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PETITIONER: FIRM GULAM HUSSAIN HAJI YAKUB &SONS

       Vs.

RESPONDENT: STATE OF RAJASTHAN

DATE OF JUDGMENT: 19/04/1962

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. AIYYAR, T.L. VENKATARAMA SINHA, BHUVNESHWAR P.(CJ) WANCHOO, K.N. AYYANGAR, N. RAJAGOPALA

CITATION:  1963 AIR  379            1963 SCR  (2) 255

ACT: Custom  Duty-Export  of Charcoal-Validity of  State  Council Order imposing liability-Regency Act for the Sirohi Minority Administration,  1947, s. 9-Rajasthan Ordinance (No.  16  of 1949), a. 4(2).

HEADNOTE: The  appellant  firm was made liable to  pay  Rs.  24,395/as customs  duty for exporting charcoal from the  State  Sirohi and  as  it  did not deposit the  amount  the  collector  of Sirohi,  on  the  requisition of  the  customs  authorities, issued  a notice for recovery of the said amount  under  the Public  Demands Recovery Act.  The appellant moved the  High Court under Art. 226 of the Constitution.  Its case was that the  order of the Sirohi State Council levying customs  duty on the export of charcoal at the rate of 1-81- per maund wag invalid  and  ultra vires.  The case of the  respondent  was that the said duty had been validly levied by virtue of  the resolution  passed by the State Council and approved by  the Rajmata.   The-High Court held in favour of  the  respondent and  dismissed the petition.  The question was  whether  the impugned  order dated May 31, 1948, purported to  have  been passed in pursuance of the Council Resolution dated May  15, 1948, imposing for the first time customs duty on export  of charcoal, had been validly issued. Held, that the State Council did not have legislative  power ;  after  the  passsing of the Regency Act  for  the  Sirohi Minority Administration, 1947, it could pass a law only with the  approval of the Board of Regency of which  the  Rajmata Saheba  was the President ; since there was nothing to  show that  the Board had approved of. the order, it must be  held to be invalid. It  was  not  correct to say that the  Raj  Mata  could  act independently  of  the Board, it was the  Board  alone  that could collectively legislate or pass executive orders.   The view of the High Court that the Raj Mata could be treated as the de facto Ruler as the State was clearly erroneous. 256 Nor  could the levy on the appellant be sustained under  the

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relevant provisions of Rajasthan Ordinance (No. 16 of 1949), which had no application.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 300 of 60. Appeal from the judgment and order dated November 13,  1958, of  the Rajasthan High Court in D.B.C. Writ Application  No. 58 of 1957. Chand Mal Lodha and Brijbans Kishore, for the appellant. S.   K. Kapur and D. Gupta, for the respondent. 1962.   April 19.  The Judgment of the Court. was  delivered by GAJENDRAGADKAR,  J.-The appellant, Firm Ghulam Hussain  Haji Yakoob &. 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 Controller of  Sirohi by  his  order of the 9th Feb., 1956.  It appears  that  one Mohammad  Sagir had taken a contract for cutting  forest  of Haranj  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 on 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 257 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  2  7, 003 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 &  Excise,  and he passed on 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 Demand Recovery Act on the 9th February, 1956.  It is the validity of this notice that the appellant challenged by its  present writ petition.  The appellant’s 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

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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 Demand Recovery Act. On the other hand, the respondent, the State 258 of  Rajasthan, disputed the correctness of, the  appellant’s 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 Demand Recovery Act. 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. The  customs  tariff  had been prescribed in  the  State  of Sirohi  by the Sirohi Customs Act of 1944 Section 14 of  the said Act lays down that : "’except as hereinafter’ provided, customs  duties  shall  be  levied  at  such  rates  as  are prescribed  in  the  Sirohi  Customs  Tariff  on  all  goods mentioned therein, at the time of import or export of  goods (including  those  belonging to the State) into  or  out  of Sirohi  State by rail, road or air".  It would thus be  seen that  s.  14  which is the charging  section  provides  that customs duties shall be levied on the goods mentioned in the Tariff at the rates prescribed by it.  The result is that it is  only in respect of goods mentioned in the Tariff and  at the  rates. specified therein that customs duties  could  be leived. Section  15 of the said Act conferred upon the Darbar  power to fix and alter tariff rates.  It says that the Darbar may, from time to time, by 259 notification in the Sirohi State Gazette, save in  emergency cases,  alter  the rates prescribed in the Tariff  and  such altered rates shall come into force from the date  mentioned in the notification or, in the event of the notification not reaching  any customs post concerned, on a  subsequent  date from  such  date." The effect of this section  is  that  the power  to fix and alter tariff rates has been  conferred  on the   Darbar  which  is  required  ordinarily  to  issue   a notification in that behalf.  The High Court thought that as a result of reading sections 14 and 15 together, it was open to the Darbar not only to alter rates at which customs could be  levied but, also to include new items under the  taxable articles  mentioned  in the Tariff.  This  view  is  clearly erroneous.  The power conferred on the Darbar by s 15 is  to fix and alter tariff rates.  No ,power has been conferred on the Darbar to add to the list of taxable commodities in  the Tariff  itself  The goods on which customs duties  could  be levied have been specified in the Tariff attached to the Act and  no  addition could be made to the said Tariff  in  that behalf by the Darbar by virtue of the authority conferred on it by s. 15.  There is no doubt about this position. At  this  stage, it is relevant to add that  in  the  Tariff prescribed  by the Act of 1944, charcoal is included in  the list  of commodities, the import of which is liable  to  pay the  customs duty.  It is however, not included in the  list of commodities the export of which is liable to pay  customs duty.   This position is not disputed.  Therefore, in  order

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that  export  of charcoal should be made liable to  pay  the customs  duty, the respondent ought to be able to rely  upon some legislative enactment in that behalf. It  appears  that  in 1940, the Ruler of  the  Sirohi  State brought into existence the Council of 260 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 member 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 rule  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 I I 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 rule 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 rule 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 wag competent to the Council to reach a decision on topics covered by entry 7 in Schedule 1, it  was for  the  Ruler to pass final orders which  would  make  the decision  effective.   In other words,  there  can  belittle doubt  that  the  power 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 the Council. Since  the Ruler of the State, His Highness  Maharajadhiraja Maharao Taj Singhji Bahadur, was 261 a minor in 1947, His Excellency the Crown Representative was pleased  to sanction the passing of the Regency Act for  the Sirohi  Minority  Administration on the 14th  August,  1947. This Act provided that it was to come into force on the 14th August,  1947 and was to continue until the  Ruler  attained the  age of 18 years.  Section 3 of the Act prescribes  that for the purpose of the Constitution of the Sirohi State, the word "Ruler" wherever occurring in the Constitution shall be deemed  to be the Board of Regency.  Section 4 provided  for the constitution of the Board of Regency.  It was to consist of  Her  Highness  the Dowager Maharani  Saheba  of  Sirohi, Maharana  Shri Sir Bhawani Singhji Bahadur of Danta and  Raj Saheban Shri Bhopalsinghji of Mandar.  Section 6 of the  Act provided  that the Board of Regency shall be legal  guardian of  the Ruler.  After this Act was passed, the functions  of the Ruler were discharged by the Board of Regency which, for all constitutional and legal purposes, represented the Ruler during   his  minority.   In  pursuance  of   the   material provisions of this Act, notification was issued on the  same clay  constituting the Board of Regency.  Thus, it 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

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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 be judged, On the 31st May, 1948, an order was passed which purports to have  been  issued in pursuance of  the  Council  Resolution dated 15th May, 1948, for which approval had: been  obtained from  Her  Highness Shri; Raj Mata Saheba.  As a  result  of this Order, the duties imposed on goods specified 262 in  the Tariff attached to the earlier Act were enhanced  in respect  of bones, wool, timber and fire wood, and  a  fresh duty  was  imposed in respect of export of  charcoal.   This duty  was imposed @ As. /8/- per maund.  As we have  already soon,  it  is  common ground that according  to  the  Tariff prescribed by the Act of 1944, charcoal was not included  in the  list  of articles, the export of which  was  liable  to customs duty.  The question which calls for decision in  the present  appeal is whether the order thus issued  is  valid; and the answer to this question depends upon whether or  not the  imposition  of the customs duty on  charcoal  has  been levied by an authority which was legislatively competent  to issue  such an order.  If the levy has been ordered only  by the  State  Council  without the approval of  the  Board  of Regency,  then  it  would  be invalid  because  it  was  not competent  to the State-Council to pass a law.  It was  open to  the  State Council to reach a decision on  the  question about the imposition of customs duty on any new article, but that  decision had to be approved and accepted by the  Board of  Regency  which  alone was  clothed  with  the  requisite legislative power.  Therefore, the validity of the order can be  sustained  only if it is shown that it has  been  passed with the approval of the Board of Regency of which Shri  Raj Mata Saheba was the President. In  dealing with this question, it is necessary to  bear  in mind  that the order does not formally recite that Shri  Raj Mata  Saheba had approved of the order as the  President  of the  Board  of Regency.  The order 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 at all and does not purport to say that Shri Rajmata Saheba, when  she  gave her approval, was acting on  behalf  of  the Board.  If the order had formally been passed as on behalf 263 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  has  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 assist it in coming  to the conclusion in favour of the validity  of  the impost. Indeed,  the plea taken by the respondent is  disputing  the correctness  of the appellants claim before the High  Court, was that Shri Raj Mata Saheba was the President of the Board of Regency and that whenever she acted, she did so on behalf of  the  Board and it was for her to take counsel  from  the other  members.   It  was,  therefore,  urged  that  in  the circumstances, it would be presumed that she has passed  the

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orders in consultation with other members till the  contrary is proved.  It is significant that this plea proceeds on the assumption that it was at the option of Shri Raj Mata Saheba either  to  consult  the  Board  of  Regency  or  not.   The respondent’s 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 she acted on its behalf.  On  the contrary, the plea taken seems to suggest that the Raj  Mata was not bound 264 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 infirmity  arising from the fact that the State Council  had no legislative power. The  High Court seems to have taken the view that since  the Raj  Mata entered into the agreement of merger, she  can  be treated at the de facto Ruler of the State and as such,  she was competent to exercise the necessary legislative power to pass the impugned order. we are 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. 265 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 Board’s 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  no 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.

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It  is,  however,  urged that the duty  levied  against  the appellant for the export of charcoal can be sustained  under the  provisions  of  Rajasthan Ordinance  (No.16  of  1949). Section 4(2) of the said Ordinance authorised the Government to  issue any revised tariff and in exercise of this  power, the  Government of Rajasthan has issued a  notification  No. 211/SRD  on the 10th August, 1949, whereby a revised  tariff was  imposed and it was directed that the duties of  customs shall  be levied and collected in accordance with  the  said revised  Tariff.   According  to item  No.367  in  the  said Tariff, export duty on charcoal was As.-/8/-per maund.   The respondent’s argument was that when Sirohi became a part  of Rajasthan,  the Ordinance in question applied to Sirohi  and so,  the  claim  for  the  customs  duty  made  against  the appellant was justified under the relevant provisions of the said  Ordinance.  This Ordinance came into force on the  4th August, 1949. In  our  opinion, this argument is not  well-founded.   When Ordinance XVI was passed and 266 same  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  appears  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  subsection (2)  of section 3 of the Extra-Provincial  Jurisdiction  Act 1947  (47  of  1947)  and  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 section  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  in question.  The respondent attempted to suggest that as  soon as  Sirohi  became  a part of Rajasthan,  the  Ordinance  in question  applied to it.  This argument is obviously  falla- cious.   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  laws specified in the Schedule to the Act  shall, in so far as they relate to any of the matters enumerated in Lists II and III in the Seventh Schedule to the Constitution of India, apply, and as from the appointed day, be deemed to have  applied  to Sirohi not withstanding any thing  to  the contrary contained in the Sirohi Administration Order, 1948, or  in any other law, or instrument.  There is a proviso  to this    267 section with which we are not concerned for the purposes  of the  present  appeal.   The  Ordinace  in  question  is  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 law 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  1949  to support  the  demand for customs duty against the  State  of

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Sirohi. In  the  result,  the appeal must be allowed  and  the  writ issued  in  favour  of  the  appellant  declaring  that  the appellant is not liable to pay the customs duty in  question and  quashing  the orders passed by the  Dy.   Commissioner, Customs  &  Excise  as  well as the  Minister  of  Excise  & Taxation  and the demand notice issued by the  Collector  at the instance of the excise authorities.  The appellant would entitled to its cost throughout. Appeal allowed. 268