1. This judgment will dispose of Civil Writ Petitions Nos. 104 of 1967, 105 of 1967, 563-D of 1966 and 564-D of 1966.
2. On February 9, 1959, the Delhi Municipal Corporation passed a resolution purporting to be under Sub-section (1) of Section 150 of the Delhi Municipal Corpora- corporation Act, 1957 (hereafter referred to as the said Act) for the levy of three taxes-
(i) Local rate on land revenues;
(ii) A tax on the consumption or sale of electricity; and
(iii) Toll fax.
All these three taxes are optional under Sub-section (2) of Section 113 of the said Act. Although Sub-section (1) of Section 150 of the said Act requires the resolution to define the maximum rate of tax to be levied, yet the said resolution only specified the rates of taxes without expressly mentioning that they were the maximum rates. The opening part of the resolution reads:
'Resolved that as required under the provisions of Sub-section (1) of Section 150, read with Sub-section (2) of Section 109 of the Delhi Municipal Corporation Act, 1957, the Municipal Corporation of Delhi determines to levy in the following year (1959-60) the following taxes specified in Sub-section (2) of Section 113 of the Act, namely:'
With respect to the tax on the consumption or sale of electricity a mode of collection was prescribed in the resolution that 'the tax be collected through the distributing licensee in the Corporation area and from persons generating for their own consumption, and a commission for such collection be paid if necessary.' Sub-section (2) of Section 150 of the said Act requires-
'Any resolution passed under Sub-section (1) shall be submitted to the Central Government for its sanction, and if sanctioned by that Government, shall come into force on and from such date as may be specified in the order of sanction.'
In view of this provision the resolution was submitted to the Central Government and by order dated 20th June, 1959, the Central Government accorded sanction to the resolution 'for the levy of a tax on the consumption or sale of electricity with effect from the 1st day of July, 1959 at the rates shown in the Schedule and subject to the conditions specified therein, provided that in the case of generating or distributing licensees no tax shall be levied on the consumption of electricity used in their works solely in the process of generation or distribution or both.' The rates Shown in the Schedule were different from those in the resolution of 9th February, 1959.
The matter came for consideration before the Standing Committee in its meeting dated 23rd June, 1959, and the Standing Committee resolved 'that it be recommended to the Corporation that the rates of tax sanctioned by the Government be determined under Sub-section (3) of Section 150 of the Municipal Corporation Act, 1957, as the actual rates at which the tax will be livable during 1959-60'. The resolution of the Standing Committee did nto in terms specify the rates but merely referred to the rates sanctioned by the Government. The resolution of the Standing Committee was followed by a resolution of the Corporation dated 24th June, 1959, whereby the Corporation resolved 'that the recommendations of the Standing Committee vide its resolution No. 18 dated 23-6-1959 regarding tax on sale or consumption of electricity be approved.' This resolution was in purported exercise of the power under Sub-section (3) of Section 150 which requires the Corporation to determine the actual rates at which the tax shall be livable after the resolution under Sub-section (1) of Section 150 has come into force under Sub-section (2).
Again, no rates were set out in the resolution dated 24th June, 1959, and the suggestion on behalf of the Corporation, which we shall elaborate later, was that the approval of the recommendation of the Standing Committee which recommendation had referred to the rates as sanctioned by the Government amounted to determination of actual rates in full compliance with Sub-section (3) of Section 150. In pursuance of the resolution dated 24th June, 1959, heavy demands of taxes were made on the petitioners. 'The petitioners, Delhi Cloth and General Mills Company Limited and Birla Cotton Spinning and Weaving Mills Limited, challenged the levy by writ petitions in the Punjab High Court, which were dismissed by a learned Single Judge. The Letters Patent Appeals filed by the petitioners, however, succeeded and a Divisional Bench of the Punjab High Court by judgment dated December 10, 1964, allowed the writ petitions. The Punjab High Court decided-
(1) 'The scheme of Section 150 when considered as a whole would militate against the view that the Central Government in its sanction order can fix a rate of tax different from and in excess of the maximum as determined by the Corporation in its resolution under Sub-sec-lion (1) of Section 150' and, thereforee, on account of modification and enhancement of the maximum rate by the sanction order the said order was beyond the scope of Sub-section (2) of Section 150 and was, thereforee, illegal;
(2) The second resolution dated 24th June, 1959, was in contravention of Sub-section (3) of Section 150 inasmuch as-
(a) the order of the Central Government came into force from 1-7-1959 while the second resolution was passed on June 24, 1959, that is, before the date of the order coming into force; and
(b) 'in one particular the maximum rate as specified in the first resolution had been exceeded and the exemption conferred by that resolution to domestic consumption under 35 Kwhr was rescined;' and
(3) Having regard to the provisions of Sub-section (2) of Section 109 read with Sub-section (4) of Section 150 the liability to pay tax could nto commence earlier than 1st of April, 1960, having regard to the dates of the Government sanction and the second resolution.'
3. The last mentioned conclusion of the Punjab High Court was arrived at on the ground that in view of Sub-section (2) of Section 109 and Sub-section (4) of Section 150 all the steps required under Sub-sections (1), (2) and (3) of Section 150 had to be completed on or before February 15, 1959, if the desire was to impose tax during the succeeding financial year, that is, 1959-60. To revitalise the levy the Parliament enacted on 3rd December. 1966, the Delhi Municipal Corporation (Validation of Electricity Tax) Act, 1966 No. 35 of 1966 (hereafter referred to as the Validation Act). It is necessary to read the provisions of Section 2 of the Validation Act, which is as under:
'2. (1) Notwithstanding anything contained in Section 150 read with Sub-section (2) of Section 109 of the Delhi Municipal Corporation Act, 1957, the resolution of the Delhi Municipal Corporation dated the 24th June, 1959, passed under Sub-section (3) of Section 150 aforesaid, in so far as the said resolution relates to the determination of the rates at which tax shall be livable on the consumption or sale of electricity shall be deemed to have been passed in accordance with law and the rates specified in the said resolution in respect of tax on the consumption or sale of electricity shall be deemed to be, and to have been, the actual rates of the tax under the said Act with effect on and from the 1st day of July, 1959 and up to and inclusive of the 31st day of March, 1966.
(2) Notwithstanding anything contained in any judgment, decree or order of any Court to the contrary, all taxes on the consumption or sale of electricity levied or collected or purporting to have been levied or collected in pursuance of the resolution referred to in Sub-section (1) shall, for all purposes, be deemed to be, and to have always been, validly levied or collected, and accordingly-
(a) all acts, proceedings or things done or taken by the Delhi Municipal Corporation or by any other authority in connection with the levy or collection of such taxes shall, for all purposes be deemed to be, and to have always been, done or taken in accordance with law:
(b) no suit or other proceedings shall be maintained or continued in any Court against the Government, the Delhi Municipal Corporation or any person on authority whatsoever for the refund o| any taxes so paid; and
(c) no court shall enforce any decree or order directing the refund of any taxes so paid.'
4. Before we deal with the contentions raised at the bar we must, for completeness, advert to the relevant provisions of the Delhi Municipal Corporation Act 'Year' is defined In Section 2 (67) to mean 'a year commencing on the 1st day of April'. Section 113 of the said Act provides for levy of taxes and Sub-section (1) thereof specifies certain taxes which the Corporation must levy while Sub-section (2) enumerates the various taxes which the Corporation may 'for the purposes of this Act' levy in addition to the taxes specified in Sub-section (1). The impugned tax, that is, a tax on the consumption, sale or supply of electricity, is an optional tax. Sections 114 to 135 make elaborate provisions for the various steps requisite for the levy and collection of property taxes. By Sub-section (1) of Section 114, water tax, scavenging tax and fire tax, which are the constituents of property tax, can be levied on such percentage of the rateable value of lands and buildings as the Corporation may deem reasonable for providing the relevant facilities.
The maximum prescribed for general tax, another constituent of property tax, is 20 per cent, of the rateable value. Section 136 read with the Third Schedule dealing with the levy of tax on vehicles and animals also set out the maximum tax which can be levied. Similarly, the said Act prescribes the maximum livable with respect to the other compulsory taxes as well. Section 115 deals with the imposition of other taxes and prescribes certain limitations and exemptions in this behalf. No ceiling has been provided with respect to the impugned tax. Section 109 requires the Corporation to adopt on or before the 31st day of March of every year the budget estimates for the ensuing year and Sub-section (2) thereof reads-
'On or before the 15th day of February of each year the Corporation shall determine the rates at which various municipal taxes, rates and cesses shall be levied in the next following year and save as otherwise provided in this Act the rates so fixed shall nto be subsequently altered for the year for which they have been fixed.' Sections 41 to 43 prescribed the 'functions of the Corporation'. The relevant part of Section 42 reads-
'It shall be incumbent on the Corporation to make adequate provision by any means or measures which it may lawfully use or take, for each of the following matters, namely:
XX Xx Xx XX (d) the construction or purchase, maintenance, extension, management and conduct of-
(i) any undertaking for the generation or supply and distribution of electricity to the public,
(ii) any undertaking for providing road transport services by mechanically propelled vehicles, and
(iii) any undertaking for providing a sufficient supply of pure and wholesome water.'
Chapters Xiii and Xiv make elaborate provisions in respect of the Electricity Supply and Transport Services Undertakings referred to in the aforesaid clauses (i) and (ii). Section 43 vests in the Corporation a discretion to provide for all or any of the matters prescribed thereby and clauses (b) and (i) thereof read-
'The Corporation may in its discretion provide either wholly or in part for all or any of the following matters, namely;
** ** ** (b) the establishment and maintenance of, and aid to, libraries, museums, art galleries, botanical or zoological collections;
** ** ** (i) the providing of music or other entertainments in public places or places of public resort and the establishment of theatres and cinemas; --
** ** ** The Corporation is thus obliged and/or authorised also to engage in adventures in the nature of trade.
5. In pursuance of the Validation Act, heavy demands of taxes on consumption etc. of electricity have been made on the petitioners and those demands have now been challenged by writ petitions. By writ petitions Nos. 104 of 1967 and 105 of 1967 challenge has been made against demand of taxes for the period 1-7-1959 to 31-3-1966.
6. On February 17, 1965, the Municipal Corporation passed another resolution in pursuance of Sub-section (1) of Section 150 of the said Act for the levy of tax on consumption, sale or supply of electricity and provided the maximum rates. The maximum rates in this resolution were higher than the rates levied earlier. This resolution was submitted to the Government for sanction under Sub-section (2) of Section 150 of the said Act and sanction was accorded by the Central Government on 8th December, 1965. The order inter alias reads-
'Now, thereforee in exercise of the powers conferred by Sub-section (2) of Section 150 of the Delhi Municipal Corporation Act, 1957, the Central Government hereby sanctions with immediate effect the said Resolution No. 817 dated the 17th February, 1965.'
The sanction order is signed by Shri A.F. Cquto, Deputy Secretary to the Government of India. On 27th December, 1965, the Corporation passed the second resolution under Section 150(3) of the said Act resolving that the rates fixed as the maximum rates be adopted as actual rates for the levy of the tax. By Writ Petitions Nos. 563-D of 1966 and 564-D of 1966 the challenge is to the levy by the resolutions dated 17th February, 1965 and 27th December, 1965.
7. It is in the light of these facts that various contentions, dealt with hereafter, have been raised on behalf of the petitioners by way of challenge to the said levy.
8. It was contended on behalf of the petitioners that in enacting the Validation Act the Legislature had misfired. In elaboration of this argument it was said that-
(a) the Legislature wrongly assumed that there was a valid levy of tax and only the rates had to be determined by the Corporation with the result that the Legislature validated the resolution only so far as the rates were concerned. As a matter of fact, there was no valid levy and the validation of the resolution dated 24th June, 1959, to the limited extent did nto have the effect of validating the levy;
(b) the Legislature wrongly assumed that the rates were specified in the resolution dated 24th June, 1959; and
(c) neither the sanction of the Government required under Sub-section (2) of Section 150 of the said Act had been validated nor the requirement as to sanction been dispensed with or abrogated. Sub-section (3) of Section 150 is in two parts. The first part deals with the determination of actual rates at which the tax shall be livable within the maximum rates defined by a resolution under Sub-section (1) of Section 150 and sanctioned by the Government. By the second part the tax comes into force on the 1st day of the quarter of the year next following the date on which the second resolution is passed. Once, thereforee, the actual rates are determined by a resolution under Sub-section (3) of Section 150, the tax automatically comes into force. Sub-section (1) of Section 150 has also two requirements--(i) the determination to levy a tax which is optional under Sub-section (2) of Section 113; and (ii) prescription of the maximum rates of the tax to be levied and other particulars. The steps provided in Sub-section (2) and Sub-section (1) are the steps anterior to the passing and validity of the resolution under Sub-section (3) of Section 150 and the resolution under the last-mentioned provision is required to be confined only to the determination of the rates.
The resolution determining rates is dependent on valid steps taken under Sub-sections (1) and (2) of Section 150. If the Legislature, acting within the sphere of its legislative competence, puts a seal of validity on a resolution passed under Sub-section (3) of Section 150, the steps anterior to it stand automatically validated. If there are certain conditions anterior or precedent to the doing of an act and the Legislature competently declares the last act in the series to be valid, it must follow logically that the Legislature put its stamps of validity on such conditions precedent or the anterior steps. In the case at hand the Parliament declared the second resolution retrospectively valid. Once that is done, the fax becomes effective by the force of Sub-section (3) of Section 150 itself. Our conclusion, thereforee, is that validation of the resolution under Sub-section (3) of Section 150 validated also the steps to be taken under Sub-sections (1) and (2) of Section 150. Considerable emphasis was laid by the petitioners on the words 'in so far as the said resolution relates to the determination of the rates at which tax shall be leviable. . . .' in Section 2 of the Validation Act.
The resolution dated 24th June, 1959, accepted the recommendations of the Standing Committee 'regarding tax on sale or consumption of electricity. . . .'
That resolution of the Standing Committee dealt nto only with determination of rates under Sub-section (3) of Section 150 but also with other matters and that resolution of the Standing Committee was approved in toto. In passing the Validation Act the Legislature was concerned only with the part of the resolution dealing with determination of rates end that appears to be the reason for the use of the words of limitation.
The petitioners relied on Amalgamated Coalfields Ltd. Calcutta v. State of M. P. : AIR1967MP56 . In that case coal tax could be levied under an Act of 1920. The first imposition of tax required Government sanction. Tax at the rate of three pies per ton was levied by resolution of the Mining Board in 1935 which imposition was accorded sanction by the Government. Thereafter the rates were increased to four pies, seven pies and nine pies in 1943, 1946 and 1947 respectively without Government sanction. Act of 1920 was repealed and a new Act was passed in 1948. The taxes in force under the 1920 Act were continued by a saving clause In the new Act. On a challenge by the tax-payers, the Supreme Court struck down the increase as in their Lordships' opinion the increase also required Government sanc- tion. The Legislature passed a Validation Act. The majority of the learned Judges construed the Validation Act to mean that it did nto impose tax retrospectively by its own force, but it only validated retrospectively the notifications by the Board without dispensing with the necessity of the Government sanction and consequently in the absence of Government sanction the increase was ineffective. The decision turns on the interpretation of the statute there under consideration and no universal rule governing other Validation Acts was laid down. As we read the decision it does nto apply to the Validation Act before us where unlike that Act the Government sanction is a step anterior to the second resolution.
9. It was then argued that Section 2 of the Validation Act validated only the rates 'specified' in the said resolution and the learned counsel underlined (herein' ') the words--'and the rates specified in the said resolution in respect of tax on the consumption or sale of electricity shall be deemed to be, and to have been, the actual rates of the tax under the said Act. . . .'
The suggestion on behalf of the petitioners was that neither the resolution dated 24th June, 1959, of the Corporation nor the resolution of the Standing Committee 'specified' the rates which were mentioned only in the Government sanction with the result that the Validation Act was of no avail to the Corporation. There are two answers to this argument-
(1) The Corporation approved the resolution of the Standing Committee which in turn referred to the rates sanctioned by the Government with the result that the rates were determined by reference though nto expressly recited in the resolution of the Corporation. The words 'the rates specified in the said resolution...' cannto be given that rigid, wooden and limited meaning. In our opinion, the rates were specified by reference to the resolution of the Standing Committee which in turn referred to the Government sanction.
(2) The earlier part of Section 2 of the Validation Act provides that the resolution relating to the determination of rates 'shall be deemed to have been passed in accordance with law'. Subsection (3) of Section 150 of the said Act only requires the second resolution to determine the actual rates. The actual rates were determined by reference and when the Validation Act says that the said resolution 'shall be deemed to have been passed in accordance with law' that resolution must, thereforee, be taken as validly determining the actual rates within Sub-section (3) of Section 150 and specification or non-specification becomes immaterial. Once that resolution is declared to have been passed in accordance with law it comes into force by virtue of the second part of Sub-section (3) of Section 150.
10. It was then contended by Mr. Palkhivala and further elaborated by Mr. N.C. Chatterjee that, in any case, the Validation Act does nto have the effect of validating the levy for the years after the year 1959-60. The first resolution purports to have been passed 'as required under the provisions of Sub-section (1) of Section 150, read with Sub-section (2) of Section 109. . . .' The levy by the said first resolution is in express terms limited to the year 1959-60 as appears clearly from the following part of the resolution:
' . . . . the Municipal Corporation of Delhi determines to levy in the following year (1959-60) the following taxes specified in Sub-section (2) of Section 113 of the Act.'
As we have said earlier, it is optional for the Corporation to levy or nto to levy any of the taxes set out in Sub-section (2) of Section 113 and all the taxes levied by the first resolution fall under Sub-section (2) thereof. It is also optional for the Corporation to levy any of those taxes either for one year or for a longer period. Having regard to the optional nature of levy, it becomes effective only after a decision is taken under Sub-section (1) of Section 150 to levy a tax. If that levy is for a limited period, the option in favor of levy stands exercised only for that period and nto beyond. The decision to levy becomes effective upon sanction by the Central Government under Sub-section (2) of Section 150. The effect of the sanction would be to render the levy effective only for the period to which the resolution extends. The actual rates and the right to charge tax on those rates spring into effectiveness only after the second resolution is passed and that resolution is required to determine actual rates within the maximum fixed by the first resolution. It follows that the second resolution determining the actual rates within the range prescribed by the first resolution does nto touch upon the levy itself. To illustrate the point, if the first resolution decides to levy tax for two years and the second resolution determines the actual rates for five years, the actual rates determined under the second resolution for three years extending beyond the period of levy would be ineffective and of no force. What has been done in this case is this: The first resolution levied tax only for one year 1959-60. The second resolution, even if it extends beyond that period, would be ineffective to that extent Sub-section (1) of Section 2 of the Validation Act validated only the second resolution and consequently validated only the determination of rates under Sub-section (3) of Section 150 of the said Act. No doubt, Sub-section (1) of the Validation Act says that the rates specified in the second resolution shall be deemed to be, and to have been, the actual rates of tax under the said Act with effect on and from the 1st day of July, 1959, and up to and inclusive of the 31st day of March, 1966, yet the effect of Sub-section (1) would be only to validate the determination of rates and extend those rates to 31st day of March, 1966. But that determination of rates itself is nto backed by a levy for the period beyond 1959-60 and, thereforee, would be ineffective. We were asked by the Corporation to consider Sub-section (2) as validating the levy independently of Sub-section (1). Even Sub-section (2) of Section 2 of the Validation Act does nto either impose or validate any levy beyond 1959-60. Sub-section (2) merely says that 'all taxes on the consumption or sale of electricity levied or collected or purporting to have been levied or collected in pursuance of the resolution referred to in Sub-section (1) shall, for all purposes, be 'deemed to be, and to have always been, validly levied or collected. . . .'
What Sub-section (2) saves, thereforee, is the tax levied or purporting to have been levied in pursuance of the second resolution. The second resolution itself does not, and, as a matter of fact, could not, in the absence of levy extend beyond 1959-60. The Government sanction is also confined to the period specified in the resolution dated 9th February 1959. The resolution of the Standing Committee also recommends that the rates sanctioned by the Government be determined 'as the actual rates at which the tax will be livable during 1959-60'. The second resolution merely approves the recommendation of the Standing Committee. If the first resolution is read as levying tax only for the year 1959-60, the Government sanction and the second resolution must necessarily be, and in fact are, limited to that period. It follows that the validation of levy, or purported levy, in pursuance of the second resolution as validated by Sub-section (2) of Section 2 of the Validation Act must also be confined to the period 1959-60. In any case, the second resolution did nto levy any tax, a function to be performed under Sub-section (1) of Section 150.
Indeed, in passing the first resolution the Corporation appears to have been suffering from misapprehension of the scope and requirements of the relevant provisions of the said Act The perusal of Sub-section (3) of Section 150 shows that if actual rates have been determined there under the tax comes into force on the first day of the quarter of the year next following the date on which the second resolution is passed. As in the instant case, the second resolution having been passed on 24th June. 1959, the tax could come into force by virtue of Sub-section (3) of Section 150 from 1st July, 1959. To that extent Sub-section (3) of Section 150 has effect independently of Section 109. By virtue of Sub-section (4) of Section 150 the provisions of Sub-section (2) of Section 109 of the said Act apply in relation to optional taxes as they apply to compulsory taxes after a tax has been levied in accordance with Sub-sections (1) to (3) of Section 150; so that, when the year in which the levy commences under Section 150(3) comes to an end, the provisions of Sub-section (2) of Section 109 become applicable and consequently in the succeeding years the Corporation would be obliged to determine fresh rates of tax on or before the 15th of February.
That, however, does nto mean that till rates are determined under Section 109, the tax does nto come into force even under Sub-section (3) of Section 150. In that view, reference to Sub-section (2) of Section 109 in the first resolution, at least with respect to the tax on the consumption or sale of electricity, was irrelevant. Section 109(2) is indifferent to the resolution passed under Sub-section (1) of Section 150 which is only concerned with passing a resolution for the levy of tax, prescribing the maximum rates and deciding the class or classes of persons etc. to be taxed. Under Sub-section (2) of Section 109 the Corporation has to determine the rates at which the various municipal taxes shall be levied in the next following year and to us it appears that in passing the first resolution also the Corporation thought that they were determining the rates of tax to be levied in the following year and that is why reference was made to Section 109(2) even with respect to the tax in question and no maximum rate was defined as required by Sub-section (1) of Section 150 of the Act. That further lends support to the contention of the petitioners that the Corporation was confining its first resolution only to the year 1959-60.
Mr. Gokhale, the learned counsel for the respondents, contended that reference to Section 109(2) was made because besides the tax in question two other taxes were being imposed by the said resolution on which Section 109(2) had a bearing. He asked us to read the resolution by omitting reference to Section 109(2) for the purposes of the levy in question. There was some contro- versy at the bar as to whether or nto Section 109(2) had any relevance even with respect to the other two taxes as the learned counsel for the petitioners contended that these taxes were being levied for the first time in which case Section 109(2) would have no relevance. We need nto launch ourselves upon that enquiry as to us it is clear that resort to Section 109(2) was unnecessary for the purposes of the impugned tax. Mr. Gokhale further suggested that nto only should we ignore Section 109(2) for the purposes of the tax in question but also read the words 'in the following year 1959-60' as limited to the other two taxes, or, in other words, as limited to taxes to which Section 109(2) applied. It is impossible to perform that surgical operation on the resolution as that would involve complete recasting thereof. May be, the petitioners are right that the Corporation acted under the impression that they were determining the rates of the three taxes to be levied in the next following year under Section 109(2) and that is why the levy was confined to the year 1959-60. Be that as it may, perusal of the resolution clearly shows that all the three taxes were, in fact, confined only to the year 1959-60. It follows that the levy was only for the year, 1959-60 and thereforee, validation of rates beyond 1959-60 in the absence of levy, was of no effect and consequence.
11. Before we deal with one of the main contentions that Section 150 suffers from the vice of excessive delegation, we may dispose of one other minor point raised by the petitioners. They contend that tax can be levied only on such electricity consumed as results from the sale or supply thereof and nto on electricity generated by the consumer himself. Under Section 113(2)(d) levy of tax is authorised on the consumption, sale or supply of electricity. The provision has nto been challenged as suffering from any legislative incompetence. It was, thereforee, within the powers of the Corporation to levy tax on the consumption of electricity irrespective of the source of that electricity. Electricity purchased and consumed by the petitioners would be as much a consumption of electricity as that of the electricity generated by themselves. This contention, thereforee, must be answered against the petitioners.
12. That takes us to the last contention on behalf of the petitioners put forward by Mr. N.C. Chatterjee and Mr. Ashok Sen that Section 113(2) read with Section 150 amounts to excessive delegation. The argument is that under the aforementioned two Sections the Corporation may levy tax at any rate that it may like as there is no ceiling provided for such levy in the Act According to the petitioners, the Legislature has, in conferring power on the Corporation to levy tax without prescribing any maximum and without laying down any guiding principles which should govern the determination of the maximum tax to be levied, delegated essential legislative function and created a legislature armed with full legislative powers. The argument proceeds that-after the Constitution (Seventh Amendment) Act, 1956, the Parliament was nto possessed of any power to create or continue for the Union Territory of Delhi a body to function as a Legislature for the said Territory so that the Parliament could nto confer powers on the Corporation to legislate. On this there is no dispute. The real controversy between the parties is that whereas the petitioners maintain that unregulated and unlimited powers to fix any rates of tax is a delegation of essential legislative power, and, in any case, in delegating the power to fix the rates of tax the Legislature has failed to provide guidance for such fixation, the respondents, on the other hand, seek to support the levy on the grounds that (i) the power to fix rates is nto an essential legislative power, and (ii) sufficient guidance has been provided in the Act for determining the rates by the Corporation.
13. From the majority decision in the Corporation of Calcutta v. Liberty Cinema : 2SCR477 , two propositions emerge--(i) fixation of rates of a tax is nto of the essence of the legislative power and it can be delegated; and (ii) when the power to fix rates of tax is left to another body, the Legislature must provide guidance for such fixation. In this case the provision under consideration was Section 548 of the Calcutta Municipal Act (33 of 1951), the relevant part of which reads-
'(1) Every license .... granted under this Act . . . shall specify,
(e) the tax or fee, if any, paid for the license. . . .'.
It was contended in that case that Section 548 suffered from the vice of illegal delegation of legislative functions to the Corporation because it left entirely to the latter to fix the amount of the tax and provided no guidance for that purpose. On the other hand, the Corporation had contended that fixation of rates of a tax was nto an essential feature of legislation and sufficient guidance had been provided in the Act for the purpose. It is on these rival contentions that the majority of their Lordships arrived at the afore-mentioned two conclusions. While answering the contention as to whether or nto any guiding principles were provided in the Act for fixation of rates, their Lordships said-
'The Corporation, subject to certain controls with which we are nto concerned, is an autonomous body. It has to perform various statutory functions. It is often given power to decide when and in what manner the functions are to be performed. For all this it needs money and its needs will vary from time to time with the prevailing exigencies. Its power, to collect tax. however, is necessarily limited by the expenses required to discharge those functions. It has, thereforee, where rates have nto been specified in the statute, to fix such rates as may be necessary to meet its needs. That, we think, would be sufficient guidance to make the exercise of its power to fix the rates valid. The case is as if the statute had required the Corporation to perform duties A, B, and C and Rive power to levy taxes to meet the costs to be incurred for the discharge of these duties and then said that provided, however, that the rates of the taxes shall be such as would bring into the Corporation's hands the amount necessary to defray the 'costs of discharging the duties'. We should suppose, this would have been a valid guidance. We think the Act in the present case impliedly provides the same guidance: see Section 127 (3) and (4). It would be impracticable to insist on a more rigid guidance. In the case of a self-governing body with taxing powers, a large amount of flexibility in the guidance to be provided for the exercise of that power must exist.'
One another case strongly relied upon by the respondents is the Western India Theatres Ltd. v. Municipal Corporation of the City of Poona Air 1959 Sc 583. There the Corporation had been given power to levy 'any other tax'. The contention that conferment of such a power amounted to abdication of legislative power was rejected principally on the ground that the Municipality was authorised to impose taxes with the sanction of the authority therein mentioned 'for the purposes of the Act' and that furnished sufficient guidance for the imposition of the tax. Relying on these two decisions, Mr. Gokhale suggested that (1) different criteria should be adopted while testing the delegation of powers in favor of a self-governing body which, by the very nature of things, demands a large amount of flexibility in the guidance to be provided for the exercise of the power and (2) the fact that under Section 109 the Corporation is required, on or before the 31st day of March of every year, to adopt the budget estimates for the ensuing year and to determine rates of taxes every year, coupled with the financial needs, provides sufficient guidance in the matter of fixation of rates and circumscribe the power.
On behalf of the petitioners, on the other hand, reliance was placed on the decision of their Lordships of the Supreme Court on Devi Das Gopal Krishan v. State of Punjab, Civil Appeals Nos. 526, 527 and 529 of 1966, D/- 10-4-1967 : : 3SCR557 . The provision challenged in that case was Section 5 of the East Punjab General Sales-tax Act, 1948 (Act 46 of 1948), reading-
'Subject to the provisions of this Act, there shall be levied on the taxable turnover every year of a dealer a tax at such rates as the Provincial Government may by notification direct.'
Their Lordships of the Supreme Court came to the conclusion that Section 5 unconstitutionally delegated legislative power without prescribing any guiding principles. Dealing with the Liberty Cinema case : 2SCR477 , their Lordships said-
'If this decision is an authority for the position that the Legislature can delegate its power to a statutory authority to levy taxes and fix the rates in regard thereto, it is equally an authority for the position that the said statute to be valid must give a guidance to the said authority for fixing the said rates and that guidance cannto be judged by stereotyped rules but would depend upon the provisions of a particular Act. To that extent this judgment is binding on us. But we cannto go further and hold, as the learned counsel for the respondents asked us to do, that whenever a statute defines the purpose or purposes for which a statutory authority is constituted and empowers it to levy a tax that statute necessarily contains a guidance to fix the rates: it depends upon the provisions of each statute.'
Dealing with the argument in support of the validity of the section on the ground that the doctrine of constitutional and statutory needs would afford reasonable guide-lines for the Government to fix the rate and that the principle laid down in Liberty Cinema case, : 2SCR477 would equally apply to this case, it was observed-
'We cannto accept this argument for three reasons, namely, (1) the decision of this Court in : 2SCR477 should be confined only to the provisions of the Calcutta Municipal Act wherein this Court found a guidance; (2) the provisions of the Sales-tax Act, including the preamble, do nto disclose any policy or guidance to the State for fixing the rates; and (3) the general constitutional power to impose taxes has no relevance for discovering a statutory policy under a particular Act.'
14. On behalf of the petitioners it was said that their Lordships of the Supreme Court in Devi Dass' case, C.A. Nos. 526, 527, and 529 of 1966 D/- 10-4-67 : : 3SCR557 did nto accept the principle laid down in Liberty Cinema case, : 2SCR477 that guidance for the exercise of administrative power could be found in the monetary needs of the Municipality for discharging the functions entrusted to it under the Act. As we read the decision in Devi Dass' case, C.A. Nos. 526, 527, and 529 of 1966 D/- 10-4-67: : 3SCR557 it appears to us that their Lordships confined the Liberty Cinema case, : 2SCR477 only to the statute there under consideration and further laid down that guiding principles must be found in the statute concerned and that the financial needs of the administrative agencies may nto in every case necessarily provide the guide-lines for such agencies to fix the rates. On the principles deducible from these decisions each statute must be examined in the light of its own provisions. In view of the decision in Liberty Cinema case, : 2SCR477 , it must be held that power to fix rates is nto an essential legislative function and can be delegated.
The question to be seen is whether the Legislature has laid down intelligible standards for the guidance of the administrative agencies. It has long been established that every statute has to be adapted to complex conditions involving host of details with which the Legislature cannto deal directly. Filling in of such details must be left to the administrative agencies by applying their own talent, skill and experience having regard to the demands of the situation. The Constitution has never been regarded as denying to the Legislature the necessary resources of flexibility and practicability, but, in so doing, the Legislature must indicate something to be thus supplemented or, in other words, the lawmakers must first adopt a policy or set an intelligible standard to which the administrative action must conform. The Courts uphold delegation where intelligible standards have been prescribed yielding to common-sense and the inherent necessity of governmental co-ordination. The Legislature, though best conversant with the needs of its subjects, cannto be expected to deal with all the details that may be required to be filled in. For this reason, the matter of such details has, of necessity, to be left to the administrative agencies in the interest of achievement of the goals shared by different limbs of a democratic Government.
15. Is there then an intelligible standard laid down by the Legislature for the exercise of power of fixation of rates? It has been left completely to the Corporation to fix any rates it likes. The fact that under Sub-section (2) of Section 150 the first resolution has to be sanctioned by the Central Government provides no check or control as that also has to be done by the Executive. As we have pointed out earlier, the Corporation can, no doubt as a matter of fact must, launch upon business adventures. A ceiling is provided with respect to all the compulsory taxes under Section 113 so that if the Corporation suffers losses it can make up the said losses only from the optional taxes. In that view, the words 'for the purposes of this Act' in Section 113 would also be of no avail to the respondents as levying tax to meet the losses in business would also be 'for the purposes of the Act'. Again, the formulation of budget estimates in the light of the activities that the Corporation may decide to enter into is a matter exclusively to be determined by the Corporation itself.
What would be the financial needs of the Corporation must, thereforee, necessarily depend also on the result of its activities in running inter alias Electric Supply and Transport Undertakings and its decision to expend funds for other activities in which the Corporation may decide to engage. Even selection of the persons and the properties to be taxed, the system of assessment to be adopted and the exemptions to be granted nave been left completely to the judgment of the Corporation. It cannot, thereforee, be said that any intelligible standards have been prescribed for the exercise of this power of taxation committed to the Corporation. It must, thereforee, be held that Section 113(2)(d) read with Section 150 delegates to the Corporation an unguided and unfettered power to impose any amount of tax it likes on any person or property of its own exclusive choice. In the absence of any intelligible standards prescribed by the Legislature, Section 113(2)(d) and Section 150(1) must be held to be suffering from the vice of excessive legislation (delegation?) and, thereforee, void. In view of our conclusion on the points discussed hereinbefore we need nto decide whether or nto sanction dated 8th December, 1965, was accorded by a competent officer.
16. In the result, the petitions succeed and are allowed with no order as to costs.
17. Petitions allowed.