AVINDER SINGH ETC v. STATE OF PUNJAB & ANR. ETC.
Citation: [1979] 1 S.C.R. 845; 1978 INSC 181
Court: Supreme Court of India
Bench: V.R. KRISHNA IYER , D.A. DESAI
Judgment date:
Case summary
1978 INSC 181. Supreme Court of India judgment dated 1978-09-19. AVINDER SINGH ETC v. STATE OF PUNJAB & ANR. ETC. Read the judgment and case details on...
Judgment text
AVINDER SINGH ETC. v. STATE OF PUNJAB & ANR. ETC. September 19, 1978 [V. R. KRISHNA IYER AND D. A. DESAI, JJ. ] Constitution of India-Articles 14, 265-Vice of excessive delegati'on- . Absence of guidelines-What can be delegated-lnipo,sing flat rate of taxation- Choice of classification in taxing statute. Punjab Municipalities Act, I976-Sec. 90 Punjab Municipal Act, 1911- Sec. 62A-Double taxation if proltibited by Art. 265. The Municipalities of Punjab are governed by two enactments. The numerous little ones are statutory bodies created and controlled by the Ptlnjab htuni-cipal Act, 1911 and few large ones by the Punjab Municipal Corporation Act, 1976. For the purpose of the present petitions the provisions run on identical terms. The State of Punjab in April, 1977 required the various municipal bodies in the State to impose tax on the sale of Indian made foreign liquor @ Re. 1/-per bottle w. e. f. 20-5-1977.
The Municipal authorities having failed to take action pursuant to the directive the State of PlQljab directly issued a notification under sec. 90(5) of the Punjab Municipal Corporation Act, 1976 and similae provi5ion of the Municipal Act, 1911. The petitioner challenged the constitutional validity of the said statutes and levy on the following grounds : 1. Section 90(2) (b) of the Act suffers from the vice of excessive delegation or legislative abdication. 2. There are no guidelines for the exercise of the wide fiscal power of the Q:>rporation or Government which make· it too unreasonable to be salvaged by Art. 19(5) and too arbitrary to be equal under Art. 14. 3.
The Order imposing the tax itself is vitiated because : (a) It seeks to impose the tax which is already imposed and, therefore, violates section 90 (4) ; (b) There is double taxation; (c) It levies too heavy taxation; (d) Picking out from the broad spectrum of luxury goods or intoxicants the Indian made foreign liquor amounts to discriμiination; (e) No opportunity of being heard was given; (f) U municipal bodies and ( c) that unequals are being treated equally be- -cause the tax of Re. 1/- bottle at a flat rate disregards germane considerations like the price of the liquor or the degree of alcoholic content. A feeble plea that the tax is bad because of the vice of double taxation and is unreasonable because there are heavy prior levies was also voiced. Some of these contentions hardly merit consideration, but have been mentioned out of courtesy to counsel. The last one, for instance, deserves the least attention. There is nothing in Art.
265 of the Constitution ·from which cine can •pin out the constitutional vice called double taxation. (Bad economics may be good law and vice versa). Dealing with a somewhat similar argument, the Bombay High Court gave short shrift to it in Western India Theatres('). Some undeserving contentiO'! ls die hard, rather survive after death. The only epitaph we may inscribe is : Rest in peace and don't be re-born ! If on the same subject-matter the legislature chooses to levy tax twice over there is no inherent invalidity in the fiscal adventure save where other prohibitions exist. Likewise, the plea that a flat rate of Re. 1/- per bottle, be it brandy or other stronger beverage or be It Rs. 501- or Rs. 500 /- per bottle, cannot be seriously pressed. In the field of taxation many complex factors enter the fixation and flexibility is necessary for the taxing authority to make a reasonably good job of it.
Moopil Nair's case(') does not discredit as unconstitutional anathema all flat rates of taxation. Maybe, in marginal cases where the virtual impact of irrationally uniform impost on the same subject is glaringly discriminatory, expropria- 1 tory and beyond legislative competence, different considerations may ' arise; but to condemn into invalidity a tax because it is levied at a conveniently flat rate having regard to the commodity or service which has a high range of prices and the minimal effect on the overall price, . ' its easy means of collection a11d a variety of other pragmatic variables, is an absurdity, especially because in fiscal matters large liberality must _be extended to the Government having regard to the plurality of criteria / (1) Cantonment Board Poona v. Western India Theatres Ltd. , A. I. R. 1954 Born. 261. (2) Moopil Nair (K. T. ) v. Sta1 one of the propositions underlying the major arguments advanced be.
-fore us is that while municipal bodies know their needs and respond to local pressures and tailor their taxes accordingly, the distant State Government is neither aware nor responsive and the impugned tax measure is bad· because the pragmatic and policy guidelines of (a) the local people's welfare requirements vis-a-vis available municipal finances, and (b) people's pressurising proximacy and municipality's correctional reaction to undue tax burdens are absent when the power is exercised by a remote control board niched in the State Secretariat. But if the picture is of a powerless talking shop of elected councillors passing resolutions but all the do's and don'ts, sanctions and appro-vals, countermands and even supersession of the Council itself reside in the State Government, the effective voice, the meaningful responses, • the appreciation of budgetary needs and gaps and need for grants and a host of other responsibilities can be traced to the Government.
Such is the backdrop to the discussion of the issues raised. Now Jct us scan the Act from this angle. Corporations are created for the purposes of carrying out the provisions of the Act and they are charged with municipal adntinistra1ion (sees. 4). So, corporations cannot do anything beyond the purposes set out in the statutory provisions. This itself is a statutory restriction on action. The composition of the body corporate is by periodically elected councillors (see s. 5) and this feature ensures responsive action. The powers necessary for municipal government are spelt out as also the obligatory and discretionary functions (see Chapter ITT). •· Now come certain other aspects of local self-government. The entire executive power of the corporation vests in the Commissioner who is appointed by Government. This means that the Corporation Council takes a back scat in the municipal administration see ss. 4 7, si et ul. Section 54 brings the Government into the expenditure picture.
The municipal staff also is, in a way, under Government control (s. 71). • Money shall be spent by the municipality only according to budget provisions and budget estimates shall be submitted to Government for approval which has the power to modify them. Thus, the financial control over the corporation by Government is a statutory fac! t. Now we may consider the mode of raising tax revenue. Any non-traditional tax (i. e. which falls under s. 90(2) of the Act) has to be with the prior approval of Government. Indeed, affirmative directio11 to impose taxes may be issued by the Government to the local body and if the addressee is indifferent the Government itself may impose • the tax and the corporation shall levy such tax. Sub-section (6) en" ables Government to make other tax payments to municipal bodies. Municipal borrowings require government sanction, municipal accounts shall be audited by government auditors.
Chapter XXH provides for further government control upto even supersession of the corporation itself. Even the resolutions of corporations may be sus-pended by Government and its proceedings annulled or modified. There is a whole army of governmental minions in the department of local self-government to sit upon, check, oversee and control municipal doings that the elective element becomes a decorative parlour. This conspectus of provisions brings into bold relief the auaemic nature of municipal autonomy. Full-blooded units of self-government, reflecting full faith in decentralised democracy uninhibited by a hierarchy of bureauc. rats is the vision of Art. 40. While the Gandhian goal is of a shining crescent on a starry sky the sorry reality is that our municipalities vis-a-vis government are wan like a fullmoon at mid-day.
This study of the statutory scheme shows that, in large measure, municipa1l councils reign, municipal commissioners rule; local self-government is an experiment in directed democracy by the bureaucracy, Art. 40, notwithstanding. State Governments master-mind municipal administration in broad policies and even in smaller details and legally can suspend resolutions and supersede the organ itself. , Municipal legislation sanctions this Operation Mask. If pluralism and decentralisation are to strengthen our democracy more authority and autonomy, at least experimentally, must be vested in local bodies. To-day, prompt elections when periods expire are rare; councillors exist, debate, resolve, but power eludes them. Even so, municipal maya also counts ceremonially and otherwise. AVINDER SINGH v. PUNJAB (Krishna Iyer, J.
) 86 7 To set the record straight, we must state that many municipal bodies do exercise their limited powers properly and serve the public without nagging interference by Government officials. Municipalities are realitie! i, often precarious, though. This statutorily sanctified comprehensive oversight by Government weaken the assumption of Shri Tarkunde that State Governments know little of the needs and respond remotely to the pressures of the locality and that the guidelines stressed in the rulings cited above vanish when Government directly operates under s. 90(5). The finances, budgetary estimates and many aspects of the affairs of each municipal body, reach the Government, channelled through its minions, and, by force of statute, are approved, sanctioned, modified or reversed by the State Secretariat. So, there is not much force in the submission that under l s. 90(5) governmental action may be a blind man's buff, not intelli-gent appreciation. Secondly, under s.
90(5) Government acts to augmcrnt municipal revenues and so will, understandably, inform itself of the needs of the corporation and, on fiscal economics, 'of what the traffic will bear'. The statutory strategy also ensures this. First, a directive is given, obviously after considering relevant matters. Only if indifference or intractability is displayed, the fi'scal sword of s. 90(5) is unsheathed. Moreover, there is overall control by the legislature, sometimes, ineffective, sometimes meaningful. It. is familiar knowledge that there are a number of institutionalised means by which the legislature exercises supervision and control over municipal matters. Broadly speaking, they are : (a) through inter-relations, (b) by discussions and debates, (c) by approval or otherwise of rules and orders, and (d). by financial control when the budget is presented.
A study of the legislative proceedings in the various States of the country brings out many of these means of control (see Indian Administrative System, edited by Ramesh K. Arora & Co. Chapter 17). In a sense, the general municipal administration comes under fire in the House o'rt many occasions, including during the debate on the Governor's Ad-dress. Financial control and supervision by the legislators come up when budget proposals which contain allocation fo'r municipal adminiStration are presented to the House and at the time of the Appropria-tions Bill. Moreover, the Public Accounts Committee, the Estimates Committee and like other bodies also make functional probes into municipal administration-fiscal and other.
There may be a big gap between the power of control and its actual exercise but it is also a fact that in a general way the political echelons in Government and the bureaucracy in tum are influenced in their policies by the criticisms of the municipal administration on the floor of •J1e House and through other representations. We cannot, theJefore, dismiss the legal position that there is control by the Legislature over Government in its supervision of municipal administration therefore. delegated legislation cannot be said to be uncontrolled or unchecked by the delegator. I ·rhis discussion is of cdtica] in1portancc in vic\V of the argument put forward by Shri Tarkunde that when Government exercises power under s. 90(6) it is a law unto itself, unbridled and uncontrolled by the Legislature.
We may now refer to a few decisions which have been brought to our notice by counsel appearing for the municipal bodies and the State of Punjab to make out that the needs of municipalities and the pressures of local people are within the ken of the State ' Government and they also respond like municipal bodies and guide themselves in the manner corporations do. More importantly, excessive delegation stands negatived because of legislative control over Government. Even in the Liberty Cinema case, (supra) the control by Government over the municipal administration was relied upon . a·s a policy guideline and it is an a fortiori case if the Government itself takes action, responsible and responsive as it is to the elected representatives of the House. Great stress was laid on Papiah's case(') which dealt witl1 subordinate legislation elaborately and upheld the validity o'f a provision where, superficially viewed, too wide a power bad been delegated. Mathew, .. J.
speaking for the court, gave considerable latitude to the Legislature in delegating its power and referred to many prior rulings. He quotes Subba Rao, C. J. to say : "An over-burdened Legislature or one controlled by a powerful executive may unduly overstep the limits of delegation. It may not lay down any policy at all; It may declare its policy in vague and general terms; it may not set down any stan· dard for the guidance of the executive; it may confer an arbitrary power on the executive to change or modify the policy laid down by it, without reserving for itself any control over subordinate legislI! tion. This self-effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation. "(") (1) [1975] 3 S. C. R. 607. (2) Ibid. 611. ' > - AVINDER SINGH v. PUNJAB (Krishna Iyer, J. ) 869 Nevertheless, this observation was neutralised by another made by Hegde, J.
in Bishambhar Dayal(') : f "However much one might deplore the 'New Despotism' of the executive, the very complexity of the modern society and the demand it _makes· on its Government have set in motion forces which have made it absolutely necessary fonhe Legislatures to entrust more and more powers to the executive. Text book doctrines evolved in the 19th Century be-come out of date. " Mathew, J. proceeded to cover English cases and reached the conclusion : "The legislature may ~! so retain its control over its delegate by exercising its power of repeal. This was the basis on which the Privy Council in Cobb & Co. v. Kropp(') upheld the validity of delegation of the power to fix rates to the Commissioner Transport in that case. " (P.
613) The learned Judge quoted the Privy Council(") which held that the Legislature was entitled to use al)y agent or machinery that it considered for carrying out the object and the purpo·ses of the Acts and to use the Commissioner for Transport as its instrument to fix and re-cover the licence and permit fees, provided it preserved its own capacity intact and retained perfect control over him; that as it could at any time repeal the legislation and withdraw such authority and discretion as it had vested in him, it had not assigned, transferred or · abrogated its sovereign power to levy taxes, nor had it renounced or l abdicated its responsibilities in favour of a newly created legislative authority and that, accordingly, the two Acts were valid, Lord Morns of Borth-y-Gest said : "What they (the legislature) created by the passing of the Transport Acts could not reasonably be described as a new legislative power or separate legislative body armed with general leuislative authority (see R.
v. Burah, 1978) 3 A. C. 889)~ Nor did the Queoosland Legislature 'create and endow' with its own capacity a new legislative power not created by the Act to which it owes its own existence (see In re the Initiative and Referendum Act (1919) A. C. 945 at 946) . " (I) Sil• Ram Bishambhar Dayal v. State of l/. P. [1972] 2 S. C. R. 141. (2) [1967] I A. C. 141 (P. C. ). (3) [1975] 3 S. C. R. 614. 3-699SCil78 l 870 SUPREME COUllT REPORTS [1979] I s. c. R. The point to be emphasised-and this is rather crucial-is the statement of their Lordships that the legislatnre preserved its capacity ' ' intact and retained perfect control dver the Commissioner for Trans- • port inasmuch as it could at any time repeal the legislation and with· draw the authority and discretion it had vested in him, and, therefore, the legislature did not abdicate its functions. The proposition so stated is very wide and sweeping. By that standard, there is nothing unconstitutional about s. 90(5) of the Act.
In the course of the argument certain observations of this Court 1 were read to the effect that there was always a check by the courts on unconstitutional misuse of delegated power and that, in ifself without more, was good enough to make the delegation good. So stated, the proposition may be perhaps too wide to be valid; for any naked delegation may then be sustained by stating that the court is there as the watch-dog. We do not have to go that far in the present case and so we make no final pronouncement on this extension of delega-tions jurisprudence. We must state, while concluding that Punjab & Haryana High Court has overruled similar contentions on grounds which have our , approval [see AIR 1977 P&H 297 and 74 PLR (1972) P 149]. We are conscious that constitutional legitimation of unlimited power • of delegation to the Executive by the Legislature may, on critical occasions, be subversive of responsible government and erosive of democratic order.
That peril prompts us to hint at certain portents to our parfumentary system, not because they are likely new but because society may have to pay the price some day. As a back-drop to this train of thaughts a few statements from a working paper presented by Prof. Upendra Baxi of the Delhi Univer-sity at a recent seminar may be excerpted : " ... law making remains the, more or less, exclusive prerogative Of a small cross-section of elites. This necessarily affects both the quality of the law made as well its special communication, acceptance and cffectivity. It also reinforces the highly centralised system o'f power. It is time that we considered the desirability and feasibility of building into the law-making processes a substantial amount of public participation. " AVINDER SINGH v. PUNJAB (Krishna Iyer, !. ) 871 "People's participation in the enforcement and implemen-tation of the Jaw is also not actively sought, sponsored or • structured by the State ....
Equally oow is the idea that there should be a "social audit" of major legislations by the benefi-ciaries or, more generally, the consumers of legal justice. " A. " ... The situation in regard to delegated legislation the volume of which is immensely greater than th~! of usual legislation; is even more alarming. The Indian Parliament enac-ted from the period 1973 to 1977 a total of 302 laws; as against this the total number of statutory orders and rules passed in the same perldd was approximately 25 ,414. Corres- ) ponding figures for States and union territories are not just available but the number of rules issued under the delegated legislation powers may well be astronomical ...... " Plenary powers of law-making are entnisted to elected representatives. But the political government instructed by the bureaucracy, by and large, gets bills through with the aid of the thr~~-line whip.
Even otherwise, legislators are some times innocent of legal skills; and complex legislations call for considerable information and instruction. The law-making sequence JeaveLmuch to subordinate legislation which, in · practical terms, means surrender to the surrogate, viz. , the bureaucracy which occupies commanding heights within the Secretariat. The technocracy and the bureaucracy which mostly draft subordinate legislation are perhaps well-_meaning and well-informed but insulated from parliamentary audit, isolated from popular pressure and paper-logged most of the time. And units of local self-government are reduced ' to a para-babel mechanisms, wMt with a pyramid of officialdom above them. The core of Shri Tarkunde'Saigument, even though rejected in legal terms by force of precedents, has a realistic touch to the effect that municipal administration in the matter of taxation, if taken over by Government as under s.
90(5) of the Act, becomes administration by the barrel of the Secretariat pen. The doctrine of delegation, in its extreme positions, is fraught with democracy by proxy of a coterie, of which the nation, in its naivete, may not be fully cognizant. , TherefO're, the system of Jaw-making and performance auditing needs careful, yet radical, re-structuring, if participative, pluralist Government bv the People is not to be jettisoned. We have laid down the Jaw and obeyed the precedents but felt it necessary to Jay bare briefly the political portents implicit in the extent law, for action by the national leadership betimes. Who owns and operates India, that is Bharat ? Tbat disturbing interrogation beoo'mes deeply relevant A as we debate and decide the jurisprudence of delegation of p<lwpr and vicarious exercise and so we have pardonably ventured to make heuris-tic hints and to project new perspectives. The journey's end is in sight. The discussion has come to a close.
The notification suffers from no infirmity. The writ petitions stand B dismissed. Costs one set. (to the state) P. H. P. Petitions dismissed. .. ) •
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