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PETITIONER: KANSHI RAM JAGAN NATH AND OTHERS

       Vs.

RESPONDENT: THE STATE

DATE OF JUDGMENT: 28/07/1961

BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. GAJENDRAGADKAR, P.B. (CJ) SUBBARAO, K. SHAH, J.C. DAYAL, RAGHUBAR

CITATION:  1966 AIR  805            1966 SCR  (2) 942

ACT: Excise  Duties-Law of erstwhile Indian State  providing  for royalty  on  bricks-Extension of Indian excise  law  to  the State on merger with part B state-Effect on prior  law--Levy of  royalty, if repealed-Central Excises and Salt Act,  1944 (1  of 1944), ss. 2(d) 3(1)-Finance Act, 1950 (25 of  1950), ss. 11, 13 (2).

HEADNOTE: The  Council  of Regency of the erstwhile State  of  Patiala issued  an order dated February 6, 1919, imposing a  royalty on  bricks from all kiln. owners at the rate of Rs.  50  per one lakh.  After the State of Patiala became merged with the Patiala  and East Punjab States Union, a Part B State  under the Constitution of India, the Finance Act, 1950, which came into force on April 1, 1950, became operative in that State. By virtue of s. 11 of that Act the Central Excises and  Salt Act, 1944, was extended, inter alia, to Part B States, while under  s. 13(2) it was provided that if  immediately  before April  1,  1950,  there  was in force in  any  State  a  law corresponding to but other than an Act referred to in s.  II such  law became repealed with effect from that state.   The legality  of the levy of royalty on bricks under  the  order dated February 19, 1949, after April 1, 1950, was challenged by the appellant on the grounds that the royalty was in  the nature of an excise duty, and that the order levying it  was a  law  corresponding to the Central Excises and  Salt  Act, 1944, and therefore became repealed by s.   13(2) of the Finance Act, 1950. Held,  that  the Central Excises and Salt Act,  1944,  which provided for the levy and collection of duties of excise  on goods specified in the First Schedule to the Act did not  by a negative provision, expressly save other commodities,  not intruded  in  the  Schedule,  from  the  operation  of  an), existing local law.  Consequently, the order dated  February 19, 1949, passed by the erstwhile State of Patiala, was  not a  law  corresponding  to  the Act  of  1944  and  was  not, therefore,  within  the repeal created by s.  13(2)  of  the Finance Act 1950.

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JUDGMENT: CIVIL APPELLATE JURISDICTION  Civil Appeal No. 292 of 1958. 943 Appeal from the judgment and decree dated October 23,  1956, of  the  PEPSU  (now Punjab) High Court  in  Regular  Second Appeal No. 29 of 1954. C.   K. Daphtary, Solicitor-General of India, J.  B.Dadachanji, Ravinder Narain and O. C. Mathur, for the appellants. S.M.  Sikri, Advocate-General for the State of Punjab, N. S. Bindra and P.D. Menon, for the respondent. 1961.  July 28.  Judgment of the Court was delivered by HIDAYATULLAH,  J.-The  only question in  this  appeal,  with certificate  under  Art.  133(1)(c)  of  the   Constitution, against  the  judgment  and decree of’  the  High  Court  of Patiala  and East Punjab States Union., is whether the  levy of  royalty  at Rs. 50 per one lakh bricks  under  a  Robkar issued  by  the Ijlas-i-Khas (Council of  Regency),  Patiala State, on February 6, 1919, is valid. The  Appeal  arises  out  of a suit  filed  by  the  present appellants in the Court of the Subordinate Judge,  Faridkot, for declaration and injunction.  The, suit was dismissed  by the  trial Judge, but on appeal to the District  Court,  the decision  was  reversed.   On. further appeal  to  the  High Court, the decision of the Additional District Judge was set aside, and that of the trial Judge restored. In  this appeal, the only point argued is whether the  order of  the  Ijlas-i-Khas continues to be effective,  after  the enactment  of the Finance Act, 1950.  The suit was filed  on May  13,  1952, for conjunction against  notices  of  demand issued  to the appellants from the Tehsil Office,  Faridkot, on  or about April 20, 1951.  The learned  Solicitor-General concedes that the appellants’ claim must be confined to  the period after April 1, 1950, from 944 which  date  the Finance Act, 1950, began  to  operate.   He states  that  prior  to  that date  the  law  could  not  be considered  to be invalid because of Art. 277,  which  saved taxes, duties, cesses or fees which were being levied in any State  prior  to the commencement of the  Constitution.   He also concedes that the Finance Act,, 1950, could not operate before April 1, 1950, and the question, therefore, is,  what is  the  effect  of  the Finance Act,  1950,  on  the  order impugned ? It may also be pointed out that the authority  of the  Regency  Council to issue the impugned  order  and  the validity,of  that order, unless affected by any Indian  law, are not called in question. The  Finance  Act, 1950, was passed to give  effect  to  the financial  proposals  for the year commencing  on  April  1, 1950.  Section 11 of’ that Act extended, amongst others, the Central  Excises and Salt Act, 1944, to the whole  of  India including  Part  B  States, except the State  of  Jammu  and Kashmir.   By  s.  13(2), it was provided,  inter  alia,  as follows :       "If  immediately before the 1st day of  April,       1950,  there  is in force in any  State  other       than Jammu and Kashmir a law corresponding to,       but  others  than an Act referred to  in  sub-       section (1) or (2) of section 11, such law  is       hereby  repealed  with effect  from  the  said       date............ It is contended that by the extension of the Central Excises and  Salt  Act, 1944, there was repeal of any  law  imposing

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excise  duty  on  the manufacture of  any  class  of  goods. Attention  is,  therefore, drawn to the  provisions  of  the Robkar, where the royalty is charged as follows :       "Mehsul (Royalty at the rate of Rs. 50 per lac       bricks  be  charged from  all  the  kilnowners       irrespective of the fact whether they       945       construct  brick-kilns oil the land  belonging       to Government or not.  In case they  construct       brick-kilns   on   the   land   belonging   to       Government,  cost  (of’ the land,  or  damages       thereof be charged (from them) in addition  to       the Mehsul (Royalty)......... The  provisions  of  s. 13(2) of  the  Finance,  Act,  1950, clearly  show that only a law corresponding to  the  Central Excises  and  Salt Act, 1944, was intended to  be  repealed. If’  the  law did not correspond to the Indian  statute,  it would  be  save,  by virtue of Art. 277.  We  have  thus  to determine  in this case whether the Robkar of  the  ljlas-i- Khas,  imposing a royalty on bricks call be said to be,  law corresponding  to  the Central Excises and Salt  Act,  1944, which was extended on April. 1, 1950. The,  argument  of Mr. Daphtary proceeds on  the  assumption that  the royalty is ill the mature, of an excise duty,  and the  Robkar  is  thus  a law  corresponding  to  the  Indian statute.   That, however, does not determine  the  question, because the word,,,, of sub-s. (2) of s. 13 of the,  Finance Act,  1950,  are  that  the  law  repealed  must  be  t  law corresponding to the Indian statute.  The argument insupport of  the  contention  that this is such a  law  is  that  the Central  Excises and Salt Act, 1944, is, as its  long  title and preamble s ow, a consolidation and amending law relating to  Central  duties  of  excise  on  goods  manufactured  or produced in certain parts of India and to salt.  It is urged that  the Act is ill the nature of a code, which  riot  only provides  for  the levy of excise ditty on  the  commodities specifically,   mentioned   therein  but   by   implication, exonerates other articles from the levy of excise duty,  and that, therefore, the Indian statute is comprehensive  enough to include not only such commodities as are mentioned ill it but  also other’ commodities on which there is no levy.   It is conceded, however, that there is no negative provision 946 under which other goods manufactured in India are  expressly saved from the operation of any other law. Section 3(1) of the Central Excises and Salt Act, 1944, lays down the charge of excise duty, and provides       "There  shall be levied and collected in  such       manner  as may be prescribed duties of  excise                     on  all excisable goods other than  salt  which       are produced or manufactured in India.........       at   the  rates,  set  forth  in   the   First       Schedule." "’Excisable  goods" is defined by s. 2(d), and means  "goods specified  in the First Schedule as being subject to a  duty of  excise  and includes salt".  These two  provisions  read together   limit  the,  operation  of  the  excise  law   to enumerated commodities and salt, and the ambit of the law is thus confined.  The words "to consolidate and amend the law" have reference really to the Acts, which were repealed by s. 39.  Prior to the enactment of this consolidating Act, there were   no   less  than  17  Acts  dealing   with   different commodities, and in 1944, all those laws were repealed,  and a consolidated Act was passed to cover all those Acts and to include  certain new commodities.  The effect of  consolida-

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tion  was not to codify the law in such a way as  to  repeal other  acts,  which were not specifically mentioned  in  the Schedule  dealing  with repeals.  No negative  provision  to save  other commodities from the operation of  any  existing local law was either expressly included or even contemplated in the Act.  The result, therefore, is quite clear that  the Robkar,  under which the royalty was imposed cannot be  said to  be a law corresponding to the Central Excises  and  Salt Act, 1944, and is, therefore, not within the repeal  created by s. 13(2) of the Finance Act, 1950.                     947 In our judgment, the decision of the High Court is  correct, and the appeal is dismissed with costs. Appeal dismissed.