Case: Municipal Corporation Of Delhi Vs. Birla Cotton, Spinning And Weaving Mills, Delhiand Another


Decision reasoning: 1[ds]With respect, it seems to us that if this observation means that it is open to the legislature to delegate the power to fix the rate of tax to another authority without any qualification, guidance, control or safeguard, it is too widely stated and does not appear to be supported by the authorities on which it is based, though those authorities do indicate that in certain cases it is open to the legislature to give power to another authority to fix rates under proper guidance, control and safeguard. Take the case of Powell v. Apollo Candle Co., Ltd., (1885) 10 AC 282. In that case Section 133 of the Customs Regulation Act of 1879 of New South Wales was under attack. That section ran thusany article of merchandise then unknown to the collector is imported, which in the opinion of the collector or the commissioners, is apparently a substitute for any known dutiable article, or is apparently designed to evade duty, but possesses properties in the whole or in part which can be used or were intended to be applied for a similar purpose as such dutiable article, it shall be lawful for the Governor to direct that a duty be levied on such article at a rate to be fixed in proportion to the degree in which such unknown article approximates in its qualities or uses to such dutiable article; and such rate thus fixed shall be published in a Treasury order in the Gazette, and one other newspaper published in Sydney, and exhibited in the long room or other public place in the Custom House and a copy of all such Treasury orders shall, without unnecessary delay, be laid before both Houses of Parliament.A bare perusal of the section shows that though the power was delegated to the Governor to levy the duties, it gave complete guidance to him in the manner of fixing the rate of duty and finally provided that the order passed by the Governor would be laid before both Houses of Parliament without unnecessary delay. The observations of the Privy Council in that cave have in our opinion to be read in the context of the words of Section 133 where full guidance was provided as to the fixation of the rate.A review of these authorities therefore leads to the conclusion that so far as this Court is concerned the principle is well established that essential legislative function consists of the determination of the legislative policy and its formulation as a binding rule of conduct and cannot be delegated by the legislature. Nor is there any unlimited right of delegation inherent in the legislative power itself. This is not warranted by the provisions of the Constitution. The legislature must retain in its own hands the essential legislative functions and what can be delegated is the task of subordinate legislation necessary for implementing the purposes and objects of the Act. Where the legislative policy is enunciated with sufficient clearness or a standard is laid down, the courts should not interfere. What guidance should be given and to what extent and whether guidance has been given in a particular case at all depends on a consideration of the provisions of the particular Act with which the Court has to dead including its preamble. Further it appears to us that the nature of the body to which delegation is made is also a factor to be taken into consideration in determining whether there is sufficient guidance in the matter of delegation.Though delegation as to municipal taxation is held to be permissible under the U. S. Constitution, it is so because of historical reasons peculiar to that country. The American example may not be an apt analogy but the history of municipal Acts in our country indicates that for nearly century or more power of taxation has been delegated to municipal bodies. In some Acts all taxes delegated to the municipal bodies are compulsory; in other Acts a taxes so delegated are optional: (See U. P. Municipalities Act). In some cases some taxes are compulsory and some taxes are optional as is the case in the present Act. In some cases maximum limits are provided for some taxes and not for others; in some cases no maximum is provided, though there are restrictions and safeguards within which the municipal bodies must act. In all case however, there has been a large area a delegation of taxing power for local purposes to local bodies subject to control by Government or to such other procedural safeguards as the legislature considers necessary in the matter of imposition of taxes. According to our history also there is a wide area of delegation in the matter of imposition of taxes to local bodies subject to controls and safeguards of various kinds which partake of the nature of guidance in the matter of fixing rates for local taxation. It is in this historical background that we have to examine the provisions of the Act impugned before us.32. We have already set out S. 150 of the Act which delegates power to the Corporations to levy any of the optional taxes at such rates as it thinks fit and further gives power to it to specify persons, and articles and properties on which tax will be levied and the system of assessment to be adopted and exemptions if any to be granted.The argument which found favour with the High Court was that the words of Section 2 only validated the levy and collection of tax for the year ending March 31; 1960 and no further though the section in terms refers to the Period from July 1, 1959 to March 31, 1966 The contention which was accepted by the High Court, was that though fixation of rate of tax was validated upto March 31, 1966, the levy of the tax was not validated for the whole period by Section 2 of the Validation Act. The same argument was raised before us in support of the contention that the Validation Act failed in its purpose so far as the period from April 1, 1960 to March 31, l966 is concerned. We are of opinion that the High Court was in error in holding that the levy and collection was not validated for the period from April 1, 1960 to March 31, 1966 and that the Validation Act merely validated the fixation of rate of tax for that period. Section 2 (1) which is said to have failed in validating the levy and collection of tax for the period from April 1, 1960 to March 31, 1966 is in two parts. In the first place it validates the resolution of the Corporation dated June 24, 1959 by which rates were fixed under Section 150 (3) for the year ending March 31, 1960. As the High Court says-and rightly so this means that everything that went before the resolution of June 24, l959 was passed was validated. It was on this ground that the High Court held that the Validation Act validated the levy and collection of tax at the rates fixed for the period from July 1, 1959 to March 31, 1960 The High Court seems to have overlooked the second part of Section 2 (1) which lays down that the rates specified in the resolution of June 24, 1959 in respect of tax on the consumption or sale of electricity under the Act with effect on and from the Ist day of July 1959 and up to and inclusive of the 31st day of March, 1966 shall be deemed to be, and to have been, the actual rates of the tax. By this part of Section 2 (1), Parliament has clearly approved the rates deductible from the resolution of June 24, 1959 as the actual rates of tax for the entire period from July 1, 1959 to March 31, 1966. This could only be to validate the levy and collection of tax at that rate for that period, for otherwise we can see no sense in the Validation Act. It is however said that the words "at which tax shall be levied and collected do not appear after the words "the actual rates of the tax" in Section 2 (1) and therefore the section must be taken to have validated the rates only. It has neither provided for levy and collection of tax nor validated its levy and collection for the period mentioned therein. It seems to us that when S 2 (1) lays down that the rates deducible from the resolution of June 24, 1959 shall be the actual rates of tax for the entire period from July 1, 1959, to March 31, 1966. it must be understood to sanction the levy and collection of tax at the rates fixed. This to our mind is implicit in the word "actual" which governs the words "rates of the tax" We may add that even if there was some doubt in the matter from the words of Section 2 (1), that doubt is resolved by the words of Section 2 (2), which lays down that "all taxes on the consumption or sale of electricity levied or collected or purporting to have been levied or collected in pursuance of the resolution referred to in sub-section (1) shall, for all purposes, be deemed to be, and to have always been validly levied or collected."This clearly shows that the validation was not merely of the rate of tax but of levy and collection also for the entire period from July 1, 1959 to March 31, 1966. We cannot therefore agree with the High Court that only the rates of tax were validated and not levy and collection thereof for the period from April 1, 1980 to March 31, 1966. We may go further and say that as we read Section 2 (1) and Section 2 (2) together it seems to us that Parliament not only validated what was done but also itself imposed the rates deducible from the resolution of June 24, 1959 and authorised the levy and collection thereof for the entire period from July 1, 1959 to March 31, 1966 notwithstanding anything contained in any judgment, decree or order of any court to the contrary.