Case: Jullundur Rubber Goods Manufacturers'Association Vs. Union Of India &amp; Anr

2. M/s. Jullundur Rubber Goods Manufacturers, Association is an association of rubber chappal manufacturers at Jullundur in the State of Punjab. Its members, who manufacture chappals, are stated to use about 15 to 20 per cent of rubber in the process of their manufacture while the rest of the materials used by them consists of various other articles. A petition was filed under Arts. 226 and 227 on behalf of the aforesaid Association, the second petitioner being its Secretary, challenging the levy and collection from the manufacturers of chappals under the provisions of the Act, the Rules framed and the relevant notification issued thereunder of a duty as a result of the amendment made in S. 12 of the Act by the Rubber Act of 1960. A learned Single Judge dismissed the writ petition and his judgment was affirmed by a Division Bench of the High Court.

Court's reasoning:
4. The relevant statutory provisions may first be noticed. In 1947 the Central legislature enacted. The Rubber (Production and Marketing) Act 1947. Its name was changed to Rubber Act 1947 by the Rubber (Production and Marketing) Amendment Act 1954. The Act was enacted to provide for the development, under the control of the Union, of the rubber industry. Under S. 4 the Rubber Board was to be constituted. The functions of the Board were enumerated in section 8. It was to be its duty to promote by such measure as it thought fit the development of the rubber industry. Under S. 10 it was obligatory on every person owning land planted with rubber plants to get himself registered as an owner by applying to the Board. Section 12 provided for the imposition of rubber cess. Under S. 14 no person could sell or otherwise dispose of or buy or otherwise acquire rubber except in accordance with the terms of general or special license issued by the Board. The Central Government was given the over all control over the acts of the Board by S. 22. Section 25 empowered the Central Government to make Rules. Prior to the amendment made by the Rubber Amendment Act of 1960 (Act XXI of 1960) the duty of excise was payable under S. 12 (2) by the owners of the estates on which rubber was produced and it was to be paid by them to the Board within one month from the date on which they received a notice of demand. By Act XXI of 1960 an important change was made which affected the manufacturers and the duty could be collected by the Board either from the owners of the estates or from the manufacturers by whom the rubber issub-section (2) cannot alter the substantive provision in the charging sub-section (1) and since the Parliament has employed the words "duty of excise" which have well understood meaning the incidence of tax would fall only on the actual producers. Once the incidence of tax was shifted to the users the tax would cease to be one which would fall within Entry 84. In re the Central Provinces and Berar Act No. XIV of 1938, 1939 FCR 18 at pp. 40, 41 = (AIR 1939 FC 1 at p. 6), Gwyer C.above statement of law in no way supports the argument that the excise duty cannot be collected from persons who are neither producers nor manufacturers. Its incidence certainly falls directly on the production or manufacture of goods but the method of collection will not affect the essence of the duty. In our opinion sub-s. (2) of S. 12 provides for the method of collection as the excise duty can be collected either from the producers or from the manufacturers as defined by the Act which would include members of the appellant association who use rubber in the manufacture offind it difficult to endorse the reading of sub-s. (1) and sub-s. (2) of S. 12 in isolation.Not only the statute but also the section have to be read as a whole and together and in our judgment whatever be the nature of duty Parliament would undoubtedly have legislative competence under Entry 97 of List I in the Seventh Schedule read with Art. 248 of theis pointed out that there is no guiding principle or policy laid down in the Act to enable the Board to make a choice between the twois well established that essential legislative functions consist of the determination of the legislative policy and its formulation as a binding rule of conduct and cannot be delegated by the legislature. What can be delegated is the task of subordinate legislation necessary for implementing the purpose and objects of an enactment. Where legislative policy is enunciated with sufficient clearance or a standard is laid down the courts will not interfere. It will depend on consideration of the provisions of a particular Act including its preamble as to the guidance which has been given and the legislative policy which has been laid down in the matter. In a taxing statute the guidance may take the form subjecting the rate to be fixed by the local body to the approval of the Government which acts as a watch-dog on the actions of the local body in this matter on behalf of the legislature. The reasonableness of the rates may be ensured by providing safeguards laying down the procedure for consulting the wishes of the local inhabitants. So long as the law has provided the method by which the local body can be controlled and there is a provision to see that reasonable rates are fixed it can be said that there is guidance in the matter of fixing the rates for local taxation;vide Wanchoo C. J. in Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills, Delhi 1968-3 SCR 251   at pp. 269, 270 = (AIR 1968 SC 1232   at pp. 1244,the light of this scheme as embodied in the Act, it is difficult to sustain the challenge on the ground of excessive delegation. The policy of the Act has been enunciated with sufficient clarity and the guidance has been furnished by the provisions to which reference has been made as to how the Board should exercise its powers in the matter of levy and collection of tax.There is also another important safeguard which is contained in S. 22 of the Act. All acts of the Board by virtue of that section shall be subject to the control of the Central Government which may cancel, suspend or modify any action taken by the Board.9. The provision in S. 12 (2) that the Board shall levy and collect the duty in accordance with the Rules is another important safeguard against the Board acting arbitrarily in the matter of collection of duty from the owners of the rubber estates or the25 (3) makes it obligatory on the Central Government to place every rule before each House of Parliament for a specified period of 30 days and those Rules can be subject to criticism and can be modified or even be abrogated.Thus it is not possible to hold that the Parliament has abdicated its functions in enacting S. 12 (2) of theh it may not be permissible to take the Statement of Objects and Reasons into consideration for construing the provisions of an Act the facts contained in such a statement can certainly be looked at for the purpose of seeing any alleged infringement of Art. 14.It is quite clear from the data given that the Rubber Board was finding it difficult to levy and collect the duty from the owners of rubber estates and it was considered that it would be much easier to collect the same from the manufacturers. The Board was, therefore, to collect the duty in accordance with the rules made in this behalf by the Central Government. Thus it was necessary, in view of the entire facts and circumstances stated before, that it should be left to the rule-making authority to indicate the cases and the circumstances in which the duty of excise was to be collect from the owner or the manufacturer. It was open to the rule-making authority to vary the rules according to the changing circumstances and conditions. The Board which was a high powered body was mainly responsible for collection of the duty and the rules would naturally be made in consultation with it from time to time.We are unable to see how the challenge on the ground of discrimination under Art. 14 can be sustained in view of all these reasons. It does not appear that the Board can discriminate in an arbitrary manner between owners of rubber estates and the manufacturers or between persons inter se of the same category.Now the above rule seems to contemplate the filing of return both by the owners of rubber estates and manufacturers. But under Rule 33D the demand notice can be sent only to a manufacturer on receipt of which he must make payment to the Board of the amounts specified therein. On his failure to make such payment the Board can take steps for recovery of the amounts due as arrears of land revenue by reporting to the Central Government or the State Government as the case may be. There is no such procedure prescribed with regard to owners of estates. It would follow that under the rules the demand notice is to be sent only to the manufacturers and the amounts of duty are to be realised from them alone. The substantive provisions of sub-ss. (4), (5) and (6) of S. 12 also contemplate assessment being made with regard to the returns to be furnished by owners and manufacturers. Any person aggrieved by an assessment has been given the right of appeal to the District Judge. But as pointed out before, there is no provision either in the statute or in the rules for a demand to be made and a corrective process to be employed in the event of failure to make the payment. That is done by Rule 33D alone from which it would be reasonable to conclude that under the rules it is only the manufacturers who are liable to pay the amount of duty. The rules can therefore, be said to make a definite provision with regard to the category of persons from whom the collection of the duty is to be made, namely, thed it difficult to endorse the reading of sub-s. (1) and sub-s. (2) of S. 12 in isolation.Not only the statute but also the section have to be read as a whole and together and in our judgment whatever be the nature of duty Parliament would undoubtedly have legislative competence under Entry 97 of List I in the Seventh Schedule read with Art. 248 of the