Appeal No 252 of 1956
Appeal from the judgment and decree dated September 29 1953 of the Rajasthan High Court Jaipur Bench in Civil Writ Application No 28 of 1951
Gopal Singh and T M Sen for the appellants
section N Andley J B Dadachanji and P L Vohrafor the respondent
January 19
The Judgment of the Court was delivered by SINHA C J
This appeal on a certificate granted by the Jaipur Bench of the High Court of Judicature for Rajasthan that  the case involves a substantial question of law as to the interpretation of articles 277 278 294 and 295 of the Constitution of India and the case is a fit one for appeal to the Supreme Court under article 1321 and also under article 1331c of the Constitution of India is directed against the judgment dated September 29 1953 of the High Court of Judicature for Rajasthan at Jaipur to the effect that the appellant the Union of India was not entitled to levy and recover arrears of excise duty on cotton cloth for the period April 1 1949 to March 31 1950 from the respondent the Maharaja Krishnagarh Mills Ltd The facts of this case which have not been in dispute at any stage of the proceedings may shortly be stated as follows
The respondent is a cloth mill located in Krishnagarh in District Jaipur in the State of Rajasthan
It had a stock of manufactured cloth on April 1 1949 and also manufactured cloth during the period April 1 1949 and March 311950
In respect of such cloth an excise duty became payable under the Rajasthan Excise Duties Ordinance 1949 XXV of 1949 at rates set forth in the schedule to the Ordinance
The sum of Rs 156291 odd became payable on that account out of which only a sum of Rs 19739 odd was paid to the Government of Rajasthan thus leaving the sum of Rs 136551 odd outstanding against the respondent
After the Indian Constitution came into effect the Central Excise and 526 Salt Act 1944 and the rules framed thereunder were extended to the State of Rajasthan by section 11 of the Finance Act of 1950
Hence the duty became payable in respect of the cloth manufactured on and from April 1 1950 under the provisions of that Act
The appellant claimed that as a result of the agreement between the Government of India and the State of Rajasthan to be noticed hereinafter in detail and of the Constitution the Union of India became entitled to realise the arrears of the excise duty in respect of the cloth manufactured by the respondent before April 1 1950
In enforcement of that claim the Superintendent of Central Excise Jaipur served a notice dated February 16 1951 on the respondent demanding payment of the outstanding amount of Rs 136551 odd
The respondent thereupon filed a writ petition in the High Court of Rajasthan Jaipur under article 226 of the Constitution against 1 the Union of India 2 the Central Board of Revenue Delhi 3 the Collector of Central Excise for Rajasthan Delhi and 4 the Superintendent of Central Excise Jaipur who are the appellants before us praying for a writ of prohibition against them prohibiting them from imposing levying or collecting any tax or duty by way of excise as also for any appropriate direction order or writ
The writ petition was founded on the contentions that the notice of demand served upon the respondent as aforesaid was illegal and unauthorised on the ground 1 that the Central Government had no jurisdiction to levy any tax before January 26 1950 2 that the Central Excise and Salt Act was not in force in Rajasthan before April 1 1950 and 3 that without the application of the rules framed by the Central Government under section 37 of the Central Excise and Salt Act 1944 to Rajasthan no duty could be imposed levied or collected and those rules were made applicable to Rajasthan only on December 16 1950
On behalf of the appellants who were the respondents in the High Court it was contended that it was got correct to say that the rules framed under s 37 527 of the Central Excise and Salt Act 1944 were made applicable to the State of Rajasthan by virtue of the notification dated December 16 1950 and it was asserted that those rules became applicable to the State of Rajasthan with effect from April 1 1950 as a result of section 11 of the Finance Act 1950
It was also contended that by virtue of section 3 of Rajasthan Excise Duties Ordinance XXV of 1949 promulgated by His Highness the Rajpramukh of Rajasthan on September 5 1949 excise duty was levied on cloth and other articles produced and manufactured in Rajasthan on and after April 1 1949 at the rates set forth in the first schedule of the said Ordinance
It was also contended that in pursuance of articles 278 and 295 of the Constitution the President of India had entered into an agreement with the Rajpramukh of Rajasthan on February 25 1950 whereby the parties agreed to accept the recommendations of the Indian States Finance Enquiry Committee 1948 49 contained in part I of its report read with chapters 1 11 and III of part II of its report in so far as they applied to the State of Rajasthan together with the recommendations contained in Chapter VIII of part 11 of the said report
By virtue of the said agreement the Union of India became entitled to claim and recover all excise duties whether assessed or un assessed which the State of Rajasthan was entitled to recover from the respondent as from April 1 1949 before the Central Excise and Salt Act 1944 was extended to the State of Rajasthan as aforesaid
The matter was first heard by a Bench consisting of Ranawat and Sharma JJ which in view of the importance of the points involved in the case referred the following two points for decision by a larger Bench by its judgment dated November 5 1951  1
Whether by virtue of Articles 278 279 and 295 of the Constitution of India and the agreement entered into between the President of India and the Rajpramukh of Rajasthan on the 25th of February 1950 the Union of India is entitled to levy and recover arrears of excise duty on cloth held in stock or manufactured before the 1st of April 1950 68 528 in case excise duty thereon was payable to the State of Rajasthan under the provisions of the Rajasthan Excise Duties Ordinance No 25 of 1949  2
Whether the publication of the Government notification by which the Jaipur Excise Rules were adopted under the provisions of the Rajasthan Excise Ordinance was sufficient publication within the meaning of section 28 of the Rajasthan Excise Duties Ordinance No 25 of 1949 and whether the publication of the aforesaid notification should be deemed to have been properly authenticated by authentication of the publication of the Ordinance
If not whether want of authentication would have the effect of invalidating the said Excise Rules   The case was then heard by a Full Bench consisting of Wanchoo CJ Ranawat and Dave JJ
The judgment of the Court was delivered by the learned Chief Justice on November 24 1952 in substance upholding the contentions raised on behalf of the petitioner before the High Court now respondent
The High Court came to the conclusion that article 277 of the Constitution was a complete answer to the claim of the Government of India to collect the dues in question for any period anterior to April 1 1950
This conclusion was based on the reasoning that the agreement aforesaid between the Government of India and the Government of Rajasthan was in effect overridden by article 277 and that the agreement contemplated by article 278 was in respect of a duty which was leviable by the Government of India
By virtue of article 277 of the Constitution cotton excise duty was actually leviable by the State of Rajasthan up to March 31 1950 because Parliament made the contrary provision only from April 1 1950
Therefore it was further observed by the High Court that the effect of article 277 on Art 278 of the Constitution was that cotton excise duty could not be said to be leviable by the Government of India so far as the State of Rajasthan was concerned up to March 31 1950
In view of that conclusion it was further held that the right to collect the arrears of excise duty in question could not be held to have been transferred to the Union of India 529 by virtue of the agreement aforesaid of February 25 1950
The first question referred to the Full Bench was thus answered in favour of the petitioner in the High Court
The second question relating to the publication and authentication of the Excise Rules was also answered in favour of the petitioner now respondent
The High Court held that the Hindi Gazette relied upon on behalf of the Government did not contain any authentication of the Rules and did not show by whose authority they had been published
This conclusion was based on the ground that the contention raised on behalf of the Government that the publication in the Gazette and the authentication therein did not only apply to the Ordinance but covered the Rules also was not correct
The answers given by the Full Bench to the questions referred to it by the Division Bench were returned to the Bench concerned and the Bench in pursuance of the opinion of the Full Bench ordered by its judgment dated September 29 1953 that a direction be issued against the opposite party not to recover from the petitioner the amount of Rs 136551 12 as per their notice of demand of the 16th of February 1950
The petitioner shall get costs of this petition from the respondents
 The Union of India applied for and obtained the necessary certificate as quoted above from the High Court of Rajasthan
That is how the matter is before this Court
It is manifest that if the opinion of the Full Bench on the second question referred to as to the publication and authentication of the Rules is correct then no other question will arise for determination by this Court
It  the Rules under the Rajasthan Excise Duties Ordinance XXV of 1949 had not been properly promulgated and authenticated then the Ordinance by itself could not be sufficient for the levy and collection of the tax sought to be imposed
It is therefore necessary for us first to determine that controversy
At the outset it may be mentioned that the writ petition filed by the respondent in the High Court under article 226 of the Constitution did not allege any facts bearing on this part of the controversy
530 Thus there was no foundation laid in the pleadings for a contention that the Rules aforesaid had not been promulgated on a proper authentication
As already indicated the petition was founded only on the lack of power in the Union Government to levy and collect the excise duty with reference to the provisions of the Central Excise and Salt Act of 1944 and the Rules framed thereunder
There is no reference to the provisions of Ordinance XXV of 1949 promulgated by the Rajasthan Government
It was only in the reply to the writ petition made by the respondent in the High Court that reliance was placed upon the said Ordinance and the Rules framed thereunder
We do not find any pleadings or any petition by way of amendment of the pleadings in the record of this case raising the contention that the Rules framed under the Ordinance aforesaid had not been promulgated on a proper authentication
The High Court therefore on the face of the pleadings was not justified in permitting the petitioner before it to raise this contention but our decision need not be rested on the lack of pleadings only
We have examined the Rajasthan Gazette the Hindi version of which is entitled Rajasthan Raj Patra published by authority of the Rajasthan Government dated Margashirsa Krishna 7 Saturday Samvat 2006 containing the notification dated Jaipur September 15 1949 the preamble of which states that Shriman Rajpramukh had made and promulgated the following Ordinance which was being published for the information of the public and it purports to have been authenticated by the Law Secretary Sanyukta Rajasthan Sarkar
Under that authentication follows the Ordinance XXV of 1949 dated September 5 1949
The Ordinance goes to the end of page 169 and from the next page 170 ending with page 172 appear the Rules
They begin with the declaration which may be translated as follows  In exercise of the powers conferred under sections 5 and 26 of the Rajasthan Excise Duties Ordinance of 1949 the Rajasthan Government orders that till new Rules are framed under the said Ordinance the Rules framed under the Jaipur Excise Duties Act 531 of 1945 known as the Jaipur Excise Duty Rules of 1945 will be in force throughout the whole of Rajasthan with necessary modifications and for this purpose will be treated as made under the Rajasthan Ordinance
 It would thus appear that the authentication by the Law Secretary appearing on the first page of the Gazette as aforesaid was intended to govern not only the Ordinance in question but also the Rules which had been promulgated thereunder
Apparently section 28 of the Ordinance which ran  All rules made and notifications issued under this Ordinance shall be made and issued by publication in the Rajasthan Gazette
All such rules and notifications shall thereupon have effect as if enacted in this Ordinance  was understood to authorise such a mode of promulgation and authentication
The authority that promulgated the rule having intended the signature of the Law Secretary appearing at the beginning of the publication as an authentication of the rules we are of opinion that the formal requirements of section 8 2 of the Ordinance V of 1949 were satisfied
Whether the authentication appears in the beginning of the notification or at the end of it is not material so long as it is clear on a reference to the publication in the Gazette that the matter is substantially covered by the authentication whether appearing at the beginning or the end of the notification
The High Court therefore was in error in coming to the conclusion that the authentication covered the Ordinance proper without the Rules framed thereunder
The correct conclusion from the record as it stands is that the authentication covers the entire notification including both the Ordinance proper and the Rules framed thereunder which became parts of the Statute
In view of this conclusion it becomes necessary now to examine the ratio of the decision of the High Court on the first question referred to it namely the authority of the Union of India to realise the arrears of the duty in question
It is clear in view of our conclusion 532 that the Ordinance and the Rules framed thereunder have been properly promulgated in the Official Gazette that the Government of Rajasthan was entitled to levy and collect the duty of excise in respect of
cotton cloth from the respondent
As a matter of fact the respondent appears to have paid about Rs 19739 odd out of the duty payable by it to that Government
The remaining amount for which the notice of demand had been issued by the official of the Government of India was certainly payable to the Government of Rajasthan
We have therefore to consider whether the Government of India by any process of law stepped into the shoes of the Rajasthan Government in respect of the arrears aforesaid
In this connection reliance was placed on the agreement between the President of India and the Rajpramukh of Rajasthan dated February 25 1950
The relevant provisions of the agreement are these  Whereas provision is made by Articles 278 291 295 and 306 of the Constitution of India for certain matters to be governed by agreements between the Government of India and the Government of a State specified in Part B of the First Schedule to the Constitution 
Now therefore the President of India and the Rajpramukh of Rajasthan have entered into the following agreement namely The recommendations of the Indian States Finance Enquiry Committee 1948 49 hereafter referred to as the Committee contained in Part I of its Report read with Chapters 1 11 and III of Part 11 of its Report in so far as they apply to the State of Rajasthan hereafter referred to as the State together with the recommendations contained in Chapter VIII of Part 11 of the Report are accepted by the Parties hereto subject to the following modifications namely 
The modifications are not material to this case
The agreement thus incorporates as terms of the agreement the report of the Committee the relevant portion of which is in these terms 533  With effect from the prescribed date the Centre will take over all federal  sources of Revenue and all federal  items of expenditure in State together with the administration of the Departments concerned
The Centre must also take over all current out standings including pending assessments refunds and arrears liabilities claims etc and all productive and unproductive capital assets connected with these Departments
 It is common ground that federal sources of revenue include the duty of excise in question
It is also clear that all outstanding dues from assessees including pending assessments and arrears have been by the terms of the agreement made over to the Centre
This agreement as the preamble itself indicates has been made in accordance with the provisions of articles 278 and 295 of the Constitution
The relevant portions of article 278 are as under  278
1 Notwithstanding anything in this Constitution the Government of India may subject to the provisions of clause 2 enter into an agreement with the Government of a State specified in Part B of the First Schedule with respect to a the levy and collection of any tax or duty leviable by the Government of India in such State and for the distribution of the proceeds thereof otherwise than in accordance with the provisions of this Chapter and when an agreement is so entered into the provisions of this Chapter shall in relation to such State have effect subject to the terms of such agreement
 It is noteworthy that the provisions of article 278 override pro tanto other provisions of the Constitution including article 277 and the terms of the agreement override the provisions of the Chapter namely Chapter I of Part XII
In this Chapter are contained articles 264 to 291
Thus on a construction of the pro
visions of articles 277 and 278 it is clear that in the absence of any agreement between the Government of India and the Government of a State specified in Part B duties of customs which immediately before 534 the commencement of the Constitution were being lawfully levied by the Government of such a State continue to be levied by that State until provision to the contrary is made by Parliament by law notwithstanding that such a duty is mentioned in the Union List
Article 277 therefore is in the nature of a saving provision permitting the States to levy a tax or a duty which after the Constitution could be levied only by the Centre
But article 277 must yield to any agreement made between the Government of India and the Government of a State in Part B in respect of such taxes or duties etc
The pro
vision to the contrary contemplated by article 277 was made by the Finance Act XXV of 1950 section 11 which extended the Central Excise and Salt Act 1944 along with other Acts to the whole of India except the State of Jammu and Kashmir
But that section has effect only from April 1 1950 and therefore does not apply to the arrears of duty of excise now in controversy
The agreement envisaged by article 278 was entered into as aforesaid on February 25 1950
That agreement conceded to the Centre the right to levy and collect the arrears of the duty in question
The reasons given by the High Court for the conclusion that in spite of article 278 read with the agreement aforesaid the Union Government was not entitled to realise the arrears are 1 that the agreement does not contain any specific provision about levy and collection of cotton excise duty in Rajasthan 2 that the mere approval in the agreement of the principles set out in the report is not enough in view of article 277 which made a distinctly different provision from that contemplated in the report and 3 that the agreement could be only with respect to a duty which was leviable by the Government of India
In our opinion none of these reasons aforesaid can stand in the way of the Union of India
Though the agreement does not in terms refer to levy and collection of cotton excise duty in Rajasthan it is clear that the agreement has to be read with the relevant portions of the report quoted above
So read there cannot be the least doubt that cotton excise duty in Rajasthan as a  federal 535 source of revenue is also covered by the agreement
Nor is it correct to say that the agreement read with the report is not enough to override the provisions of article 277
The agreement read with article 278 as already indicated in terms overrides the provisions of article 277
The only other reason which weighed with the High Court in getting over the terms of article 278 cannot also hold good
That a duty of the kind now in controversy on the date of the agreement after coming into force of the Constitution is leviable only by the Government of India even in respect of the State of Rajasthan is clear beyond all doubt
The Union List only namely entry 84 in the Seventh Schedule authorises the levy and collection of the duty in question
Neither the State List List II nor the Concurrent List List III contains any such authorisation
It is true that article 277 has saved for the time being until Parliament made a provision to the contrary the power of the State of Rajasthan to levy such a duty but that is only a saving provision in terms subject to the provisions of article 278
Thus the combined operation of articles 277 and 278 read with the agreement vests the power of levy and collection of the duty in the Union of India
It is only in the absence of an agreement like the one we have in this case that the Rajasthan Government could continue to levy and collect the duty in question
The agreement between the two Governments completely displaced the operation of article 277 in regard inter alia to the levy of this duty so far as the State of Rajasthan is concerned
It is clear therefore that the High Court was in error in holding that Art
277 was any answer to the claim of the Government of India and should override the provisions of article 278 read with the agreement
On a proper construction of these provisions in our opinion the result is just to the contrary
In this view of the matter it is not necessary to consider the other arguments advanced on behalf of the appellants whether article 295 should prevail over article 277
For the reasons aforesaid this appeal is allowed and the decision of the High Court set aside
The result 69 536 is that the writ petition filed by the respondent in the High Court stands dismissed with costs here and in the High Court
Appeal allowed


Summary:
On November 16 1949 the respondent was convicted under sections 38o and II4 of the Indian Penal Code
On October 5 1957 the Deputy Commissioner of Police Bombay acting under section 571 of the Bombay Police Act passed an order externing him from the limits of Greater Bombay
Later he was prosecuted and convicted under section 142 of the Bombay Police Act by the Presidency Magistrate for returning to the area from which he was externed
On an application for revision the High Court acquitted the respondent upholding his contention that section 57 of the Bombay Police Act was not retrospective and was not applicable unless the conviction on which the externment was based took place after the Act came into force
On appeal by the appellant with the special leave of this Court it was 27 Held that though statutes must ordinarily be interpreted prospectively unless the language makes them retrospective either expressly or by necessary implication and penal statutes creating new offences are always prospective penal statutes creating disabilities though ordinarily interpreted prospectively are sometimes interpreted retrospectively when the intention is not to punish but to protect the public from undesirable persons whose past conduct is made the basis of future action
Midland Ry
Co vs Pye IO CB NS 179 Rex vs Birth whistle 1889 58 LJ NS MC 158 Queen vs Vine 1875 IO QB 195 Ex Parte Pratt  Bourke vs Nutt 1898 I QB 725 Ganesan vs AK Joscelyne AIR 1957 Cal
33 Taher Saifuddin vs Tyebbhai Moosaji AIR 1953 Bom
183 The Queen vs Inhabitants of St Mary Whitechapel    and Rex vs Austin  considered and applied
Section 57 of the Bombay Police Act did not create a new offence but was designed to protect the public from the activities of undesirable persons convicted of particular offences and enabled the authorities to take note of their activities in order to put them outside the areas of their activities for preventing any repetition of such activities in the future
The verb  has been  as used in section 57 meant  shall have been Legislation which takes note of a convicted offender s antecedents for restraining him from his acts cannot be said to be applied retrospectively as long as the action taken against him is after the Act comes into force
The Act in question was thus not applied retrospectively but prospectively
An externment order must be bona fide and must relate to a conviction which is sufficiently proximate in time