Case: Bimal Chandra Ranerjee Vs. State Of Madhya Pradesh

transported, or(d) manufactured, cultivated or collected under any licence granted under S. 13; or(e) manufactured in any distillery established, or any distillery or brewery licensed under this ActProvided that it shall be lawful for the State Government to exempt any excisable article from any duty to which the same may be liable under this Act.(2) Duty may be imposed under sub-section (1) at different rates according to the places to which any excisable article is to be removed or according to the strength and quality of such article.(3) Notwithstanding anything contained in sub-section (1) duty shall not be imposed thereunder on any article which has been imported into India and was liable, on such importation, to duty under the Sea Customs Act, VIII of 1878 or the Indian Tariff Act, VIII of 1894."13. Under this section excise duty or countervailing duty can be imposed on excisable articles when they are either imported or exported or transported or manufactured or cultivated or collected and not otherwise.14. Section 26 deals with the manner of levying the duty. It says:"Subject to such rules regulating the time, place and manner as the State Government may prescribe, such duty shall be levied rateably on the quantity of excisable articles imported, exported, transported, collected or manufactured in or issued from a distillery, brewery or warehouse.Provided that:(1) duty may be levied-(a) on intoxicating drugs by an acreage rate levied on the cultivation of the hemp plant or by a rate charged on the quantity collected;(b) on spirit or beer manufactured in any distillery established or any distillery or brewery licensed under this Act -(i) in accordance with such scale of equivalents calculated on the quantity of materials used, or by the degree of attenuation of the wash or wort, as the case may be, as the State Government may prescribe, or(ii) by rate charged directly on the materials used(c) on tari, by a tax on each tree from which the tari is drawn.(2) Where payment is made upon the issue of an excisable article for sale from a warehouse, it shall be at the rate of duty in force on the date of issue of such article from the warehouse."Section 27 says:"Payment for grant of leases: Instead of or in addition to any duty leviable under this chapter, the State Government may accept payment of a sum in consideration of the grant of any lease under section 18."15. Section 18 deals with the power to grant lease of right to manufacture or right to sell excisable articles.16. The only other relevant section for our present purpose is Section 62 which confers power on the State Government to make rules. Clause (1) of that section says:"The State Government may make rules for the purpose of carrying out the provisions of this Act."In Clause 2 reliance was placed on sub-cls. (d) and (h). Those sub-clauses read:"In particular, and without prejudice to the generality of the foregoing provision, the State Government may make rules. . .xx xx xx(d) regulating the import, export, transport, manufacture, collection, possession, supply or storage of any intoxicant, or the cultivation of the hemp plant and may, by such rules, among other matters-(i) regulate the tapping of tari producing trees, the drawing of tari from such trees, the marking of the same and the maintenance of such marks;(ii) declare the process by which spirit shall be denatured and the denaturation of spirit ascertained, and(iii) cause spirit to be denatured through the agency or under the supervision of its own officers;(d-l) regulating the import, export, transport, collection, possession, supply, storage or sale of Mahua flowers prescribing licences and permits therefor, throughout the State or in any specified area or for any specified period."x x x(h) prescribing the authority by the form in which and the terms and conditions on and subject to which any licence, permit or pass shall be granted, and may by such rules among other matters -(i) fix the period for which any licence, permit or pass shall continue in force(ii) prescribe, the scale of fees or the manner of fixing the fees payable in respect of any such license, permit or pass,(iii) prescribe the amount of security to be deposited by holders of any licence, permit or pass-for the performance of the conditions of the same;(iv) prescribe the account to be maintained and the returns to be submitted by licence holders, and(v) prohibit or regulate the partnership in or the transfer of, licences."17. Neither S. 25 or S. 26 or S. 27 or S. 62 (1) or cls. (d) and (h) of S. 62 (2) empower the rule-making authority viz. the State Government to levy tax on excisable articles which have not been either imported. exported, transported, manufactured, cultivated or collected under any licence granted under S. 13 or manufactured in any distillery established or any distillery or brewery licensed under the Act. The legislature has levied excise duty only on those articles which come within the scope of S. 25.The rule-making authority has not been conferred with any power to levy duty on any articles which do not fall within the scope of S. 25. Therefore it is not necessary to consider whether any such power can be conferred on that authority. Quite clearly the State Government purported to levy duty on liquor which the contractors failed to lift. In so doing it was attempting to exercise a power which it did not possess.18. No tax can be imposed by any bye-law or rule or regulation unless the statute under which the subordinate legislation is made specially authorises the imposition even if it is assumed that the power to tax. can be delegated to the executive. The basis of the statutory power conferred by the statute cannot he transgressed by the rule-making authority. A rulemaking authority has no plenary power. It has to act within the limits of the power granted to it.19. We are of the opinion that the impugned rule as well as the demands are not authorised by law.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]17. Neither S. 25 or S. 26 or S. 27 or S. 62 (1) or cls. (d) and (h) of S. 62 (2) empower the rule-making authority viz. the State Government to levy tax on excisable articles which have not been either imported. exported, transported, manufactured, cultivated or collected under any licence granted under S. 13 or manufactured in any distillery established or any distillery or brewery licensed under the Act. The legislature has levied excise duty only on those articles which come within the scope of S. 25.The rule-making authority has not been conferred with any power to levy duty on any articles which do not fall within the scope of S. 25. Therefore it is not necessary to consider whether any such power can be conferred on that authority. Quite clearly the State Government purported to levy duty on liquor which the contractors failed to lift. In so doing it was attempting to exercise a power which it did not possess.18. No tax can be imposed by any bye-law or rule or regulation unless the statute under which the subordinate legislation is made specially authorises the imposition even if it is assumed that the power to tax. can be delegated to the executive. The basis of the statutory power conferred by the statute cannot he transgressed by the rule-making authority. A rulemaking authority has no plenary power. It has to act within the limits of the power granted to it.19. We are of the opinion that the impugned rule as well as the demands are not authorised by law.