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

1. The appellant was an excise contractor. He secured the privilege of vending arrack in retail in certain talukas in the State of Karnataka for a period of 18 months beginning from 28-12-1967 and ending on 30-6-1969 He purchased arrack from the Government at a price of 17 paise Per litre and the Government collected besides the sale price of arrack, excise duty, health cess and education cess. The Government also collected sales tax on the sale price of arrack on excise duty, on health cess and on education cess for the period from 28-12-1967 to 31-1-1968 and made similar demands for the month of February. 1968 also. The appellant and other excise contractors filed writ petitions in the High Court of Karnataka challenging the validity of the levy and collection of excise duty, education cess, health cess and sales tax. The High Court accepted some of the contentions of the appellant, granted him reliefs on that basis but rejected the other prayers. The appellant has filed these appeals on the basis of certificates granted by the High Court against the order.

Reasoning: 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.