GWALIOR RAYON SILK MFG. (WVG.) CO. LTD. versus THE ASSTT. COMMISSIONER OF SALES TAX & ORS.

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

THE ASSTT. COMMISSIONER OF SALES TAX & ORS.

December 21, 1973

[A. N. R;.Y, C.J., K. K. MATHEW, H. R, KHANNA, A. ALAGJRJSWAMI AKO P. N. BiiAGWAT!, I/.]

.Central Salis Tax Act, 1956-S. 8(1) (h)-Whether it suffers fronz the lice of t'.H:'essil•c delegation. .

Sec. 8(2)(b) of the Central Sales Tax Act 19S6, provides that tbe tax payable by any dealer on his turnover, in so far as it relates to the sale of goods in the course of intcr·state trade or-commerce not falling -wi_thin sub-sec. (1),~,.....­ia· cas_e of· ioods other than declared goods, shall bo Calcu_Iated at the rate Of ,ten per -cent or at the rate applicable to the sale or purchase of such 1:0Qds jnside·tbe :.i.ppropriate state, 'whichever is higher ... ·.etc.

The short-question which arose ·ror determination in these four _ ilppcals . , \\'as whether the provisions of sec. 8(2)(b) Of the Central Sales Tax Act, 1956 5iJ.lI~r from the vice of excessive delegation because the parliament, 'in not fixing tlie'_Tate itself and in- adopting the rate applicable to the sale or purchase of goods iDside the appropriate State had not laid down any legislative policy and thus-.. abd~c;tcd its· Ie!::islittive function. The High Court ti:nsw~re~_-th!~ quc:stion_in the .nc.gati\re and upheld" the Constitutionul" validity of those -prOviSions.

Dismiss.Ing ihe appeals,

HELD : (I) There is cl~ar Jegislati\"C policy which can be found in the _prod· sions of Sec. -8(2)(b) of the Central Sales Tax Act ·19S6 .. The polie'y cif"-the law in _this _respect is. that .in_ case the rate of local &ales :tax.l:Je less than 1_-0 pe;r:-;ce11-t,,, in such an event; the dealer, if the case- doc!s ·!lot fall within Sec. R(l') Of . t.be_: Act, shoiJltf pay Central S;ilcs Tax at the rare of JO per cent. If, ho\\cvi:r, the J~te of local s<iles tax for the goods concerned be more than 10 per cent, in that e\·ent, the policy is that the rate of the Central Sales Tax shall also be the same as that of lhh local sales tax for the said goods. The object of the law thus is that the fJtC of the _CCotral Sales tax: shall in no event be less than the rate of loc<if' &ales 1a.i.: for- the goods in question though it may exceed the Joc~.l rate in case thoit rate be le~s than JO per cent. [984 A]

For example, if the local rate of tax in the appropriate State· tor the uon-F declared goods be 6 per cent, in such an event dealer, whose case is not covered by sec. 8(1) of the Act, would hu\'e to pay Central Sales Tax at rate of 10 per cent. Jn ca'!e, ho\vever, the rate of Jocal sa1es tax for such goods be 12 per cent tbe rate of Central Sales tax \\'ould also be 12 per cent because otherwise, if the rate of Central Sates Tax were _only IO per cent, the unregistered dealer who pur-chases goods in the course of inter.State trade would be in better position than .:n intru-Slate purchaser and there would be no disincentive to the dealers to desist fron1 selling goods to unre¥tstcre<l purchasers in course of inter-State trade. The object of the law apparently t'i to deter inter-State sales to unregiStered deale-rs as such inter-Stnte Sales \\'OUld facilitate evasion of tax. [984 CJ

(2) Jl is also not possible to fix the maximum rate under Sec. 8(2) (b) because the local sa!es tax: varies from State to State. The rate of Jocal sales tax' can also be changed by the State legislatures front time to time. Jt is not within the com· DCtence of the parliament to fix the maximum rate of local Sales tax. _The fixa· lion Of the rate of local Sales tax is essentially matter for the State·legisl_atures aod the parliament does not ha\'e any control in the matter. The parliament has therefore necessarily, if it wants to prevent evasion o[ payment of Central Sales Tax, to tack the rate of such tax \\'ith that of local sales tax, in case the rate of local sales tax _exceeds partict1lar limit. [984 E]

Sta" of Madras v. N. K. Nalarain Mridaliar, [1968] 3 S.C.R. 829, referred I<> and l&-748SCI/74

B. Sfl(1111a Rao \'. The Union Territory of Po11dicllerry, [1967] 2 S.C.R. 650, explained and distinguished.

(3) The growth of the' legislative power of the executive is significant dev::-lo_pment of the twentieth century. The theory of laissez-faire has been given go-by and large and comprehensive powers are being assumed by the State with view to in1prove social arid economic well-being of the people. Most of the modern socio-economic le~islations passed by the legislature lay down the guiding principles and the legislative policy. The legislatures because of Ii1nitati~n impos-ed upon by the time factor hardly go into matters of detail. Provision is, there-for~ mnde for delegated legi'>lation to obtain flexibility, elasticity, expedition and opportunity for experimentation. The practice of empowering the Executive to mak~ subordinate legislation within prescribed sphere has .evolved out of practi-c.11 necessity and pragmatic needs of :.i n10Jern welfare '!.late. [890 DJ

( ~) Jn questions of delegated legislation, the principle which has been well et)tablished is that the legislature must lay down the guidelines, principles or policy for the authority to whon1 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 <ind the legitin1acy of delegation depends entirely upon its being u .. eJ as an ancillary measure which the legislature considers to be necessary for the purppse of exerci~ing its legislntive powers effectively and completely. The legis· latures_ must retain in its o_wn hands the essential legislative functions which con· sist in declaring the legislative policy and laying down the stand which is to ho enacted into rule of law, and what can be delegated is tbe task of subordinate legislation which by its very nnture is ancillary to the statute which delegates the power to m:.1ke it provided the legislative policy is enunciated with sufficient clearness or ti standard laid down. The courl'i cannot and should not interfere v.ith the discretion that undoubtedly rests with the legislature itself in determining the ..:".'\tent of delegation ncCCS!iary in <L particulnr case.'' [892 CJ

In re JJdlii Lair.\· Act 1912. [19511 S.C.lt 747 and Municipal Corporlltion of Dt•fhi v. Bir/a J.1i/fs [1968j 3 S.C.R. 23], Devi D!ls Gopal Kri.~ha1i v. State of P111Jjah A.LR. 1967 S.C. 1895; Jlart~f1a11kar Baf!/a v. The State of Madhya Pra-des11 [1955] 1 S.C.R. 380; Pane/it Banarasi Das Bhagat v. The Stare of Madhya Pradesh & Ors. rt 9591 S.C.R. 427; Corporation gf Calcutta &: A11r. v. Liberly Ci11e111a rt965] 2 S.C.R. 477 and Sita Ra111 Bislienibhar Dayal & Ors. V. State of U.P. & Otltm [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 makin~ the subordinate legislation an<l, as such, it is not necessary for the legislature to lay Llown 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 particular date would be such as is framed by <in olficer n1entioned in the enactment. Can it be said that there has been no excessive delegation of legislative power even though ihe Parlian1ent omits to lay down in the stlltnte any guideline or legislative policy for the making of such cri-minal law ? The vice of such an enactment cannot be ignored or lost sight of on th~ ground that if the Parliament does not approve the law made by the officer concerned, it can repeal the enactn1ent by which that officer was authorised to n1~1ke the law. [894 H-895 C]

(per CJ. ;ind ~fathew J:)

( 1) Delegation is not handing over or transference of power from one per· 'iOtl or body of 'Persons to another: Delegation may be defined as the entrust_ing, by Person or bo<ly of persons, of the exercise of power res~ding in that person or body of persons, to another person or body of persons, with complete :PQ:wer of revocation or amendment, remaining in the grantor or delegator, [899 G]

(2) Delegation often involves the granting: of discretionary authority to !"! nother, but such authority is purely derivative. The ultimate po,,...·er always remains in the de1egator and is never renounced. {900 A]

Wills l in H11tl1 v. Clarke. (1890] 25, Q.B.D. 391, 395 an<l Hodge v. The Queen [1S8J] q A.C. 117.

(3) What is prohibited, is the conferment of arbitrary power by the lesisla· turc upon 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 Qther words, the legislature should not. abdicate its essential function . ..[904 CJ ·

Devi Das Gopal Krishan v. State of Pun/ab, [1967] 3 S.C.R. 551, Corroration o/Calcutta & another v. Liberty Cinema, [1965] 2 S.C.R. 477; Municipa Board, Nagpur v. Raghuvendra Kripal, [1966] I S.C.R. 956; The Municipal Corporation of Dellli v. Bir/a Cotton and Spinning and Weaving Mills, (1968] 3 S.C.R..251 and Sita Ram Bislrcmbhar Dayal v. Siate of U.P. [1972] 2 S.C.R, 141, referred to.

(4) The.concept of·1abdication' seems no less· vague, fluctuating and µncertain than the "transfer to others of tbC essential legislative functions". Some wrHers think that legislature does not 'abdicate' unless it withdraws from the field and surrenders its responsibility thCrefor; and to some, there ·seems to be 'abdication' whenever. legislatu~ while remaining in the field' and retaining its responsibility therefOre entrusts to others the formulation of policy, otherwise than with definite .standard· or purpose -laid down by it. [904. D-E]

111 re Gray• 57 S.C.R. tso; In re Initiative and Referendum Act, .[1919] A.C 935; 111 Sl1an11011 v~ Lower. Mainland l)dlry--Pruducts BOtlrd, [19381 A.C. 708 P,C.; R: v. B11rali [1878] 5 I.A. 178; fll Re lhe Deihl Laws Act 1912 etc. [1951] S.C.R. 747, .referred to.

(5) The cruciar point is, whether the legislature preserved its capacity inta:cf and retained perfect control over the delegate inasmuc11 as it could at any time 0 repeal the legislation· and withdraw the. authori~ aild dis:cretion it .had vested -ori the· delegate. [906 BJ ' · ·

'(6), Deiegation of 'law makingt 2QWer is .tlie 'dynamo of modern governmeQt, DelegatioJ! by; the legislature is nectlSP!i);Jtli order that the exertion of legislativb power does norbecome futility. · Ti>day; whit~ theoiy &till affirms legjslative supremacy, power floats: back increasingly to the Executive. One must not taki lightly and say that there can be transfer of legislative pow( under the guise of dCiegation which would tentamount to abdication. At the t. ne time, one must be aware .of the practical reality that the parliament cannot g.._ into details of all legislative matters. [906 ·D-E]

. .(7) The making of law is only means to achi .. ·eve,!f~rpose. It is not en. in itself .. That end can be attained by the legislature · the law. But manY topics or subjects of legislation are such that they require expertise, technical · -knowledge and degree of adaptability to changing situations etc., which parlia-ment.might not possess·and, therefo.ro ·1ws end is better secured ,by extensive dele;" gation of legislative power. The legisiative procesS would frequtntly bog down: if Ie~islalure were required to appraise before hand the myriad situations to which it wishes particular policy to·. be applied and to fo'rmulate specific rules for each situa.tion. [906 GJ(8) ·In the present case, by Sec. 8(2)(b) of the Act, parliament has not dele· gated any power to the State leaislatures~ Therefore, die question was whether parliament had abdicated its Je&isJ:ative fUnction· when it.-choae to adopt ~e rate to be fixed by the state!cgislaturcs for local sales. Jn. the prosent case, parliament had fixed.the iate of tax on inter-state iatcs of .th• descrlptlon specified lD s. 8(2)-(b) of the Act at the rate. fixed by the appropriate state leplature in respect of intra-state-sales. with a. pu.rpose. , namel.y,. to check evasion of tax on inter-state sales and to prevent discrimination betwct11·riiidents Of different states .. Further, ln the instant case, parliament can repeal the provisions of s. 8(2)(b) adopting hilber rate of tax .fixed by the appropriate state legislaturdn res~! of intra ... ta. le $ales. If parlitune'nt can repeal tho provision, there can be no ob1ection on the score that parliament has abdicated its· legislative-·functioo. It retains"its control over· the fixation of the ratdtself. [911 HJ · · . · . · ·

Cobb & Co. Ltd. v,'/(ropp. [1967j 1 A.C. 141, referred to.

Therefore' there ·is no excessive. delegation ·of tegislativt . power as contended by the petitioner.: · · . . ·

CI'<:IL APPELLATE JURtst>ICTION: Civil !\pPCals Nos. 2'12-215 of 1973.

From the judgment and order dated the 29th August, 197-2 of the Ma'!,!1fr PJadesh High Court atJabalpur, in Misc. Petitions Nos. 191 of ll'OlS, 30 of 1970, 63 and 64 of 1972.

.. K. Stn, R .V. Patel, Biswar11p Oupte, R. N. Jhunjhunwala and

U. K. Kluiita11, for the appellants {in C. A. 212-215).

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

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

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

Tllo judgment of H. R. Khattna, A. Alagiriswami and P. N. Bhag-wati, JJ. was delivered by Khanna J. K. K. Mathew, J. gave separate Opillion 011 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 refer- · red to as the Act) suffer from the vice of excessive delegatiOn. The High Court answered this question in the negative and upheld the cons-titutional validity of those provisions.

Sub-sections (!), (2) and (4) of section 8 of the Act read as under:·

"(!) Every dealer, who in the course of inter-Estate trade or commerce-

la} sells to the Government any goods; or

(b) sells to registered dealer other than the Govern-ment goods of the description referred to in sub· iection (.3) ;

shall . be

shall be liable to pay tax under this Act, which three per cent of fiis turnover.

. (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in tl).e course of inter-Staie trade or commerce not falling within sub-section (1 )-· ·

(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 dealer liable to pay tax under

the sales tax law of the appropriate State, notwithstaoding that he, in fact, may not be so liable under that law.

( 4) The provisions .of sub-section (I) shall not apply to any sale in the course of inter-State trade or commerce, un-. less the dealer selling the goods furnishes to the prescrib.:d authority in the prescribed manncr-

(a) declaration duly filled and signed by tbe register-ed dealer to whom the goods arc sold containing the prescribed particulars in prescribed form obtained from the prescribed authority; or

lb) if the goods are sold to the Government, not being registered dealer, certificate in the prescribed form duly filled and signed by duly authorised officer of Government."

It has been argued ou behalf of the appellants that the fixation of rate of tax is legislative .function and as the Parliament has, und~r section 8(2) (b) of the Act, not fixed the rate of central sales tax bur has adopted the rate applicable to the sale or purchase of goods in.,idc the appropriate State in case such rate exceeds 10 per cent, the Parlia-D ment has abdicated i.ts 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 view to prevent evasion of the payment of the central sales tax. The Act prescribes 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 registered dcal~r other than the Go\·crnn1cnt. In the case of such registered dealer, it is essential that the goods should be o[ the description mentioned in sub-section (3) of section 8 of the Act. ln order, however, to avail of the benefit of such Io\V rate of tax unc.h.::r section 8 (I) of the Act, it is also essential that the dcakr selling the goods should furnish to the.prescribed authority in the prescribed man-ner declaration duly filler I and signed by the registered dealer, to whom the goods ai·c sold. i:ontaining the prescrihed particulars in prescribed form obtained from the prescribed authOl'ity. or ff the goods arc sold to the Government not being rcgist~r~d d..:-a!L:r, ccrtiti~ .. :..:: in the prescribed form duly Jilled and signed by duly authorised.oCT\-::·;r of the Government. In cases not falling under sub-section (l), the tax payable by any dealer in respect of inter-Stat< sak of declared goods is the rate applicable to the sale or purchase of such goods inside the appropriate state 1·hfe section 8(2) (a) of the Act. As rcgard-gooJs other than the <lcclared goods, section 8(2) (b) ·provides t'nao the tax payable by any dealer on the sale of such goods in the course of inter-State trade or commerce shall be .calculateJ at the rate of IC per cent t}r at the rate applicable to the sale or purchase of such gocd' inside the appropriate State, whichever is higher.

The question with which we arc concerned is whether the Parlia -ment 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 clown any legislative policy and has abdicated its legislative function.

In this connection we are of the view that clear legislative policy can be found in the provisions of section 8(2) (b) of the Act. The policy of the Jaw 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 (!) of tho 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 lie 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 n.on-declared goods be 6 per cent, in such an event dealer, whose case is not covered by section 8(1) of the Act, would have to pay central sales tax at rato of 10 per cent. In case, however, the rate of local sales tax for •uch 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 lO per cent, the unregistered dealer who pur~hases goods in the course ef inter-State trade would be in better position than an intra-State pur-chaser 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 appar.ently 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 ot local sales tax is essentially matter for the State Legislatures and the Parliament does not have any control in the matter The Parliament has therefore necc•sarily, if it wants to prevent evasion of payment ot 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 particular limit. Deal-ing with the provisions of section 8(2) (b) of the Act, Hegde J. in-ibe case of State of Madras v. N. K. Nataraja Mudaliar([1]) observed :

"'Then we come to cl. (b) of s. 8(2), which deals with goods other than declared goods. Here the law at the r.ele-vant time was that the tax shall be calculated at the rate of seven percentum of the turnover or at the rate applicable to sale or purchase of such goods i!lliide the appropriate State, wbiche~cr is higher. As could be seen from the report of 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 bas great deal of control. It is not very easy for them to evade tax. measure which is intended to check the evasion of tax is undoubtedly valid measure. Further, inter-State trade carried on through.

(t) [t968J J SCR 829.

dealers coming within s, 8 (2); must be in the very natµre of things very little. It is iil public interest to see that in the guise of freedom of irade, they do not evade the payment of tax. lf the sales tax they have to pay is as high or e•en higher than intre-State sales tax then they will be coJISlrained to register themselves and pay the tax legitimately due. The impact of this provislonon infer-State trade is bound to ·be negligible, but at 'the ilame time it .is an effecti\le saf~guard. against evasion of tax:" · ·

' 1be adoption of the rate of local sales tax for the purpose of the central; sales tax as applicable iri particular State does not show that the" Parliament has in any way adbicated its legislative function. Where law of Parliament provides that the rate of central sales tax should be 10 per cent or that of the !Ocal sales tax, whichever be higlter, definite legislative policy can be discerned in such .law, the i:olicy being ·that the rate of central sales tax should. in no event be Jess than the rate of local sales tax. In such case, it is as Wrea:dy stated above, not possible to mention the precise figure of the maximum rate of .::en-tral sales tax In the law made by the Parliament because such Ii rate is linked with the rate of local sales tax which is prescribed by the State Legislatu~es. The Parliament in making such law cannot be said to have indulged in self-effacement. On the contrary, the. Parliament by making such 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 approp~ate State~ 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 c.entral salestax and to plui possible loophples.

There is, in our opiniOn, marked difference between the enactmeni of law which was struck down by this Court in the case of B. Shama Rao v. The Union Territory of Pontlicherry~t.) and that containod in section 8 (2)(b) of the Central Sales Titx Act. In Shama. Rao's case the Legislativt> Assembly for the Union Territory of Pondicherry passed the Pondicherry General Sales. Tax Act 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 notifi-cation appoirit and section 2(1) provided that the Madras General Sales l'ax Act, 1959, as in force in the State of Madras imoledWJ!ly before the collimencement of the Pondicherry Act; shall he extended to Pondicberry subject to certain . modifi~ation$. The Pondicberry Government issued a· nQtification on .March 1, 1966, appointing April 1, 1961! as the ·date of l;OJD!Dencement Of the· Pondicherry Act.. Prior to the issue of the notification,· th~ Madras. Legislature had am~ed· the Madras Ac.t and ronsequently it was the. Madras Act. as amended Up. to April 1, 1966 which WM brought into f~ in Pondicherry.

(I) (1967] 2 SCR 6SO.

petition was tbereupol) filed challenging the validity of the Pondicherry Act. During tlie pendency of that petition, the Pondicberry Legisla· ture tiassed Amendment Act 13 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 a!T material times. 1t was hefd by majority by this Gourt that the Act of 1965 was void and still-born and cou,ld 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 piincipal Act, but in effect it also euactcd that if the Madras Legislature were to amend its Act prior to the notifl· cation 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 predicate what amendments would be carried out, whether they would be of sweeping character or whether they would be suit.able in Pon-dieherry. The result, in the opinion of the Court, was that the. Pondi-cherry Legislature accepted the amended Act though it was and could not be aware what the provisions of the amended Act would be .. There was, according to the Court, in these circumstances total suxrender in the matter of sales tax legislation by the Pondicherry Assembly in favour of the Madras Legislature.

It would a{'pear from the above that tbe 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 ls involved in the present case because or the Parliament having adopt-ed in one particular respect the rate of local sales tax for the purpose ot central sales tax. Indeed, as mentioned earlier, the adoption of the local sales tax .. is in pursuance. of legislative policy induced by the desire to prevent evasion of the payment of central sales tax by dis-couraging inter-State sales to unregistered dealers. No sucn 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 PondiC. cherry case the provisions of the Madras Act along with the subsequent ameudments 'were made applicable to an area which was witlun the Union Territory of Pondichcrry am! not in Madras State .. As against that, ln the present case we find that th.e 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 tax. The central sales tax in res· peel of the territory of State is ultimately assigned to that State under article 269 of the Constitution and ;, 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 bas upheld the validity .. of statute by which the legislature left the fixation of rates to another body. This was, however,. subject to the rider that. !lie legislature

must pfovide guidance for such fixation. In the case of Corporation of Cillcutta & Anr. v. Liberty Ci1iema(I) while dealing with section 548 of the Calcutta Municipal Act relating to the levy of licence fee on cinema houses, Sarkar 1. (as the then was) speaking for the majority after refenilrg to the earlier case of Pa11dit Banarsi Das Bhanot v. The State of Madhya Pr/Jdesh(') 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 legis-lature must provide guidance for such fixation. .The question then is, was much guidance provided in the Act? We first wish to observe that the validity of the guidance cannot he tested by riglid uniform rule: that must demand on the ob-ject of the Act giving power to fix the rate."

In Municipal Corporation of Delhi v. Bir/a Cotto11, Spinning and Weaving Mills Delhi & Anr.([3 ]) this Court dealt with the provisions of sections 113 and J 50 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 whether section 150 of the abovementioned Act transgres-sed the limits of permissible delegation. According to that section, the Municipal Corporation may at meeting pass resolution for the ~evy 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 articleg and properties to be taxed, the sy_stem of 8Slessmcnt to be adopted and the exemptions, if any, to be granted. Snch resolution has to be sanctioned by the Central Govern-ment and thereafter the Corporation bas to pass second resolution determining, subject to the maximum rate, the actual rate of tax. Wan-choo CJ., Hidayatullab, Sikri, Ramaswami and Shela! JJ. unheld the validity of the above section, while Shah and Vaidialingam JJ. dis· sented and held that section 150(1) of the Act was void beause of excessive delegation of .legislative authority to the Corporation. Wan-choo CJ. and Shelat J. on consideration of the various provisions of the Act held that the power conferred by section 150 on the Corpo-ration was not unguided and cculd not be said to amount to excessive delegation. After referring to the earlier authorities, Wanchoo CJ. speaking for himself and Shela! J. observed : .

"A review of these authorities therefore leads to the con-clusion 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 fo1mu-lation as binding rule of conduct and cannot be delegated by the legislature. Nor is there any unlimited right of delc· gation inher~nt in the legislative power itself. This is. not

(2) {1959] SCR 427~

(1) 11965) 2 SCR 477.

(3) (1968) 3 SCR 231.

legis-A

warranted by the provisions of the Constitution. ~ legis-lature must retain in its own hands the essential legislative functions and what can be delegated is the task of subordinate ~egislation necessary for implementing the purposes and ob-1ects of the Act. Where the legislative policy is enunciated wit.h sufficient clearness or standard is laid dow.n. the courts should not interfere. What ¥uidance should be given and to. what extent and whether gwdance has been given in particular case at all depends on consideration of the provisions of the particular Act with which the Court bas to deal includiqg its preamble. Further it appears to us that the. nature of the body to "'.hich delegation is made to also 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 Rania-:swami J. observed : · ·

"Once it is established that the legislature itself has willed that particular thing be done and has merely left the exe· cution of it to 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 bas done."

l t was further observed :

"To insist that tlfto legislature should provide for every matter connected'..tith municipal taxation would make muni· cipalities mer\i'!tx 'collecting departments and not self-governing bodies which they arc intended to be. Go~ernment might as well collect taxes and make them available to the municipalities. That is not correct reading of the history of Municipal Corporations and other self-governing institutions in our country."

Sikri J. (as he then was) observed:

"L.ca11 see no sign of abdication of its functions by Par-liament in this Act. On the contrary Parliament has consti-tuted the Corporation and prescribed its duties and powers in great deal.

But assuming I am bound by authorities of this ·court to test the vali4ity of s.ll3(2)(d) and s.150 of the Act by ascertaining whether guide, or policy exists in 'the Act, I find adequate guide or policy ·in the expression 'pur-p05es of the Act' ins. 113. The. Act has point~ out· the objectives or the results to be achieved and taxation can be levied only for the purpose of achieving the .objectives o~ the results. This in my view, is sufficient gmdance especially to self-gove~ning body like the Delhi Municipal Corpora-tion. It is necessary to rely on the safeguards men-tioned by the learned Chief JustiC4' to sustain the delegation."

Shah J. (as he then was) speaking for himself and Vaidialingan J. after referring to the earlier authorities observed :

"On review of the cases the following principles appear to be well-settled : (i). Under the Constitution the Legis-lature has plenary powers within its allocated field; (ii) Essential legislative function cannot be delegated by the Legislature; t!tat is, there can be no ~bdication of legislative function or authority by complete effacement, or even parti-ally in respect of particular topic or matter entrusted by the Constitution to the Legislature; (iii) Power to make sub-sidiary or ancillary legislatfon may .howev~r be en!f11Sted by the Legislature to another body of its choice, provided there is enunciation of policy, principles or standards either ex-pressly or by implication for the guidanee of the delegate in that behalf. Entrustment of power without guidance amounts to excessive delegation of legislative authority; (iv) Mere authority to legislate on 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 topic is specifically entrusted to that body, and it is necessary intendment of the constitutional provision which confers that power that it shall not be delegated without laying down principles, policy, standard or guidance to another body unless the Constitution expressly permits dele· gation; and (v) the taxing provisions are not exception to these rules.''

It was further observed :

"The Constitution entrusts the legislative functions to the legislative branch of the State and directs that the func-tions shall be performed by that body to which the Consti-tution bas entrusted and not by some one else to whom the Legislature at given time thinks it proper to delegate the function entrusted to it. body of experts in· particular branch of undoubted . integrity or special competence may pr?b~lyl f?e in better position to e~ercise the power of legislation m that branch, but the Constitution bas chosen to invest the. elected representatives of the people to exercise the power of legislation, and not to such bodies of exP.erts. Any attempt on the part of the experts to usurp, or of the representatives of the people to abdicate the functions ves-ted in the legislative branch is incpnsistent with the consti-tutional scheme. Power to make subordinate or ancillary legislation may. undoubtedly be conferred upon delegate,. , but the Legislature must in conferring that power di~lose the policy, principles or standards which are to govern the 'IC!lllt~ in the exercise of that power so as to set out guidance. Any delegation which transgtesses this limit in-frin8Jl8 the constitutional scheme."

After 1'.. zrring to the provisions of the Delhi Munici)1al Corporation Acf, Shah and Vaidialingam JJ, held that the delegation could not

be upheld merely because of the special status, character, competence or capacity of the· delegate or by reference to the provisioll$ made in the statute to prevent abuse by the delegate or its authority. Shah and VaidiaJingam JJ. ~rdingly came tc, the conclusion thJt Section 150(1) was void as it permitted excessive delegation of legislative authority to the Corporation.

would appear from Ille above that not only was the constitu-tional validity of section 150 of the Delhi Municipal Corporaiion Act upheld by the majority, the majority of the jude;es also expressed the view that it was essential for the legislature to lay. down the legislative policy and standards before it could delegate the. tas\t of subordinate · legislation to another body.

We find ourselves unable to agree with the view, which has .been canvassed during ti1e course of arguments that if legislature confers power to make subordinate or ancillary legislation upon 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 significant development of the twentieth century. The theory of laiss~z-faire has been given go-by and large and comprehensive powers arc being assumed by the State with view to improve social and economic well-being of the people. Most of the modern socio-economic legislations passed by the legislature lay down the guiding principles and the legislative policy. The le~­latures because of limitation imposed upon by the time factor hardly go into matters of detail. Provision is, therefore, made for delegated legislation to obtnin flexibility, elasticity, expedition and opportunity for experi01entation. The practice of empowering the executive to make subordinate legislation within prescribed sphere has evolved out of practical necessity and pragmatic needs of modern welfare state. At the same time it has to be borne in mind that our Constitu-tion-makers have entrusted the power of kgislation to the representa-tives of the people, so that the said power may be exercised not only in the name of the people but also by the people spea1'ing _through their representatives. The rule against excessive delegatio\1 of legislative authority fiows from and is necessary postulate c~ the sovereignty of the people. The rule contemplates that it is not permissible to substitute in the matter of legislative policy the views of indlvidual officers or other authorities, however competent they may be, for that of the popular will as expressed by the representatives of the peOJ.lle. As ·observed on page 224 of Vol. I in Cooley's Constitutional Limtta· tions, 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 autho-rity. Where the sovereign power of the State bas located the authority, there it must remain; and by the constitutional agency alone the laws must be made until the constitution

119lfif :Is cbanged. The power to wboseJudgment. wisdom, and patriotism this high prerogative ·&as 6etn ililtllsted can· not relieve itself ~f the respof!sjbility by choosing other agen· aies ·upon 'Wlli~h the power shiilr ·fie Hevolve(!, nor can it sub$111ute the juilgm~nt, wl$dom, and patriotism of any other 'bi>d.Y for lht>Se to Which ·atone the poot>le ha'l'e seen fit to CO!lfide this sovereign trust."

Aci:oriling :to John Locke when parliamentary representatives have been chosen and the authority to make laws has been delegated . to them, they have no right )o redclegatc 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 pre-adoption, being the joint . work of the legislator and th_c ·'subordinate power holder'. In the latter case, he says, the legislator 'sketches out sort of imperfect mandate which he leaves it to the subordinate bolder 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 ad-jllstment in the light of experience) to some responsibfe minister or public body. (see Foreword by Sir Cecil Carr to Hewitt's The Control of Delegated Legislation, 1953 Ed.).Tiie Constitution, as observed by this Court in the case of Devi Dars Gopal Krishan v. State of Punjab(I) confers power and imposes diity on the legislature to make laws. The essential legislative function · is the determination .of the legislative policy and its formulation as rule o! conduct. Obviously it cannot abdicate its functions In favour ol another. But in view of the multifarious activities o( welfare State, it cannot presumably work out all the .detalls · to. .suit the varying aspect of 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, process of delegation. An. over-burdened legislature or one controlled by 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 a)ly standard tor the guidance of the executive; .it may confer an arbiltary power on the executive • to change' or modify the. policy laid down by it without reserving for 1tself any control 'over subordinate .legislation. This self effacement of legislative power in favour of another agency either in whole or . in part i~ beyond the permissible limits of delegaiionc It is for . .Co\lrt to hold on a.fair, generous and liberal construction of an im-pugiied statute whether the legislature exceeded such limts.

The question as to the limits or permissible delegation of legislative power bas.arisen before this Court in n11mber of cases. Those cases were reviewed at length in the judgments of Wanchoo CJ. and Shah 11 J. fo die case of Municip(il Corporation of belhi v. Birla.Mills (supra) and tit~y sUJi!Ji!cld up tile conclusions or .principles which hac! been

(l) · AlP.. 1967 S.C. 1895.

established by "those cases. Th.ose conclusions or principles have al-ready been reproduced above. .

The matter came up for the first time before this Court In re Delhi Laws Act; 1912.0[1]) Although each one of the learned Judges who heard that ~ase wr~te separate judgment, the view whith emerged from the different 1udgments 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 Consti-tution, which vested the power cif legislation either in Parliament or St~te legislatures. The legitimacy of delegation depended upon its bemg vested as an ancillary measure which the legislature considered to be necessary for the purpose of exercising its legislative powers effectively and completely. T-he JegisJature .must retain in 'its own hands the essential legislative function. Exactly what constituted "essential legislative function" was difficult to define in general terms, but this much was clear that the essential legislative function must at least co.nsist of the determination of the legislative policy . and its formulation as binding rule. of conduct. Thus where thflaw _passed by the legislature declares the legislative policy and lays down the standard which is enacted into 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 t<i be consistent with the law under which it is made and canno;t go beyond the limits or the policy and standard laid down in the law. As long as the legislative policy is enunciated with sufficient clearness or standard is laid down, the courts should not i11terfere with the discretion. that undoubtedly rests with the legis-lature itself in determining the extent of delegation necessary in particular case (see observations of Wancho9 CJ. in Municipal Corporation -'If [)elhi v. Birla Mills, Supra).In Harishankar Bagla v. The State of Madhya Pradesh(•) this Court dealt with the validity of clause 3 of the Cotton Text~ (Control of Movement) Order, 1948 promulgated by the Central Government under section 3 of the Es~ential Supplies (Temporary Powers) Act, 1946. While upholding the validity of the impugned clause,_ . this Court observed that the legislature mu$~ declare the policy of the law and the legal principles which are to control any given cases and must provide standard to guide the officials or the body in power to execute the law, and where the legislature has laid down such principle in the Act. and that P?!1ciple is the mai~tenan~ or ~5!' in supply of essential commodities and of securing eqwtable d1stn-butio11 and availability at given prices, the exercise of the po•ver was valid;·

In Pandit Banarsi Das Bhanot v. The State of Madhya Pradesh & Ors. (supra) Venkatarama Aiyar J. speaking for majority o~rved :

(2) (195511 SCR 380.

(!) (19511 SCR 747.

" .... the authorities are clear that itis not unconstitu-tional for the legislature to leave it to the.executive to deter: mine 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 ·or goods, and the like."

The learned Judge held that the power conferred on the State Gov-ernment 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 Vasa11tlal Maganbhai Sanjanwala v. The State of Bombay & 01's.([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 n11tification to fix lower rate of the maximum rent payable 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 consti-tuent element of legislative power, the legislature cannot delegate its essentiallegislative function -in any case and before it can delegate any subsidiary or ancillary powers to delegate of its choice, it must lay down the legislative.policy and principle so as to afforJ the dele-gate proper guidance in implementing the same.

'fhe views expressed by this Court in Corporation of Calcutta & A11r. 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 tax is legislative power but if the legislature lays down the li;,gisla-tive policy and provides the necessary guidelines, that power· can be delegated to the executive."

It would appear from the above that th~ view taken by this Court in long cham of authorities is that the legislature in conferring power upon another authority to make subordinate or anclllary legis. lation must lay-down policy, principle or standard for the guidance of the authority concerned. The said view has been affirmed by Benche& 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 ·water-ed down by . the opinion of writer, however eminent he may be, ~" nor by observations i11 foreign judgments made in the context of the statutes ·with which they were dealing.

(2) 11912)2 SCR 141.

(0 119611SCR341.

Regardiilg the subject of delegation, it bas . been Pbscrv~ on [page 228 of"'Cooley's Constitutional Limitations, Vol. I, 8th Edition:

Pbscrv~ on

"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 law which may involve discretion, but such authority .111ust be. exercised under and in pQrsuance of the law. The legislature must declare the policy of the law and fix the legal prmtiples which are to control in given cases; but an administrative officer or body 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 Jaws, and in an effort to detail and to pa~ ticnlarise, they would miss sufficiency both in provis;oo and execution."

The matter has been dealt with on page 1637 of Vd. III in Willoughby on the Constitution of the United States, 2nd Edition, in the following words :

"The qu?lifications to the rule prohibiting the .delegation of legislative power whic.h J,ave been earlier adverted to are those which provide that while the real Jaw-making power may not be delegated, discretionary authority may be granted to executive and administrative authorities : (I) to determine in specific cases when and how the powers legis-latively conferred are to be exerdsed 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."

authority may be (I) to the powers legis-• (2) to establish

The matter has also been dealt with in Corpus Juris Secundum Vol. 73, page 324. It is stated there that the Jaw-making power may not be granted to an administrative body to be exercised under the guise of administrative discreliiln. Accordingly, in delegating powers to an administrative body with respect to the administration ,,f statutes, the legislature must ordinarily prescribe policy, standard, or rule for their guida11cc and must not vest them with an arbitrary and uncontroll~ discretion with regard thereto, and statute .or ordinance which is deficient in this respect is invalid. In other wards, 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 certain courSe of procedure and rules 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 arc 100 broad, its atlempt to delegate is nullity.

We arc also unable to subscribe to the view that if the Jcgislature can repeal an enactment, as it nomrnlly 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 wodld lead to startling results. . Supposing the Parliament . tomorrow enacts that as .the crime situation in .the .country ha8 . .!leteriorated, crimjnal law .to be, enforced in !he cou~try .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 legisla-tive power even though the Parliament omits to lay down in the statute any guideline or legislative polii:.y for the making of such criminal Jaw? The vice of such an e.nact.ment cannot,· in our. opinion, be igli.ored or lo&t ·sight· of on the graund ihat if the Patliament 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 Commit.te• 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 Queensland; The first action was for· repayment of·fees levied under the State Transport Facilities Act for the carriage of goods and rassengers on motor vehiCles operated by the appellants in the State o Queensland. 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· fees were an imposition of taxallon, which would be illegal ·and void if not done with the authority of Parliament but contended that the two Acts w_ere within th'e legislative competence of the queensland legislature. The Judicial Committee held that the po;.ver of the Queensland 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 Queensland fegislature was en-titled to use any agent or any subordinate agency or any machinery that they considered appropriate for carrying_ out the object and the pilrposea that they had in mind and which they designated. The legislature, it was observed, wa~ entitled to use the Commissioner for Transport ·as their instrument to fix and recover the licen~ and permit fees, provided they preserved their own capacity intact and retained perfect control over him. In this context, the Judicial Committee observed:

'G "In their Lordships' view the Queensland legislature were fully warranted in legislating in the terms of the Trans· port Acts now being considered. They preserved their own capacity intact and they retained perfect control over the Commiasioner 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 levying of money by pretence or prerogative

(I) [1967] AC 141.

17-748SCl/74

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 o( 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 t!!e 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 framework, set of bounds, within which the person holding the office created by Parliament may grant, or re-train from collecting fees which are taxes."

the above passage shows that the Judicial Committee expressly took note of the fact that the impugned legislation had laid down the framework and set of bounds within which the authority holding the office could act. The above case cannot, therefore, be an authority for the pr"l'osition that it is not necessary for the Parliament to lay down framework and set of bounds within which person authorised by an enactment could act.

We Jiave been referred to the literal meaning of the word "abdi-cation" and it has been argued that even if the legislature does not Jay down any guidelines, policy or standard for the guidance of the authority to whom it gives the power of making subordinate legisla-tion, it (the legislature) does not abdicate its function as long as it retains the power to repeal the statute giving that power. 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 u;pon another body for making subordinate legislation are questions which may have some attraction for literary purists or those indulging in sonan!ic niceti<cs; they cannot, in our view, detract from the principle which has been well established in long chain of authorities of this Court that the legislature must Jay down the guide.. lines, 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. in the 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 . legi.slature ~ust retain iir 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 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 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 particular case."

As 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 certi-ficates granted by the High court of Madhya Pradesh under article 133(1) (c) of the Constitution from 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 11round that Parliament has abdicated its ·~entiahlegislative function m enacting them.

Mr. A. K. Sen appearing for the appellants submitted that Parlia-. ment, by enacting s. · 8 (2)(b) has delegated its legislative function to fix the rate of tax ltviable on the turnove.r of sales of goods in the J • :rse 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 ttf time for taxing the local sales. Counsel submitted that fixing the rate of tax is an essential legislative function and that this · function cannot be delegated without laying do\vn the legislative policy for the guidance of the delegate. In support of this contention coun-.F <el referred to the decisions of this Court on the subject.

Jn Corporation of Calcutta and Another v. Liberty Cinema,(') the validity of .s. 548(2) of the Calcutta Municipal Act, l951, which empowered the Corporation to levy fees "at such rates as may · Jrom time to time be fixed by the Corporation" was challenged on the ground of excessive delegation as it provided no guidance for the fixa-tion of the atllount. The majority upheld the provision relaying. on the decision in Banarsidas v. State of Madhya Pradesh(') holding that the fixation of rates of tax not being. an essential legislative function, co\lld be validly delegated to non-legislative body, but observed that when it was left to such 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.

(ll [t96Sf 2 I. C.R. 477.

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

In Municipal Board, H"J" v. Raghuvendra Kripal('), the validity of the U.P. Municipalities /\ct, 1916, was involved. The Act haJ empowered the municipalities to fix the rat~ of tax and after having enumerated the kinds of taxes to be levied, prescribed an elaborate procedure for such levy and also provided for the sanction of the Government. Section 135(3) of the Act raised conclusive pre.umI?-tion that the procedure prescribed had been gone through on ccrtam notification being issued by the Government in that regard. This pro-vision, it was contended, was ultra vires because there was an ab<lica-tion of essential legislative functions by the legislatute 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 tho Act itself. This, it was contended, was an indirect exempting or dispens-ing power. Hidayatullah, J., speaking for the majority, said that re-gard being had to the democratic set·up of the municipalities which need the proceeds of these taxos for their own administration, it 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 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('), 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 :

"An overburdened legislature or one controlled by powerful executive may unduly overstep the limits of delega-tion. It may not Jay 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 the executive to change or modify the policy laid down by it without reserving for itself any control over subordinate legislation. This self-efface-ment of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of dele-gation."

In Muni.'ipal Corporation of Delhi v. Birla Cotton and Spinning and Weaving Mills('), the main question was about the constitution-ality of delegation of taxing powers to Municipal Coroorations. The Delhi Municipal Corporation Act (66 of 1957), bys. 113(2) had em-powered the Corporation to levy certain optional taxes. Under s. 150,

(1) [1966] l S.C.R. 9SO.

(2) [1967] 3 S.C.R. SS?.

(3) [1968] 3 S.C.R. 2SI.

power was given to the Corporation to define the maximum rate of tax to be levied, the classes of persons ~nd 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 majoriiy 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-ments 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"thc nature of the body to which delegation is made is · also factor to be taken into consideration in determining. whether _thCrc is sufficient .suidaace in the matter of delegation''. According to the learrtedChief Justice, the fact that delegation was made to an elected body responsible to the people including those who paid taxes provided great check on the elected councillors imposing unreasonable rates of tax. He then said:

"The guidance may take the form of providing maxi-mum rates of tax upto which local body may be given the discretion to make its choice, or it may take the form of pro-D vidiog for consultation with the people of the local areas and then fixing the rates after such consultation. It may also take the form of su.bjecting the rate to be fixed by the local body to the approval of Government which acts as watch-dog on the actions of the local body in this matter on behalf of the legislature. There may be other ways in which guid-ance may be provided",

In Sita Ram Bishambher Dayal v. State of U.P.(1), s. 3-D(l) of the U.P. Sales Tax Act, 1948, had provided for levying taxes at such rates as may be ~rescribed by the State Government not exceeding the maximum prescnbed therein. Hegde, J,. speaking for the Court, ob-served : "However much one might deplore the "New Despot-F ism" 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 ma.de it absolutely necessary for the legislatures to entrust more and more powers to the ~xecutive. Text book doctrines evolved in the 19th Cen-tury have become out of date''. In thi~ context it is. nec.essary to have clear idea cif the concept of delegation. Delegation 1s not the complete handing over or trans-ference of power from one person or body of persons to another. · Delegation may be defined as the entrusting, by person or bodv of persons, of the exercise of power residing in that person or body of persons, !<? another person or bod~ ~f ~rsons, with complete power of .re~ocation or amendment. re~am.mg m the grantor or delcgator. It 1s important to grasp the implications of this for much con-fusion of thought had unfortunately resulted from 'assuming th;it,

(I) (1972] 2 S.C.R. 141.

delegation involves, or may involve, the complete abdication or ilbro· gation of power. This is precluded by the definition. ~legation 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.

Willis, J. said in Huth v. Clarke,(') :

Delegation, as the word is generally used, does not imply parting with powers by the person who gralllli the delega-tion, bnt 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 manner as to denude himself of his rights"

See also John Willis, "De/egatus non potesi delegare"(').

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 Hodge v. The QueenQ'),.the Privy Council said thats. 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 "· 92 as the Imperial Parliament in the plenitude of its pow~r 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 !mperial Parliament, or the Parliament of the Dominion would have had under like circumstances to confide to municipal institution or body of its own creation authority to make by-Jaws 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 power :o make regulation ancillary to legislation mi.2ht be intra vires hut for legislature to pass skeleton legislation and to empower the Govern-:nent to clothe the bare ,bones was not delegation but abdication, as :bat would create and endow with its own capacity new lcgi•lative power not' created by the British North America Act to which it owes :ts existence.

In 1918, nearly forty years after Hodge v. The Queen('), the '.heory of "abdication" wa8 raised in In ri Gray(') where the Sup-reme Court of Kanada upheld an Act but the judges did not agree in ·heir reasoning for so. holding. The Act was called the ".Qominion War Measures Act" which, empowered the Governor-General to make ·'such regulations as he may by reason of the existence of real or

(2) 21 Canadian Bar Review 257, (4) 57 S.R.C. ISO.

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

(3) [188319 A.C. 117.

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 very narrow meaning; for he went" on to describe it as "some-thing so inconceivable that the constitutionality of an attempt to do anything of the kind ~eed not be considered" and expressly said that the Dominion Parliament had as much !luthority to delegate as the Imperial Parliament Duff, J. also thought that an .implied. _Pro]).ibition against "abandonment" must be read into the Act; but for .hlDl no de)e-gatio• of legislative power, Iiowever extensive, . wouJ.Q .amount to "abandonment", since the executive .in making the regulations is no more than an agent of the legislature which can lllways recall.its autho-c rity. For him the borbidden 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 ther~ was no constitutional objection to the extremely extensive delegation con-templated by the Act, and in giving very narrow meaning to the word "abdication".

Unfortunately, In re Gray was "!artime case and the profession tends to regard wartime cases with a· cynical but natural suspicion.

Jn re Initiative and Referendum Act([1]) Viscount Haldane said that by s. 92 of the British North America Act, legislative power in pro-vince is conferred only upon its legislature and went on to make state-ment which has often been quoted : ·

"No doubt body, with power of. legislation on the subjects entrusted to it so ample as that enjoyed by Provin-cial 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 new. legislative power not created by the Act to which it owes its own existence."

In S'!an'!on v. lower Mainf.~nd Dairy Products Board('), the usual ob1ect1on was made t~at m the present case. there is practically ~ surrender by the provincial Legislature of its legislative responsibi-lity to another. body" and as usual Lord Haldane's dictum was cited ~·. Privy Cou.ncil did not even call on the Attorney General fo; BntJs~ Columbia for an answer and dealt with the objection in the followmg pithy sentences of Lord Atkin : .

. "Within its appointed sph.;,e the 'Provinci~ Legislature 1s as· supreme as any othe~;Parliament; and it is unnecessary to ~CY, to enumerate the innumerable occasions on which Legislatures, Provincial, Dominion and Imperial, have

(I) 119!9] A.C. 935.

(2) [1938! A.C. P.C. 708

entrusted various persons and bodies with similar powers to those contained in this Act"

Now it is well known that the English Parliament may, by le~Ia­tion, give to an}'body of its own ch005ing, the power to modify or iidd to given Act of Parliament (the legality of all English statutory rules and orders derives from this) .

In R. v. B11rah([1]), the Ptivy Council held that the Indian Lcgisla· ture was in no sense an agent or delegate of the British Parliament, that within the limits of its powers, the Indian legislatlirc 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 prerequisite to valid delegation of legislative power that the law must lay down policy or standard; nor did it do so .in any other case of delegated legislation. Indeed, such requirement is opposed to the principle affirmed by it that within the limits of their powers, Indian legislatures had, nnd 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.('), 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 Raval v. Stale of Saurash-tra ( 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 differ-ent 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 func-tion by transferring it and thus efface itself.

In Municipal Corporation of Delhi v. Bir/a 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 "ade-quate 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.

(2) (1951) S.C.R. 747.

(I) [1878] 5 I.A. 178.

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

This ixiw.er flows, in my jud&ment, 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. ParJ.ia;. ment must pas$ ii law in respect of an item or· items of the relevant list. Negatively, thiB means that Parliament caa-not abdicate its functions. It seems tO me that this was the position under the various Government of Indi~ Acts and the: Consti\ution has made no difference in tl!is respect. I read (1883) 9 A.C. 117 aod (1885} 10 A.C. 282 as layiJlg down that legislatures like Indian legislatures had fµll power .to delep~ legislative authority to subordinate bodies. · Io the judgments in these cases no such words as 'policy', 'standard' or 'guidance' is mentioned."In Lichter v. United States('), the Supreme Court uphchj the validity of the Renegotiation Act. That Act !>rovid~d for the rene-gQtiation of war contracts and authorised admmistrative ofticers to recover profits which they determined to be excessive; such profits being defined to mean "any amount of contract or· subccoutra~t price which is found as result of renegotiation to represent -.xcessive profits" which means, in other words that excessive profits menn exces-111ve profits. The Court repelled the challenge on th~ ground of <lele-gated legishttion _by saying :

~·11 is not necessary that Congress supply ~dministrative officials with specific formula for their guidance in field where flexibility and the adaptation of the congressional po)icy to infinitely variable conditions constitute the ~ssence of the program. The statutory terms "excessive . profits" in the context was 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 ~tandard$ such .as those contained in the Rene-gotiation and Communications Acts are upheld as adequate7 it becomes apparent that the requirement of standardK bas be-~ome .more 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 poeition in Australia is also practically the Sl\DIC. In Victoria/I Sttvedoring and General Contracting Co. Pvt. Ltd. · v. Dlg11ali(') : . Dixon, J .. ·said that the. Obiection to delegation of legislative power wu not based on .the ground that the doctrine of separation of powers for-bade such delegation. He 1aid that when in Huddarl Parker Ltd. v. ·--

(2) "American Acb1iinistrative Law", 2nd e<l.;pp. 41·42 .

(I) 3:W U. S. 742.

. (3) [1931! ~ C.L.R. 73.

Commonwealth([1]) the judges answered the·objection against delega-uun uf legislative power by observing that Roche v. Kronheimert ') upheld the validity of such delegation, it ceally meant that the time had gone by fo,. assigning to the separatii>n of powers in the Australian Constitution, the eflect of restraining Parliament from makin2 bw .:onferring the power of an essentially legislative character on the exe-cutive. While logically. or· theoretically, legislative power belonged exclusively to Parliament, the power of Parliament to authorise rnb-ordinate legislation was based more upon the usages of Britiso le;i!,la-tion and to the theory of English Law and whatever may be the rationale, the decision in Roche v. Kronheimer(') must be adhered to. And acmrding to that judgment "the true view is that legislative }lUWer 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 Cilief Justice Sobba Rao in Devi Das Gopal Krishnan v. State of. Punjab (supra) is the conferment of arbitrary power by the legislature upon •ubordinate body without reserving to itself control over that body and the self-effacement of legislative power in favour of another a~enoy either in whole or in part. In other worcfs, the legislature ;houiu not abdicate its essential function. The question to be asked and answered then is when does legislature abdicate its legislative function ?The concept of 'abdication' seems no less vague, fluctuating and utl::ertain 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('),, To Lord Haldane, Jegi;lature does not 'abdicate' unless it withdraws from the field and surrenders its responsibility therefor. But in the eyes of some other judges, there reems to be 'abdication' whenever legislature, while remaining in the field arid retaining its responsibility therefor entrusts to others the formulation of policy otherwise than with definite standard or purpose laid down by it.

In In re the Delhi Laws Act, 1912 etc. (supra) Kania, C.J. sald that if full powers to do everything that the legislature can do aro con-ferred on subordinate authority, although the legislature retains the power to control the action of subordinate authority by recaliing such power or repealing the Acts passed by the subordinate authority, there 1s no abdication or effacement of the legislature conferring such power. fazl Ali, J. observed that there are only two ma.in checks in this country on the power of the legislature to delegate, these being its good ~ense And the prlnciple that it should not cross the line beyond which delega-tion amounts to "abdication and self-effacement". Patanjali Sastri, J. was of the view that delegation of legislative authority is different from the creation, of new legislative power. In the former, the delegating body does not efface itself but retains its legislative power intaot and

(1) [1931] 44 C.L.R. 492.

(3) 193 U.S. 388, 421.

merely elects to exerciie such power through an agency or instrumen~ tality of its choice. In the latter there is no delegation of power to subordinate \lllits but gi:ant of power iq an· independent and ~oordinate body to· make laws operative of their own force. For the first, no expn;ss provision ~uthorities dekgation is required. In the absence of constitutional inhibition, delegation of legislative power, however extensive, . could be made so long a~ the delegating body retains its. own legislative powedntact-Mahajan, J .. was of the opinion that the legiS!ature cannot substitute the judgment, wisdom and patriotism of any other body, for those to which alone the people have seen fiHo confido this sovereign trust and that the view that unless expressly prohibited legislature has genera~ power to delegate its legislative functions to 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 legtslative functions which consist in· declaring the legislative policy and laying down the standard which is to be enacted into ·a rule of law. Das, J. said thatthe power of delegation is necessary for, and ancillary ti>, the · exercise of legislative power and is component part of it. The only . qualification upon the power to delegate is that the legislature may not, withol!i presel'Ving its own capacity intact, create and endow with its . . own capacity'a new legisllitive power not created ·or authorise by the Act . to which it oweg its existence. Bose, J. s.aid that the Indian Parliam~nt . can legislate along the lines Queen v. Burah (supra); that is-to say, it · can leave to another person ·or body the introd~tion ·or ·application of laws. which are or may be in existence at that time in any part of India !E · which 'is subject to the legislative control of Parliament.· ·In Cobb & Co. Ltd. v, Kroop(I), the question was whether the Queensland legislature had legislative authotjty under the .. impugned · Acts to invest the CommiSsioiler for Transport with .pilwer Oto impose and levy licence and permit fees. It was n_ot disputed . before .their Lordships· that fees imposed are to be regarded as constituting taxation. S Accordingly, it was contended. that the legislature had abdicated its exclU$ive power of levying tax.ation. The Privy ·Council held that Queensland Legislature was entilied to use any agent or subor~e agency and aniy machinery that it considered appropriate for carrying out the 9bject .and the purposes that they had iii mind and which they designated, and to Use the . Commissioner for Transport as its instrU• ·· ~nt to fix and recover. the licence and permit fees, provided it pre-G served its own capacity intact and retained perfect control over him; · that as it could at any time repeal the legislation and withdmw such . auth9rity and discretion ~s it h.ad .vested in him. it bad n0t &Ssignlllj, · transferred or abrogated 1.ts sovereign pow.er to levy ta~es. nor had . Jt renounced -Or abdicated its ·responsibilities In favour of newly.created legisfutive. authority'· and, that, accordingly, the two Acts were valid. . Lcird Morris of Borth-y-Gest said : ·

.. "What they (theJ<;gislatute) ~eated by the passing of'the ::rransport Acts could not reas..r.rbiy he described as new

'(I) (1967!1 A.C. 141.

legislative power or separate legislative body armed . with general legislative. authbtity (see R. v. Biil'.ah, 3 A.C. · SS9) .. Nor did the Queenslilnd legislature "create and endow with its own capacity new legislative pmver not created by the Act to which it owes its own existence" (see In .re the Initia-tive and Referendum Act, 1919 A.C. 935, 945)".

The point to be emphasised-and this· is rathe~ crucial-is the slal.e-ment of their L<lrdships that the legislature preserved its ·capacity intact' and retained perfect control over the Commissioner for Transport in asmuch as it could at any time repeal the legislation and withdraw the authority and discretion it had vested in him and, therefore, the legii-Jature did not abdicate its functions.

Duff, J .. said ln re Gray (supra)

"There is no attempt to substitute the executive for Parliament in the sense of disturbing tho 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 pqwer 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 :ationablizatidon of the stat~us quf~' arousets dthistrust. The legid'sla.h!re . compnses roa er cross·sec ion o mteres s an any one nurus· trative organ; it is less likely to be captured by particular interests. We must not, therefore, lightly say that here can be transfer of legis-lative power under the guise of delegation 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 mat· ters. The doctrine of abdication expresses· 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 govern· ment is to gain acceptance for objectives demonstrated as desirable and to realize them as fully as possible.· The making of law is only means to achieve purpose. It is not an end in itself. That end can be attained by the legislature making the law. But many topics or sub-jects of legislation are such that they require expertise. technical knowledge and degree of adaptability to .changing situations which parliament might not possess and, therefore, this end is better secured by extensivo delegation of legislative power. The legislative process would frequently bog down if legislature were required to appraise before hand the myriad situations to w11icli it wishes par-ticular policv to be applied and to formulate specific rules for each situation. The presence of Henry VIII clause in many of the statutes is pointer to the necessity Qf extensive delegation. The hunt by court for legislative policy or guidance in the crevices of statute or the nook and cranny of its preamble is not an edifying spectacle. It is not

clear what difference di>es itmake in pririciple by saying.that!ince the delept!On is tr rePR&erifative body, that would be .a. ,guarantee that the delepte will not exercise the power unreasonably, for, if ex hypothesi the Icgislatore must per(orm the essential legislative function, it is certainly· no consolaiion that the body to which the function has been delegated has representative character. In other words, if no guidance is provided. or policy laid down, the fact that the qe\egate has tepresehtative character could make no. difference in principle.

Seeing that by I. 8(2) (b) of the Act Parliament· has not delegated any poiver 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 sovereign legislature with plenary powers of legislation within its spherecand while legislating in that sphere, it is not subject to any guidance or control from any outside agency including the Parliament, and, th~ rates of tax which may be fixed · by the State legislature from time to time would, therefore,· be rates for taxing the !()Cal 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(I) in support of this submission. ·

In that case, the legislative assembly for the Union Territory of Pondicherry passed the Pondicherry General Sales Tax ·Act ( l 0 ol 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 Pondi-cherry Government may, by notification, appoint, and s. 2(1) provid· · ed that the Madras General Sales Tax Act, J 959, as in force in !hr State of Madras immediately before the commencement of the Pon\11· cherry Act, shall be extended to Pondicherry subject to certain modi· fications, one of which related to the constitution of the Appellate Tribunal. The Act also enacted Schedule, giving the description of goods, the point of levy and the rates of tax. The Pondicherrv Gov-ernment issued notification on March 1, 1966, appointing April l, 1966, as the date of commencement. Prior to the issue of the noti· fication, 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 notice to register himself as dealer and he thereupon filed writ petiiion challenging the vali· dity of the Act. After the petition was filed, the Pondicherry Legisla-ture 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 "shall come into force on the !st day of April, 1966"; it was also provided that all taxes levied or collected and all proceedin~

(I) [19671 2 S.C.R. 650.

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 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 Legis-lature were to amend it~ Act prior to the notification of its extension to Pondicherry, it would be the amended Act that would apply; that the · .B 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 sweepirig character qr whe1c ther they would be suitab!e i.n Pondicherry and that, the result was that the Pondicherry Legislature accepted the amended Act· though it W.s not and could not be aware what the provisions of the amended Act would be. There was, in these circumstances, the Court said, total '5urrender in the matter of sales tax legislation by the Pondicherry Assembly in favour of the Madras Legislature. The Court referred with approval the oft-quoted dictum of Lord Haldane in In re lniriative and Referendum Act (supra) that the le_gislature of provinco in Canada could not create and endow with its own capacity new kgis-lative power not created by the Act to which it owed its own txi,tonce ·and the passage from Cooley on "Constitutional Law", 4th ed. 138, to the effect :

"This high prerogative have been entrusted to its own wisdom, jndgment 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 exten<ive delegation. Bora Laskin, after referring to the dictum of Lord Haldane, said : ( ')

"This oft-quoted I?assage remains more counsel of caution than constitutional limitation. . . This pro-position has in no· way affected the widest kind of delegation by Parliament and by provincial legislature to agencies of their own creation or un.der 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 bein.g 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. Pondi-che"y (supra) must be confined to the facts of the case. It is doubtful

(l) See Canadian Bar Review, vol. 34 (1956), footnote on t'- 919.

whether there is any general priilciple which precludes either Parliament or State legislature ·from adopting Jaw and the future amendments to the law passed ·respectively by State legislature or Parliament and incorporating them in its legislation. At any rate, there can be no such prohibition wh.en the adoption is not of the entire corpus of Jaw on subject but only of provision and its future amendments and that for Special reason or purpose.· In A-G N.S. v. A.G. Can. (Nova Scotia Inter-delegation Case)(I), the Supreme Couns of Canada ;aid that neither the Parliament of Canada nor the legislature of any province can delegate one to the other (to be exercised by that other I as Parliament or Legi~lature, as the case may be) any of the legis-· !alive authority respectively confetred 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 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 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 i\1 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 constituent Act. The Cpurt said that delegation of this kind is incompatible with· 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 appreciate the limits of the doctrine affirmed by the Nova Scotia Inter-delegation case. Property under-stood the case does not prohibit either Parliament or provincial legi$lature from incorporating referentially into th.e valid /egis/Qtion of one the futurt valid enactmtnts of the other. Illustrations of this kind of anticipatory incorporation by reference may be seen in the Cr. Code. S.534 (fixing the qualification.~ of jurors in criminal proceeding• a> those prescribed by 'the laws in force for the time being in province'), and in the Summary Convictions Act, R.S.O. 1960, c. 387, s. 3 (making applicable to provincial summary conviction proceedings certain pro- . visions 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 legis!ative authority of the referred legislature, but rather borrowing of provisions which are within its competence and which were enacted for its own purposes, and which the referring legislature coul<! have validly spelled-out for its owu purposes. 'This was appreciated by Judson, J. in Re Brinklow, (1953) 0.W:N. 325; 105 Can. C.C. 203 (aff'd on appeal on other grounds)'. However, in Regina v. Pia/ka (1953) 4 D.L.ll. 440, (1953) O.W .N. 596, JOG Can. CC. 197 (C.A.), Laidlaw, J.A. reserved the question of the·

(I) (19S0)4 D.l.R. 369.

validity of'the Provincial Summary Convictions Act if it were construed to incorporate not only provisions of the Cr. Code in existence when ~he provincial statu.te was last enacted but also provisions subsequently mtroduced.

"This· is, with respect, an unnecessary as well as an Unwarranted acceptance of limitation on legislative competence, and justifiable only .as matter of legislative policy of the referring legislawre; see Laskm, Note (1956) 34 Clio. Bar. Rav. 215; but cf. Bourne, Note, (1956) .34 Can.Bar. Rav. 500. ·Once it is determined that referring legislature is legislating in relation to matter within its competeBce and that the referred legislature is similarly legislating within its com-petence and for its own purposes, borrowing by the one from the other 1of future enactments does not invo Ive 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) 54&'.'. (see Bora Laskin, "Canadian Constitutional Law", 1rd ed., pp. 40-41).

The decision in A-G Ont. v. Scott(>) was in an appeal from judgment reversing an order dismissing motion for prohibition directed to Magistrate pllrporting to act under the Ontario Reciprocal Enforcement of Maintenance Orders Act, R.S.0. 1950, c.334. The Act carried out an arrangement, to which certain other province; and England became parties, for enforcement in Ontario, against resident husbands, of provisional maintenance orders for which proceedings had been initiated in reciprocating jurisdiction by wives resident there. By.s.5(2) of the Act, resident husband against whom 'confirmotion' of foreign order was sought was entitled 'to raise any deience that he might have raised in the original proceedings had he been 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 Cartwri&ht JJ. agreed, held that the action of each legislature was wholly discrete and independent of the other, relation incompatible with delegation; and that it was case of adoption of circumscribed nature in that only single right was involved, namely, the private right of maintenance between husband and wife; that the right touched resident •.if each country; that the obligation of support was recognized by buth; nod 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 Province which would obV!ously 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.0. 1950, c.379, s.3. According to tl1c learned judge, from the standpoint of legislative competency, there was .no difference between the adoption of procedure and that of substantive

(I) (19S6J S.C.R. 137.

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 subject of such local and civil rights nature, then the oft··quoted words of Lord Fitzgerald in Hodge 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 passessed 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 -availa_ble defences to those thar 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 iii England, and this, it was contended, amounted to 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 judg-ment 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 valid exercise of provincial powers under head (13) of &. 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 Jaw in the_ Province.

As regards the correctness of the reasoning of Locke, J. see Bora Laskin, comments in (1956) 34 Can. Bar. Review, 215, 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 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 ln-_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 105-106 of 1970 the objectives which Parliament wanted to achieve by adopting the rate of "tax in the appropriate State for taxin!!I 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 Jaw of the appropriate State as regards the procedure for levy and collection of -the _tax as also for imposition of penalties.

There can Ile no doubt that. Parliament can repeal the provisions of s.8(2) (b) adopting the higher rate of tax fixed by the appropriate

State legislature in respect of intra-State sales. If Parliament o.:an re-peal the provision, there can be no objection on the score that Parlia-ment 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 o[ tax fixed by thee State legislatures, it has not abdfoated its legislative function. As already stated, this point has been expressly decided by ihe 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 tl:tat reached by the High Court of Gujarat in RalliS India Ltd. v. R. S. Joshi </iales Tax Officer(') and the High Court of Punjab in Tek Chand Daulat Rai v. The Excise and Taxation OUicer, Ferozepore and Others(').

In the result these appeals are dismissed with costs.

Appeals dismissed.

(2) 29 S.T.C. SSS •

. (1) 31 S.T.C. 261.