colourable piece of legislation intended to circumvent the decision of this Court which declared the invalidity of the levy as a fee. (2) The levy under S. 11(1) would be invalid even as a tax as such a tax would not be included in the Consolidated Fund of the State to which all taxes levied by its Legislature should go under Art. 266(3) The delegation of the power to fix the rate of tax to the executive was illegal and therefore the entire provision was illegal. (9) It was urged that Act 33 of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o arise as to whether the Legislature in a particular case has or has not, in respect to the subject matter of the statute or in the method of enacting it, transgressed the limits of its constitutional powers. Such transgression may be patent, manifest or direct, but it may also be disguised, covert and indirect and it is to this latter class of cases that the expression 'colourable legislation' has been applied in certain judicial pronouncements. The idea conveyed by the expression is that although apparently a Legislature in passing a statute purported to act within the limits of its powers yet in substance and in reality it transgressed these powers, the transgression being veiled by what appears, on proper examination, to be a mere pretence or disguise. It cannot be said that in repealing the old S. 11(1) of the Act and re-enacting it in its present form the State Legislature has transgressed the limits of its enumerated powers. Art. 246(3) read with Entry 54 of List 2 in the 7th Schedule to the Constitution confers plenary powers to the State Legislature to impose a tax on the sale of goods. S. 11(1) which levies only a cess by way of sales tax cannot be impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess is levied for the purposes mentioned in S. 13 of the Act. Sec. 13 provides that the market committee fund shall be expended for the purposes mentioned therein only. The tax was, therefore, intended solely for the purpose of enabling the market committee, providing it with a suitable building and for other expenses in connection therewith. A market committee, if, as I shall presently show, it is to be local authority, the tax levied for its purposes would not augment the general revenues of the State. The tax collected being solely for the benefit of the local authority it is but appropriate that it should be termed a cess. It is, therefore, relevant to consider as to what a market committee is. S. 4-A of the Act authorises the State Government to establish a market committee for every notified area. The committee has the duty of enforcing the provisions of the Act and the rules and by-laws made thereunder in such notified area. The committee has also power to establish a number of markets and providing facilities therefor. S. 6(2) enacts that the District Agricultural Officer shall ex officio be a member of the market committee. S. 7 enacts that the market committee shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsolidated fund. Although to start with the various presidencies in India were independent of each other, the Regulating Act of 1773 made the Governor of Bengal as Governor General and the Supreme Head of all the provinces. The Charter Act of 1853 gave legislative power to the Governor General and deprived the local Governments of the power of independent legislation. After the passing of the Indian Councils Act, the local Legislatures had gradually acquired power. But the Government of India's control over revenues and expenditure was derived from the Acts of 1853 and 1858, which treated the revenues of India as one and applied them to the purposes of the Government of India as a whole. This denied to Provincial Governments the right to use revenues which they raised, and they had to look to the Central Government for expenses. But gradually that system was changed. Later on, each local government was given a fixed grant for the upkeep of definite services, and a classification of revenue heads into Indian, and provincial was made. Section 80-A of the Government of India Act, 1919 invested the local Legislature of a province to make laws for the peace and good Government o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1919, and that right was preserved by the Government of India Act, 1935, and the Constitution. Under the Constitution the levy of taxes for the benefit of local authority is within the competence of State Legislature. Article 246(3) specifically vests the State Legislature with exclusive power to make laws for such state or any part thereof with respect to any of the matters enumerated in List II in the 7th Schedule. Thus both before and after the Constitution the Provincial or State Legislature had or has power to enact measures to enable a local authority to raise funds for its activities by taxation. In Dow v. Black, (1875) 6 PC 272, a question arose as to whether the Provincial Legislature New Brunswick had power to make law so as to impose taxes in connection with the construction of railway line in the State. Under Art. 2 of S. 92 of the British North America Act, 1867, the Provincial Legislature was enabled to impose direct taxation for a local purpose upon a particular locality within the province. It was held by the Privy Council that the Act in question related to a matter of a merely local or private nature in the province'' and it did not relate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no constitutional restrictions, as Parliament is supreme. In matters other than taxation the Crown had certain prerogatives. A delegation by the appropriate authority would appear to have no constitutional invalidity. But from the 18th Century the powers of the State were shared between the King, Parliament and the Courts. The Donoughmore Committee stated that it was not so much the theory of separation of powers but the fact that officials and bodies had a large measure of autonomy that enabled them to develop under the exigencies of the duties entrusted to them. (Report of the Committee on Member's Powers, page 9). In R. v. Burah, 1878-3 AC 889 at p. 906, it was stated legislation conditional on the use of particular powers or the exercise of a limited discretion entrusted by the Legislature to persons in whom it places confidence is no uncommon thing and in many circumstances may be highly convenient. The necessity for such delegation was held to be (1) that the Parliament had no time for discussion of details or no ability to decide technical details and (2) there may be necessity for speedy action as in cases of emergency. The safeguards adopted in England against ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the public interest . From these typical criterions, it is apparent that the courts exercise considerable liberality toward upholding legislative delegations, if a standard is established. Such delegations are not subject to the objection that legislative power has been unlawfully delegated. The filling in or mere matters of detail within the policy of, and according to the legal principles and standards established by the legislature, is essentially ministerial rather than legislative in character, even if considerable discretion is conferred upon the delegated authority. In fact, the method and manner of enforcing a law must be left to the reasonable discretion of administrative officers, under legislative standards. It should be noted, however, that the standard established in Criminal statutes must be more exacting and precise, if the statute is to avoid being fatally defective for vagueness and uncertainty, since criminal statutes are strictly construed by the courts. (17) Mr. Nambiar contended that in enacting Sec. 11(1) the Legislature completely abdicated its functions, as it did not determine or lay down any policy to be followed by the State Government in determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent' appears to be whether in conferring the power to the delegate the legislature, in the words used to confer the power retained its control. Does the decision of the delegate derive sanction from the act of the delegate or has it got the sanction from what the legislature has enacted and decided? Every power given t a delegate can be normally called back. There can hardly be a case where this cannot be done because the legislative body which confers power on the delegate has always the power to revoke that authority and it appears difficult to visualise a situation in which such power can be irrevocably lost.............. In my opinion, therefore, the question whether there is 'abdication' and 'effacement' or not has to be decided on the meaning of the words used in the instrument by which the power is conferred on the authority. Abdication according to the Oxford Dictionary, means abandonment, either formal or virtual, of sovereignty. Abdication by a legislative body need not necessarily amount to a complete effacement of it. Abdication may be partial or complete. When in respect of a subject in the legislative list the legislature says that it shall not leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n could go to the extent of authorising an executive authority to modify the law made but not in any essential feature. Such a modification could not include a change of policy, as essentially the legislative function consisted in the determination of legislative policy and its formation as binding the rule of conduct. In a recent case D. S. Garewal v. State of Punjab, 1959 SCJ 399, C. A. No. 426 of 1958: , the Supreme Court again considered the question of propriety of delegation of legislative power. In that case disciplinary proceedings were started against the appellant who was a member of the Indian Police Service under R. 5 of the All India Services (Discipline and Appeal) Rules, 1955, framed under S. 3 of the All-India Services Act, 1951. The propriety of the proceedings initiated against him was the subject-matter of an application under Art. 226 of the Constitution. It was contended that Art. 312 laid down a mandate on Parliament to make the law itself regulating the recruitment and the conditions of service of all India services, and therefore, it was not open to Parliament to delegate any part of the work relating to such regulation to the Central Government for fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its control and was therefore held to be a valid delegation. The learned Advocate General relied upon a recent decision of the Supreme Court in Banarsi Das Bhanot v. State of Madhya Pradesh, . In that case the power conferred on the State Government by S. 6(2) of the C. P. and Berar Sales-tax Act, 1947, to amend the schedule relating to exemption was held to be in consonance with the accepted legislative practice relating to the topic and was not unconstitutional. At page 394 (of STC): (at p. 913 of AIR), it is observed as follows: On these observations, the point for determination is whether the impugned notification relates to what may be said to be an essential feature of the law, and whether it involves any change of policy. Now, the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods, and the like. It may be seen that in the instant case before the amendment by act 33 of 1955, there was maximum fee fixed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the demand was invalid for the reason that the notification fixing the rate of tax under S. 11(1) was made only on 11-7-1957 and was liability to pay the tax does not arise till the rates were fixed, the market committee would have no right to levy a tax or fee for any anterior period. Section 11(1) does not have any retrospective effect. The demand for the anterior period however is sought to be justified under the provisions of S. 10 of the Amending Act 33 of 1955. That provision runs: 10(1) Notwithstanding anything contained in any law or in any judgment, decree or order of any court, all fees levied and collected or purporting to have been levied and collected by market committees under S. 11 of the principal Act before it was amended by this Act shall be deemed always to have been levied under the principal Act as amended by this Act as if this Act was in force at all relevant times. (2) No suit or other proceeding shall be maintained or continued in any court for the refund of any fee so paid; and no court shall enforce any decree or order directing the refund of any fee so paid. That section would only apply to the case where a fee had been levied and coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property treated as assessable, the wrongful inclusion in it of certain items of property which by virtue of a provision of law were expressly exempted from taxation, rendered the assessment invalid in toto. In the present case it will not be possible to dissociate the portion of the fee collected for the purpose of services rendered with the portion which was outside those purposes, that is, those that could be achieved only by collecting a tax. It, therefore, follows that the entire assessment is bad. (21) The learned Advocate for the petitioners next contended that S. 11(1) should be held to be invalid, as it would be hit by Art. 14 of the Constitution. It is urged that the provisions of S. 11 are not general in their scope and are not applicable to all dealers within the State, but that only a few districts are picked out by the State Government. It is further contended that while under the Madras General Sales-tax, a dealer has right of appeal to the departmental authority and to an independent Tribunal with a power of revision by the High Court, there is no such right in a case of levy under S. 11(1) of the Act. I am satisfied, that there is no substance in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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