Kanshi Ram Jagan Nath & Ors Vs.
The State  INSC 230 (28 July 1961)
GAJENDRAGADKAR, P.B. (CJ) SUBBARAO, K. SHAH,
CITATION: 1966 AIR 805 1966 SCR (2) 942
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repealed-Central Excises and Salt Act, 1944 (1 of 1944), ss. 2(d) 3(1)-Finance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).
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to in s. II such law became repealed with effect from that state.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repealed by s. 13(2) of the Finance Act, 1950.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.
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
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 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 in support 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 sow, 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
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- 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.