Hyderabad Chemical and Pharmaceutical works
Ltd. Vs. State of Andhra Pradesh & Ors [1964] INSC 84 (20 March 1964)
20/03/1964 WANCHOO, K.N.
WANCHOO, K.N.
GAJENDRAGADKAR, P.B. (CJ) SHAH, J.C.
AYYANGAR, N. RAJAGOPALA SIKRI, S.M.
CITATION: 1964 AIR 1870 1964 SCR (7) 376
CITATOR INFO:
R 1981 SC1863 (16,22,29) RF 1992 SC1256 (13)
ACT:
Medicinal and Toilet Preparation (Excise
Duties) Act No. 16 of 1955, s. 21--Whether repeals rule 36 framed under
Hyderabad Abkari Act-If Act No. 16 is a law "otherwise made by Parliament'
within the meaning of Art. 277--Hyderabad Act and Rule 36 repealed-Constitution
of India, Art. 277, Entry 84, List 1 of VII Schedule-Hyderabad Medical
Preparations and Spirituous Rules 1345 F, r. 36.
HEADNOTE:
The appellants are manufacturers of medicine
in which they have to use alcohol. According to r. 36 of the Medical
Preparation and Spirituous Rules, 1345 F framed under the Hyderabad Abkari Act,
1316 F the appellant used to pay certain fees to the State Government for the
supervision of the use of alcohol by the appellants. After the coming into
force of the Medical and. Toilet Preparations (Excise Duties) Act, 1955 and the
Rules framed thereunder the appellants contended that since R. 36 was repealed
by this Act they had not to pay that fee. On the refusal of the State
Government to accept their contention the appellants filed writ petitions
before the High Court challenging the power of the Government to levy the fee.
But the High Court held that R. 36 was not repealed and dismissed the writ
petitions. Thereupon the appellant filed the present appeals on certificates
granted by the High Court.
Before this Court it was contended on behalf
of the appellant that s. 21 of the 1955 Act in terms repealed any corresponding
State law and therefore R. 36 stood repealed.
The respondent contended that the proviso to
that section saved all previous rules which were not inconsistent with the Act
and hence R. 36 should be deemed to be in force. It was further contended by
the respondent-State that R. 36 remained in force because it was meant to carry
out the general purpose of the Hyderabad Abkari Act which was a general Act
relating to alcohol and intoxicating drugs.
Held:(i) By virtue of Entry 84 List I of the
VII Schedule to the Constitution no charge could be levied on the manufacture
of medicinal preparations except by the Union of India and since the 1955 Act
is a law made otherwise by Parliament within the meaning of Art. 277 the duties
and other charges which used to be levied by the State in connection with
medicinal preparations could no longer be levied by it. Further the effect of
s. 21 of the Act is that so far as the Hyderabad Act applied to the use of
alcohol in the manufacture of medicinal and toilet preparations, the Hyderabad
Act must be deemed to have been repealed.
(ii)By reasons R. 143 of the 1956 Rules r. 36
must be held to have been repealed after the coming into force of the 1955 Act
and the rules framed there under. The purpose of R. 36 is clearly covered by
the 1955 Act and the rules framed there under and it cannot survive the said
Act and Rules in view of s. 21 of the Act and r. 143 and the proviso to s. 21
cannot be availed of by the State.
377 (iii)The field covered by R. 36 is
completely covered by the Rules framed under the Act and therefore R. 36 can no
longer be justified as good under the general law relating to alcohol and in-,,
toxicating drugs as contended by the State.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 399403/1962. Appeal from the judgment and order dated February 17, 1961 of
the Andhra Pradesh High Court in Writ Petitions Nos. 400, 431 to 433 and 495 of
1958.
K.Srinivasamurthy and Naunit Lal, for the
appellants (in all the appeals).
K.R. Chaudhuri and B. R. G. K. Achar, for the
respondents (in all the appeals).
March 20, 1964. The Judgment of the Court was
delivered by WANCHOO, J.---These are five connected appeals on certificates
granted by the High Court of Andhra Pradesh. They involve a common question of
law and will be dealt with together. The brief facts necessary to understand
the question of law raised in these appeals are these. The appellants
manufacture medicines in which they have to use alcohol. Before Parliament
passed the Medicinal and Toilet Preparations (Excise Duties) Act, No. 16 of
1955, (hereinafter referred to as the Act), the appellants were working under
licences granted -under the Hyderabad Abkari Act, No. 1 of 1316-F. Under that
Act certain rules called the Medical Preparations and Spirituous Rules, 1345-F
were framed and r. 36 thereof provided that "the expenses of the
establishment for the supervision of the work shall be borne by the
pharmaceutical laboratory (licensee) as per the decision of the Commissioner
Excise". It appears that for the manufacture of medicines, the appellants
used to be supplied with alcohol. Further the State Government posted on the
bonded manufacturies of the appellants certain supervisory excise staff, and r.
36 was obviously framed to reimburse the Government for expenses incurred in that
behalf. After the Act came into force from April 1, 1957, the appellants who
were manufacturing medicinal preparations were governed by it and the Rules
framed there under and took licences under the Act. The appellants then
contended that as the Act had repealed all previous provisions with respect to
medicinal preparations, they were no longer bound to pay the charges prescribed
under r. 36 of 1345-F Rules. Their contention was that this rule along with
such provisions of the Hyderabad Abkari Act, which concerned medicinal preparations
were repealed by the Act and the Rules framed there under. The State Government
could therefore no longer ask them to pay the costs of the establishment posted
at their 378 bonded manufactories for supervision*. The appellants thereupon
filed writ petitions in the High Court challenging the levy of these charges.
The petitions were opposed on behalf of the
State and its contention was that even though the Act and the Rules framed there
under had come into force from April 1, 1957, r. 36 of the 1345-F Rules
continued and was not repealed by the Act and the Rules framed there under, and
the State was entitled to the expenses of the supervisory staff and could
realise it from the appellants.
The High Court held that r. 36 could not be
said to have been repealed by the Act and the Rules framed there under and was
still good law. In this connection the High Court pointed out that the
Hyderabad Abkari Act was not concerned only with medicinal preparations but was
a general Act dealing with excise including alcohol, and that alcohol in the
ultimate analysis was liquor; therefore the State Government which supplied
alcohol to the appellants for the purpose of making medicinal and toilet
preparations for which no duty was paid was entitled to see that the alcohol
was not used for purposes other than that for which it was supplied to the
appellants. Accordingly the High Court held that r. 36 of the 1345-F Rules was
designed to achieve this object, under the general law of excise contained in
the Hyderabad Abkari Act, and was therefore good. In consequence the writ
petitions were dismissed. The appellants then applied for certificates to
appeal to his Court, which were granted; and that is how the matter has come up
before us The only question that falls for consideration therefore is whether
after the coming into force of the Act and the Rules,r. 36 of the 1345-F Rules
can still be said to survive. There is no doubt that the Hyderabad Abkari Act
was a general Act and before the Constitution came into force, r. 36 of the
1345-F Rules would be good law. Under the Constitution, however, medicinal and
toilet preparations came under entry 84, List I of the Seventh Schedule to the
Constitution, which provides for duties of excise on tobacco and other goods
manufactured or produced in India, except-(a) alcoholic liquors for human
consumption;
(b) opium, Indian hemp and other narcotic
drugs and narcotics, but including medicinal and toilet preparations containing
alcohol or any substance containing opium, Indian hemp and other narcotic drugs
and narcotics. No charge could thereafter be levied on the manufacture of
medicinal preparations except by the Union in the shape of duties under item 84
of List I.
* The State Government however insisted on
the payment of the charges.
379 But under Art. 277 of the Constitution
"any taxes, duties, cesses or fees, which, immediately before the
commencement of this Constitution were being lawfully levied by the Government
of any State may, notwithstanding that those taxes, duties, cesses or fees are
mentioned in the Union List, continue to be levied and to be applied to the
same purposes until provision to the contrary is made by Parliament by
law". In view of this provision, all duties and charges levied by the
State before the coming into force of the Constitution on the manufacture of
medicinal preparations could continue to be levied until law was made by
Parliament otherwise. It is not in dispute that the Act came into force from
April 1, 1957 and is a law made otherwise by Parliament within the meaning of
Art. 277, and therefore duties and other charges levied by the State in
connection with medicinal preparations could no longer be levied by it. Further
the Act specifically provides in s.
21 that "if, immediately before the
commencement of this Act, there is in force in any State any law corresponding
to this Act, that law is hereby repealed". It is true that the Hyderabad
Abkari Act was a general law which was concerned with liquor and intoxicating
drugs generally; it thus applied to alcohol also (treating it as liquor) used
for manufacturing medicinal preparations. The effect of s. 21 therefore is that
so far as the Hyderabad Abkari Act applied to the use of alcohol, treating it
to be liquor, in the manufacture of medicinal and toilet preparations, the
Hyderabad Abkari Act must be deemed to have been repealed to that extent only
by s. 21.
Reliance is placed on behalf of the State on
the proviso to S. 21, which lays down that "all rules made under any law
hereby repealed shall, so far as they are not inconsistent with this Act, have
the same force and effect as if they had been respectively made under this Act
and by the authority empowered hereby is in that behalf." It is therefore
contended that by virtue of the proviso to s. 21, r. 36 of the 1345-F Rules
must be deemed to continue. We are of opinion that there is no force in this
contention. Rules were framed under the Act in 1956 and came into force along
with the Act. Rule 143 of these Rules provides that all rules made under any
law corresponding to the Act in force in any State are hereby repealed except
as respects things done or omitted to be done before such repeal. Consequently
all rules framed for the purpose of the manufacture of medicinal preparations
came to an end in view of r. 143 of 1956 Rules.
Therefore r. 36 of 1345-F Rules, which
appears in the Medicinal Preparations and Spirituous Rules must be held to be
no longer good law so far as it applies to medicinal preparations. That is one
reason why we consider that r. 36 must be held to have been repealed after the
coming into force of the Act and the Rules framed there under. The proviso to
s. 21 on which reliance has been placed 380 cannot change the position ciew of
the new Rules framed in 1956 with respect to medicinal preparations. As soon as
the new Rules came into force the old rules must fall and there is a specific
provision in the new Rules (namely r. 143) which says that all rules made under
any law corresponding to the Act are hereby repealed.
We may refer in this connection to the
construction of r. 36 of the Rules of 1345F. It provides that the expenses of
the establishment for the super-vision of the work shall be borne by the
pharmaceutical laboratory. The establishment which has to be paid for under r.
36 therefore is for the supervision of the work done by the pharmaceutical
laboratories. Now the work done by a pharmaceutical laboratory is to
manufacture medicinal preparations. Rule 36 therefore provides that expenses of
the establishment for the supervision of the work of medicinal preparations
manufactured by pharmaceutical laboratories have to be paid by the laboratory
concerned. The supervisory staff which has to be paid for under r. 36 therefore
is meant for the supervision of the manufacture of medicinal preparations and
it is for that purpose only that expenses have to be borne by the laboratory
concerned. The purpose of the rule therefore is clearly covered by the Act and
the Rules framed thereunder and it cannot survive the Act and the Rules in view
of s. 21 of the Act and r. 143 of the 1956-Rules, and the proviso to s. 21
cannot be availed of by the State.
This brings us to the alternative argument on
behalf of the State, namely, that in any case the rule still remains good
because it is meant to carry out the general purpose of the Hyderabad Abkari
Act, namely to see that unauthorised sale of alcohol is not made for human
consumption by the laboratory to which it is supplied for purposes of
manufacture of medicinal preparations. Therefore it is said that the rule is
good inasmuch as it is concerned with the enforcement of the general law
relating to alcohol and intoxicating drugs contained in the Hyderabad Abkari
Act. We are of opinion that there is no force in this contention either. In the
first place, as we have already indicated, the main object of the supervisory
staff mentioned in r. 36 is to supervise the manufacture of medicinal
preparations. In that connection the supervisory staff will certainly see that
the alcohol supplied is used for the purpose for which it is supplied and is
not used in any other manner. Rule 36 is only concerned with seeing that the
manufacture of medicinal preparations is made properly and is done under the
supervision of the establishment attached to each laboratory,, and it is only
incidentally that in that connection the establishment is also to see that the
alcohol supplied is not used otherwise than for the purpose of manufacture.
That however will not make the rule good under the Hyderabad Abkari Act, which
deals with alcohol and intoxicating drugs generally.
381 What we have said above is borne out if
we look at the 1956Rules. Rule 20 provides that in case of manufacture in bond
(and we are concerned in the present appeals with such manufacture) alcohol on
which duty has not been paid shall be used under excise supervision. Rule 42
provides that "it shall be open to the Excise Commissioner to determine
the size of the supervisory staff in consultation with the licencee." It
is clear therefore that under the 1956 Rules supervisory staff is attached to
bonded manufacturies which manufacture medicinal preparations. This is also the
purpose of r. 36. Further r. 141 provides that "the licencee of a bonded
manufactory or warehouse shall, where so required by the Excise Commissioner,
provide the officer and the staff posted to the manufactory or bonded warehouse
with suitable lodging conveniently situated to the factory or bonded warehouse
premises at a rent not exceeding 10 per cent of the pay of each officer so
accommodated. If for any reason the licencee is not able to provide such
accommodation he shall provide suitable accommodation to the satisfaction of
the Excise Commissioner near the manufactory or bonded warehouse recovering only
10 per cent of the pay of the occupant." Then r. 45 provides that
"tile officer-incharge shall exercise such supervision as is required to
ensure that alcohol issued for a certain preparation is added to the materials
which go to make that preparation and that no portion of such alcohol is
diverted to other purpose." It is clear therefore from these rules that
the supervisory staff is attached to a bonded manufactory for the purpose of
supervision to see that the manufacture is carried on properly and also to see
that alcohol issued for the purpose of manufacture is not diverted to any other
use.
We cannot therefore accept the argument that
simply because the supervisory staff has got to see that alcohol supplied,
assuming it to be liquor, is not misused, r. 36 is still good law because its
purpose is to see that the general law relating to alcohol and intoxicating
drugs contained in the Hyderabad Abkari Act is carried out. As the 1956-Rules
show it is the duty of the supervisory staff attached to a bonded manufactory
to see that the manufacture is properly made and that alcohol supplied is not
diverted to any use except that of the manufacture of the preparation. This
being the purpose of the 1956-Rules, the levy under r. 36 of 1345-F cannot be
justified on the ground that under that rule the supervisory staff has to see
that the general law relating to alcohol and intoxicating drugs is not
violated. There is no doubt that the field covered by r. 36 of the 1345-F Rules
is completely covered by the Rules framed under the Act and therefore r. 36 can
no longer be justified as good under the general law relating to alcohol and
intoxicating drugs. We may add that the Act or the 1956 Rules make no provision
for any such charge as is provided in r. 36 of 1345-F Rules, the intention
being that the duty under the Act will cover all expenses 382 for enforcing it.
The fact that members of the supervisory staff are the servants of the
respondent makes no difference because they function under the Act and the
rules framed there under and not under the Hyderabad Act. We are therefore of
opinion that reading s. 21 of the Act and r.
143 of the Rules framed there under, r. 36 of
1345-F Rules must be held to have been repealed and that it is not saved by the
proviso to s. 21. We therefore allow the appeals, set aside the orders of the
High Court, and direct the issue of writs as prayed for. The appellants will
get their costs from the respondents--One set of hearing costs.
Appeals allowed.
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