Case: Organon (India) Ltd. [Now known as Infar (India) Ltd.) & Another Vs. The Collector of Excise & Others


Decision reasoning: 0[ds]We think not. Section 5 is really a continuation of Section 4. Section 4, as it stands after the amendments in 1930, prohibits the possession, transport, import/export and sale of opium by any one except as permitted by the said Act or any other enactment relating to opium for the time being in force by the Rules framed under the Opium Act or any such other enactment. As stated hereinbefore, opium is a noxious drug. It is dangerous to health. Addiction to opium has brought nations to grief. It is serval times more dangerous to health than liquor or tabacco. In the modern era, It has not mixed up with international crime and terror. It is but natural that the State should seek to prohibit its possession, movement, sale and all dealings therein except under strict and close control. To start with, there is the prohibition, which prohibition is lifted only to the extent provided for by the statute or the rules made thereunder. Sections 4 and 5 are thus motifs of the same pattern. Section 5 empowers the State Government to specify situations in which the prohibition will be lifted, either fully or partially and either unconditionally or subject to such conditions, as may be deemed necessary, including `payment of duty. Section 5 provides for two things, viz., (a) the State Government may, from time to time, by notification in the Official Gazette make rules consistent with this Act to permit absolutely or subject to the payment of duty or to any other conditions, possession, transport, import/export and sale of opium and the form of duties leviable on the sale of opium by retail and (b) the State Government may, from time to time, by notification in the Official Gazette make rules consistent with this Act to regulate within the whole or any specified part of the territories administered by such Government, all or any of the following matters, viz., possession, transport, import/export and sale of opium by retail. The primary purpose of Section 5 is controlling and regulating the posession, transport, import/export and sale of opium and not collection of revenuethough the relevance and validity of the said purpose is undeniable in the case of noxious goods, as emphasised by this Court in Cooverjee B. Bharucha v. Excise Commissioner, Ajmer and others, (AIR 1954 SC 220 ). The selection empowers the State Government to make Rules prescribing the situations in which the possession etc. of opium will be permitted and also to specify in which situations the permission would be absolute, i.e., unconditional and in which situations would it be subject to prescribed conditions. One of the conditions that can be so prescribe is "payment of duty". The other part of Section 5 speaks of regulating possession etc. of opium again by means of Rules. Can it be said in the above situation that Section 5 is a provision primarily concerned with levy of duty. Would it not be more correct to say that it is a provision designed to control and regulate the possession, transport etc. of opium and it is only as a part of such control and regulation (which must be understood in the light of the prohibition contained in Section 4) that it provides that paymnent of duty can also be insisted upon as a condition for permitting the possession, transport etc. of opium. Much should not be read into the expression `duty used in Section 5. Having regard to the context in which the said expression occurs, it cannot be understood in the sense it carries in Entry 51 of ListII. Opium Act is aAct. Indeed, it is law preceding the 1935 Act. In the context, the expression `duty means and "amount" which shall be collected as a condition for granting the permission to possess, transport, import/export or sell opium. (We need not say anything about "the farm of duties leviable on the sale of opium by retail" referred to in clause (d) of Section 5 since we are only concerned herein only with the validity of the "payment of duty" referred to in the main limb of Section 5). All that it means is that is open to the State Government to make Rules providing for payment of such amount as it thinks appropriate as a condition for granting the permission contemplated by Section 5. The idea is not to allow possession, transport etc. of opium freely (except in those cases where it is to be so permitted having regard to the objects and purposes of Act and public interest) but to make it prohibitive, to make it aproposition in commercial sense. In this context, it would be appropriate to refer to the decision of this Court in Har Shankar and others v. The Deputy Excise and Taxation Commissioner and others, (1975(3) SCR 254), which affirms the fact that the name given to a particular payment is not allways indicative of the true nature of the payment.We are also not prepared to place the tag of ``price for parting with the privilege" on the said payment. We refuse to be drawn into the controversy whether such a conceptaffirmed by this Court consistently over a period of forty yearshas been negatived in this Courts decision in Synthetics and Chemicals Ltd. Incidentally, we may say that the majority opinion delivered by Sabyasachi Mukharji, J., on behalf of the six learned Judges, does not expressly say so. The said question was not put in issue and was not pronounced upon expressly. Rejection of such aproposition cannot be inferred. If it is proposed to be rejected, it must be put in issue in a straight manner and be pronounced upon. This has not been done in the majority judgment. Actually, the said case was concerned only with the States power to levy taxes and other regulatory fees on industrial alcohol. It was held that the States are denuded of the legislative power to do so under Entry 24 ofby virtue of the declaration made by Parliament under and in terms of Entry 52 ofOnly the separate concurring opinion delivered by G.L. Oza, J. says that the said concept is unacceptable under our constitutional scheme. We need express no opinion on the said opinion. It is enough to say for the present purpose that Section 5 of the Opium Act does not purport to levy duty of excise but that it only purports to empower the State Government to make Rules to permit possession, export etc. of opium subject to such conditions as it may think appropriate to impose including the payment of an amount (called `duty by the Section ). In this view of the matter, the principle enunciated in Sunderaramier has no application herein. That principle could perhaps have been relevant if Section 5 had purported to levy duty of excise or other tax on opium. Perhaps, it could then have been argued that Entry 59 ofor for that matter Entry 19 ofdoes not take in the power to levy taxes and duties on opium. We need express no opinion on the said aspect. For the same reason, the argument of Sri Salve that opium among other narcotic drugs has been excluded from the purview of Entry 84 ofneed not be dealtour opinion, this contention is equally unsustainable. Firstly, no material has been placed before us to show the price of poppy husks during the several years under consideration. Secondly, even if the contention is factually true, it matters very little for the very idea underlying Sections 4 and 5 is to make possession and dealings in opium prohibitive and, commercially speaking, aproposition. The idea is to discourage the people from possessing or otherwise dealing in matters specified in Sections 4 and 5. Even otherwise, duties of excise at more than 100% is not unknown in law. (See in this connection the observations of this Court in Har Shankar at page 279 E to G).30. There is another good reason for upholding the validity of Section 5, viz., the provision in Article 372. Opium Act is a law preceding the Government of India Act, 1935. The division of powers between the Centre and the provinces was first introduced by the 1935 Act. Section 292 of the said Act provided that "notwithstanding the repeal by this Act of the Government of India Act but subject to the other provisions of this Act, all the law in force in British India immediately before the commencement ofof this Act shall continue in force in British India until altered or repealed or amended by a competent legislature or other competent authority". Article 372(1) provides similarly that "notwithstanding the repeal by this Constitution of the enactments referred to in Article 395 but subject to the other provision of this Constitution, all the laws in force in the territory of India immediately before the commencement of this Constitution shall continue in force therein until altered or repealed or amended by a competent legislature or other competent authority." ExplanationI to the article defines the expression `law in force. It reads thus:The expression `law in force in this article shall include a law passed or made by a legislature or other competent authority in the territory of India before the commencement of this Constitution and not previously repealed, notwithstanding that it or parts it may not be then in operation either at all or in particular areas." The effect of these provisions was considered by the Constitution Bench of this Court in South India Corporation Private Limited v. Secretary, Board of Revenue, (AIR 1964 SC 207 ). It was held that the said provisions save and continue a law notwithstanding the fact that according to the provision of the Constitution, the law could not have been made by the legislature which had enacted it, though they do not save such enactment from inconsistency with other provisions of the Constitution, viz., provisions other than those relating to legislative competence.We are also of the opinion that it is unnecessary to go into the question whether Mandsaur district was a part of a princely State and whether the Opium Act was extended to the said are after the commencement of the Constitution because no factual foundation has been laid for this argument in the High Court, through Article 372 was expressly relied upon by State. In any event, ExplanationI to Article 372 appears to be a complete answer to this argument. For all the above reasons, we hold that Section 5 is a perfectly valid piece of legislation and cannot be faulted on the ground suggested.It is not possible to agree with the learned counsel. It would be seen at once that this argument is based upon the same premise as the previous argument. The argument proceeds on the assumption that Section 5 is a taxing provision; that its main purpose is to levy excise duty. We have pointed out hereinbefore that Section 5 is not a taxing provision, that the "duty" referred to therein is not "duty" in the sense in which it is used in Entry 51 ofof the Seventh Schedule to the Constitution and that the said expression really means an amount. As explained hereinbefore, Section 5 is a continuation of Section 4 and it merely empowers the State Government to lift the prohibition on the possession, transport, import/export and sale of opium in such cases as it deems appropriate and subject to such conditions, as it may deem fit to impose including payment of an amount. It has been held that it is a regulatory provision. For this reason, the decisions of this Court [e.g., Devi Das Gopal Krishan v. State of Punjab, 1967 (3) SCR 557 )] which lay down the proposition that where the taxing power to fix rates of tax is delegated by the Legislature to another body, the Legislature must either fix minima or maxima or retain some control over the Acts of the delegate are not really relevant and need not be deal with. So far as guidance in the matter of making of Rules providing for the matters contemplated by Section 5 is concerned, the provisions of the Act go furnish sufficient guidance in the matter of making rule under Section 5. The scheme of the Act including Section 4, which bars any and every person from possessing, transporting, importing/exporting and selling opium except as provided by the said Act or the Rules made thereunder (or by any other Act or Rules made under such other Act) furnish adequate guidance to the State Government. It must also be noticed that thepower is conferred upon a responsible body like the State Government. The very noxious nature of opium and the desirability to closely control and regulate possession, transport, movement and all dealings therein are matters which the State Government has also to keep in mind while making the Rules. We may in this connection refer to the decision of the Constitution Bench of this Court in Harishankar Bagla and another v. State of Madhya Pradesh (1955 (1) SCR 380 ). Section 3(1) of the Essential Supplies (Temporary Powers) Act, 1946 conferred rule making power upon the Central Government.The same principle was reiterated in State of Tamil Nadu v. Hind Stone, (1981 (2) SCR 742 ). It was contended before this Court that a rule made by the Government of Tamil Nadu under Section 15 of the Mines and Minerals (Regulation and Development) Act providing that no lease for quarrying black granite should be granted to private persons and creating a monopoly in favour of a Constitution wholly owned by the State Government was beyond thepower. This argument was rejected holding that the provisions of the Act furnished sufficient guidance. It was held : "the public interest which induced parliament to make the declaration contained in Section 2 of the Mines and Minerals (Regulation and Development) Act, 1957, has naturally to be the paramount consideration in all matters concerning the regulation of mines and the development of minerals. Parliaments policy is clearly discernible from the provisions of the Act. It is conservation and the prudent and discriminating exploitation of minerals, with a view to secure maximum benefit to the community. There are clear sign posts to lead and guide the subordinate legislating authority in the matter of the making of rules." We are, therefore, of the opinion that Section 5 cannot be faulted either on the ground that it delegates essential legislative functions to the State Government or on the ground that it conferspower upon the State Government without furnishing any guidance and without laying down any policy in that behalf. In this view of the matter, it is not possible to agree with the decision of the Allahabad High Court in M/s. Rameshwar Prasad Kishan Gopal.