Case: Firm Gulam Hussain Haji Yakub &amp; Sons Vs. State of Rajasthan

1. The appellant, Firm Ghulam Hussain Haji Yakoob and Sons, moved the Rajasthan High Court by a petition under Art. 226 of the Constitution for the issue of a writ in the nature of prohibition or other writ or appropriate order, declaring that it was not liable to pay the customs duty sought to be levied on it by the Collector of Sirohi by his order of the 9th February, 1956. It appears that one Mohammad Sagir had taken a contract for cutting forest of Harani Amrapura from the Thakur of Nibaj on the 12th July, 1946. The duration of this contract was five years and the purpose of the contract was to enable the contractor to prepare charcoal. This contract was subsequently transferred to the appellant by the said Sagir on the 13th September, 1948. In due course, the contract was extended by the Thakur of Nibaj by two years and an endorsement was made on it to that effect on the 15th April, 1950. Under this contract the appellant prepared charcoal and exported it out of the State of Sirohi. The Assistant Commissioner, Customs and Excise, Sirohi, took the view that the appellant was liable to pay customs duty @ As. -/8/- per maund on the quantity of charcoal exported by it. The Asstt. Commissioner found that the charcoal thus exported by the appellant was 27,000 mds. Accordingly, the said Asstt. Commissioner made a report to the Commissioner on the 11th February, 1954. The matter was then dealt with by the Dy. Commissioner, Customs and Excise, and he passed an order that the appellant had exported charcoal without payment of duty. This order was made on the 17th December, 1954. According to the finding made by the Dy. Commissioner, the charcoal exported by the appellant after the 30th November, 1948, amounted to 48,650 maunds. On this basis, the appellant was asked to pay Rs. 24,325/- on account of the duty on export of charcoal @ As. -/8/- a maund. The appellant challenged the correctness of this order by preferring an appeal to the Government, but its appeal was rejected on the 24th May, 1956. The appellant came to know about this order on the 5th April, 1957, when it was asked by the Tehsildar to deposit the duty assessed on it along with interest. Since the appellant did not deposit the amount, the Customs authorities had, in the meanwhile, made a requisition to the Collector of Sirohi for recovery of the said amount, and the Collector had issued a notice on the appellant under the Public Demands Recovery Act on the 9th February, 1956. It is the validity of this notice that the appellant challenged by its present writ petition. The appellants case was that the order purported to have been passed by the State Council of Sirohi by which the customs duty @ As. -/8/ was levied on charcoal was invalid and ultra vires and so, it was not competent to the Customs authorities to levy any duty on the charcoal exported by the appellant and it was not competent to the Collector to issue a demand notice for the recovery of the said duty under the Public Demands Recovery Act.*The Rajasthan Public Demands Recovery Act, 1952 (Raj. V of 1952)2. On the other hand, the respondent, the State of Rajasthan, disputed the correctness of the appellants allegation that the duty had been illegally levied. It was urged by the respondent that the said duty had been levied validly by the resolution passed by the State Council which had been approved by Her Highness Shri Rajmata Saheba. Since the said resolution had been duly passed by a competent authority the levy of the duty imposed on the appellant was valid and the Collector was justified in issuing the notice of demand under the Public Demands Recovery Act.3. The High Court has upheld the plea made by the respondent with the result that the writ petition filed by the appellant has been dismissed with costs. The appellant then applied for and obtained a certificate from the High Court and it is with the said certificate that it has come to this Court by its present appeal.

Reasoning: 7. It appears that in 1940, the Ruler of the Sirohi State brought into existence the Council of State and its functions and duties and its rights were duly notified in the State Gazette. The Council which was designated as the Council of State, Sirohi, was to consist of His Highness as President, the Chief Minister as Vice-President and such other members as His Highness may appoint from time to time. The general working of the Council had to be under the control of the President who, under R. 9, was empowered, if the matter was urgent, to act on behalf of the Council, provided that the Council was duly informed about the action taken by the President as soon as possible. Rule 11 of the notification provided that all cases of the kind enumerated in Schedule I shall be referred to the Council for decision before final orders are passed, save as provided in R. 9. Now, amongst the matters specified in Schedule I is included the topic of any new taxation, or alteration or abolition of taxation. This is entry 7 in the said Schedule. It would thus appear that it was within the competence of the Council to consider the proposal for any new taxation or alteration or abolition under R. 11 and it was for the Ruler to pass final orders in the light of the decision by the Council on that point. Rule 11 makes it clear that though it was competent to the Council to reach a decision on topics covered by entry 7 in Schedule I, it was for the Ruler to pass final orders which would make the decision effective. In other words there can be little doubt that the powers of the Council in respect of the matters covered by Schedule I were no more than advisory, it was always for the Ruler to decide what final orders should be passed in respect of the matters referred to the Council for its decision. That is the nature and scope of the power conferred on theit would be clear that when the impugned order levying a duty on coal was passed on the 31st May, 1948, the constitutional position was that the governance of the State was entrusted to the Board of Regency; and under the Board of Regency was functioning the State Council which had been constituted by the previous Ruler in 1940. It is in the light of this constitutional position that the question about the validity of the impugned levy of customs duty on the appellant has to beorder has been issued by the Secretary of the State Council and does not purport to have been issued by the executive officer of the Board of Regency. The order does not refer to the Board of Regency as all and does not purport to say that Shri Raj Mata Saheba, when she gave her approvals was acting on behalf of the Board. If the order had formally been passed as on behalf of the Board of Regency it would have been open to the respondent to contend that the assumption should be that it was duly passed by the Board of Regency and had been promulgated according to the rules of business prescribed by the said Board. But since the order does not purport to have been issued either on behalf of the Board of Regency or on behalf of Shri Raj Mata Saheba acting for the Board of Regency, it is necessary to enquire whether, in fact, the Board of Regency has approved of this order, and it appears that so far as this enquiry is concerned, the respondent has placed no material before the Court which would have assisted it in coming to the conclusion in favour of the validity of therespondents case appears to be that the Raj Mata being the President of the Board of Regency could act on her own in matters relating to the government of the State either executively or legislatively and that it was for her to decide whether she should consult the other members of the Board or not. The case set out by the respondent is not that the Raj Mata as the President of the Board always consulted the Board before the acted on its behalf. On the contrary, the plea taken seems to suggest that the Raj Mata was not bound to consult the Board and could have acted independently of the Board in passing orders either executive or legislative. That being the plea, it is difficult for us to accept the argument that the approval of the Raj Mata to which the impugned order makes a reference, can be safely taken to be the approval of the Raj Mata after she had consulted the Board in that behalf. There is no doubt that as a result of the Sirohi Regency Act, the governance of the State was left in the hands of the Board of Regency and it was the Board of Regency alone acting collectively that could legislate or pass executive orders. If the Raj Mata took the view that she could act on her own without consulting the Board, that was clearly inconsistent with the material provisions of the Act.Therefore, we are not inclined to accept the conclusion of the High Court that the impugned order can be said to have been passed as a result of the decision of the Board of Regency, since the Board of Regency alone was clothed with the necessary legislative authority. Unless the Board passed the resolution it could not take effect as a law in the State of Sirohi. The approval of the Raj Mata to the resolution passed by the State Council cannot cure the infirmity arising from the fact that the State Council had no legislativeare not inclined to accept this view. It is clear that the document of merger has been signed by the Raj Mata describing herself as the President of the Regency Board; but the High Court thought that since the document had not been signed by the Board itself the Raj Mata could be treated as the de facto Ruler of the State. This view is clearly erroneous. Since the Raj Mata was the President of the Board of Regency it was competent to her to sign the document on behalf of the Board and she purported to sign it as the President of the Board of Regency obviously because she had consulted the Board and it was as a result of the decision of the Board that she proceeded to execute the document and sign it as the Boards President.Therefore, there is no substance in the contention that the Raj Mata alone without the concurrence of the Board could have validly given sanction to the passing of the impugned order. In the result we must hold that the impugned order has not been validly passed and so levy of customs duty can be legally imposed on the appellant in regard to the charcoal which it has exported out of the State of Sirohi.In our opinion this argument is not well founded. When Ordinance XVI was passed and came into force, it no doubt applied to the whole of Rajasthan as it was then constituted but the State of Sirohi was at the relevant time not a part of Rajasthan and it became a part of Rajasthan as from the 25th January 1950. It appear that the Ministry of States issued a notification on the 24th January 1950, in exercise of the powers conferred on the Government of India by sub sec. (2) of S. 3 of the Extra Provincial Jurisdiction Act 1947 (47 of 1947)band it was as a result of this notification that the Central Government delegated to the Government of the United States of Rajasthan the extra provincial jurisdiction including the power conferred by S. 4 of the said Act to make orders for the effective exercise of that jurisdiction. It is thus clear that until the 25th January 1950 Sirohi was not a part of Rajasthan and was not amenable to the application of the Ordinance inargument is obviously faillacious. When Sirohi became a part of Rajasthan the laws applicable to Rajasthan prior to the merger of Sirohi could be made applicable to Sirohi only after an appropriate legislation had been passed in that behalf. In fact in 1953 the Rajasthan Laws (Application to Sirohi) Act (No. III of 1953) was passed to declare that certain Rajasthan Laws applied to Sirohi. Section 3 of this Act provided that the Rajasthan law specified in the Schedule to the Act shall in so far as they relate to any of the masters enumerated in Lists II and III in the Seventh Schedule to the Constitution of India, apply and as born the appointed day be deemed to have applied to Sirohi notwithstanding anything to the contrary contained in the Sirohi Administration Order 1948, or in any other law, or instrument. There is a proviso to this section with which we are not concerned for the purposes of the present appeal. The Ordinance in question 55 not included in the Schedule and so it is clear that the said Ordinance was not intended to apply to Sirohi. It is not suggested that any other Las passed by the Rajasthan State or any other instrument executed in that behalf made the Ordinance in question applicable to Sirohi. Therefore, we are satisfied that the respondent cannot rely upon the relevant provisions of the Rajasthan Ordinance of 1949 to support the demand for customs duty against the appellant for having exported charcoal out of the State of Sirohi.