Umesh Chandra Banerjee, J.
1. This writ petition is directed against a memorandum issued by the Zonal Office Entry Tax Howrah Zonebearing No. 389/ET/HOW dated March 3rd, 1983 under which the petitioner was asked to make a standing deposit of Rs. 40,000/- under Rule 14 (6) (d) of the Rules framed under The Taxes on Entry of Goods into the Calcutta Metropolitan Area Act, 1972.
2. Section 6 of the said Act authorises the levy and collection of a tax on the entry of every specified goods into the Calcutta Metropolitan Area for consumption, use or sale therein. Sub-sec-tion (2) of Section 6 provides that subject to such rules as may be made by the State Government in this behalf, no tax shall be levied and collected under this Act on the entry of any specified goods into the Calcutta Metropolitan Area if such goods are brought into that area:
(a) as personal luggage by a passenger and the value or the number or quantity thereof does not exceed the prescribed amount or limit, as the case may be, or
(b) in such circumstances and subject to such conditions and restrictions as may be prescribed.
3. Rule 14 of the said Rules provides for exemptions and Sub-rule (6) pre-cribes that empty used containers of durable nature which are brought into the Calcutta Metropolitan Area by a dealer or his agent may, if otherwise liable to the tax leviable under this Act, be exempted from such tax, if :--
(a) such empty used containers are brought bark within a period of six months from the date of despatch from the Calcutta Metropolitan Area.
(b) a written statement is submitted by the dealer or his agent to the appropriate Assessing Officer at the time of entry stating, inter alia, that the consignment consists of empty used containers, with name and addresses of the person sending them, and supporting evidence is produced to the satisfaction of the appropriate Assessing Officer.
(c) the dealer or his agent gives a written undertaking to such Assessing Officer to submit to him a monthly report disclosing how far the empty used containers so brought have been filled in and conveyed out of the Calcutta Metropolitan Area together with a statement showing their disposal.
(d) a standing deposit of such amountas may be determined by the appropriate
Assessing Officer is made into the appropriate Govt. Treasury and receipted challan is submitted to such Assessing Officer as a security for compliance with the conditions. If the conditions are not complied with such deposit may be adjusted towards any assessment that may be made in accordance with the Act and these rules.
4. I may briefly refer to the facts relevant for the present purpose.
5. The petitioner No. 1 is a manufacturer of gas of various descriptions having its factory situated at No. 103, Foreshore Road. Shibpur, Howrah, The gas so manufactured is sold to various customers spread across the State of West Bengal and outside including the South Eastern Railway at Kharagpur.
6. In 1970 President's Act 18 of 1970 (Entry of Goods into Calcutta Metropolitan Area Act. 1970) was enacted. The said Act came into force on and from 16th November, 1970 and was for a period of one year and on the cessation of the operation of the said Act an ordinance was promulgated by the Government of West. Bengal on 23rd March, 1972 known as the Taxes on Entry of Goods into the Calcutta Metropolitan Area Ordinance 1972. With the expiry of the said Ordinance, the West Bengal Legislature enacted the Taxes on Entry of Goods into Calcutta Metropolitan Area Act. 1972 and the Act received the assent of the Governor and was published in the Calcutta Gazette on 4th May, 1972. Under Section 37 (2) of the Act, of 1972 anything done or any action, taken under the Ordinance is to be deemed to have been validly done or taken as if the Act has commenced on 16th November, 1970.
7. In exercise of the power conferred by Section 34 of the said Act of 1970 the Governor of the State of West Bengal by Notification No. 5219/F.T. dated 27th October, 1970 made the Taxes on Entry of Goods into Calcutta Metropolitan Area Rules. 1970. These Rules after coming into operation of the Act of 1972 have been given effect to by the State Authorities.
8. The petitioner's case is that until February, 1983 empty cylinders were brought back by the petitioner to its factory through various check posts including Bani Tabla, without any hindrance by the respondent authorities andthe Company paid all taxes payable on entry of goods which are assessed to tax by the respondent authorities. In early February, 1983 the Entry Tax Officer, Bani Table instructed the Company to deposit a sum of Rs. 100/- as standing deposit under Rule 14 (6) (d) in respect of empty cylinders brought back into the Calcutta Metropolitan Area and such deposit was duly made. In spite, however, of such deposit on 20th February, 1983, a truck containing empty cylinders was obstructed by the Entry Tax Officer, Bani Tabla from re-entering the Calcutta Metropolitan Area on the grounds that the Entry Tax is leviable on empty cylinders. Protests were lodged as against such steps, but to no effect and as a matter of fact correspondence between the parties culminated in the issuance of the said memorandum dated March 3rd, 1983 whereunder a standing deposit of Rs. 40,000/- was demanded on account of empty cylinders brought by the Company into the Calcutta Metropolitan Area through the said Bani Tabla Check Post from Kharagpur.
9. Mr. Bhaskar Gupta, counsel for the petitioner, submitted that unguided uncanalised and arbitrary powers have been conferred on the Assessing Officer for the purpose of determination of standing deposit under Rule 14 (6) (d) and in any event there exists no machinery for determination of the amount of standing deposit and the Rule is arbitrary and offends both Articles 14 and 19(1)(g) of the Constitution.
10. Mr. Gupta further submitted that the Act namely the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972 (hereinafter referred to as the Act of 1972) does not contain any provision for payment of any standing deposit. The Rules have been framed for the purpose of proper and efficient carrying out of the objects of the said Act. The Rules by themselves cannot levy any fee or deposit and since the Act is silent about standing deposit, Rule 14 (G) is bad and ultra vires the said Act.
11. Mr. Gupta contended further that grant of exemption under Section 35 of the said Act ought to be unconditional and the conditions laid down in Sub-rule (6) are bad. Mr. Gupta, however, does not challenge conditions (a), (b) or (c) but concentrated his objection on condition (d) of the said Sub-rule (6) of Rule 14. According to Mr. Gupta conditions (a), (b) or (c) can be severed from (d) of the said Sub-rule (6) and conditions (a), (b) and (c) can exist on their own. The other contention of Mr. Gupta is that the Respondent Authorities have no authority to demand further standing deposit and the demand for further deposit of Rs. 40,000/- is bad in law.
12. I propose to deal with, the question of unconditional exemption first before I deal with the other contentions raised in this application.
13. Mr. Roy Chowdhury, counsel for the State Government contended that Section 6 (2) which speaks of general exemption, authorises the imposition of condition for exemptions as laid down in Rule 14 (6) (d). Mr. Roy Chowdhury submitted that Section 35 cannot be looked into the consideration of R. 14 (6). 13A. Section 35 reads as follows:-
'The State Government may, if it is satisfied that it is necessary so to do in the interests of the general public, exempt any specified goods or class of specified goods from any tax leviable under this Act.'
14. Mr. Roy Chowdhury further contended that even Section 36 is not to be considered for interpreting R. 14 (6) (d) since the said provision relates to the general rule making power.
15. In so far as the question of imposition of conditions are concerned I am unable to accept the contentions of Mr. Roy Chowdhury that Section 6 (2) is relevant to the matter of granting conditional exemption.
16. The heading o'f Section 35, viz., 'power to exempt' makes it clear as to the applicability of Section 35. The exemptions under Rule 14 (6) of the Rules are to be granted in terms of Section 35 and not otherwise. In this case Section 35 and Section 36 are to be read together so as to give a meaning to the said Rule 14 (6). It is a well recognised principle of interpretation of statutes that heading and marginal notes can be looked into for the purpose of ascertainment of the intention of the Legislature, In this context reference may be made to a decision of Supreme Court reported in : 131ITR597(SC) (K. P. Varghesc v. I. T. O. Ernaku-lam) wherein Supreme Court held that the marginal note to a section can be relied upon as indicating the draft of the Section and being part of the statute, it prima facie furnishes some clue as to the meaning and purpose of the Section,
17. I am however unable to accept the contention of Mr. Gupta that since Section 35 does not speak of any authority to impose condition the rule making authority has no right or authority to impose any condition. It is however, to be noted in in this context that there is no challenge to conditions (a), (b) and (c) of the said Rule 14 (6). Imposition of condition is a matter of administrative expediency and for the purpose of carrying out the main objects of the Act. Power to impose conditions necessarily flows from the power to exempt and imposition of conditions under Sub-rule (6) of Rule 14 cannot be said to be beyond the powers of the rule making authority.
18. In regard to the other contention of Mr. Gupta that the State Government has no right or authority to demand a further standing deposit since the petitioners have already deposited a sum of Rs. 100/- as per the earlier order, Mr. Roy Chowdhury contended that under Section 14 of General Clauses Act, the power to determine and demand further standing, deposit can be exercised from time to time as and when occasion arises and since in the facts of this case rate has varied from 76 Paise to Rs. 16/- the authorities have not exceeded their jurisdiction by demanding further security deposit. In this connection reference may be made to the decision of the Supreme Court reported in : 4SCR1028 wherein Supreme Court observed that it is a well known rule of construction that when a power is conferred by a statute that power may be exercised from time to time when occasion arises unless contrary intention appears. Though it is true that the power to demand standing deposit emanates from the Rules and not under the Act but I see no justification in restricting the exercise of that power if the particular provision is otherwise valid. In the premises I am unable to accept the contention of Mr. Gupta, in this regard.
19. Coming back to the question in regard to the Constitutional validity of the Rule 14 (6) (d) Mr. Gupta submitted that absence of arbitrary power is the first essential of the Rule of law upon which the whole Constitutional system is based and if R. 14 (6) (d) is to be given effect to then it would fall within thevice of arbitrariness as it is left completely at the sole discretion of the Assessing Officer and there exists no guidelines whatsoever. In this connection it is relevant to refer the decision reported in : 65ITR34(SC) (S. G. Jai-singhani v. Union of India). In that judgment Supreme Court observed that discretion when conferred upon executive authorities, must be confined within clearly defined limits. The rule of law from this point of view means that decisions should be made by the application of known principles and rules, and, in general, such decisions should be predictable and the citizen should know where he is. If a decision is taken without any principle or without any rule it is unpredictable and such a decision is the antithesis of a decision taken in accordance with the rule of law.
20. Discretion, as Lord Mansfield stated it in classic terms in the case of John Wilkes, (1770) 4 Burr 2528 'means sound discretion guided by law. It must be governed by rule, not by humour, it must not be arbitrary, vague and fanciful.'
21. The question was again examined by the Supreme Court in the case of State of Punjab v. Khanchand : 2SCR768 . The Supreme Court observed that the total absence of guidelines for the exercise of power under the statute falls within the mischief which Aricle 14 of the Constitution is designed to prevent.
22. Mr. Roy Chowdhury, however, disputed the contention of Mr. Gupta and submitted that in regard to the guidelines for Rule 14 (6) (d) reference may be made to Sections 20 and 21 read with Rules 26 and 27 of the said Rules.
23. In my opinion Section 20 or Section 21 read with Rule 26 or 27 of the said Rules cannot cover the cases under Rule 14 (6) (d) of the said Rules. Section 20 read with Rule 26 deal with advance deposit of tax and not security deposit or standing deposit. Further Section 21 read with Rule 27 deal with issuance of Transport pass where no tax is leviable. As such the same has no effect in the matter of determination and demand of standing deposit under Rule 14 (6) (d).
24. Though it is true that in a modern State some amount of discretion ought tobe left with authority acting under the enactment and that discretion does not by itself contravene the constitutional safeguard of Article 14 but the enactment must prescribe the necessary guidelines for the furtherance of the object of the enactment and it is within the limits of these guidelines that the authorities can use their discretion. In the instant case there appears to be no guidelines whatsoever and the Assessing Officers have been given sole discretion in the matter of determination and demand of standing deposit under R, 14 (6) (d). The Supreme Court in the said judgment (State of Punjab v. Khan-chand) observed that if a legislature bestows such untrammelled discretion on the authorities acting under an enactment, it abdicates its essential function for such discretion is bound to result in discrimination and it is no answer to the above that Executive Officers are presumed to be reasonable men who do not stand to gain in the abuse of their power and can be trusted to use 'discretion' with discretion.
25. The Supreme Court however in the case of Sukhwinder Pal Bipan Kumar v. State of Punjab reported in : 2SCR31 held that where the discretion to apply the provisions of a particular statute is left with the Government or on one of the highest officers, it will be presumed that discretion vested in such highest authority will not be abused.
26. It would not be out of place to mention that during the course of hearing pursuant to an enquiry from the Court Mr. Roy Chowdhury on instructions submitted that in so far as term 'Assessing Officer' appearing in Rule 14 (6) (d) is concerned it means and includes any officer from the rank of Sub-Inspector to the Director of the Entry Tax Directorate of the State of West Bengal. In this context reference may be made to Section 4 read with Rules 3 and 5 of the said Rules. Powers conferred under the Act can be exercised not only by the prescribed authority, in this case, the director of Entry Tax department, but also by persons to whom it may be delegated by the prescribed authority. There is nothing in the Act that the person to whom the powers under the Act can be delegated must not be below a particular rank and the result is that power to determine and demand standing deposit can be conferred even upon a petty officer. That being the factual position, therefore, a very junior officer of the rank of Sub-Inspector of the Directorate is authorised to assess the said standing deposit. In my opinion vesting of such uncontrolled and unguided power on the Assessing Officer may very well result the exercise of such discretion in a manner contrary to the Constitutional safeguards.
27. There exists no method of determination of the standing deposit nor any machinery provided for determination of such amount of standing deposit under Rule 14 (6) (d).
28. In the case of Maneka Gandhi v. Union of India reported in : 2SCR621 , the Supreme Court observed that when a statute vests unguided and unrestricted power in an authority to affect the rights of a person without laying down any policy or principle which is to guide the authority in exercise of this power, it would be affected by the view of discrimination since it would leave it open to the authority to discriminate between persons and things similarly situated.
29. Further, the Rule 14 (6) (d) does not provide any limit. It has been left completely at the discretion of the assessing officer. Had there been a prescribed limit then the question may have been different inasmuch as the assessing officer would be bound to assess the quantum of deposit within the said limit, as is the case in Section 14(b) of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. The validity of the said Section 14(b) was challenged and the Supreme Court in the case of Organ Chemical Industries v. Union of India (Reported in AIR 1979 SC 1803), observed that since the discretion to a ward damages could be exercised within the limits fixed by the statute and considering the punitive nature of the power exercisable under Section 14(b) it cannot be said to be violative of the Constitutional safeguard under Article 14 of the Constitution of India.
30. The Court must be very cautious in judging the question of validity of legislature because every presumption is in favour of the validity of an Act of the legislature until the same is beyond rational doubt since the legislature is supposed to know the wishes and the needs of the people and the law makers are supposed to reflect the intention of the people. It is also said that our law makers are in possession of facts upon which the legislation is based while the Courts are not. But if by clear and indubitable demonstration a statute be opposed to the Constitution the Court has no choice but to say so. The Constitution by its own terms is the Supreme law of the land under our form of Government. A legislation on the other hand is the Act of an agency of this sovereign authority and if it conflicts with the Constitution, it must fail. To hold the legislation invalid, if it is invalid, is a plain exercise of judicial power, a power vested in Courts to enable them to administer justice according to law. (See the case of State Bank of India v. State of West Bengal, 1979 (1) CLJ 363 : 1979 Tax LR 133.
31. In that view of the matter I am of the opinion that the Rule 14 (6) (d) of the Taxes of Entry of Goods into Calcutta Metropolitan Area Rules, 1970 contravenes the Constitutional safeguard under Article 14 of the Constitution. As such, the said Rule 14 (6) (d) is unenforceable and I therefore declare that the provisions as contained in R. 14 (6) (d) of the said Rules of 1970 to be bad and violative of Article 14 of the Constitution,
32. The question in regard to the violation of Article 19(1)(g) has not been seriously urged before me and as such it is not necessary for me to go into the said question more so by reason of the view which I have taken nor is it necessary for me to decide the other contention of Mr. Gupta in regard to the question of the Rules being ultra vires the Act.
33. In the view I have taken as indicated above, I declare the provisions as contained in Rule 14 (6) (d) of the said Rules of 1970 to be ultra vires and restrain the respondent authorities from enforcing or realising any standing deposit under the said Rule 14 (6) (d). The notice under challenge is set aside and quashed. The demand made therein is cancelled. I further direct that the standing deposit, lying with the Respondent should be refunded to the petitioner within a period of three months from date.
34. The Rule is made absolute. In the facts and circumstances of this case there will however be no order as to costs.