Case: Bimal Chandra Ranerjee Vs. State Of Madhya Pradesh

2. The appellants herein are excise contractors. They are the successful bidders for some of the shops in Madhya Pradesh for the financial year- 1964-65. The sale memorandum on the strength of which auction was held intimated that the successful bidders will have to sell a prescribed minimum quantity of liquor in their shops and if they fail to take delivery of the prescribed minimum quantity of liquor, they will have to pay excise duty on the quantity of liquor which they failed to take delivery. On March 20, 1964 the Government in the purported exercise of its powers under cls. (d) and (h) of S. 62 of the Madhya Pradesh Excise Act, 1915 (Act II of 1915) (to be hereinafter referred to as the Act) issued the notification No. 144401089/V-SR amending the rules published on January 7, 1960. This notification prescribed that the conditions mentioned therein should be inserted in the licences to be issued to the successful bidders. At present we are only concerned with Clause 2 (C) thereof. That Clauseminimum quantity for taking issues from the Warehouse for sale is fixed at 3213 p. litres spiced spirit and 25940 p. litres plain spirit. You shall be liable to make good every month the deficit of monthly average of the total minimum duty on or before the 10th day of each month following the month to which the deficit duty relates.The appellants are challenging the validity of this notification.These appeals by certificates granted by the High Court of Madhya Pradesh raise common questions of law. Hence we propose to dispose them of by a common order.The appellants herein are excise contractors. They are the successful bidders for some of the shops in Madhya Pradesh for the financial year- 1964-65. The sale memorandum on the strength of which auction was held intimated that the successful bidders will have to sell a prescribed minimum quantity of liquor in their shops and if they fail to take delivery of the prescribed minimum quantity of liquor, they will have to pay excise duty on the quantity of liquor which they failed to take delivery. On March 20, 1964 the Government in the purported exercise of its powers under cls. (d) and (h) of S. 62 of the Madhya Pradesh Excise Act, 1915 (Act II of 1915) (to be hereinafter referred to as the Act) issued the notification No. 144401089/V-SR amending the rules published on January 7, 1960. This notification prescribed that the conditions mentioned therein should be inserted in the licences to be issued to the successful bidders. At present we are only concerned with Clause 2 (C) thereof. That Clauseminimum quantity for taking issues from the Warehouse for sale is fixed at 3213 p. litres spiced spirit and 25940 p. litres plain spirit. You shall be liable to make good every month the deficit of monthly average of the total minimum duty on or before the 10th day of each month following the month to which the deficit duty relates.The appellants are challenging the validity of this notification.An excise licensee in Madhya Pradesh as in other places has to meet three charges namely (1) he has to pay the prescribed licence fee for obtaining the privilege of vending liquor in a shop (2) he has to pay the price of the liquor purchased by him-generally the Government has a monopoly of liquor manufacture and (3) he has to pay excise duty on the liquor purchased by him.5. In this case there is no dispute that the appellants had paid the prescribed licence fee, the price of the liquor purchased by them and also the duty on the liquor taken delivery of by them. The dispute centres round the duty required to be paid by them under the impugned clause in the notification of March 20, 1964 referred to earlier. The controversy is whether the said clause is valid in law.6. The Government of Madhya Pradesh have issued demand notices on the appellants demanding the duty said to be due from them as per the impugned clause in the notification The appellants have challenged the validity of these notices as well.

Court's reasoning:
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.