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PETITIONER:

GWALIOR RAYON SILK MFG. (WVG.) CO. LTD.

Vs.

RESPONDENT:

THE ASSTT. COMMISSIONER OF SALES TAX & ORS.

DATE OF JUDGMENT21/12/1973

BENCH:

KHANNA, HANS RAJ

BENCH:

KHANNA, HANS RAJ

RAY, A.N. (CJ)

MATHEW, KUTTYIL KURIEN

ALAGIRISWAMI, A.

BHAGWATI, P.N.

CITATION:

1974 AIR 1660 1974 SCR (2) 879

1974 SCC (4) 98

CITATOR INFO :

RF 1975 SC1389 (11,12)

F 1975 SC1604 (3)

RF 1975 SC2299 (151)

RF 1976 SC 714 (42)

D 1976 SC1031 (29)

R 1982 SC 710 (55)

RF 1982 SC1126 (9)

R 1984 SC1130 (28)

R 1984 SC1194 (19,20,22)

F 1988 SC 567 (14)

RF 1989 SC 222 (4,9)

R 1990 SC 560 (13,16)

RF 1991 SC 672 (29)

ACT:

Central Sales Tax Act, 1956-S. 8(2) (b)-Whether it suffers

from the vice of excessive delegation.

HEADNOTE:

Sec. 8(2)(b) of the Central Sales Tax Act 1956, provides

that the tax payable by any dealer on his turnover, in so far

as it relates to the sale of goods the course of inter-state

trade or commerce, not falling within sub-sec. (1) in, case

of goods other than declared goods, shall be calculated at

the rate of ` per cent or at the rate applicable to the safe

or purchase, of such goods inside the appropriate state,

whichever is higher. etc.

The short question which arose for determination in these

four appeals was whether the provisions of sec. 8(2)(b) of

the Central Sales Tax Act, 1956 suffer from the vice of

excessive delegation because the parliament, in not fixing

the rate itself and in adopting the rate applicable to the

gate or purchase of goods inside the appropriate State had

not laid down any legislative policy and thus abdicated its

legislative function. The High Court answered this question

in the live and upheld the constitutional validity of those

provisions.

Dismissing the appeals,

HELD : (I) There is clear legislative policy which can be

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found in the provisions of Sec. 8 (2) (b) of the Central

Sales Tax. Act 1956. The ' Policy of the law in this

respect is that in case the rate of local sales tax be less

than 10 per cent in such ,in event, the dealer, if the case

does not fall within Sec. 8(1) of the Act ' should pay

Central Sales Tax at the rate of 10 per cent. If,

however the rate of , local sales tax for the goods

concerned be more than 10 per cent, in that event, the

policy is that the rate of the Central Sales Tax shall also

be the same as (bat of the local sales tax for the said

goods. The object of the law thus is that the rate of the

Central Sales tax shall in no event be less than the rate of

local sales tax for the goods in question though it may

exceed the local rate in case that rate be less than 10 per

cent. [984 A]

For example, if the local rate of tax in the appropriate

State for the non-declared goods be 6 per cent, in such an

event a dealer, whose case is not covered by sec. 8(1) of

the Act, would have to pay Central Sales Tax at a rate of 10

per cent. In case, however, the rate of local sales tax for

such goods be 12 per cent the rate of Central Sales tax

would also be 12 per cent because otherwise if the rate of

Central Sales Tax were only 10 per cent, the unregistered

dealer who purchases goods in the course of inter-State

trade would be in a better position than an intrastate

purchases and there would be no disincentive to the- dealers

to desist from selling goods to unregistered purchasers in

course of inter-State trade. The object of' the law

apparently is to deter inter-State sales to unregistered

dealers as such inter--State Sales would facilitate evasion

of tax. [984 C]

(2) It is also not possible to fix the maximum rate under or

Sec. 8(2) (b) because the local sales tax varies from State

to State. The rate of local sales tax can also be changed

by the State legislatures from time to time. It is not

within the competence of the parliament to fix the maximum

rate of local Sales tax. The fixation of the rate of local

Sales tax is essentially a matter for the State legislatures

and the parliament does not have any control in the matter.

The parliament has therefore necessarily, if it wants to

prevent evasion of payment of Central Sales Tax, to tack the

rate of such tax with that of local sales tax, in case the

rate of local sales tax exceeds t particular limit. [984 E]

State of Madras V. N.K. Nataraja Mudaliar, [1968] 3 S.C.R.

829, referred to and

748SCI/174

880

B. Sharma Rao v. The Union Territory of

Pondicherry, [1967] 2 S.C.R. 650 explained and

distinguished..

(3) The growth of the legislative power of the

executive is a significant development of the

twentieth century. The theory of laissez-faire has

been given a go-by and large and comprehensive

powers are being assumed by the State with a view

to improve social and economic well-being of the

people. Most of the modern socioeconomic

legislations passed by the legislature Jay down the

guiding principles and the legislative policy. The

legislatures because of limitation imposed upon by

the time factor hardly go into matters of detail.

Provision is, therefore made for delegated

legislation to obtain flexibility, elasticity,

expedition and opportunity for experimentation.

The practice of empowering the Executive to make

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subordinate legislation within a prescribed sphere

has evolved out of practical necessity and

pragmatic needs of a modern welfare state. [890 D]

(4) In questions of delegated legislation, the

principle which has been well established is that

the legislature must lay down the guidelines,

principles or policy for the authority to whom

power to make subordinate legislation is entrusted.

The correct position of law thus is that an

"unlimited right of delegation is not inherent in

the legislative power itself. This is not

warranted by the provisions of the Constitution and

the legitimacy of delegation depends entirely upon

its being used is in ancillary measure which the

legislature considers to be necessary for the

purpose of exercising its legislative powers

effectively and completely. The legislatures must

retain in its own hands the essential legislative

functions which consist in declaring the

legislative policy and laying down the stand which

is to be enacted into a rule of law, and what can

be delegated is the task of subordinate legislation

which by its very nature is ancillary to the

statute which delegates the power to make it

provided the legislative policy is enunciated with

sufficient clearness or a standard laid down. The

courts cannot and should not interfere with the

discretion that undoubtedly rests with the

legislature itself in determining the extent of

delegation necessary in a particular case." [892 C]

In Delhi Laws Act 1912, [1951] S.C.R. 747 and

Municipal Corporation of Delhi v. Birla Mills

[1968] 3 S.C.R. 231, Devi Das Gopal Krishan v.

State of Punjab A.I.R. 1967 S.C. 1895; Harishankar

Bagla v. The State of Madhya Pradesh [1955] 1

S.C.R. 380; Pandit Banarasi Das Bhagat v. The State

of Madhya Pradesh & Ors. [1959] S.C.R. 427;

Corporation of Calcutta & Anr. v. Liberty Cinema

[1965] 2 S.C.R. 477 and Sita Ram Bishembhar Dayal &

Ors. v. State of U.P. & Others [1972] 2 S.C.R.

141, referred to.

It is not possible to subscribe to the view that if

the legislature can repeal an enactment, as it

normally can, it retains enough control over the

authority making the subordinate legislation and,

as such, it is not necessary for the legislature to

lay down legislative policy, standard or guidelines

in the statute. The acceptance of this view would

lead to startling results. Supposing the

Parliament tomorrow enacts that as the crime

situation in the country has deteriorated, criminal

law to be enforced in the country from a particular

date would be such as is framed by an officer

mentioned in the enactment. Can it be said that

there has been no excessive delegation of

legislative power even though the Parliament omits

to lay down in the statute any guideline or

legislative policy for the making of such criminal

law ? The vice of such an enactment cannot be

ignored or lost sight of on the ground that if the

Parliament does not approve the law made by the

officer concerned, it can repeal the enactment by

which that officer was autborised to make the law,

[894 H-895 C]

(per C.J. and Mathew J :)

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(1) Delegation is not handing over or transference

of a power from one person or body of persons to

another. Delegation may be defined as the

entrusting, by a person or body of persons, of the

exercise of a power residing in that person or body

of persons, to another person or body of persons,

with complete power of revocation or amendment,

remaining in the grantor or delegator. [899-G]

(2) Delegation often involves the granting of

discretionary authority to another, but such

authority is purely derivative. The ultimate power

always remains in the delegator and is never

renounced. [900 A]

Wills J in Huth v. Clarke, [1890] 25, Q.B.D. 391,

395 and Hodge v. The Queen [1883] 9 A.C. 117.

881

(3)What is prohibited, is the conferment of arbitrary power

by the legislature upon a subordinate body without reserving

to itself control over that body and the self-efacement of

legislative power in favour of another agency either in

whole or in part. In other words, the legislature should

not abdicate its essential function. [904 C]

Devi Das Gopal Krshan v. State of Punjab [1967] 3 S.C.R.

557, Corporation of Calcutta & another v. Liberty Cinema,

[1965] 2 S.C.R. 477; Municipal Board, Nagpur v. Raghuvendra

Kripal, [1966] 1 S.C.R. 950; The Municipal Corporation of

Delhi v. Birla Cotton and Spinning and Weaving Mills, [1968]

3 S.C.R. 251 and Sita Ram Bishembar Dayal v. State of U.P.

[1972] 2 S.C.R. 141, referred to.

(4)The concept of 'abdication' seems no less vague,

fluctuating and uncertain than the "transfer to others of

the essential legislative functions". Some writers think

that a legislature does not 'abdicate' unless it withdraws

from the field and surrenders its responsibility therefor;

and to some, there seems to be 'abdication' whenever a

legislature while remaining in the field and retaining its

responsibility therefore entrusts to others the formulation

of policy, otherwise than with a definite standard or

purpose laid down by it. [904 D-E]

In re Gray, 57 S.C.R. 150; In re Initiative and Referendum

Act, [1919] A.C. 935; In Shannon v. Lower Mainland Dairy

Products Board, [1938] A.C. 708 P.C.; R. v. Burah [1878] 5

I.A. 178; In Re the Delhi Laws Act 1912 etc. [1951] S.C.R.

747.referred to.

(5) The crucial point is, whether the legislature preserved

its capacity intact and retained perfect control over the

delegate inasmuch as it could at any time repeal the

legislation and withdraw the authority and discretion it bid

vested on the delegate. [906 B]

(6) Delegation of 'law making' power is the dynamo of modem

government. Delegation by the legislature is necessary in

order that the exertion of legislative power does not become

a futility. Today, while theory still affirms legislative

supremacy, power floats back increasingly to the Executive.

One must not take lightly and say that there can be transfer

of legislative power under the guise of delegation which

would tentamount to abdication. At the same time, one must

be aware of the practical reality that the parliament cannot

go into details of all legislative matters. (906 D-E]

(7) The making of law is only a means to achieve a purpose.

It is not a end in itself. That end can be attained by the

legislature making the law. But many topics or subjects of

legislation are such that they require expertise, technical

knowledge and a degree of adaptability to changing

situations etc., which parliament might not possess and,

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therefore this end is better secured by extensive delegation

of legislative power. The legislative process would

frequently bog down if a legislature were required to

appraise before hand the myriad situations to which it

wishes a particular policy to be applied and to formulate

specific rules for each situation. [906 G]

(8)In the present case, by Sec. 8 (2) (b) of the Act,

parliament has not delegated any power to the State

legislatures. Therefore, the question was whether

parliament had abdicated its legislative function when it

chose to adopt the rate to be fixed by the state

legislatures for local sales. In the present case,

parliament bad fixed the rate of tax on inter-state sales of

the description specified in s. 8(2)(b) of the Act at the

rate fixed by the appropriate state legislature is respect

of intra-state-sales with a purpose, namely to chech evation

and to prevent discrimination between residents of different

states. Further, in the instant case. parliament can repeal

the provisions of s. 8(2)(b) adopting a higher rate of tax

fixed by the appropriate state legislature in respect of

intrastate sales. If parliament can repeal the provision,

there can be no objection on the score that parliament has

abdicated its legislative function. It retains its control

over the fixation of the rate itself. [911 H]

Cobb & Co. Ltd. v. Kropp. [1967] 1 A.C. 141, referred to.

Therefore there is no excessive delegation of legislative

power as contended by the petitioner.

882

JUDGMENT:

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 212-215 of

From the judgment and order dated the 29th August, 1972 of

the Madhya Pradesh High Court at Jabalpur, in Misc.

Petitions Nos. 191 of 1968, 30 of 1970, 63. and 64 of 1972.

K. Sen, R. V.Patel Biswar up Gupte, R. N. Jhujhunwala and

U. K. Khaitan, for the appellants (in C. A. 212-215).

I. N. Shroff, for respondent Nos. 1-3 (in C.A. 212-215).

Sen and S. P. Nayar, for respondent No. 4 (in C.A. 212). S.

P. Nayar, for respondent No. 4 (in C.A. 213-215).

The judgment of U. R. Khanna, J. A. Alagiriswami and P. N.

Bhagwati, JJ. was delivered by Khanna J. K. K. Mathew, J.

gave a separate Opinion, on behalf of A. N. Ray, C. J. and

himself.

KHANNA, J. The short question which arises for determination

in these four appeals on certificate against the judgment of

the Madhya Pradesh High Court is whether the provisions of

section 8(2) (b) of the Central Sales Tax Act, 1956 (Act 54

of 1956) (hereinafter referred to as the Act). suffer from

the vice of excessive delegation. The High Court answered

this question in the negative and upheld the constitutional

validity of those provisions.

Sub-sections (1), (2) and (4) of section 8 of

the Act read as under

"(1) Every dealer, who in the course of inter-

Estate trade or commerce-

(a) sells to the Governmentany goods; or

(b) sells to a registered dealer other than

the Government goods of the description

referred to in subsection (3);

shall be liable to pay tax under this Act,

which shall, be three per cent of his

turnover.

(2)The tax payable by any dealer on his

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turnover in so far as the turnover or any part

thereof relates to the sale of goods in the

course of interstate trade or commerce not

falling within sub-section (1)-

(a) in the case of declared goods, shall be

calculated at the rate applicable to the sale

or purchase of such goods inside the

appropriate State; and

(b) in the case of goods other than declared

goods, shall be calculated at the rate of ten

per cent or at the rate applicable to the sale

or purchase of such goods inside the

appropriate State, whichever is higher;

and for the purpose of making any such

calculation any such dealer shall be deemed to

be a dealer liable to pay tax under

883

the sales tax law of the appropriate State,

notwithstanding that he, in fact, may not be

so liable under that law.

(4)The provisions of sub-section (1) shall

not apply to any sale in the course of inter-

State trade or commerce, unless the dealer

selling the goods furnishes to the prescribed

authority in the prescribed manner-

(a) a declaration duly filled and signed by

the registered dealer to whom the goods are

sold containing the prescribed Particulars in

a prescribed form obtained from the.

prescribed authority; or

(b) if the goods are sold to the Government,

not being a. registered dealer, a certificate

in the prescribed form duly filled and signed

by a duly authorised officer of Government."

It has been argued on-behalf of the appellants that the,

fixation of rate of tax is a legislative function and as the

Parliament has, under section 8(2) (b) of the Act, not fixed

the rate of central sales tax but has adopted the rate

applicable to the sale or purchase of goods inside the

appropriate State in case such rate exceeds 10 per cent, the

Parliament has abdicated its legislative function. The

above provision is consequently stated to be

constitutionally invalid because of excessive delegation of

legislative power. This contention, in our opinion is not

well founded. Section 8 (2) (b) of the Act has plainly been

enacted with a view to prevent evasion of the payment of the

central sales tax. The Act prescribes a low rate of tax of

3 per cent in the case of inter-State sales only if the

goods are sold to the Government or to a registered dealer

other than the Government In the case of such a registered

dealer, it is essential that the goods should be of the

description mentioned in sub-section (3) of section 8 of the

Act. In order, however, to avail of the benefit of such a

low rate of tax under section 8(1) of the Act, it is also

essential that the dealer selling the goods should furnish

to the prescribed authority in the prescribed manner a

declaration duly filled and signed by the registered dealer,

to. whom the goods are sold, containing the prescribed

particulars in prescribed form obtained from the prescribed

authority, or if the goods are sold to the Government not

being a registered dealer, a certificate in the prescribed

form duly filled and signed by a duly authorised officer of

the Government. In cases not falling under subsection (1),

the tax payable by any dealer in respect of inter-State sale

of declared goods is the rate applicable to the sale or

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purchase of such goods inside the appropriate state vide

section 8(2) (a) of the Act. As regards goods other than

the declared goods, section 8(2) (b) provides that the tax

payable by any dealer- on the sale of such goods in the

course of inter-State trade or commerce shall be calculated

at the rate of 1 0 per cent or at the rate applicable to the

sale or purchase of such goods inside the appropriate State,

whichever is higher.

The question with which we are concerned is whether the

Parliament in not fixing. the rate itself and in adopting

the rate applicable to the sale or purchase of goods inside

the appropriate State has not laid down any legislative

policy and has abdicated its legislative function.

884

In this connection we are of the view that a clear

legislative policy can be found in the provisions of section

8(2) (b) of the Act. The policy of the law in this respect

is that in case the rate of local sales tax be less than 10

per cent, in such an event the dealer, if the case does not

fall within section.8(1) of the Act, should pay central

sales tax at the rate of 10 per cent. If, however, the rate

of local sales tax for the goods concerned be more than 10

per cent, in that event the policy is that the rate of the

central sales tax shall also be the same as that of the

local,sales tax for the said goods. The object of law thus

is that the rate of the central sales tax shall in no event

be less than the rate of local sales tax for the, goods in

question though it may exceed the local rate in case that

rate be less than 10 per cent. For example, if the local

rate of tax in the appropriate State for the non-declared

goods be 6 per cent, in such an event a dealer, whose case

is not covered by section 8(1) of the Act would have to pay

central sales tax at a rate of 10 per cent. In case,

however, the rate of local sales tax for such goods be 12

per cent, the rate of central sales tax would also be 12 per

cent because otherwise, if the rate of central sales tax

were only IO per cent, the unregistered dealer who purchases

goods in the course of inter-State trade would be in a

better position than an intra-state purchaser and there

would be no disincentive to the dealers to desist from

selling goods to unregistered purchasers in the course of

inter-State trade. The object of the law apparently is to

deter inter-State sales to unregistered dealers as such

inter-State sales would facilitate evasion of tax. It is

also not possible to fix the maximum rate under section 8(2)

(b) because the rate of local sales tax varies from State to

State. The rate of local sales tax can also be changed by

the State legislatures from time to time. It is not within

the competence of the Parliament to fix the maximum rate of

local sales tax. The fixation of the rate of local sales

tax is essentially a matter for the State Legislatures and

the Parliament does not have any control in the matter, The

Parliament has therefore necessarily, if it wants, to

prevent evasion of payment of central sales tax, to tack the

rate of such tax with that of local sales tax, in case the

rate of local sales tax exceeds a particular limit. Dealing

with the provisions of section 8(2) (b) of the Act, Hegde J.

in the case of State of Madras v. N. K. Nataraja Mudaliar(1)

observed

"Then we come to el. (b) of s. 8 (2), which deals with goods

other than declared goods. Here the law at the relevant

time was that the tax shall be calculated at the rate of

seven percents of the turnover or at the rate applicable to

sale or purchase of such goods inside the appropriate State,

whichever is higher. As could be seen from the report of

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the Taxation Enquiry Committee, the main reason for this

provision was to prevent as far as possible the evasion of

sales tax. The Parliament was anxious that inter-State

trade should be canalised through registered dealers over

whom the appropriate government has a great deal of control.

It is not very easy for. them to evade tax. A measure which

is intended to check the evasion of tax is undoubtedly a

valid measure. Further, inter-State trade carried on

through

(1) [1968] 3 SCR 829.

885

dealers coming within s' 8 (2), must be in the

very nature of things very little. It is in

public interest to see that in the guise of

freedom of trade, they do not evade the

payment of tax. If the sales tax they have to

pay is as high or even higher than intre-State

sales tax thin they will be constrained to

register themselves and pay the tax

legitimately due. The impact of this

provision on inter-State trade is bound to be

negligible, but at the same time it is an

effective safeguard against evasion of tax."

The adoption of the rate of local, sales tax for the.

purpose of the central, sales tax as applicable in a

particular State does not show that the Parliament has in

any way abdicated its legislative function. Where a law of

Parliament provides that the rate. of central sales tax

should be IO per cent. or that of the local sales tax,

whichever be higher, a definite legislative policy can be

discerned in such a law, the policy being that the rate of

central sales tax should in no event be less than the rate

of local sales tax. In such a case, it is as already stated

above, not possible to mention the precise figure of the

maximum rate of central sales tax in the law made by the

Parliament because such a rate is linked with the rate of

local sales tax which is prescribed by the State

Legislatures. The Parliament in making such a law cannot be

said to have indulged in self-effacement. On the contrary,

the Parliament by making such a law effectuates its

legislative policy, according to which the rate of central

sales tax should in certain contingencies be not less than

the rate of the local sales tax in the appropriate State. A

law made by Parliament. containing the above provision

cannot be said to be suffering from the vice of excessive

delegation of legislative function. On the contrary, the

above law incorporates within itself the necessary

provisions to carry out the objective of the legislature,

namely, to prevent evasion of payment of central sales tax

and to plug possible loopholes.

There is, in our opinion, marked difference between the

enactment of a law which was struck down by this Court in

the case of B. Shama Rao v. The Union Territory of

Pondicherry(1) and that contained in section 8 (2) (b) of

the Central Sales Tax Act. In Shama Rao's case the

Legislative Assembly for the Union Territory of Pondicherry

passed the Pondicherry General Sales Tax Act which was

published on June 30, 1965. Section 1(1). of the Act

provided that it would come into force on such date as the

Pondicherry Government may by notification appoint and

section 2(1) provided that the Madras General Sales Tax Act,

1959, as in force in the State of Madras immediately before

the commencement of the Pondichery Act, shall be extended to

Pondicherry subject to certain modifications. The

Pondicherry Government issued a notification on March 1,

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1966, appointing April 1, 1966 as the date of commencement

of he Pondicherry Act. Prior to the issue of the

notification, the Madras Legislature had amended the Madras

Act and. consequently it was the Madras Act as amended tip

to April 1, 1966 which was brought in force in Pondicherry.

A

(1) [1967] 2 SCR 650.

886

Petition was thereupon filed challenging the validity of the

Pondicherry Act. During the pendency of that petition, the

Pondicherry Legislature passed Amendment Act 1 3 of 1966

whereby section 1 (2) of the principal Act was amended to

read that the latter Act would come into force on April 1,

1966, and that all proceedings and action taken under that

Act would be deemed valid as if the principal Act as amended

had been in force at all material times. 'It was held by

majority by this Court that the Act of 1965 was void and

still-born and could not be revived by the Amendment Act of

1966. According to the Court, the Pondicherry Legislature

not only adopted the Madras Act as it stood at the date when

it passed the principal Act, but in effect it also enacted

that if the Madras Legislature were to amend its Act prior

to the notification of its extension to Pondicherry, it

would be the amended Act that would apply. The Legislature,

it was held, at that stage could not anticipate that the

Madras Act would not be amended nor could it would be

carried out, whether they would character or whether they

would be suitable in Ponies the opinion of the Court, was

that the Pondicherry Legislature accepted the amended Act

though it was and could provisions of the amended Act would

be. There Court, in these circumstances a total surrender

tax legislation by the Pondicherry Assembly in favour of the

Madras Legislature.

It would appear from the above that the reason which

prevailed with the majority in striking down the Pondicherry

Act was the total surrender in the matter of sales tax

legislation by the Pondicherry Legislature in favour of the

Madras Legislature. No such surrender is involved in the

present case because of the Parliament having adopted in one

particular respect the rate of local sales tax for the

purpose of central sales tax. Indeed as mentioned earlier,

the adoption of the local sales tax is in pursuance of a

legislative policy induced by the desire to prevent evasion

of the Payment of central sales tax by discouraging inter-

State sales to unregistered dealers. No such policy could

be discerned in the Pondicherry Act which was struck down by

this Court.

Another distinction, though not very material, is that in

the Pondicherry case the provisions of the Madras Act along

with the subsequent amendments were made applicable to an

area which was within the Union Territory of Pondicherry and

not in Madras State. As against that, in the present case

we find that the Parliament has adopted the rate of local

sales tax for certain purposes of the Central Sales Tax Act

only for the territory of the State for which the

Legislature of that State had prescribed the rate of 'sales

t, x. The central sales tax in respect of the territory of a

State is ultimately assigned to that State under article 269

of the Constitution and is imposed for the benefit of that

State. We would, therefore, hold that the appellants cannot

derive much assistance from the above mentioned decision of

this Court.

It may be stated that this Court in two cases has upheld the

validity of statute by which the legislature left the

fixation of rates to another body. This was, however,

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subject to the rider that the legislature

887

must provide guidance for such fixation. In the case of

Corporation of Calcutta & Anr. V. Liberty Cinema(1) while

dealing with section 548 of the Calcutta Municipal Act

relating to the levy of licence fee, on cinema houses Sarkar

J (as the then was) speaking for the majority after

referring to the earlier case of Pandit Banarsi Das Bhanot

v. The State of Madhya Pradesh(2) observed:

"This therefore is clear authority that the

fixing of rates may be left to non-legislative

body. No doubt when the power to fix rates of

taxes is left to another body, the legislature

must provide guidance for such fixation. The

question then was much guidance provided in

the Act? We first wish, to observe that the

validity of the guidance cannot be tested by a

rigid uniform rule. that must demand on the

object of the Act giving power to fix the

rate."

In Municipal Corporation of Delhi v. Birla Cotton, Spinning

and, Weaving Mills Delhi & Anr.(3) this Court dealt with the

provisions of sections 113 and 150 of the Delhi Municipal

Corporation Act in the context of levy of certain taxes,

including tax on consumption or sale of electricity. One of

the questions which arose for determination in that case was

with section- 150, of the above mentioned Act transgressed

the limits of permissible delegation. According to that

section, the Municipal Corporation may at a meeting pass a

resolution for the levy of any of the taxes specified in

sub-section (2) of section 113 defining the maximum rate of

tax to be levied, the class or classes of persons or the

description of articles and properties to be taxed, the

system of assessment to be adopted and the exemptions. if

any, to ranted. Such a resolution has to be sanctioned by

the Central Government and thereafter the Corporation has to

pass a second resolutions determining subject to the maximum

rate, the actual rate of tax. Wanchoo CJ., Hidayatullah,

Sikri, Ramaswami and Shelat JJ. upheld the validity of the

above section, while Shah and Vaidialingam JJ.. dissented

and held that section 150(1) of the; Act was void because of

excessive delegation of legislative authority to the

Corporation. Wanchoo CJ. and Shelat J. on a consideration

of the various of the Act held that the power conferred by

section 150 on provisions ration was not unguided and could

not be said to amount to excessive delegation. After

referring to the earlier authorities, Wanchoo CJ. speaking

for himself and Shelat J. observed :

"A review of these authorities therefore leads

to the. conclusion that so far as this Court

is concerned the principle is well established

that essential legislative function consists

of the determination of the legislative

policy, and its formulation as a binding rule

of conduct and cannot be delegated by the

legislature. Nor is there any unlimited right

of delegation inherent in the legislative

power itself. This is not

(1) [1965] 2 SCR 477. (2) [1959] SCR 427-

(3) [1968] 3 SCR 231.

888

warranted by the provisions of the

Constitution. The legislature must retain in

its own hands the essential legislative

functions and what can be delegated is the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 33

task of subordinate legislation necessary for

implementing the purposes and objects of the

Act. Where the legislative policy is

enunciated with sufficient clearness or a

standard is laid down, the courts should not

interfere. What guidance should be given and

to what extent and whether guidance has been

given in a particular case at all depends on a

consideration of the provisions of the

particular Act with which the Court has to

deal including its preamble. Further it

appears to us that the nature of the body to

which delegation is made to also a factor to

be taken into consideration in determining

whether there is sufficient guidance- in the

matter of delegation."

Hidayatullah J. (as he then was) speaking for

himself and Ramaswami J. observed :

"Once it is established that the legislature

itself has willed that a particular thing be

done and has merely left the "execution of it

to a chosen instrumentality (provided that it

has not parted with its control) there can be

no question of excessive delegation. If the

delegate acts contrary to the wishes of the

legislature the legislature can undo what the

delegate has done."

It was further observed

"To insist that the legislature should provide

for every matter connected with municipal

taxation would make municipalities mere tax

collecting departments and not self,governing

bodies which they are intended to be.

Government might as well collect taxes and

make them available to the municipalities.

That is not a correct reading of the history

of Municipal Corporations and other self-

governing institutions in our country."

Sikri J. (as he then was) observed

"I can see no sign of abdication of its

functions by Parliament in this Act. On the

contrary Parliament has constituted the

Corporation and prescribed its duties and

powers in great deal.

But assuming I am bound by authorities of this

court to test the validity of s.113(2)(d) and

s.150 of the Act by ascertaining whither a

guide or policy exists in the Act, I find

adequate guide or policy in the expression

'purposes of the' Act' in S. 113. The Act has

pointed out the objectives or the results to

be achieved and taxation can be levied only

for the purpose of, achieving the objectives,

or the results. This, in my view, is

Sufficient guidance especially to a self-

governing body like the Delhi Municipal

Corporation. It is necessary to rely an the

safeguards mentioned by the learned Chief

Justice to sustain the delegation.".

889

Shah J. (as he then was) speaking for himself

and Vaidialingan J. after referring to the

earlier authorities observed

"On a review of the cases the following

principles appear to be well-settled : (i)

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Under the, Constitution the Legislature has

plenary powers within its allocated field;

(ii) Essentiallegislative function cannot be

delegated by the Legislature,that is, there

can be no abdication of legislative, function

orauthority by complete effacement, or

even partially in respect of a particular

topic or matter entrusted by the Constitution

to the Legislature-; (iii) Power to make sub-

sidiary or ancillary legislation may however

be. entrusted by the Legislature to another

body of its choice, provided there is

enunciation of policy, principles or standards

either expressly or by implication for the

guidance of the delegate in that behalf.

Entrustment of power without guidance amounts

to excessive delegation of legislative

authority; (iv) Mere authority to legislate on

a particular topic does not confer authority

to delegate its power to legislate on that

topic to another body. The power conferred

upon the Legislature on a topic is

specifically entrusted to that body, necessary

intendment of the constitutional provision

confers that power that it shall not be

delegated without laying down principles,

policy, standard or guidance to another body

unless the Constitution expressly nation; and

(v) the taxing provisions are not these

rules."

It was further observed

"The Constitution entrusts the legislative

functions to the legislative branch of the

State and directs that the functions shall be-

performed by that body to which the Consti-

tution has entrusted and not by some, one else

to whom the, Legislature at a given time

thinks it proper to delegate the function

entrusted to it. A body of experts in a

particular branch of undoubted integrity or

special competence may Probably be in a better

position to exercise the power of legislation

in that branch, but Constitution has chosen to

invest the elected representatives of the

people to exercise the power of legislation,

and not to' such bodies of experts. Any

attempt on the part of the experts to usurp,

or of the representatives of the people to

abdicate the functions vested in the

legislative branch is inconsistent with the

constitutional scheme. Power to make

subordinate or ancillary legislation may

undoubtedly be conferred upon a delegate, but

the Legislature must in conferring that power

disclose the policy, principles or standards

which are to govern the delegate in the

exercise of that power so as to set out a

guidance. Any delegation which transgresses

this limit infringes the constitutional

scheme."

After referring to the provisions of the Delhi Municipal

Corporation Act, Shah and Vaidialingam JJ. held that the

delegation could not

890

be upheld merely because of the. special status, character,

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competence or capacity of the delegate or by reference to

the provisions made in the statute to prevent abuse by the

delegate of its authority. Shah and Vaidialingam JJ.

accordingly came to the conclusion that Section 150(1) was

void as it permitted excessive delegation of legislative

authority to the Corporation.

It would appear from the above that not only was the

constitutional validity of section 150 of the Delhi

Municipal Corporation Act upheld by the majority, the

majority of the judges also 'expressed the view that it was

essential for the legislature to lay down the legislative it

policy and standards before could delegate the task of

subordinate legislations to another body.

We find ourselves unable to agree, with the view. which has

been canvassed during the course of arguments that if a

legislature confers power to make subordinate or ancillary

legislation upon a delegate, the legislature need not

disclose any policy, principle or standard which might

provide guidance for the delegate in the exercise of that

power.

It may be stated at the outset that the growth of the

legislative powers of the executive is a significant

development of the twentieth century. The theory of

laissez-faire has been given a go-by and large and

comprehensive powers are being assumed by the State with a

view to improve social and economic well-being of the

people. Most of the modern socioeconomic legislations

passed by the legislature lay down the guiding principles

and the legislative policy. The legislatures because of

limitation imposed upon by the time factor hardly go into

matters of detail. Provision is, therefore, made for

delegated legislation to obtain flexibility, elasticity,

expedition and opportunity for experimentation. The

practice of empowering the executive to make subordinate

legislation within a prescribed sphere has evolved out of

practical necessity and pragmatic needs of a modern welfare

state. At the same time it has to be borne in mind that our

Constitution-makers have entrusted the power of legislation

to the representatives of the people, so that the said power

may be exercised not only in the name of the people but also

by the people speaking through their representatives. The

rule against excessive delegation of legislative authority

flows from and is a necessary postulate of the sovereignty

of the people. The rule contemplates that it is not

permissible to substitute in the matter of legislative

policy the views of individual officers or other

authorities, however competent they may be, for that of the

popular 'will as expressed by the representatives of the

people. As observed on page 224 of Vol. 1 in Cooley's

Constitutional Limitations, 8th Ed.

"One of the settled maxims in constitutional

law is, that the power conferred upon the

legislature to make laws cannot be delegated

by that department to any other body or

authority. Where the sovereign power of the

State has located the authority, there it must

remain; and by the constitutional agency done

the laws must be Made until the constitution

891

Itself is changed. The power to whose

judgment, wisdom and patriotism this high

prerogative has been intrusted cannot relieve

itself of the responsibility by choosingother

agencies upon which the power shalt be

devoted, nor can it substitute the judgment,

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wisdom, and patriotism of any other body for

those to which atom the people have seen fit

to confide this sovereign. trust."

According to John Locke when, parliamentary representatives

have been chosen and the, authority to make laws has been

delegated to them,, they have no right, to redelegate it.

As against that Jeremy Renthas in. The Limits of

Jurisprudence Defined distinguishes between laws which

belong to the legislator by conception, being his work

alone, and laws which belong to him by proadoption, being

the joint work of the legislator and the 'subordinate power

holder'. In the latter case, he says, the legislator

'sketches out a sort of imperfect mandate which he leaves it

to the subordinate holder to fill up'. To economise its own

time and to take advantage of export skill in

administration, parliament is content to lay down principles

and to leave the details (frequently experimental or

requiring constant adjustment in the light of experience) to

some responsible minister or public body. (see Foreword by

Sir Cecil Carr to Hewitt's The Control of Delegated

Legislation, 1953 Ed.).

The Constitution, as observed by this Court in the case of

Devi Dass Gopal Krishan v. State of Punjab(1) confers a

power and imposes duty on the legislature to make laws. The

essential legislative function is the determination of the

legislative policy and its formulation as a rule of conduct.

Obviously it cannot abdicate its functions in favour of

another. But in view of the multifarious activities of a

welfare, State, it cannot presumably work out all the

details to suit the varying aspect of a complex situation.

It must necessarily delegate the working out of details to

the executive or any other agency. But there is danger

inherent in such a process of delegation. 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 standard 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

legislation. This self effacement of legislative power in

favour of another agency either in whole or in part is

beyond the permissible limits of delegation. It is for a

Court to hold on a fair, generous and liberal construction

of an impugned statute whether the legislature exceeded such

limits.

The question as to the limits or permissible delegation of

legislative power has arisen before this Court in a number

of cases. Those cases were reviewed at length in the

judgments of Wanchoo CJ. and Shah J. in the case of

Municipal Corporation of Delhi v. Birla Mills (supra) and

they summed up the conclusions or principles which had been

(1) AIR 1967 S.C, 1895.

892

established by those cases. Those conclusions or principles

have- already been reproduced above.

The matter came up for the first time before, this Court In

re Delhi Laws Act, 1912.(1) Although each one of the learned

Judges who beard that case wrote a separate judgment, the

view which emerged from the different judgments was that it

could not be said that an unlimited right of delegation was

inherent in the legislative power itself. This was not

warranted by the provisions of the Constitution, which

vested the power of legislation either in Parliament or

State legislatures. The legitimacy of delegation depended

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 33

upon its being vested as an ancillary measure which the

legislature considered to be necessary for the purpose of

exercising its legislative powers effectively and

completely. The legislature must retain in its own hands

the essential legislative function. Exactly what

constituted "essential legislative function" wag difficult

to define in general terms, but this much was clear that the

essential legislative function must at least consist of

the,., determination of the legislative policy and its

formulation as a binding rule of conduct. Thus where the

law passed by the legislature declares the legislative

policy and lays down the standard which is enacted into a

rule of law, it can leave the task of subordinate

legislation like, the making of rules, regulations or bye-

laws which by its very nature is ancillary to the statute to

subordinate bodies. The subordinate authority must do so

within the framework of the law which makes the delegation,

and such subordinate legislation has to be consistent with

the law under which it is made and cannot go beyond the

limits of the policy and standard laid down in the law. As

long as the legislative policy is enunciated with sufficient

clearness or a standard is laid down, the courts should not

interfere with the discretion that undoubtedly rests with

the legislature itself in determining the extent of

delegation necessary in a particular case (see observations

of Wanchoo CJ. in Municipal Corporation of Delhi v. Birla

Mills, Supra).

In Harishankar Bagla v. The State of Madhya Pradesh(2) this

Court dealt with the validity of clause 3 of the Cotton

Textile (Control of Movement) Order, 1948 promulgated by the

Central Government under section 3 of the Essential Supplies

(Temporary Powers) Act, 1946. While upholding the

validity--of the impugned clause, this Court observed that

the legislature must declare the policy of the law and the

legal principles which are to control any given cases and

must provide a standard to guide the officials or the body

in power to execute the law, and where the legislature has

laid down such a principle in the Act and that principle is

the maintenance or increase in supply of essential

commodities and of securing equitable distribution and

availability at given prices, the exercise of the power was

valid.

In Pandit Banarsi Das Bhanot v. The State of Madhya Pradesh

& ors. (supra) Venkatarama Aiyar J. speaking for majority

observed

(1) [1951] SCR 747. (2) [1955] 1 SCR 380.

893

".... the authorities are clear that it is not

unconstitutional for the legislature to leave

it-to the executive to determine details

relating to the working of taxation laws, such

as the selection of persons on whom the tax is

to be laid, the rates at which it is to be

charged in respect of different classes of

goods, and the like."

The learned Judge held that the power conferred on the State

Government by section 6(2) of the Central Provinces and

Berar Sales Tax Act, 1947, to amend the Schedule relating to

exemptions was in consonance with the accepted legislative

practice relating to the topic and was not unconstitutional.

In Vasantlal- Maganbhai Sanjanwala v. The State of Bombay &

Ors.(1) the validity of section 6(2) of the Bombay Tenancy

and Agricultural Lands Act 67 of 1948 was assailed. The

said provision authorised the Provincial Government by

notification to fix a lower rate of the maximum rent payable

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by the tenants of lands situate in any particular area or to

fix such rate on any other suitable basis as it thought fit.

Gajendragadkar J. (as he than was) speaking for the majority

observed that although the power of delegation was a consti-

tuent element of legislative power, the, legislature, cannot

delegate its essential legislative function in any case and

before it can delegate any subsidiary or ancillary powers to

a delegate of its choice, it must lay down the' legislative

policy and principle so as to afford the delegate proper

guidance in implementing the same.

The views expressed by this Court in Corporation of Calcutta

& Anr. v. Liberty Cinema (supra), B. Shama Rao v. Union

Territory of Pondicherry (supra) and Devi Dass Gopal Krishan

v. State of Punjab (supra) have already been reproduced

above. In Sita Ram Bishambhar Dayal & Ors. v. State of U.P.

& Ors.,(2) this Court observed :

"It is true that the power to fix the rate of

a tax is a legislative power but if the

legislature lays down the legislative policy

and provides the necessary. guidelines, that

power can be delegated to the executive."

It would appear from the above that the view taken by this

Court in a long chain of authorities is that the legislature

in conferring power upon another authority to make

subordinate or ancillary legislation must lay down policy,

principle or standard for the guidance of the authority

concerned. The said view has been affirmed by Benches of

this Court consisting of seven Judges., Nothing cogent, in

our opinion, has been brought to our notice as may justify

departure from the said view. The binding effect of that

view cannot be watered down by the opinion of a writer,

however eminent he may be, nor by observations in foreign

judgments,made in the context of the statutes with which

they were dealing.

(1) [1961] SCR 341. (2) [1972] 2 SCR 141.

894

Regarding the subject of delegation, it has been observed on

page 228 of Cooley's Constitutional Limitations, Vol. I,

8th Edition

"The maxim that power conferred upon the

legislature to make laws cannot be delegated

to any other authority does not preclude the

legislature from delegating any power not

legislative which it may itself rightfully

exercise. It may confer an authority in

relation to the execution of a law which may

involve discretion, but such authority must be

exercised under and in pursuance of the. law.

The legislature must declare the policy of the

law and fix the legal principle-, which are to

control in given cases: but an administrative

officer or by may be invested with the power

to ascertain the facts and, conditions to

which the policy and principles apply. If

this could not be done there would be infinite

confusion in the laws,, and in an effort to

detail and to particularise, they would miss

sufficiency both in provision and execution."

The matter has been dealt with on page 1637 of

Vol. ]it in 'Willoughby on the Constitution of

the United States, 2nd Edition, in the

following words :

"The qualifications to the rule prohibiting

the delegation of legislative power which have

been, earlier adverted to are those which

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provide that while the real law-making power

may not be delegated, a discretionary

authority may be granted to executive and

administrative authorities : (1) to determine

in specific cases when and how the powers

legislatively conferred are to be exercised

and (2) to establish administrative rules and

regulations, binding both upon their

subordinates and upon the public, fixing in

detail the manner in which the requirements of

the statutes are to be met, and the rights

therein created to be enjoyed."

The matter has also been dealt with in Corpus Juris Secundum

Vol. 73, page 324. It is stated there that the law-making

power may not be granted to an administrative body to be

exercised under the guise of administrative discretion.

Accordingly, in delegating powers to an administrative body

with respect to the administration of statutes, the

legislature must ordinarily prescribe a policy, standard, or

rule for their guidance and must not vest them with an

arbitrary and uncontrolled discretion with regard thereto,

and a statute or ordinance which is deficient in this

respect is invalid. In other words, in order to avoid the

pure delegation of legislative power by the creation of an

administrative agency, the legislature must set limits on

such agency's power and enjoin on it a certain course of

procedure and rule-. of decision in the performance of its

function; and, if the legislature fails to prescribe with

reasonable clarity the limits of power delegated to an

administrative agency, or if those limits are too broad, its

attempt to delegate is a nullity.

We are also unable to subscribe to the view that if the

legislature can repeal an enactment, as it normally can, it

retains enough control

895

over the authority making the subordinate legislation and,

as such, it is not necessary for the legislature to lay down

legislative policy, standard or guidelines in the statute.

The acceptance of this view would lead to startling results.

Supposing the Parliament tomorrow enacts that as. the crime

situation in the country has deteriorated, criminal law to

be enforced in the country from a particular date would be

such as is framed by an officer mentioned in the enactment.

Can it be said that there has been no excessive delegation

of legislative, power even though the Parliament omits to

lay down in the statute any guideline or legislative policy

for the making of such criminal law ? The vice of such an

enactment cannot, in our opinion, be ignored or lost sight

of on the ground that if the Parliament does not approve the

law made by the officer concerned, it can repeal the

enactment by which that officer was authorised to make the

law.

Reference has been made to the decision of the Judicial

Committee in the case of Cobb & Co. Ltd. & Ors. v. Norman

Eggert Kropp(1). The appellant companies in that case

brought two actions against the Commissioner for Transport,

who was the nominal defendant for the Government of

Queens-land. The first action was for repayment of fees

levied under the State Transport Facilities Act for the

carriage of goods and passengers on motor vehicles operated

by the appellants in the State of Queens-land. The second

action was for repayment of fees levied under the State

Transport Act for the same purposes as in the first action.

The appellants challenged the validity of the legislation in

both the actions. The respondent conceded that the licence

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fees were an imposition of taxation, which would be illegal

and void if not done with the authority of Parliament but

contended that the two Acts were within the legislative

competence of the queens-land legislature. The Judicial

Committee held that the power of the Queens-land legislature

to legislate for the peace welfare and good government of

the state was full and plenary within certain limits. It

was further held that the Queer legislature was entitled to

use any agent or any subordinate agency or any machinery

that they considered appropriate for carrying out the object

and the purposes that they had in mind and which they

designated. The legislature, it was observed, was entitled

to use the Commissioner for Transport as their instrument to

fix and recover the licence and permit fees, provided they

preserved their own capacity intact and retained perfect

control over him. In this context, the Judicial Committee

observed :

"In their Lordships' view the Queens-land

legislature were fully warranted in

legislating in the terms of the Transport Acts

now being considered. They preserved their

own capacity intact and they retained perfect

control over the Commissioner for Transport

inasmuch as they could at any time repeal the

legislation and withdraw such authority and

discretion as they had vested in him. It

cannot be asserted that there was a levying of

money by presence or prerogative

(1) [1967] AC 141.

-748SCI/74

896

without grant of Parliament or without

parliamentary warrant."

Reference in the above observations to the

retention of control and repeal of

legislation, in our opinion, should be taken

to be in the context of the overall effect of

the impugned legislation. The effect of the

impugned legislation had been brought out

clearly in the judgment of Stable J. and the

Judicial Committee quoted with approval the

following passage from that judgment

"The Commissioner has not been given any power

to act outside the law as laid down by

Parliament. Parliament has not abdicated from

any of its own power. It has laid down a

framework, a set of bounds, within which the

person holding the office created by

Parliament may grant, or retrain from

collecting fees which are taxes.

The above passage shows that the Judicial Committee

expressly book-note of the fact that the, impugned

legislation had laid down the framework and set of bounds

within which the authority holding office could act. The

above case, cannot, therefore, be an authority for the

proposition that it is not necessary for the Parliament to

lay down a framework and set of bounds within which a person

authorised by an enactment could act.

We have been referred to the literal meaning of the word

"abdication" and it has been argued that even if the

legislature does not lay down any guidelines, policy or

standard for the guidance, of the authority to whom it gives

the power of making subordinate legislation, it (the

legislature) does ;not abdicate its function as long as it

retains the power to repeal the statute giving that power.

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What is the exact connotation of the word "abdication" and

whether there is proper use of the word "abdication" if the

legislature, retains the right of repealing the law by which

uncanalised and unguided power is conferred upon another

body for making subordinate legislation are questions which

may have some attraction for literary purists or those

indulging in sonantic niceties; they cannot, in our view,

detract from the principle which has been well established

in a long chain of authorities- of this Court that the

legislature must lay down the guidelines, principles or

policy for the authority to whom power to make subordinate

legislation is entrusted. The correct position of law, if

we may say so with all respect, is what was enunciated by

Mukherjea J. inthe Delhi Laws Act case (supra). Said

the learned Judge

"It cannot be said that an unlimited right

of delegation is inherent in the legislative

power itself. This is not warranted by the

provisions of the Constitution and the

legitimacy of delegation depends entirely upon

its being used as an ancillary measure which

the legislature considers to be necessary for

the purpose of exercising its legislative

powers effectively and completely. The

legislature must retain in its own hands the

essential legislative functions which consist

in declaring the legislative policy and laying

down the standard which is to be enacted into

a rule of

897

law, and what can be delegated is the task of

subordinate legislation which by its very

nature is ancillary to the statute which

delegates the power to make it. Provided the

legislative policy is enunciated with

sufficient clearness or a standard laid down

the courts cannot and should not interfere

with the discretion that undoubtedly rests

with the legislature itself in determining the

extent of delegation necessary in a particular

case."

As a result of the above, we hold that section 8 (2) (b) of

the Central Sales Tax Act does not suffer from the vice of

abdication or excessive delegation of legislative power.

The appeals fail and are dismissed with costs. One hearing

fee.

MATHEW, J.-These appeals are preferred on the basis of

certificates granted by the High Court of Madhya Pradesh

under article 133 (1) (c) of the Constitution from a common

judgment of that Court holding that the provisions of s. 8

(2) (b) of the Central Sales Tax Act, 1956 (hereinafter

referred to as the Act) do not suffer from the vice of

excessive delegation and are therefore immune from attack on

the ground that Parliament has abdicated its essential

legislative function in enacting them.

Mr. A. K. Sen appearing for the appellants submitted that

Parliament, by enacting s. 8(2)(b) has delegated its

legislative function to fix the rate of tax leviable on the

turnover of sales of goods in the course of inter-State

trade coming within the purview of the sub-clause and has

abdicated its legislative function in so far as it adopted

the rate that might be. fixed in the sales tax law of the

appropriate State from time to time for taxing the local

sales. Counsel submitted that fixing the rate of tax is an

essential legislative function and that this function cannot

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be delegated without laying down the legislative policy for

the guidance of the delegate. In support of this contention

council referred to the decisions of this Court on the

subject.

In Corporation of Calcutta and Another v. Liberty Cinema,(1)

the validity of s. 548(2) of the Calcutta Municipal Act,

1951, which empowered the Corporation to levy fees "at such

rates as may from time to time be fixed by the Corporation"

was challenged on the ground of excessive delegation as it

provided no guidance for the fixation of the amount. The

majority upheld the provision relaying on the decision in

Banarsidas v. State of Madhya Pradesh ( 2 ) holding that the

fixation of rates of tax not being an essential legislative

function, could be validly delegated to a non-legislative

body, but observed that when it was left to such a body, the

legislature must provide guidance for such fixation. The

Court found the guidance in the monetary needs of the

Corporation for carrying out the functions entrusted to

it under the Act.

(1)[1965] 2 I. C. R. 477.

(2) [1959] S.C.R. 427.

898

In Municipal Board, Hapur v. Raghuvendra Kripal(1), 'the

validity of the U.P. Municipalities Act, 1916, was involved.

The Act had empowered the municipalities to fix the rate of

tax and after having enumerated the kinds of taxes to be

levied, prescribed an elaborate procedure for such a levy

and also provided for the sanction of the Government.

Section 135(3) of the Act raised a conclusive presumption

that the procedure prescribed had been gone through on a

certain notification being issued by the Government in that

regard. This provision, it was contended, was ultra vires

because there was an abdication of essential legislative

functions by the legislature with respect to the imposition

of tax inasmuch, as the State Government was given the power

to condone the breaches of the Act and to set at naught the

Act itself. This, it was contended, was an indirect

exempting or dispensing power. Hidayatullah, J., speaking

for the majority, said that regard being had to the

democratic set-up of the municipalities which need the

proceeds of these taxes for their own administration, ;at is

proper to leave to these municipalities the power to impose

and collect these taxes. He further said that apart from

the fact that the Board was- a representative body of the

local population on whom the tax was levied, there were

other safeguards by way of checks and controls by Government

which could veto the action of the Board in case it did not

carry out the mandate of the legislature.

In Devi Das Gopalkrishnan v. State of Punjab(2), the

question was whether s. 5 of the East Punjab General Sales

Tax Act, 1948, which empowered the State Government to fix

sales tax at such rates as it thought fit was bad. The

Court struck down the section on the ground that the

legislature did not lay down any policy or guidance to the

executive in the matter of fixation of rates. Subba Rao

C.J., speaking for the Court, pointed out that the needs of

the State and the purposes of the Act would not provide

sufficient guidance for the fixation of rates of tax. He

pointed out the danger inherent in the process of delegation

"Art overburdened 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 not set

down any standard for the guidance of the

executive; it may confer an arbitrary power on

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the executive to change or modify the policy

laid down by it without reserving for itself

any control over subordinate legislation.

This self-effacement of legislative power in

favour of another agency either in whole or in

part is beyond the permissible limits of dele-

gation."

In Municipal Corporation of Delhi v. Birla Cotton and

Spinning and Weaving Mills(3), the main question was about

the constitutionality of delegation of taxing powers to

Municipal Corporations. The Delhi Municipal Corporation Act

(66 of 1957), by S. 113(2) had empowered the Corporation to

levy certain optional taxes. Under s. 150,

(1) [1966] 1 S.C.R. 950. (2) [1967] 3 S.C.R. 557.

(3) [1968] 3 S.C.R. 251.

899

power was given to the Corporation to define the

maximum rate of tax to-be levied, the classes of persons and

the description of articles and property to be taxed, the

system of assessment to be adopted and the exemptions, if

any, to be granted. The majority of the Court held the

delegation to be valid. Wanchoo C.J. observed that there

were sufficient guidance, checks and safeguards in the Act

which prevented excessive delegation. The learned Chief

Justice observed that state merits in certain cases to the

effect that the power to fix rates of taxes is not an

essential legislative function were too broad and that "the

nature of the body to which delegation is made is also a

factor to be taken into consideration in determining whether

there is sufficient guidance in the matter of delegation".

According to the learned Chief Justice, the fact that

delegation was made to an elected. body responsible to the

people including those who paid taxes provided a great check

on the elected councillors imposing unreasonable rates of

tax. He then said :

"The guidance may take the form of providing

maximum rates of tax upto which a local body

may be given the discretion to make its

choice, or it may take the form of providing

for consultation with the people of the local

areas and then fixing the rates after such

consultation. It may also take the form of

'subjecting the rate to be fixed by the local

body to the approval of Government which acts

as a watchdog on the actions of the local body

in this matter on behalf of the legislature.

There may be other ways in which guidance may

be provided".

In Sita Ram Bishambher Dayal v. State of

U.P.(1), s..3-D(1) of the U.P. Sales Tax Act,

1948, had provided for levying taxes at such

rates as may be prescribed by the State

Government not exceeding the maximum

prescribed therein. Hegde, J. speaking for

the Court, observed :

"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 for the legislatures to entrust more

and more powers to the executive. Text book

doctrines evolved in the 19th Century have

become out of date".

In this context it is necessary to have a clear idea of the

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concept of delegation. Delegation is not the complete

handing over or transference of a power from one person or

body of persons to another. Delegation may be defined as

the entrusting, by a person or body of persons, of the

exercise of a power residing in that person or body of

persons, to another person or body of persons, with complete

power of revocation or amendment remaining in the grantor or

delegator. It is important to grasp the implications of

this, for, much confusion of thought had unfortunately

resulted from assuming that,

(1) [1972] 2 S.C.R. 141,

900

delegation involves, or may involve the complete abdication

or abrogation of a power. This is precluded by the

definition,. Delegation often involves the granting of

discretionary authority to another, but inch authority is

purely derivative. The, ultimate power always remains in

the delegator and is never renounced.

Willis, J. said in Huth v. Clarke,(1)

Delegation, as the word is generally used,

does not imply a parting with powers by the

person who grants the delegation, but points

rather to the conferring of an authority to do

things which otherwise that person would have

to do himself. It is never used by legal

writers, so far as I am aware, as implying

that the delegating person parts with his

power in such a manner as to denude himself of

his rights".

See also John Willis, "Delegates non protest delegate" (2)

If this essential nature of the concept of delegation is

kept in mind, it is not difficult to understand the

principle of the leading decisions on the question of

delegation of legislative power and the theory of

abdication.

In Hedge v. The Queen(3), the Privy Council said that s. 92

of the British North America Act conferred powers not in any

sense to be exercised by delegation from or as agents of the

Imperial Parliament, but authority as plenary and as ample

within the limits prescribed by s. 92 as the Imperial

Parliament in the plenitude of its power possessed and could

bestow and that, within these limits of subjects and area

the local legislature is supreme, and has the same authority

as the Imperial Parliament, or the Parliament of the

Dominion would have had under like circumstances to confide

to a municipal institution or body of its own creation

authority to make by-laws or resolutions as to subjects

specified in the enactment, and with the object of carrying

the enactment into operation and effect.

The main argument in the case was that the delegation of a

power to make regulation ancillary to legislation might be

intra vires but for a legislature to pass a skeleton

legislation and to empower the Government to clothe the bare

bones was not delegation but abdication, as that would

create and endow with its own capacity a new legislative

power not created by the British North America Act to which

it owes its existence.

In 1918, nearly forty years after Hedge v. The Queen(3), "he

theory of "abdication" was raised in In re Gray(4) where the

Supreme Court of Kanada upheld an Act but the judges did not

agree in heir reasoning for so holding. The Act was called

the "Dominion War Measures Act" which, empowered the

Governor-General to make "such regulations as he may by

reason of the existence of real or

(1) [1890] 25Q.B.D.391,395.

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(2) 21 Canadian Bar Review 257.

(3) [1883] 9 A.C.117.

(4) 57 S.R.C. 150.

901

apprehended war deem necessary or advisable for the

security, defence, peace, order add welfare of Canada". The

argument was that the legislation transferred legislative

power of Dominion Parliament to the executive authority.

Anglin, J. thought that the British North America Act

forbade "complete" abdication but obviously gave to that

phrase a very narrow meaning; for he went on to describe it

as "something so inconceivable that the constitutionality of

an attempt to do anything of the kind need not be

considered" and expressly said that the Dominion Parliament

had as much authority to delegate as the Imperial

Parliament. Duff,, J. also thought that an implied

prohibition against "abandonment" must be read into the Act;

but for him no delegation of legislative power, however

extensive, would amount to "abandonment", since the

executive in making the regulations is no more than an agent

of the legislature which can always recall its authority.

For him the forbidden point of "abandonment" is not reached

until there is, on the part of the legislature, an intention

to abandon control over the executive or an abandonment of

control in fact. Despite these differences of opinion, the,

judges agreed in holding that there was no constitutional

objection to the extremely extensive delegation contemplated

by the Act, and in giving a very narrow meaning to the word

"abdication".

Unfortunately, In re Gray was a wartime case and the

profession tends to regard wartime cases with a cynical but

natural suspicion.

In re initiative and Referendum Act(1) Viscount Haldane said

that by s. 92 of the British North America Act, legislative

power in a province is conferred only upon its legislature

and went on to make a statement which has often been quoted

"No doubt a body, with a power of legislation

on the subjects entrusted to it so ample as

that enjoyed by a Provincial Legislature in

Canada could, while preserving its own

capacity intact', seek the assistance of

subordinate agencies as in Hodde v. The Queen

(supra) (but) it does not follow that it can

create and endow with its own capacity a new

legislative power not created by the Act to

which it owes its own existence."

In Shannon v. Lower Mainland Dairy Products

Board(2), the usual objection was made that

"in the present case there is practically a

surrender by the provincial Legislature of its

legislative responsibility to another body"

and as usual Lord Haldane's dictum was cited.

The Privy Council did not even call on the

Attorney General for British Columbia for an

answer and dealt with the objection in the

following pithy sentences of Lord Atkin

"Within its appointed sphere the Provincial

Legislature is as supreme as any other

Parliament; and it is unnecessary to try to

enumerate the innumerable occasions on which

Legislatures, Provincial, Dominion and

imperial, have

(1) [1919] A.C. 935. (2) [1938] A.C.

P.C. 708

902

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entrusted various persons and bodies with

similar powers to A those contained in this

Act.

Now it is well known that the English Parliament may, by

legislation, give to anybody of its own, choosing, the power

to modify or add to a given Act of Parliament (the legality

of all English statutory rules and orders derives from

this).

In R. v. Burah(1), the Privy Council held that the Indian

Legislature was in no sense an agent or delegate of the

British Parliament, that within the limits of its powers,

the Indian legislature had plenary powers of legislation as

wide and of the same nature as those of the British

Parliament, and that the plenary powers of legislation

carried with them the power to' legislate absolutely or

conditionally. The Privy Council did not require as a

prerequisite to a valid delegation of legislative power that

the law must lay down a policy or standard; nor did it' do

so, in any other case of delegated legislation. Indeed,

such a requirement is opposed to the principle affirmed by

it that within the limits of their powers, Indian

legislatures had, and were intended to have plenary powers

of legislation as large, and of the same nature, as the

British Parliament itself. And as already stated, it has

never been doubted that the British Parliament can delegate

legislative powers without laying down any policy or

standard for guidance.

In In re the Delhi Laws Act, 1912, etc.(2), the question was

elaborately dealt with and all the relevant ruling were

considered but it is difficult to extract any binding

principle from that decision. While dealing with this

decision in Kathi Ranging Ravat v. State of Saurashtra(3)

Patanjali Sastri, C.J. said

"While undoubtedly certain definite

conclusions were reached by the majority of

the judges who took part in the decision in

this regard to the constitutionality of

certain specified enactments, the reasoning in

each case was different and it is difficult to

say that any particular principle has been

laid down by the majority which can be of

assistance in the determination of other

cases."

But that decision is generally held to have

laid down the principle that the legislature

should not abdicate its essential legislative

function by transferring it and thus efface

itself.

In Municipal Corporation of Delhi v. Birla

Cotton and Spinning and Weaving Mills (supra)

already referred to, Sikri, J. (as he then

was), in his concurring judgment took the view

that there was "adequate guide or policy in

the expression 'purposes of the Act' in s.

113" but that it was not necessary to rely on

the safeguards mentioned by Wanchoo, C. J. in

his judgment to sustain the delegation. He

said

"Apart from authority, in MY view, Parliament

has full power to delegate legislative

authority to subordinate bodies.

(1) [1878] 5 I.A. 178. (2) [1951] S.C.R.

747.

(3) [1952] S.C.R, 435,444.

903

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This power flows, in my judgment, from article

246 of the Constitution. The word 'exclusive'

means exclusive of any other subordinate body.

There is, however, one restriction in this

respect and that is also contained in Art.

246. Parliament must pass a law. in respect

of an item or items of the relevant list.

Negatively, this means that Parliament can not

abdicate its functions. It seems to me that

this was the position under the various

Government of India Acts and the Constitution

has made no difference in this respect. I

read (1883) 9 A.C. 117 and (1885) 10 A.C. 282

as laying down that legislatures like Indian

legislatures had full power to delegate

legislative authority to subordinate bodies.

In the judgments in these cases no such words

as 'policy', standard' or 'guidance is

mentioned."

In Lichter v. United States(1), the Supreme

Court upheld the validity of the Renegotiation

Act. That Act provided for the renegotiation

of war contracts and authorised administrative

officers to recover profits which they

determined to be excessive; such profits being

defined to mean "any amount of a contract or a

sub-contract price which is found as a result

of renegotiation to represent excessive

profits" which means, in other words that

excessive profits mean excessive profits. The

Court repelled the challenge on the ground of

delegated legislation by saying

"It is not necessary that Congress supply

administrative officials with a specific

formula for their guidance in a field where

flexibility and the adaptation of the

congressional policy to infinitely variable

conditions constitute the essence of the

program. The statutory terms "excessive

profits" in the context Was a sufficient

expression of legislative policy and standards

to render it constitutional".

The position so far as U.S.A. is concerned has

been summarized by Schwartz(2) :

". . . . If standards such as those contained

in the Renegotiation and Communications Acts

are upheld as adequate, it becomes apparent

that the requirement of standards has become

more a matter of form than substance.

Provided that there is no abdication of the

Congressional function, as there was in the

Schechter Case, the enabling law will be

upheld, even though the only standard which

the Court can find is so broad as to be almost

illusory".

The position in Australia is also practically the same. In

Victorian Srevedoring and General Contracting Co. Pvt. Ltd.

v. Dignan(3) : Dixon, J. said that the objection to

delegation of legislative power was not based on the ground

that the doctrine of separation of powers forbade such

delegation. He said that when in Huddart Parker Ltd. v

(1) 334 U.S. 742.

(2) "American Administrative Law", 2nd ed., pp. 41-42.

(3) [1931] 46 C.L.R. 73.

904

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Commonwealth(1) the judges answered the objection against

delegation of legislative power by observing that Roche v.

Kronheimer (2) upheld the validity of such a delegation, it

really meant that the time had gone by for assigning to the

separation of powers in the Australian Constitution, the

effect of restraining Parliament from making a law

conferring the power of an essentially legislative character

on the executive While logically or theoretically,

legislative power exclusively to Parliament, the power of

Parliament to authorise subordinate legislation was based

more upon the usages of British legislation and to the

theory of English Law and whatever may be the rationale, the

decision in Roche v. Kronheimer (2) must be to. And

according to that judgment "the true view is that

legislative power in itself includes the power of

delegation" (see also Wynes, Legislative, Judicial and

Executive Powers". 4th ed. 118).

In the ultimate analysis, what is prohibited, according to

Chief Justice Subba Rao in Devi Das Gopal Krishnan v. State

of, Punjab (supra) is the conferment of arbitrary power by

the legislature upon a subordinate body without reserving to

itself control over that body and the self-effacement of

legislative power in favour of another agency either in

whole or in part. In other words, the legislature should

not abdicate its essential function. The question to be

asked and answered then is. when does a legislature abdicate

its legislative function

The concept of 'abdication seems no less vague, fluctuating

and uncertain than the "transfer to others (of) the

essential legislative functions" banned by the Supreme Court

of the United States In the Panama Refining Co. v. Ryan(3).

To Lord Haldane, a legislature does not 'abdicate' unless it

withdraws from the field and surrenders its responsibility

therefore. But in the eyes of some other judges, there

seems to be 'abdication' whenever a legislature, while

remaining in the field and retaining its responsibility

therefore entrusts to others the formulation of policy

otherwise than with a definite standard or purpose laid down

by it.

In In re the Delhi Laws Act, 1912 etc. (supra) Kania, C.J.

said that if full powers to do everything that the

legislature can do are conferred on a subordinate authority,

although the legislature retains the power to control the

action of subordinate authority by recalling such power or

repealing the Acts passed by the subordinate authority,

there is no abdication or effacement of the legislature

conferring such power. Fazl Ali, J. observed that there are

only two main checks in this country on the power of the

legislature to delegate, these being its good sense and, the

principle that it should not cross the line beyond which

delegation amounts to "abdication and self-effacement".

Patanjali Sastri, J. was of the view that delegation of

legislative authority is different from the creation) of a

new legislative power. In the former, the delegating body

does not efface itself but retains its legislative power

intact and

(1) [1931] 44 C.L.R. 49).

(2) [1921] 29 C.L.R. 329.

(3) 293 U.S. 388, 421.

905

merely elects to exercise such power through an agency or

instrumentality of its choice. In the latter there is 'no

delegation of power to subordinate units but a grant of

power to an independent and coordinate body to make laws

operative of their own force. For the first no express

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provision authorities delegation is required. in the absence

of a constitutional inhibition, delegation of legislative

power, however extensive, could be made so long as the

delegating body retains its own legislative power intact.

Mahajan, J. was of the opinion that the legislature cannot

substitute the judgment, wisdom and patriotism of any other

body, for those to which alone the people have seen fit to

confide this sovereign trust and that the view that unless

expressly prohibited a legislature has a general power to

delegate its legislative functions to a subordinate

authority is not supported by authority or principle.

Mukherjea, J. took the view that it cannot be said that an

unlimited right of delegation is inherent in the legislative

power itself and the legislature must retain in its own

hands the essential legislative functions which consist in

declaring the legislative policy and laying down the

standard which is to be enacted into a rule of law. Das,

said that the power of delegation is necessary for, and

ancillary to, the exercise of legislative power and is a

component part of it. The only qualification upon the,

power to delegate is that the legislature may not, without

reserving its own capacity intact, create and endow with its

own capacity a new legislative power not created or

authorise by the Act to which it owes its existence. Bose,

J. said that the Indian Parliament can legislate along the

lines Queen v. Burah (supra), that is to say, it can leave

to another person or body the introduction or application of

laws which are or may be in existence at that time in any

part of India which is subject to the legislative control of

Parliament.

In Cobb & Co. Ltd. v, Kroop(1), the question was whether the

Queensland legislature had legislative authority under the

impugned Acts to invest the Commissioner for Transport with

power to impose and levy licence and permit fees. It was

not disputed before their Lordships that fees imposed are to

be regarded as constituting taxation. Accordingly, it was

contended that the legislature had abdicated its exclusive

power of levying taxation. The Privy Council held that

Queensland Legislature was entitled to use any agent or

subordinate agency and any machinery that it considered

appropriate for carrying out the object and the purposes

that they had in mind and which they designated, and to use

the Commissioner for Transport as its instrument to fix and

recover 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

abdicated its responsibilities in favour of a newly created

legislative authority and, that, accordingly, the two Acts

were valid. Lord Morris 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

(1) [1967] 1 A.C. 141.

906

legislative power or separate legislative body

armed with general legislative authority (see

R V. Burah, 3 A.C. 889). Nor did the.

Queensland 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. 935, 945)

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The point to be emphasised and this is rather

crucial-is the statement of their Lordships

that the legislature preserved its capacity'

intact and retained perfect control over the

Commissioner for Transport in as much as it

could at any time repeal the legislation and

withdraw the authority and discretion it had

vested in him and, therefore, the legislature

did not abdicate its functions.

Duff, J. $aid In re Gray (supra)

"There is no attempt to substitute the

executive for Parliament in the sense of

disturbing the existing balance of

constitutional authority. The powers granted

could at any time be revoked and anything done

under them nullified by Parliament,, which

Parliament did not, and for that matter could

not, abandon any of its own legislative

jurisdiction".

Delegation of 'law making' power, it has been said, is the

dynamo of modern Government. Delegation by the legislature

is necessary in order that the exertion of legislative power

does not become a futility. Today, while theory still

affirms legislative supremacy, we see power flowing back

increasingly to the executive. Departure from the tradi-

tional rationalization of the status quo arouses distrust.

The legislature comprises a broader cross-section of

interests than any one administrative organ; it is less

likely to be captured by particular interests. We must not,

therefore, lightly say that here can be a transfer of legis-

lative power under the guise of di-legation which would

tantamount to abdication. At the same time, we must be

aware of the practical reality, and that is, that Parliament

cannot go into all legislative matters. The doctrine of

abdication expresses a fundamental democratic concept but at

the same time we should not insist that law-making as such

is the exclusive province of the legislature. The aim of

government is to gain acceptance for objectives demonstrated

as desirable and to realize them as fully as possible. The

making of law is only a means to achieve a purpose. It is

not an end in itself. That end can be attained by the

legislature making the law. But many topics or subjects of

legislation pre such that they require expertise, technical

knowledge and a degree of adaptability to changing

situations which parliament might not possess and,

therefore, this end is better secured by extensive

delegation of legislative power. The legislative process

would frequently bog down if a legislature were required to

appraise before hand the myriad situations to which it

wishes a particular policy to be applied and to formulate

specific rules for each situation. The presence of Henry

VIII clause in many of the statutes is a pointer to the

necessity of extensive delegation. The hunt by court for

legislative policy or guidance in the crevices of a statute,

or the nook and cranny of its preamble is not an edifying

spectacle. It is not

907

clear what difference does it make in principle by saying

that since the delegation is to a representative body that

Would be a guarantee that the delegate will not exercise the

power unreasonably, for, if ex hypothesi the legislature

must perform the essential legislative function, it is

certainly no consolation, it the body to which the function

has been delegated has a representative character. In other

words, if no guidance is provided or policy laid down, the

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fact that the delegate has a representative character could

make no difference in principle.

Seeing that by s. 8(2) (b) of the Act Parliament has not

delegated any power to the State legislatures 'the question

is: 'Has Parliament abdicated its legislative function, when

it' chose to adopt the rate to, be fixed by the State

legislatures for taxing local sales ?

Counsel said that when the State legislature makes its sales

tax law or amends or alters it from time to time it does not

act as delegate of Parliament. It acts as a sovereign

legislature with plenary powers of legislation within its

sphere and while legislating in that sphere, it is not

subject to any guidance or control, from any outside agency

including the Parliament, and, the rates of tax which may be

fixed by the State Legislature from time to time would,

therefore, be, rates for taxing the local sales having

nothing to do with the formulation of any policy by

Parliament and, Parliament would be adopting those rates for

the Central tax even without being aware of what those rates

might be when fixed in future. Counsel relied heavily on

Shama Rao v. Pondicherry(1) in support of this submission.

In that case, the legislative assembly for the Union

Territory of Pondicherry passed the Pondicherry General

Sales Tax Act (10 of 1965) which was published on June 30,

1965 Section 1(2) of the Act provided that it would come

into force on such date as the PondiCherry Government may,

by notification, appoint, and s. 2(1) provided that the

Madras General Sales Tax Act, 1959, as in force in the State

of Madras immediately before the commencement of the Pondi-

cherry Act, shall be extended to Pondicherry subject to

certain modifications, one of which related to the

constitution of the Appellate Tribunal. The Act also

enacted a Schedule, giving the description of goods, the

point of levy and the rates of tax. The Pondicherry Gov-

ernment issued a notification on March 1, 1966, appointing

April 1, 1966, as the date of commencement. Prior to the

issue of the notification, the Madras legislature had

amended the Madras Act and consequently it was the Madras

Act as amended upto April 1, 1966, which was brought into

force in Pondicherry. When the Act had come into force, the

petitioner was served with a notice to register himself as a

dealer and he thereupon filed a writ petition challenging

the validity of the Act. After the petition was filed, the

Pondicherry Legislature passed the Pondicherry General Sales

Tax (Amendment) Act (13 of 1966) whereby s. 1(2) of the

principal Act was amended to read that the latter Act "shalt

come into force on the 1st day of April, 1966"; it was also

provided that all taxes levied or collected and all

proceedings

(1) [1967] 2 S.C.R. 650.

908

taken and things done were to be, deemed valid as if the

principal Act as amended had been in force at all material

times.

The Court, by a majority, held that the Pondicherry

legislature not only adopted the Madras Act as it stood at

the date when it passed the principal Act, but in effect

also enacted that if the Madras Legislature were to amend

its Act prior to the notification of its extension to

Pondicherry, it would be the amended Act that would apply;

that the legislature at that stage, could not anticipate

that the Madras Act would not be amended nor could it

predicate what amendments would be carried out or whether

they would be of a sweeping character or whether they would

be suitable in Pondicherry and that, the result was that the

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Pondicherry Legislature accepted the amended Act though it

was not and could not be aware what the provisions of the

amended Act would be. There was, in these circumstances,

the Court said, I total surrender in the matter of sales tax

legislation by the Pondicherry Assembly in favour of the

Madras Legislature. The Court referred with approval the of

quoted dictum of Lord Haldane in In re Initiative and

Referendum Act (supra) that the legislature of a

province in Canada could not create and endow with its own

capacity a new legislative power not created by the Act to

which it owed its own existence and the passage from Cooley

on "Constitutional Law", 4th ed. 138, to the effect :

"This high prerogative have been entrusted to

its own wisdom, judgment and patriotism and

not to those of other persons and it will act

ultra vires if it undertakes to delegate the

trust instead of executing it."

It is pertinent to note that in almost all

cases the argument against delegation was

built upon the dictum of Lord Haldane but that

has never stood in the way of the Courts

upholding the most extensive delegation. Bora

Laskin, after referring to the dictum of Lord

Haldane, said(1)

"This oft-quoted passage remains more a

counsel of caution than a constitutional

limitation. This proposition has in no way

affected the widest kind of delegation by

Parliament and by a provincial legisl

ature to

agencies of their own creation or under their

control; see Reference re Regulations

(Chemicals, (1943)1 D.L.R. 248; Shannon v.

Lower Mainland Dairy Product., Board, (1938)

A.C. 708."

And, as regards the observations of Cooley, we think that

they were based on the American doctrine that the

legislature being the delegate of the people cannot further

delegate the trust but execute it themselves.

We think that the principle of the ruling in Shama Rao v.

Pondicherry (supra) must be confined to the facts of the

case. It is doubtful

(1) See Canadian Bar Review, vol. 34 (1956), footnote on p.

919.

909

whether there is any general principle which precludes

either Parliament or a State legislature from adopting a law

and the future amendments to the law passed respectively by

a State legislature or Parliament and incorporating them in

its legislation. At any rate, there can be no such

prohibition when the adoption is not of the entire corpus of

law on a subject but only of a provision and its future

amendments and that for a special reason or purpose.. In A-G

N.S. v. A.G. Can. (Nova Scotia Inter-delegation Case) (1),

the Supreme Courts of Canada said that neither the

Parliament of Canada nor the legislature of any province can

delegate one to the other (to be exercised by that other as

a Parliament or Legislature, as the case may be) any of the

legislative authority respectively conferred upon them by

the British North America Act and especially by sections 91

and 92 thereof. The Court was of the view that legislative

authority conferred upon Parliament and upon a provincial

legislature is exclusive and, in consequence, neither can

bestow upon or accept power from the other, although each

way delegate to subordinate agencies : and to permit through

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delegation alteration of the distribution of legislative

power established by the British North America Act (save as

permitted by s. 94) would mean that matters within Dominion

competence would be incorporated in legislation assented to

by the Lieutenant-Governor instead of by the Governor-

General, and vice versa; and, moreover, it would mean that

the debate and judgment of one legislative body would be

addressed to matters which were not its concern but that of

another legislative body as provided in a constituent Act.

The Court said that delegation of this kind is incompatible

with a federal State.

In his book "Canadian Constitutional Law," 3rd. ed., Bora

Laskin has this much to say on the case :

"It is important however, to appeciate the limits of the

doctrine affirmed by the Nova Scotia Inter-delegation case.

Property understood the case does not prohibit either

Parliament or a provincial legislature from incorporating

referentially into the valid legislation of one the future

valid enactments of the other. Illustrations of this kind

of anticipatory incorporation by reference may be seen in

the Cr. Code,, S.534 (fixing the qualifications of jurors

in criminal proceedings as those prescribed by 'the laws in

force for the time being in a province'), and in the Summary

Convictions Act, R.S.O. 1960, c. 387, s. 3 (making

applicable to provincial summary conviction proceedings

certain provisions of the Cr. Code 'as amended or re-

enacted from time to time'). There is no, unconstitutional

delegation involved where there is no enlargement of the

legislative authority of the referred legislature, but

rather a borrowing of provisions which are within its

competence and which were enacted for its own purposes, and

which the referring legislature could have validly spelled

out for its own purposes. This was appreciated by Judson,

J. in Re Brinklow, (1953) O.W.N. 325, 105 Can. C.C. 203

(aff'd on appeal on other grounds). However, in Regina v.

Pialka (1953) 4 D.L.R. 440, (1953) O.W.N. 596, 106 Can. CC.

197 (C.A.), Laidlaw, J.A. reserved the question of- the-

(1) (1950) 4 D.L.R. 369.

910

validity of the Provincial Summary Convictions Act if it

were construed to incorporate not only provisions of the Cr.

Code in existence when the provincial statute was last.

enacted but also provisions subsequently introduced.

"This is, with respect, an unnecessary as well as an

unwarranted acceptance of a limitation on legislative

competence, and justifiable only as a matter of legislative

policy of the referring legislature; see Laskin, Note (1956)

34 Can. Bar. Rav. 215; but cf. Bourne, Note, (1956) 34

Can.Bar. Rav. 500. Once it is determined that a referring

legislature is legislating in relation to a matter within

its competence and that the referred legislature is

similarly legislating within its competence and for its own

purposes, a borrowing by the one from the other of future

enactments does not involve the latter in exercise of power

which it does not otherwise possess.. This view is simply

supported by Regina v. Glibbery, (1963) 1 O.R. 232, 36

D.L.R. (2d) 548". (see Bora Laskin, "Canadian Constitutional

Law", 3rd ed., pp. 40-41 ).

The decision in A-G Ont. v. Scott(1) was in an appeal front

a Judgment reversing an order dismissing a motion for

prohibition directed to a Magistrate purporting to act under

the Ontario Reciprocal Enforcement of Maintenance Orders

Act, R.S.O. 1950, c.334. The Act carried out an arrangement,

to which certain other provinces and England became parties,

for enforcement in Ontario, against resident husbands, of

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provisional maintenance orders for which proceedings had

been initiated in a reciprocating jurisdiction by wives

resident there. By.s.5 (2) of the Act, a resident husband

against whom confirmation' of a foreign order was sought was

entitled 'to raise any defence that he might have raised in

the original proceedings had he been a party thereto but no

other defence". Among the objections to the validity of the

Act was one directed to s.5(2) as being an unconstitutional

delegation or abdication of legislative authority.

Rand, J. with whom Kerwin, C.J.C., Kellock and Cartwright

JJ. agreed, held that the action of each legislature was

wholly discrete and independent of the other, a relation

incompatible with delegation; and that it was a case of

adoption of a circumscribed nature in that only a single

right was involved, namely, the private right of maintenance

between husband and wife; that the right touched a resident

of each country; that the obligation of support was

recognized by both; and that the material matters of

adoption went to the grounds of defence. He was of the view

that there was no attempt to permit another legislature to

enact generally laws for a Province which would obviously be

an abdication. He said that the adoption of rules and

procedure from time to time in force in another jurisdiction

was exemplified by R.2 of the Exchequer Court; and the

adoption of various provisions of the Criminal Code by

Provincial statutes was seen in the Summary Convictions Act,

R.S.O. 1950, c.379, s.3. According to the learned judge,

from the standpoint of legislative competency, there was no

difference between the adoption of procedure and that of

substantive

(1) [1956] S.C.R. 137.

911

law, that in each case legislation was enacted by reference

to the legislation as it may from time to time be made by

another legislature, that no challenge could be made to the

complementary enactment 'there and that if the Province

cannot exercise the same power in relation to a subject of

such a local and civil rights nature, then the oft-.quoted

words of Lord Fitzgerald in Hedge v. The Queen that its

power is "as plenary and as ample within the limits

prescribed by s. 92 as the Imperial Parliament in the

plenitude of its power possessed and could bestow" would

seem to be somewhat rhetorical".

Locke, J. said that the validity of the statute was directed

to s.5(2) which limited the available defences to those that

might have been raised in the original proceedings in

England. The defences permitted under the law of England,

as the date of Reciprocal Enforcement of Maintenance Orders

Act came into force in Ontario, may have been extended or

limited by legislation passed thereafter in England, and

this, it was contended, amounted to a delegation of the

authority of the legislature of its power to deal with the

civil rights of residents in Ontario and that this could not

be done was made clear by the judgment of the Supreme Court

of Canada in A-G N.S. v. A-G Can. (supra) but the learned

judge came to the conclusion that this objection should not

prevail as it was a valid exercise of provincial powers

under head (13) of s. 92 of the British North America Act to

declare that the defences which may be relied upon in

proceedings of this nature shall be those from time to time

permissible under the laws of England, those laws in

substance being adopted and declared to be the law in the

Province.

As regards the correctness of the reasoning of Locke; J. see

Bora Laskin, comments in (1956) 34 Can. Bar. Review, 215,

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227.

We think that Parliament fixed the rate of tax on inter-

State sales of the description specified in s. 8 (2) (b) of

the Act at the rate fixed by the appropriate State

legislature in respect of intra-State sales with a purpose,

namely, to check evasion of tax on inter-State sales and to

prevent discrimination between residents in one State and

those in other States. Parliament thought that unless the

rate fixed by the States from time to time is adopted as the

rate of tax for inter-State sales of the kind specified in

the sub-clause, there will be evasion of tax in inter-State

sales as well as discrimination. We have already pointed

out in our judgment in Civil Appeals No. 2547-2549 of 1969

and 105106 of 1970 the objectives which Parliament wanted to

achieve by adopting the rate of tax in the appropriate State

for taxing the local sales. And for attaining these

objectives Parliament could not have fixed the rate

otherwise than by incorporating the rate to be fixed from

time to time by the appropriate State legislature in

respect, of local sales. It may be noted that in so far as

inter-State sales are concerned, the Central Sales Tax Act,

by s. 9 (2) has adopted the law of the appropriate State as

regards the procedure for levy and collection of the tax as

also for imposition of penalties.

There can be no doubt that Parliament can repeal the

provisions of s.8(2)(b) adopting the higher rate of tax

fixed by the appropriate

912

State legislature in respect of intra-state sales. If

Parliament can rePeal the provision, there can be no

objection on the score that Parliament has abdicated its

legislative function. It retains its control over the

fixation of the rate intact. In other words, so long as

Parliament can repeal the provisions of s.8 (2) (b) adopting

the higher rate of tax fixed by the State legislatures, it

has not abdicated its legislative function. As already

stated, this point has been expressly decided by the Privy

Council in Cobb & Co Ltd. v. Kropp (supra). We are glad to

find that our conclusion that Parliament has not abdicated

its legislative function by enacting S. 8 (2) (b) of the Act

is in agreement with that reached by the High Court of

Gujarat in Rallis India Ltd. v. R. S. Joshi Sales Tax

Officer(1) and the High Court of Punjab in Tek Chand Daulat

Rai v. The Excise and Taxation Officer, Ferozepore and

Others(2).

In the result these appeals are dismissed with costs.

S.C.

Appeals dismissed.

(1) 31 S.T.C. 261. (2) 29 S.T.C. 585.

L748 Sup. CI/74-2500-12-6-75-GIPF,

1