Case: M. K. Paplah &amp; Sons Vs. The Excise Commissioner &amp; Anr

delegated legislation is implied in the speech of Lord Thankerton in the House of Lords in Minister of Health v. The King, 1931 AC 494 (524) where he said:"In this case, as in similar cases that have come before the courts, Parliament has delegated its legislative function to a Minister of the Crown, but in this case Parliament has retained no specific control over the exercise of the function by the Minister, such as a condition that the order should be laid before Parliament and might be annulled by a resolution of either House within a limited period."19. In Institute of Patent Ageats v. Joseph Lockwood, (1894) AC 347, Lord Watson said:"The Legislature retained so far a check that it required that the regulations which they framed should be laid upon the table of both Houses: and of course these regulations should have been annulled by an unfavourable resolution upon a motion made in either House."20. In Bernard Schwartzs "An Introduction to American Administrative Law" it is stated:"In Britain, Parliamentary control over delegated legislation is exercised through the various forms of laying prescribed in enabling Acts. Through them, the legislature is enabled at least in theory to exercise a continuing supervision over administrative rules and regulations."21. As Dean Landis pointed out, the English techniques for laying the rules before the Houses have several virtues. "For one thing, they bring the legislative into close and constant contact with the administrative". See Landis, "The Administrative Process", 77 (l938)22.The legislature may also retain its control over its delegate by exercising its power of repeal. This was the basis on which the Privy Council in Cobb and Co. v. Kropp, (1967) 1 AC 141 (PC) upheld the validity of delegation of the power to fix rates to the Commissioner of Transport in that case. The question there was whether the Queensland Legislature had legislative authority under the impugned Acts to invest the Commissioner for Transport with power to impose and levy licence and Permit fees. It was not disputed before their Lordships that fees imposed are to be regarded as constituting taxation. Accordingly, it was contended that the Legislature had abdicated its exclusive power of levying taxation. The Privy Council held that Queensland Legislature was entitled to use any agent or machinery that it considered appropriate for carrying out the object and the purposes of the Acts and to use the Commissioner for Transport as its instrument to fix and recover the licence and permit fees, provided it preserved its own capacity intact and retained perfect control over him that as it could at any time repeal the legislation and withdraw such authority and discretion as it had vested in him, it had not assigned. transferred or abrogated its sovereign power to levy taxes, nor had it renounced or abdicated its responsibilities in favour of a newly created legislative authority and that, accordingly, the two Acts were valid. Lord Morris of Borthy-Gest said:"What they (the legislature) created by the passing of the Transport Acts could not reasonably be described as a new legislative power or separate legislative body armed with general legislative authority (see R. v. Burah, (1878) 3 A. C. 889 (PC) ). Nor did the Queensland Legislature create and endow with its own capacity a new legislative power not created by the Act to which it owes its own existence (see In re the Initiative and Referendum Act (1919) A.C. 935 at P. 945)."23. The point to be emphasized - and this is rather crucial - is the statement of their Lordships that the legislature preserved its capacity intact and retained perfect control over the Commissioner for Transport inasmuch as it could at any time repeal the legislation and withdraw the authority and discretion it had vested in himand, therefore, the legislature did not abdicate its functions.24. We. Therefore, think that the power to fix the rate of excise duty conferred on the Government by Section 22 of the Act is valid. The dilution of parliamentary watch-dogging of delegated legislation may be deplored but, in the compulsions and complexities of modern life, cannot be helped.25. The last contention raised by the appellant was that Section 19 of the Karnataka Sales Tax Act. 1957 is invalid as it purports to levy sales tax upon the sale of arrack made by the Government to licensees. The appellant submitted that the definition of dealer in Section 2 of that Act excludes the Government of Mysore and that by virtue of the provisions in Section 5 (3) of that Act, no tax could be levied on the sale of arrack by Government to the appellant. We see no merit in this contention. Section 19 of the Act reads :"19. State Government entitled to collect tax as registered dealers -Notwithstanding anything contained in this Act the (government of Mysore shall, in respect of any sale of goods effected by them, be entitled to collect by way of tax any amount which a registered dealer effecting such sale would have been entitled to collect by way of tax under this Act."26. This section makes it clear that notwithstanding anything contained in that Act. the Government shall in respect of any sale of goods effected by it be entitled to collect by way of tax any amount which a registered dealer effecting such sale would have been entitled to collect by way of tax under the Act. The section is clear that the Government could collect the tax on the sale made by it as if it were a registered dealer, notwithstanding anything contained in Section 2 or Section 5. The section itself creates a right in the State to recover and an obligation on the purchaser from the State to Pay the amount. Any imposition of liability or obligation in respect of sale or purchase of goods will be covered by Entry 54 of List II of the Seventh Schedule of the Constitution.27. We do not think that Section 19 is ultra vires the powers of the legislature.

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

Explanation:
0[ds]7. It is clear from the return filed before the High Court that the Government purchases arrack from the distillers and keeps it in the warehouse established or licensed under Section 16 and that any removal of arrack after the purchase of the same will attract the liability to pay excise duty.We see no force in this contention. Section 23 provides that excise duty shall be levied on the excisable article issued from a warehouse also. We see no reason to think that a warehouse established or licensed under Section 16 (e) is not warehouse within the meaning of that expression in Section 23.We are not certain whether the preamble of the Act gives any guidance for fixing the rate of excise duty. But that does not mean that the legislature here has no control over the delegate. The legislative control over delegated legislation may take many forms.In this case, we think that Section 71 of the Act which provides for the rule-making power imposes the necessary check upon the wide power given to the government to fix the rate.The point to be emphasized - and this is rather crucial - is the statement of their Lordships that the legislature preserved its capacity intact and retained perfect control over the Commissioner for Transport inasmuch as it could at any time repeal the legislation and withdraw the authority and discretion it had vested in himand, therefore, the legislature did not abdicate its functions.24. We. Therefore, think that the power to fix the rate of excise duty conferred on the Government by Section 22 of the Act is valid. The dilution of parliamentary watch-dogging of delegated legislation may be deplored but, in the compulsions and complexities of modern life, cannot besee no merit in this contention.This section makes it clear that notwithstanding anything contained in that Act. the Government shall in respect of any sale of goods effected by it be entitled to collect by way of tax any amount which a registered dealer effecting such sale would have been entitled to collect by way of tax under the Act. The section is clear that the Government could collect the tax on the sale made by it as if it were a registered dealer, notwithstanding anything contained in Section 2 or Section 5. The section itself creates a right in the State to recover and an obligation on the purchaser from the State to Pay the amount. Any imposition of liability or obligation in respect of sale or purchase of goods will be covered by Entry 54 of List II of the Seventh Schedule of the Constitution.27. We do not think that Section 19 is ultra vires the powers of the legislature.