judgement:
t Petition (Civil) No. 13704 of 1983.
(Under Article 32 of the Constitution of India) P.N. Lekhi and M.K. Garg for the Petitioner.
Prithvi Raj, P.P. Rao, Govind Mukhoty, Satish Chander, Raju Ramachandran, Mrs. section Dikshit, A.K. Sangal, P.K. Chakraborty.
Ms. Sadhya Goswami and Y.C. Maheshwari for the Respondents.
K.R. Gupta, Smt.
Nanita Sharma, R.C. Gubrele, Vivek Sharma and O.P. Sharma for the Intervener.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Ram Sewak Prasad, the petitioner before us, was appointed as Excise Sub Inspector, in the State of Uttar Pradesh in February, 1964 and was promoted to the post of Excise Inspector on ad hoc basis on February 24, 1972.
He was confirmed as Excise Sub Inspector by an order dated December 2, 1972 with effect from April 1, 1967.
Though promoted on ad hoc basis the petitioner 887 has continuously been working as Excise Inspector since February 24, 1972.
Raghubir Singh and Ram Dhan, respondents are direct recruits to the post of Excise Inspector.
The joined as such on March 29, 1972 and May 14, 1972 respectively.
They were promoted to the post of Excise Superintendent by an order dated September 29, 1983.
It is not disputed that the petitioner was not considered for promotion alongwith the respondents or at any time thereafter.
Even his name was not shown in the seniority list of Excise Inspectors circulated from time to time.
The respondents, including the State Government, have taken the stand that the petitioner 's promotion to the post of Excise Inspector was against the rules, he continues to be an ad hoc appointee and is not a member of the Excise Inspectors Service constituted under the rules.
For that reason he is neither been shown in the seniority list of Excise Inspectors nor considered for promotion to the post of Excise Superintendent.
It is necessary to examine the relevant statutory rules regulating recruitment and conditions of service of the Excise Inspectors.
Rule 3(ix) and 5 of the Uttar Pradesh Subordinate Excise Service Rules, 1967 (hereinafter called `1967 rules ') are as under: "3(ix).
"Member of the service" means a person appointed in a substantive capacity under the provisions of these rules, or of rules in force previous to the enforcement of these rules to a post in the cadre of the service" . 5.
Sources of recruitment Recruitment to the service shall be made (a) by direct recruitment of candidates, on the result of a combined competitive examinations conducted by the Commission, who having been selected in the prescribed manner for undergoing practical training have completed the course of training and passed the departmental examination prescribed in rule 23: Provided that no candidate shall be allowed to avail of more than three chances for appearing at the competitive examination; (b) by promotion of permanent clerks of the office at 888 the Headquarters of the Excise Commissioner and other regional and Subordinate Excise Offices of Assistant Excise Commissioners and Superintendents of Excise in Uttar Pradesh; and (c) by promotion of permanent Tari Supervisors The 1967 rules were superseded by the Uttar Pradesh Subordinate Excise Service Rules, 1983 (hereinafter called 1983 rules) which came into force on March 24, 1983.
Rule 3(g), 3(j), 5 and 21(1) of the 1983 rules are reproduced hereinafter: "3(g).
"Member of Service" means a person substantively appointed under or the rules or orders in force prior to the commencement of these rules to a post in the cadre of the service". "3(j).
"Substantive appointment" means an appointment, not being an ad hoc appointment, on a post in the cadre of the service, made after selection in accordance with the rules and, if there are no rules, in accordance with the procedure prescribed for the time being by executive instructions, issued by the Government.
" Sources of Recruitment.
Recruitment to the various categories of posts in this service shall be made from the following sources: (A) EXCISE INSPECTOR (1) 90% by direct recruitment on the result of a combined competitive examination conducted by the Commission.
(2) 10% by promotion from amongst the permanent sub Excise Inspectors.
"Rule 21(1) Except as hereinafter provided, the seniority of persons in any category of post shall be determined from the date of the order of substantive appointment and if two or more persons are appointed together, by the order in which their names are arranged in the appointed order; 889 Provided that if the appointment order specifies a particular back date with the effect from which a person is substantively appointed, that date, will be deemed to be the date of order of substantive appointment and, in other case it will mean the date of issue of the order;" Mr. Satish Chandra, learned senior advocate, appearing for some of the respondents who are direct recruits of 1982/83 has contended that the 1967 rules were holding the field when the petitioner was promoted as Excise Inspector on ad hoc basis.
According to him only clerks and Tari Supervisors could be considered for promotion to the post of Excise Inspector under rule 5 of the 1967 rules and the Excise Sub Inspectors were not eligible.
The petitioner 's promotion being in violation of the 1967 rules, he was not a member of the service and as such was rightly not shown in the seniority list of Excise Inspectors.
He, however, accepts the position that the petitioner can be considered for promotion to the post of Excise Inspector under the 1983 rules and would become member of the service from the date of promotion under the said rules.
Mr. Satish Chandra finally contended that the appointment of the petitioner from 1972 to 1983 being violative of 1967 rules, the benefit of the said service cannot be given to the petitioner towards seniority in the cadre of Excise Inspectors.
In support of his arguments Mr. Satish Chandra relied upon the judgments of this Court in Masood Akhtar Khan and Others vs State of Madhya Pradesh and Others, and Direct recruits class II Engineering Officers Association vs State of Maharashtra and Others, [1990] 2S.C.C. 715.
Mr. Govind Mukhoty, Mr. P.P. Rao and Mr. O.P. Sharma, learned senior advocates appearing for various respondents reiterated, with different flavour, the arguments advanced by Mr. Satish Chandra.
They further cited P. Mahendran and Ors etc.
vs State of Karnataka and Ors. etc.
, ; State of Punjab vs Jagdip Singh and Ors., ; ; Krishena Kumar and Ors.
vs Union of India and Ors.
, ; and A.K. Bhatnagar and Ors.
vs Union of India and Ors.
, ; Mr. Prithviraj, learned senior advocate appearing for the State of Uttar Pradesh stated that it may be possible to absorb the petitioner in the cadre of Excise Inspectors from the date of enforcement of the 1983 rules but the benefit of service rendered by him as Excise Inspector prior to that date cannot be given to him.
Mr. P.N. Lekhi, learned senior advocate appearing for the petitioner vehemently argued that the petitioner was promoted in `public interest ' as Excise Inspector in the year 1972 and since then he 890 has been working as such continuously.
He is being paid the same salary for doing the same work as is being done by the directly recruited Excise Inspectors.
There can no justifiable reason to treat the petitioner as an ad hoc Excise Inspector even after working as such for almost two decades.
According to him the 1967 rules which confined the channel of promotion to Tari Inspectors and Clerks were wholly arbitrary and as such violative of Articles 14 and 16 of the Constitution of India.
The Excise Sub Inspectors are at a lower rung in the same hierarchy of service to which Excise Inspectors belong.
The Sub Inspectors perform similar duties of less responsibility.
Mr. Lekhi further contended that providing avenue of promotion to Tari Inspectors and Clerks who had no similarity or service0link with the cadre of Excise Inspectors and depriving the same to the Excise Sub Inspectors render the 1967 rules arbitrary and discriminatory.
He relied upon Baleshwar Dass and Ors.
vs State of U.P. and Ors., [1981] 1 SCR 449; Narender Chadha and Ors.
vs Union of India and Ors.
, ; ; Rajendera Parsad Dhasmane vs Union of India and Ors., ; and Kumari Shrilekha Vidyarthi etc.
vs State of U.P. and Ors., Mr. Lekhi finally submitted that the petitioner is, in any case, entitled to be promoted substantively to the cadre of Excise Inspectors under the 1983 rules and he is entitled to fixation of seniority by counting his entire service as Excisa Inspector from 1972 onwards.
It is not necessary to go into the judgments cited by the learned counsel for the parties.
The judgments are on the peculiar facts of these cases and do not render much assistance to resolve the controversy before us.
The 1967 rules provided recruitment to the cadre of Excise Inspectors by way of direct recruitment and by promotion.
Recruitment by promotion was only confined to permanent clerks in the office of Excise Commissioner and Tari Supervisors.
The Excise Sub Inspectors were not eligible.
On the plain interpretation of 1967 rules Mr. Satish Chandra is justified to contend that the petitioner was not eligible for promotion to the post of Excise Inspector and as such he could not be member of the Uttar Pradesh Subordinate Excise Service as constituted under the 1967 rules.
On the other hand there is plausibility in the argument of Mr. P.N. Lekhi that rule 5 of the 1967 rules which denies avenue of promotion to the Excise Sub Inspectors is arbitrary and discriminatory.
When the 1967 rules were enforced on May 24, 1967 there was in existence a permanent cadre of Excise Sub Inspectors.
The nature of duties of both the cadres 891 were similar.
The Excise Inspectors, on molasses duty of the ranges, used to supervise the work of Excise Sub Inspectors under them.
The Excise Sub Inspectors were thus natural contenders for the post of Inspectors.
There was no justification whatsoever with the framers of the 1967 rules to have kept the Excise Sub Inspectors out of the channel of promotion to the post of Excise Inspectors.
Prima facie there is no escape from the conclusion that the Excise Sub Inspectors were dealt with in an arbitrary manner by the framers of 1967 rules.
However, the view we propose to take on the interpretation of 1983 rules it is not necessary for us to deal with the respective arguments of the learned counsel for the parties regarding the 1967 rules.
Rule 5 of the 1983 rules provides recruitment to the cadre of Excise Inspectors from two sources, 90% by direct recruitment and 10% by promotion from amongst the permanent Excise Sub Inspectors.
It is not disputed that under the 1983 rules the petitioner is eligible to be promoted and appointed as Excise Inspector.
In the writ petition the petitioner has specifically pleaded that the service record of the petitioner is unblemished and he is holding the post of Excise Inspector within the 10% promotion quota provided for the permanent Excise Sub Inspectors.
The State Government in its counter has not denied these averments.
The 1983 rules came into force on March 24, 1983.
There is nothing on the record to show as to why the petitioner was not considered for promotion under the 1983 rules till today.
Inaction on the part of the State Government is wholly unjustified.
The petitioner has been made to suffer for no fault of his.
He has been serving the State Government as Excise Inspector since February 24, 1972 satisfactorily.
Least the State Government could do was to consider the petitioner under the 1983 rules.
Mr. Prithviraj, learned counsel for the State of Uttar Pradesh has however fairly stated that the State Government is willing to promote the petitioner to the cadre of Excise Inspectors under the 1983 rules effect from the date of enforcement of the said rules.
Rule 21(1) of the 1983 rules provides that the seniority of a person in any category of post shall be determined from the date of the order of substantive appointment.
First proviso provides that if the appointment order specifies a particular back date with effect from which a person is substantively appointed then the said back date shall be deemed to be the date of order of substantive appointment.
It is thus obvious that rule 21(1) of the 1983 rules specifically permits substantive appointment to the cadre of Excise Inspectors with back date.
The framers of the 1983 rules were conscious that the cadre of 892 Excise Sub Inspectors was in existence from 1964 onwards and some of them were promoted to the post of Excise Inspectors much earlier to the enforcement of the 1983 rules.
In all probability the provision of back date appointment was made in the 1983 rules to do justice to persons like the petitioner.
The petitioner is eligible under the rules to be appointed as Excise Inspector by way of promotion.
It is not disputed that the petitioner was appointed as Excise Inspector on February 24, 1972 and he has been actually working in the said post continuously from that date and has been drawing the salary of the post of Excise Inspector.
This is a fit case where the petitioner should be appointed as Excise Inspector under the 1983 rules by giving him back date appointment with effect from February 24, 1972.
We, therefore, hold that the petitioner shall be deemed to be appointed by way of promotion as substantive Excise Inspector under the 1983 rules with effect from February 24, 1972.
The petitioner shall be entitled to the benefit of his entire period of service as Excise Inspector from February 24, 1972 towards fixation of his seniority in the cadre of Excise Inspector.
We further direct that the petitioner shall be considered for promotion to the post of Excise Superintendent from a date earlier than the date when respondents Ram Dhan and Raghubir Singh were promoted to the said post.
The petitioner shall also be entitled to be considered to the post of Assistant Excise Commissioner in accordance with the rules from a date earlier than the date when any of his juniors were promoted to the said post.
We make it clear that none of the respondents who have already been promoted to the higher rank of Excise Superintendents or Assistant Excise Commissioners be reverted to accommodate the petitioner or any other person similarly situated.
The State Government shall create additional posts in the cadre of Excise Superintendents and Assistant Excise Commissioners to accommodate the petitioner and other similar persons, if necessary.
The writ petition is allowed with costs in the above terms.
We quantify the costs as Rs.10,000 to be paid by the State of Uttar Pradesh.
Y.Lal.
Petition allowed.

summary:
The petitioner was appointed as Excise Sub Inspector in February 1964 in the State of U.P. and was later promoted as Excise Inspector on ad hoc basis on February 24, 1972.
He was confirmed as Excise Sub Inspector w.e.f. April 1, 1967.
Though promoted on ad hoc basis, the petitioner has continuously been working as Excise Inspector since February 24, 1972.
Raghubir Singh and Ram Dhan, respondents are direct recruits to the post of Excise Inspector and they had joined the cadre later in point of time than the petitioner i.e. after 24.2.1972.
They were promoted to the post of Excise Superintendent on 29.9.1983 and the petitioner was ignored.
Being aggrieved the petitioner has filed this petition under Article 32 of the Constitution.
According to the State and other respondents, the petitioner 's promotion to the post of Excise Inspector being on ad hoc basis was against the 1967 rules, he continues to be an ad hoc appointed and as such is not a member of the Excise Inspectors service constituted under the rules.
His name has not been shown in the seniority list of Excise Inspectors.
According to them his case has rightly not been considered for further promotion.
On the other hand, it is contended on behalf of the petitioner that the 1967 Rules in as much as they confine the channel of promotion to Tari Inspectors and Clerks were wholly arbitrary and as such violative of Articles 14 and 16 of the Constitution.
It is submitted on his behalf that the petitioner is, in any case, entitled to be promoted substantively to the cadre of excise Inspectors under 1983 rules and he is also entitled to fixation of seniority by counting his entire service as Excise Inspector from 1972 onwards.
Respondents concede that the petitioner can be appointed under 1983 rules, but contend that he is not entitled to the benefit of past service for purposes of seniority.
885 Allowing the writ petition this Court HELD: When the 1967 rules were enforced on May 24, 1967 there was in existence a permanent cadre of Excise Sub Inspectors.
The nature of duties of both the cadres were similar.
The Excise Inspectors, on molasses duty of the ranges, used to supervise the work of excise Sub Inspectors under them.
The Excise Sub Inspectors were thus natural contenders for the post of Inspectors.
There was no justification whatsoever with the framers of the 1967 rules to have kept the Excise Sub Inspectors out of the channel of promotion to the post of Excise Inspectors.
Prime facie there is no escape from the conclusion that the Excise Sub Inspectors were dealt with in an arbitrary manner by the framers of 1967 rules.
[890H 891B] It is not disputed that under the 1983 rules, the petitioner is eligible to be promoted and appointed as Excise Inspector.
[891C D] The 1983 rules came into force on March 24, 1983.
There is nothing on the record to show as to why the petitioner was not considered for promotion under the 1983 rules till today.
Inaction on the part of the State Government is wholly unjustified.
The petitioner has been made to suffer for no fault of his.
He has been serving the State Government as Excise Inspector since February 24, 1972 satisfactorily.
[891E] Rule 21(i) of the 1983 rules specifically permits substantive appointment to the cadre of Excise Inspectors with back date.
In all probability the provision of back date appointment was made in the 1983 rules to do justice to persons like the petitioner.
The petitioner is eligible under the rules to be appointed as Excise Inspector by way of promotion.
Accordingly the Court directed that the petitioner shall be deemed to be appointed by way of promotion as substantive Excise Inspector under the 1983 rules with effect from February 24, 1972.
The petitioner shall be entitled to the benefit of his entire period of service as Excise Inspector from February 24, 1972 towards fixation of his seniority in the cadre of Excise Inspector.
The petitioner shall be considered for promotion to the post of Excise Superintendent from a date earlier than the date when respondents Ram Dhan and Raghubir Singh were promoted to the said post.
The petitioner shall also be entitled to be considered to the post of Assistant Excise Commissioner in accordance with the rules from a date earlier than the date when any of his juniors were promoted to the said post.
[891G, 892B E] None of the respondents who have already been promoted to the 886 higher rank of Excise Superintendents or Assistant Excise Commissioners be reverted to accommodate the petitioner or any other person similarly situated.
The State Government shall create additional posts in the cadre of Excise Superintendents and Assistant Excise Commissioners to accommodate the petitioner and other similar persons, if necessary.
[892F] Masood Akhtar Khan & Ors.
vs State of Madhya Pradesh, ; Direct recruits Class II Engineering Officers Association vs State of Maharashtra & Ors., ; ; P. Mahendran & Ors, etc.
vs State of Karnataka Singh & Ors.
, ; ; Krishena Kumar & Ors.
vs Union of India & Ors.
, ; ; A.K. Bhatnagar & Ors.
vs Union of India & Ors.
, ; ; Baleshwar Dass & Ors. etc.
vs State of U.P. & Ors.
, [1981] 1 S.C.C. 449; Narender Chadha & Ors.
vs Union of India & Ors.
, ; and Kumari Shrilekha Vidyarthi etc.
vs State of U.P. & Ors.
, , referred to.


judgement:
Appeals Nos. 254 to 256 of 1958.
Appeals by special leave from the judgment and orders dated May 14, 1956, and June 15, 1956, of the Bombay High Court in Special Civil Applications Nos.
1270, 1373 and 1374 of 1956.
ORIGINAL JURISDICTION: Petitions No& IS and 66 of 1957.
Petitions under Article 32 of the Constitution of India for the enforcement of fundamental rights.
A. V. Viswanatha Sastri and section section Shukla, for the appellants and the petitioners.
C. K. Daphtary, Solicitor General of India, H. J. Umrigar and B. H. Dhebar, for the respondents.
December 16.
The Judgment of the Court was delivered by SUBBA RAO, J.
These are three appeals by Special Leave from the judgment of the High Court of Judicature at Bombay dismissing the petitions filed by the appellants for Writs in the nature of Prohibition restraining the respondents from realising from the appellants land revenue in respect of their estates at an enhanced rate for the year 1955 56.
The petitioners in the two petitions also asked for similar relief against the respondents.
The appeals as well as the Writ Petitions were heard together, as they raised a common question of law.
The material facts in Civil Appeal No. 254 of 1958 may be briefly stated: The appellant was a taluqdar owning several taluqdari villages situate in the Dholka Taluka of Ahmedabad District.
In the year 1922 23 there was a revision settlement of land revenue of the lands situate in the said taluka including the said taluqdari villages.
Under that settlement the aggregate of the land revenue payable in respect of the lands comprised in the said taluqdari villages was fixed in a sum of Rs. 62,627 2 6.
In the year 1925 26, in exercise of the powers conferred under 913 s.22 of the Gujarat Taluqdars Act, 1888 (Bom.
VI of 1888) (hereinafter referred to as the Taluqdars ' Act), the Government of Bombay ascertained and declared that a jama of Rs. 32,643 3 0 was payable in respect of the said taluqdari villages and the said declaration was to remain in force for a period of thirty years from the year 1925 26.
In the year 1949, the Bombay Legislature passed the Bombay Taluqdari Abolition Act, 1949, hereinafter referred to as the Abolition Act, and it came into force on or about August 15, 1950.
By section 3 of the Abolition Act, taluqdari tenure was abolished and all the incidents of the said tenure attaching to any land comprised in the taluqdari estate were extinguished.
Under the Abolition Act, the appellant became an occupant of the lands.
After the expiry of the thirty year period, the talatis of the respective villages called upon the appellant to pay the full land revenue assessment in respect of the lands comprised in the said villages.
The appellant contending that he was only liable to pay jama declared to be payable by him by the Government in 1925 26 filed a Writ Petition in the High Court of Bombay for the aforesaid relief.
The appellant in Civil Appeal No. 255 of 1958 was a; taluqdar owning several taluqdari villages situate in Dholka and Dhandhulka Talukas of Ahmedabad District.
The facts in this case are similar to those given in Civil Appeal No. 254 of 1958 except in regard to the fact that the jama ascertained and declared to be payable by the appellant in this appeal by the Government in 1925 26 was about Rs. 5,734 as against the settlement amount of Rs. 14,452 11 0.
The appellant in Civil Appeal No. 256 of 1958 was a taluqdar owning several taluqdari villages situate in Dholka Taluka in Ahmedabad District.
The facts in this appeal also are similar to those in the other two except in regard to the fact that in this case the Government ascertained and declared the jama payable by the appellant to be Rs. 21,877 as against the settlement amount of Rs. 44,551.
115 914 Writ Petition No. 66 of 1957 filed by the appellant in C. A. No. 254 of 1958 relates to the demand of enhanced revenue in respect of his Sanad estate.
The facts in this petition are similar to those in the appeals except that the Government ascertained and declared the jama payable by him at Rs. 20,886 as against the settlement amount of Rs. 48,247 13 0.
The Writ Petition relates to the demand made for the year 1956 57.
Writ Petition No. 18 of 1957 was filed by Thakur Vikramsinhji Manharsinhji of Gumph Estate, Ahmedabad District, Bombay State, who was a taluqdar of Gumph Estate in Ahmedabad District comprising of seven taluqdari villages.
The facts in this petition also are similar to those in the appeals.
In, this case the jama ascertained and declared was Rs. 16,499 4 0 whereas the assessment was fixed at Rs. 30,223 12 0.
This Writ Petition also relates to the demand made for the year 1955 56.
The appellants in the appeals and the petitioners in the Writ Petitions aforesaid will be, for the sake of convenience, described hereafter as the appellants.
Mr. A. V. Viswanatha Sastri, the learned Counsel for the appellants, contends that the jama ascertained and declared to be due from the appellants for a period of thirty years was fixed at the revenue settlement, that by reason of section 117R of the Bombay Land Revenue Code, 1879 (hereinafter referred to as the Code), they were liable to pay only the said assessment till there was re settlement and that therefore the respondents have no right to make a demand for an amount higher than that declared to be due from them in 1925 26.
The learned Solicitor General counters this argument by contending that under the Taluqdars ' Act, there was an essential distinction between revenue settlement and the ascertainment and declaration of the jama; that after the Abolition Act, the amount of jama was payable only till the expiry of the thirty year period and that thereafter the appellants who bad become mere occupants would be liable to pay the entire land revenue assessment already fixed in respect of those lands.
The question 915 is which of the two contentions should prevail having regard to the relevant provisions of the Taluqdars ' Act, the Abolition Act and the Code.
It will be convenient to read the relevant provisions from the two Acts.
GUJARAT TALUQDARS ACT, 1888: " 2.
(1) In this Act, unless there be something repugnant in the subject or context, (a) . . . . . . . . . . (b) . . . . . . . . . . (c) " jama " means land revenue payable by a taluqdar to the Provincial Government.
It shall be lawful for the Provincial Government whenever it may seem expedient, to direct a revenue survey or a revised revenue survey of any taluqdari estate, under the provisions of the Bombay Land Revenue Code, 1879, applicable to such survey.
The settlement register prepared by the Survey Officer under section 108 of the said Code on the occasion of making any such survey shall, unless the Provincial Government otherwise direct contain, in lieu of the particulars specified in the said section, the following particulars (namely) : (a) the area and the assessment of each surveynumber.
22.(1) If a taluqdar 's estate, or any portion thereof, is not wholly or partially exempt from landrevenue and its liability to payment of land revenue is not subject to special conditions or restrictions, the jama payable to Government in respect of such estate or person thereof shall, if a survey settlement has been extended thereto, be the aggregate of the surveyassessments of the lands composing such estate or such portion thereof, minus such deduction, if any, as Government shall in each case direct.
(2) The Governor in Council may declare the amount of jama so ascertained fixed for any term not exceeding thirty years." BOMBAY TALUQDARI TENURE ABOLITION ACT, LXII of 1949: 916 "3.With effect from the date on which this Act comes into force, (i)the tuluqdari tenure shall wherever it prevails be deemed to have been abolished; and (ii)save as expressly provided by or under the provisions of this Act, all the incidents of the said tenure attaching to any land comprised in a taluqdari estate shall be deemed to have been extinguished.
(4)All revenue surveys or revised revenue surveys of taluqdari estates directed by the State Government under section 4 of the Taluqdars Act and all settlements made shall be deemed to have been made under Chapters VIII and VIII A of the Code and the settlement registers and other records prepared of such surveys shall be deemed to have been prepared under the corresponding provisions of the Code.
(5)(1) Subject to the provisions of sub section (2), (a)all taluqdari lands are and shall be liable to the payment of land revenue in accordance with the provisions.
of the Code and the rules made thereunder, and (b) a taluqdar holding any taluqdari land or a cadet of a taluqdar 's family holding any taluqdari land hereditarily for the purpose of maintenance, immediately before the coming into force of this Act, shall be deemed to be an occupant within the meaning of the Code or any other law for the time being in force.
(2)Nothing in sub section (1) shall be deemed to affect (b)the right of any person to pay jama only under any agreement or settlement recognised under section 23 or under a declaration under section 22 of the Taluqdars ' Act so long as such agreement, settlement or declaration remains in force under the provisions of this Act.
(17) The enactments specified in Schedule II are hereby repealed: Provided that the repeal of the said enactment shall not in any way be deemed to affect, (a) . . . . . . . . . . 917 (b). . . . . . . . . . (c) any declaration made or any agreement or settlement recognised, any partition confirmed and any management of the taluqdari estate assumed under the provisions of any of the enactments hereby repealed, and any proceedings connected with such partition or management instituted before the aforesaid date shall be continued and disposed of as if this Act had not been passed.
" The position emerging from the aforesaid provisions may be summarized thus: The Taluqdars ' Act was enacted to make special provision for the revenue administration of the estates held by certain superior land holders in the districts of Ahmedabad, Kaira, Broach and the Panch Mahals.
Section 4 enabled the Governor in Council to direct a revenue survey or revised revenue survey of any taluqdari estate under the provisions of the Bombay Land Revenue Code.
In regard to such an estate, survey would be made under section 108 of the Code and the Settlement Officer would I prepare a Register to be called the " Settlement Register which would contain the particulars mentioned in section 5 of the Taluqdars ' Act in lieu of the particulars specified in section 108 of the Code.
Under section 22 of the Taluqdars ' Act, the jama payable by a taluqdar would be the aggregate of the survey assess ments of the lands compoSING sucH an estate or such portion thereof minus such deduction, if any, that the Government in each case should direct.
Under sub section 2, the Governor in Council was empowered to declare the jama so ascertained fixed for any term not exceeding thirty years.
In 1949, the taluqdari tenure was abolished by the Bombay Taluqdari Tenure Abolition Act.
By section 5 of the Abolition Act, the taluqdars became occupants within the meaning of the Code, i.e., they were deemed to be holders in actual possession of unalienated lands other than the tenants; with the result that all the taluqdari lands became liable to, the payment of land revenue in accordance with the provisions of the Code and the rules made thereunder.
918 Sub section 2 of section 5 saved the right of any person to pay jama only under an agreement or settlement recognized under section 23 or a declaration made under section 22 of the Taluqdars ' Act so long as such agreement, settlement or declaration remained in force.
Shortly stated, the combined effect of the provisions was that the taluqdari tenure was abolished and that the taluqdar became the occupant with liability to pay land revenue in accordance with the provisions of the Code.
If there was no other relevant provision indicating a contrary intention, it is manifest from the aforesaid summary that the appellants would be liable to pay land revenue in accordance with the provisions of the Code after the period fixed in the declaration expired, i.e., from the year 1955 1956.
The learned Counsel for the appellants contends that by reason of section 117R of the Code, the declaration made by the Governor in Council fixing the amount of jama, for a period of thirty years would continue to be in force even after the expiry of the said period till a revision settlement was made and therefore the saving clause would preclude the Government from demanding higher amount of revenue than the jama ascertained and fixed in the declaration till the date of the revised settlement.
Section 117R of the Code reads: " All settlements of land revenue heretofore made and introduced and in force at the date of the commencement of the Bombay Land Revenue Code (Amendment) Act, 1939, shall be deemed to have been made and introduced in accordance with the provisions of this Chapter and shall, notwithstanding anything contained in section 117E, be deemed to continue to remain in force until the introduction of a revision settlement.
" If the declaration of the Governor in Council is a settlement of land revenue within the meaning of this section, it would continue to be in force till the intro duction of the revision settlement.
It is, therefore, necessary to ascertain the meaning of the words " settlement of land revenue " in the section.
Settlement is defined by section 117C(1) to mean the result.
of the 919 operations conducted in a zone in order to determine the land revenue assessment.
What is the scope of the operations conducted to arrive at the said result ? The provisions of Ch.
VIII A lay down the successive steps to be followed by the authorities concerned to fix the land revenue.
Under section 117D, the Government may at any time direct a settlement of the land revenue of any land of which revenue survey has been made under section 95 or not.
It may also direct at any time a revised settlement of the land revenue of such lands.
A settlement once made remains in force for a period of thirty years unless the State Government directs that it should remain in force for any period less than thirty years.
In a case where a revised settlement of land revenue has not been made for one reason or other, the Government may extend the term of the settlement for such period as it may think fit.
The land revenue assessment shall be determined by dividing the lands to be settled into different groups and fixing a standard rate for each group.
Groups are ordinarily formed on a consideration of various factors such as physical configuration, climate, rainfall, price and yield of principal crop and other relevant considerations.
Land revenue of individual survey numbers and sub divisions shall be based on their classification and value in the manner prescribed.
The Settlement Officer, who is entrusted with the duty of making the settlement, shall follow the prescribed procedure and fix a standard rate for each class of land in each group on a consideration of the relevant factors.
A hierarchy of Tribunals are created for the persons aggrieved to take the matter in appeal.
Finally the State Government passes orders approving the standard rates or varying them.
After the State Government has passed orders and the notice of the same has been given in the prescribed manner, settlement will be deemed to have been introduced and land revenue according to such settlement will be levied from such date as the State Government may direct.
It will be seen from the aforesaid summary of the scheme of land revenue settlement that land revenue is fixed for each land, having regard to the group 920 within which it falls.
All such settlements of landrevenue made before the Bombay Land Revenue (Amendment) Code, 1939, will be deemed to remain in force until the introduction of a revised settlement.
Part II of the Taluqdars ' Act provided for survey and settlement.
Under section 4 of the Taluqdars ' Act, the Governor in Council might direct a revenue survey of the taluqdari estate under the provisions of the Code.
The settlement register prepared under that Code was directed contain particulars mentioned in section 5 such as area and assessment of such survey number, etc.
Presumably, under that Act a settlement was made in regard to the taluqdari estates and settlement registers were prepared fixing the assessment of each survey number.
That settlement would certainly be a settlement of land revenue within the meaning of section 117R of the Code and that would continue to be in force till a resettlement was made.
Part IV of the Taluqdars ' Act dealt with Revenue Administration.
Section 22 laid down that in a case where survey settlement had been extended to a taluqdari estate, the jama payable by the taluqdar to Government in respect of such an estate shall be the aggregate of the survey assessments of the lands composing such estate or such portion thereof minus such deduction, if any, as Government shall direct in each case.
Under sub section
(2) of section 22, the Governor in Council could declare the amount of jama so ascertained fixed for any term not exceeding thirty years.
Under section 23, nothing in the Act was deemed to affect the validity of any agreement thereto before entered into by or with a taluqdar and still in force as to the amount of his jama, nor of any settlement of the amount of jama made by or under the orders of Government for a term of years and still in force.
Sections 22 and 23 provided for the arrangements entered into or to be entered into with the Governor in Council in respect of the jama payable by the taluqdars.
Section 23 saved the previous agreements or settlements in respect of the jama.
Section 22 authorised the Government to fix the jama, having regard to the aggregate of the survey assessments of the lands and to declare 921 the same fixed for a period of years not exceeding thirty.
The declaration under a. 22 or the agreement or settlement of jama mentioned in section 23(1) might be described broadly as a settlement entered into between the Government and a taluqdar but it was not a settlement of land revenue within the meaning of section 117R of the Code, for settlement of revenue was the result of operations carried on in respect of different classes of lands in the manner prescribed by Ch.
A of the Code or the settlement in respect of such lands in accordance with the pre existing laws it was beyond the scope of Ch.
VIII A to ascertain ' the jama, though the rates fixed under such a settlement were taken as the basis by the Government in ascertaining the jama payable by the taluqdar.
The jama payable by the taluqdar was distinct from the revenue assessment of the land comprised in the taluqdari estate and they could not be equated.
Section 17 of the Abolition Act repealed the Taluqdars ' Act and expressly provided that the repeal of the said enactment shall not affect any declaration made or any agreement or settlement recognized in respect of the taluqdari estates.
Section 5(2) (b) of the Abolition Act expressly saved the agreement or settlement recognized under section 23 or a declaration made under section 22 from the operation of the Act till such agreement, settlement or declaration remained in force.
It is, therefore, manifest that the declaration made under the Taluqdars ' Act enured to the advantage of the taluqdars, notwithstanding the repeal of the Taluqdars ' Act, till such time it was in force.
When the Abolition Act came into force, the time mentioned in the declaration in the cases before us, i.e., thirty years, had not run out and therefore the declaration made by the Government under the Taluqdars ' Act continued to be in force till 1955 56.
After the expiry of the time, the appellants would be liableto pay the entire land revenue according to the settlement register.
The entire scheme of the Abolition Act was that after the passing of that Act, the taluqdars became 116 922 occupants with the result that they would be liable to pay land revenue in accordance with the provisions of the Land Revenue Code.
If sub section
(2) was not inserted in section 5, they would be liable to pay land revenue under the Code, notwithstanding the declaration made or the agreement entered into by the Government with them in regard to the jama payable by them.
Sub section (2) was only enacted to preserve to them the concession till the period fixed had expired.
We, therefore, hold that the declaration made by the Governor in Council in 1925 26 expired in 1955 56 and the appellants became liable to pay the entire land revenue according to the settlement registers from the year 1955 56.
In the result, all the appeals and the Writ Petitions are dismissed with costs.
, the State of Bombay and the Collector of Ahmedabad, who are the respondents herein, getting one set of hearing costs in all.
Petitions dismissed.

dataset_name: IN-Abs

summary:
The appellants were Taluqdars owning taluqdari villages in District Ahmedabad, State of Bombay.
In 1922 23 there was a revision settlement of land revenue and the aggregate sum of land revenue payable by each taluqdari estate was fixed.
In 1925 26, in exercise of the powers conferred by section 22 of the Gujrat Taluqdars Act, 1888 (Bom.
VI of 1888), the Government of Bombay ascertained and declared the jama payable by each taluq which was much less than the amount of land revenue and the said declaration was to remain in force for thirty years.
With the passing in 1949 of the Bombay Taluqdari Abolition Act, 1949, the taluqdari estates of the appellants were abolished and they became occupants of the lands and, after the expiry of the thirty years, were called upon to pay the full land revenue assessment in respect of the lands.
It was contended on behalf of the appellants that by reason of section II7R of the Bombay Land Revenue Code, i879, the declaration made by the Governor in council fixing the amount of jama for a period of thirty years would continue to be in force even after the expiry of that period till a revision settlement was made and the Government was precluded from demanding the higher amount of revenue till then.
Held, that the contention must fail.
The jama payable by the Taluqdars under section 22 Of the Gujrat Taluqdars Act, 1888, was distinct from the revenue assessment of land comprised in the taluqdari estate and they could not be equated.
The declaration under section 22 or the fixation of the jama under section 23(1) of the Act was in the nature of a settlement entered into between the Government on the one hand and the Taluqdar on the other but that was no settlement of land revenue within the meaning of section II7R of the Bombay Land Revenue Code, 1879.
As section 5(2) (b) of the Bombay Taluqdari Tenure Abolition Act, 1949, expressly saved the settlement made under section 23 and the 912 declaration under section 22 of the Gujrat Taluqdars Act, the appellants were liable to pay the entire land revenue after the expiry Of 30 years, i.e., from the year 1955 56.


judgement:
ON: Civil Appeal No. 4297 of 1983.
From the Judgment and Order dated 26.10.1979 of the Allahabad High Court in C.M.W. No. 7168 of 1972.
Raja Ram Agarwal and A.K. Srivastava for the Appellants.
K.K. Venugopal, Rajinder Sachher, Satish Chandra, K.C. Dua, and J.P. Misra for the Respondents.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
The State of U.P. by special leave appeals from the Judgment of the High Court of Allahabad dated 26.10.1979, allowing the respondents ' writ petition and holding that the State of U.P. and the Excise authori ties were not entitled to levy excise duty on the wastage of liquor in transit.
The respondents are manufacturers of high strength spirit classified as other sorts of spirit not otherwise specified ' under Section 28 of the United Prov inces Excise Act, 19 10, hereinafter referred to as 'the Act '.
After manufacture they transport those spirit in big containers from the distilleries to their warehouses, trans porting them on passes issued under section 16 of the Act.
In the bonded warehouses the same are sometimes diluted, separately bottled and sold.
They also used to manufacture and bottle military rum under a licence and supply the same to the defence personnel inside and outside the State of U.P.
The Officer Commanding Rail Head Depot A.S.C., Pathan kot having obtained permits from the State of Punjab for the import of military rum, against those permits the respond ents exported military rum from their distillery, under different passes.
The excise duty on military rum for export was Rs.7 per L.P. Litre while the rate for consumption within the State was 171 Rs.21 per L.P. Litre.
If the exported military rum was under bond thereupon duty was realised by the importing State from the importer thereof.
The respondents bottled the rum ac cording to rules and supplied the same to the consignees at the distillery premises and the consignments were taken by the consignees under the seal of the railway authorities to their respective destinations.
It appears by Notification dated March 26, 1979 in exercise of the powers under Sections 28 and 29 of the Act, read with section 21 of the U.P. General Clauses Act, 1904, and in supersession of the earlier Government Notification the Governor was pleased to direct that with effect from April 1, 1979 duty shall be imposed on country spirit at the rates specified in the schedule thereto and the duty was payable "before the issue from the distillery or bonded warehouse concerned save in the case of issued under bond".
By order dated 13.10.1970 notice was issued to the respond ents demanding Rs.4,295.55p.
on the wastage which was termed as "excess transit wastage" of rum calculated at the maximum rate of Rs.21 per L.P. Litre.
A representation of the re spondents dated November 9, 1970 was rejected by order dated 15.1.1972.
Another representation through the All India Distillers Association was also rejected by order dated August 28, 1972.
Several writ petitions challenging similar orders were filed by others before the Allahabad High Court for quashing the orders.
The respondents also filed Civil Miscellaneous Writ No. 7168 of 1972 under Article 226 of the constitution of India praying for appropriate writ, order or direction quashing the impugned orders dated 13.10.1970, 9.11.1970, 15.1.1972 and 28.8.1972 and for a mandamus commanding the State of U.P. not to realise or adjust any amount of duty towards wastage from the respondents ' advance duty account otherwise than in accordance with law and restraining them from giving effect to the impugned orders.
The High Court by the impugned judgment dated 26.10.1979 relying on an earlier Division Bench decision of the same High Court in M/s. Mohan Meakin Breweries Ltd. and Anr.
vs State of Uttar Pradesh and Ors.
, (Writ Petition No. 2604 of 1973, decided on 11.9.1979) allowed the writ petition and quashed the impugned orders thereby holding that no excise duty could legally be levied on the excess wastage the occurred during the transport of liquor in course of export, that is, taking out of U.P. otherwise than across a customs frontier as defined by the Central Government.
Mr. Raja Ram Agarwal, the learned counsel for the appel lants, submits that the duty has been levied keeping in mind the fact that in 172 U.P. excise duty is levied at two different rates at a higher rate when the liquor is sold inside the State, and at a lower rate when it is exported outside the State.
Counter vailing duty is paid by the importer on the quantity actual ly received in the importing State.
If there is excess wastage on transit the result is that the quantity actually received by the destination State is less than the quantity on which the State of U .P. charged the lower rate and, therefore, on the quantity shown as wastage the State of U.P. ought to recoup its differential duty by charging excise duty at the higher rate; and that this is clearly envisaged by the Act and the United Provinces Excise Manual Rules, hereinafter referred to as 'the Rules '.
Counsel further submits that it has a wholesome purpose, namely, to discourage evasion of duty and that there is no question of levying excise duty twice on the same article inasmuch as the amount of export duty actually paid is always deducted from the demand; and that it is a duty of regulatory charac ter meant to guard against perpetration of fraud or decep tion on excise revenue which the State is entitled to re ceive.
It is said to be a realisation of escaped duty justi fied by the implied presumption.
Mr. K.K. Venugopal, the learned counsel for the respond ents, submits that in this case while the exporting State, that is, U.P., levied export duty at a concessional rate the importing State levied countervailing duty on the quantity of rum imported; and the quantity exported and subjected to excise duty by the exporting State being the same as the quantity whereupon countervailing duty was imposed by the importing State, there could be no question of collecting differential duty on the excess wastage by the exporting State and if that was done it would amount to double taxa tion.
Explaining the procedure for export from U.P. counsel states that after export duty is paid, the exporter gets the alcohol released and transport it to the importing States in bottles or casks.
In the importing State countervailing duty is paid on full consignment at its destination and the seals of the bottles transported are intact.
So the entire con signment is taxed less the wastage.
The impugned demand notices have, submits counsel, rightly been quashed by the High Court and the appellants have rightly been restrained from levying such differential duty on excess wastage on transit in course of export.
The only question to be decided, therefore, is whether the differential duty is leviable under the Act and the Rules.
For answering the question we may refer to the Act and the Rules.
Included in Chapter V of the Act, which deals with duties and fees, Section 28 of the Act provides that an excise duty or a countervailing duty, as the 173 case may be, at such rate or rates as the State Government shall direct may be imposed either generally or for any specified local area on any excisable article stated in that section.
"Excise duty" and "countervailing duty" as defined in Section 3(3a) of the Act means any such excise duty or countervailing duty, as the case may be, as is mentioned in entry 51 of List II in the Seventh Schedule to the Constitu tion.
That entry reads as follows: "51.
Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India: (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcot ics; but not including medicinal and toilet preparations containing alcohol or any substance included in subparagraph (b) of this entry.
" The original Section 28 of the Act now re numbered as subsection (1) thereof, and sub sections 2 and 3 inserted by section 2 of the U.P. Act 7 of 1970 clearly covers Indian made foreign liquors.
There could be no dispute as to mili tary rum being one of the Indian made foreign liquors ex cisable under the Act.
A duty of excise under Section 28 is primarily levied upon a manufacturer or producer in respect of the excisable commodity manufactured or produced irre spective of its sale.
Firstly, it is a duty upon excisable goods, not upon sale or proceeds of sale of the goods.
It is related to production or manufacture of excisable goods.
The taxable event is the production or manufacture of the liq uor.
Secondly, as was held in A.B. Abdulkadir vs The State of Kerala.
reported in ; , an excise duty imposed on the manufacture and produc tion of excisable goods does not cease to be so merely because the duty is levied at a stage subsequent to manufac ture or production.
That was a case on Central Excise, but the principle is equally applicable here.
It does not cease to be excise duty because it is collected at the stage of issue of the liquor out of the distillery or at the subse quent stage of declaration of excess wastage.
Legislative competence under entry 51 of list II on levy of excise duty relates only to goods manufactured or produced in the State as was held in Bimal Chandra Banerjee vs State of Madhya Pradesh, ; In the instant case there is no 174 dispute that the military rum exported was produced in the State of U.P.
In State of Mysore & Ors.
vs M/s. D. Cawasji & Co., 10, which was on Mysore Excise Act, it was held that the excise duty must be closely related to production or manufacture of excisable goods and it did not matter if the levy was made not at the moment of production or manufacture but at a later stage and even if it was collected from retailer.
The differential duty in the in stant case, therefore, did not cease to be an excise duty even it was levied on the exporter after declaration of excess wastage.
The taxable event was still the production or manufacture.
It is settled law as was held in Bimal Chandra Banerjee vs State of Madhya Pradesh (supra), a case under the Madhya Pradesh Excise Act, that no tax can be levied by the State Government in the absence of specific authorisation by statute.
In that case the levy of duty on liquor which the contractor failed to lift was held to have been an attempt to exercise a power which the State Government did not possess.
Mr. Agarwal refers us to Rule 636 of the Rules which at the relevant time said: "636.
A distiller holding licences for bottling Indianmade foreign liquor of his own manufacture and for selling it by wholesale may export such foreign liquor bottled on his wholesale premises, to any other State or Union Territory in India subject to the following condi tions: (1) The exporter shall obtain from the importer a permit authorizing the import signed by the Chief Revenue Authority of the importing State or Union Territory or by an officer duly authorized in this behalf.
(2) The permit shall specify: (a) the name and address of the person of firm authorized to import; (b) the description and quantity of the foreign liquor to be imported; (c) the rate of duty chargeable in the importing State or Union Territory in case the Indian made foreign 175 liquor is imported in State or Union territory with which the state of Uttar Pradesh has entered into reciprocal arrangements for the adjustment of the excise duty by book transfer.
(d) the rate of duty charged in the importing State or Union Territory and the fact that it has been realized in advance in cases of import other than those covered by clause (c).
(3) On receipt of the permit the exporter shall deposit into the treasury; (a) Export duty on the total quantity of liquor to be ex ported; and (b) Where the export is made to a State or Union Territory with which the State of Uttar Pradesh has entered into a reciprocal arrangement for the adjustment of the excise duty by book transfer, and the rate higher than that enforced in the State of Uttar Pradesh, and that payable in the importing State or Union Territory on the total quantity of liquor to be exported.
(4) On receipt of the permit and the treasury receipt the wholesale vendor shall prepare a pass in form F.L. 23 in quadruplicate and submit it to the Excise Inspector, in charge of the distillery.
The Excise Inspector shall after satisfying himself that duty has been correctly realized, affix his signature to the pass.
The exporter shall then send one copy of the pass to the Collector of the district of export, one copy to the Chief Revenue Authority of the place of import or such other officer as may be authorised in this behalf.
One copy to the consignee and shall retain the fourth copy.
The treasury receipt shall always accompany the copy of the pass sent to the Collector of the exporting districts.
(5) The pass in form F.L. 23 shall state clearly: (a) the name and address of the consignor; 176 (b) the name and address of the consignee; (c) the exact description and quantity of each kind of foreign liquor despatched under the pass; (d) the route by which it is despatched; (e) the date of despatch; and (f) in case of export against duty paid permit, the fact that the duty has been prepaid in the State of import.
(6) A separate pass in form F.L. 23 shall be issued in respect of each consignment.
The Chief Revenue Authority or other officer of the place of import should send the copy of the pass received by him, duly countersigned, to the Excise Commissioner, Uttar Pradesh, in support of the claim for ' refund of duty annually after the close of the excise year.
(7) Should the rate of duty in the importing State be lower than that in force in Uttar Pradesh, exporter shall be entitled to a refund of the difference in duty.
If the duty has been prepaid in the State of import at the rate in force at the time of issuing import permit, the exporter shall be entitled to a refund of duty deposited by him in the State of export on verification of the claim by the Excise Inspector incharge of the distillery on the basis of export passes in form F.L. 23 duly countersigned by the Chief Revenue Authority of the State or Union Territory of import or the officer appointed in this behalf in token of receipt of the consignment of Indian made foreign liquor" Rule 637 provided than the duty, other that export duty, on foreign liquor manufactured at any distillery in Uttar Pradesh and exported therefrom on prepayment of duty to any State or Union Territory of India shall be credited by book transfer to the Government of the importing State or Union Territory after the close of the excise year.
Rule 637 A provided for registration of claims for refund or export of Indian made foreign liquor and provided that every distiller making exports of Indian made foreign liquor to other States, shall submit a statement showing all such exports made during the proceeding quarter, in form P.D. 31 to the Excise Commissioner, duly 177 verified by the officer incharge, distillery, despatching simultaneously a copy thereof to the Assistant Excise Com missioner of the charge.
Rule 37 B provided for maintenance of register of refunds against exports of Indian made for eign liquor and said that the Excise Inspector incharge of the distillery shall enter all the details given by the distillers in the statement in form P.D. 31, in a register to be maintained by him in form P.D. 31 A. As and when refunds are allowed by the Excise Commissioner, he shall make entries about refund in this register in relevant columns under his signature.
Similar entries shall also be made by the office of the Assistant Excise Commissioner concerned, on the copies of P.D. 31 statement received from the exporters, and be initialled by the Assistant Excise Commissioner after verification.
Thus it is seen that though not specifically mentioning charging up of differential export duty on excess wastage, the above rules definitely envisaged refund of excise duty of countervailing or equalising nature.
Mr. Agarwal also brings to our notice R.ale 8 14 which substituted the old Rule by the Excise Commissioner 's Noti fication No. 10909/IX.
241 A, dated February 8, 1978.
It provided as under: "Allowance for loss in transit.
An allowance upto 0.5 per cent will be made for the actual loss in transit by leakage, evaporation or other unavoidable cause, or spirit transport ed or exported under bond in wooden casks or metal vessels.
The allowance to be made under this rule will be determined by deducting from the quantity of spirit despatched from the distillery, the quantity received at the place of destina tion, both quantities being stated in terms of alcohol.
The allowance will be calculated on the quantity contained in each wooden cask metal vessels comprised in a consignment.
If the report of the officer by whom the consign ment of spirit has been gauged and proved at its destination shows that the wastage has occurred above the limit allowa ble the person executing the bond shall be liable to pay duty on so much of the deficiency as in excess of the allow ance.
The rate of duty leviable shall be the highest rate of duty leviable on such spirit in this State.
178 When the wastage does not exceed the prescribed limit, no action need be taken by the Officer in charge of the Distillery or bonded warehouse, as the case may be, but when the wastage exceeds the allowable limit, the Officer in charge of the Distillery shall obtain the expla nation of the Distillers or the person executing the bond and forward the same together with a full report of the circumstances to the Assistant Excise Commissioner or the Deputy Excise Commissioner of the charge in which the Dis tillery is situated.
The Assistant Excise Commissioner or the Deputy Excise Commissioner shall charge duty on excess wastage provided that when the total wastage in a consign ment is within the allowable limit.
Deputy/Assistant Excise Commissioner of the charge may write off the excess wastage in any particular wooden cask or metal vessel: Provided further that the Deputy Excise Commis sioner may write off the duty upto Rs.500, if he is satis fied that the excess wastage in a consignment was on account of an accident or other unavoidable cause but in other cases, the matter shall be referred to the Excise Commis sioner for orders.
Cases in which the Deputy Excise Commis sioner writes off duty shall be reported by him to the Excise Commissioner.
" It is emphasised by Mr. Agarwal that this provision is meant to discourage evasion of duty.
If any part of the lower export duty charged liquor is not in fact exported it should be made to pay the higher excise duty as payable on home consumed liquor.
It does not impose any new duty.
We are inclined to agree.
This rule does not authorise imposition of any new tax but only authorises charging up excise duty on the excess wastage of liquor in course of export which was charged at concessional rate.
The old Rule 814 of the Rules was made by B.O. No. 423/V 284 B, dated September 6, 1910 and No. 20/8 V E 980B, dated May 28, 1918 providing for allowance for Joss in transit.
It said: "An allowance will be made for the actual loss in transit, by leakage, evaporation or other unavoidable cause, of spirit transported or exported under bond.
The allowance is subject to the following maximum limits.
" Limits were prescribed differently for wooden casks and metal vessels, keeping in mind the duration of transport.
179 Thus, we find that the minimum limits of wastage in transit was prescribed even under the old rule.
This by implication enjoined that the excess wastage would be taxed as if not wasted.
The question may arise as to the date of the new Rule 814, to decide whether the impugned notices would be covered by it or by the old Rule.
Section 77 of the Act provides the answer.
It says: "77.
Publication of rules and notifications.
All rules made and notifications issued under the Act shall be published in the Official Gazette, and shall, have effect as if enacted in this Act from the date of such publication or from such other date as may be specified in that behalf." (The two provisos are not relevant for the purpose of this case) Both the old and the new Rule 8 14 must, therefore, have effect from the date of publication in the Official gazette or from such other date as may be specified in that behalf as if enacted in the Act.
The object of this ancient formu la, namely, "as if enacted in this Act" was to emphasise the fact that the notifications were to be as effective as the Act itself.
Its validity could be questioned in the same way as the validity of the Act could be questioned.
It is an ancient form of rule making still to be found in the Act.
Thus the Act having provided for fixed wastage allowance also in effect provided that the excess above the allowable wastage will be taxed.
It can not, therefore, be said that no such charging up of excise duty on the excess wastage in transit could be validly made.
The validity of Rule 814 had not been questioned before the High Court.
Absolute equality and justice is not attainable in taxing laws.
Legislature must be left to decide the State policy within Constitution al limitations.
In M/s. Mohan Meakin Breweries Ltd. vs Excise & Taxation Commissioner, Chandigarh, reported in 10: ; 1, the appellant company carried on the busi ness of manufacture, storage and sale of liquors.
Between June, 1967 and April 1969,.
it transported various quanti ties of liquor from its distilleries in U.P. to its bonded warehouse at Chandigarh.
On arrival, the consignments were examined by the Officer in Charge of the warehouse, and a shortage was found, exceeding the wastage allowance permis sible under rule 8 of the Punjab Bonded Warehouse Rules, 1957.
The Excise and Taxation Commissioner, exercising the powers of the .
Financial Commissioner. issued a show cause notice and then ordered 180 the appellant to pay duty on the wastage in excess.
The show cause notice required the appellant to pay duty on excess wastage in course of import of liquor from U.P. and the rules governing the appellant 's licence provided for a wastage allowance not exceeding 1% of the actual loss in transit by leakage or breakage of vessels or bottles con taining liquor, and if the wastage exceeded the prescribed limit the licensee should be liable to pay duty at the prescribed rate as if the wastage in excess of the pre scribed limit had actually been removed from the Warehouse, and it was also provided that the Financial Commissioner could in his discretion on goods cause being shown remit the whole or a part of the duty leviable on such wastage, and these provisions were challenged.
This Court held that the impugned rules did not impose any new duty or create any liability and that they were in essence and substance of a regulatory character meant to guard against perpetration of fraud or deception on the revenue.
"They provide for and regulate the storage and subsequently the removal of liquor from the bonded warehouse, on payment or otherwise of the duty which is chargeable under the Fiscal Rules of 1937.
" We agree with Mr. Agarwal that the instant Rules 636 and 814 are also a regulatory character and they are precautionary against perpetration of fraud on the excise revenue of the exporting State.
If out of the quantity of military rum in a consignment, a part or portion is claimed to have been wastage in transit and to that extent did not result in export, the State would, in the absence of reasonable expla nation, have reason to presume that the same have been disposed of otherwise than by export and impose on it the differential excise duty.
A statute has to be construed in light of the mischief it was designed to remedy.
There is no dispute that excise duty is a single point duty and may be levied at one of the points mentioned in Section 28.
The submission of the respondents that they paid duty on the entire quantity of rum to be exported under excise passes issued to the importer and that after payment of the export duty the rum bottled under the conditions enumerated in the Rules was supplied to the consignee at the distillery premises and the consignments were taken by the consignees under their seals and under the seal of the Railway authori ties and the consignments reached their destination with seals intact would not go to support the contention that the State Government was not competent to levy any duty on the excess wastage that is shown to have occurred during transit inasmuch as only a concessional rate of duty was levied on the liquor which was supposed to be exported out side the State of U.P. and if the entire quantity on which such concessional duty was paid did not reach its destination, and the 181 shortage is shown as wastage in transit, it surely meant that the short delivery was not exported.
The reason of the wastage would not be material so far as this conclusion is concerned.
Had this quantity been not exported but consumed locally the State would have derived higher duty of which it has been deprived.
The argument that countervailing duty is paid by the importers in the importing State on the quantity actually received, would also be immaterial for this conclusion though that may be of some importance for the purpose of revenue of the importing State as well as the consignee.
In case countervailing duty has been paid on the entire quanti ty of the consignment in the importing State there may be room for adjustment in accordance with the provisions of Rules 636, 637, 637 A and 637 B of the Rules.
The only material question may be whether the wastages was caused while the bottles were on transit but still within the territory of the exporting State or in transit inside the importing State.
If as a matter of fact it is found that the exported liquor actually crossed the territory of the ex porting State intact there may not be any justification for demanding differential duty.
That will of course be a ques tion of fact in no way affecting the right to demand the differential duty.
The decision in M/s. Ajudhia Distillery Rajaka, Sahaspur vs State of Uttar Pradesh and Anr., report ed in 1980 Taxation Law Reports 2262, quashing such a demand and holding that the exporting State had no jurisdiction to charge duty on the liquor wastage in transit cannot be said to have been correctly decided and the impugned judgment in the instant case suffers from the same infirmity, and has to be set aside.
Rule 814 envisages the levy of such differen tial duty.
There is no question of double charging or multi ple point charging in this case.
It is only a question of recovery of the difference on proof of the purposes for which lower duty was earlier levied having failed to be achieved entailing liability to make good the difference.
The Rules 636, 637 A and 637 are also relevant to this extent.
It was reiterated in M/s. Mc Dowell and Co. Ltd. vs Commercial Tax Officer, VH Circle, Hyderabad; , 14: ; , following Abdul Kadir (supra) that excise duty is a duty on the production or manufacture of goods produced or manufactured within the country though laws are to be found which impose a duty of excise at stages subsequent to the manufacture or production.
Similarly what was stated in Kalyani Stores vs The State of Orissa and Ors., ; , was reiterated in M/s Mohan Meakin Breweries Ltd. (supra) that a countervailing duty is meant "to counter balance; to avail 182 against with equal force or virtue; to compensate for some thing or serve as equivalent or substitute for".
A counter vailing duty is "meant to equalise the burden on alcoholic liquors manufactured or produced in the State.
" They may be imposed at the same rate as excise duty or at a lower rate so as to equalise the burden after taking into account the cost of transport from the place of manufacturing to the taxing State.
Countervailing duties are meant to equalise burden on alcoholic liquors imported from outside the State and the burden placed by excise duties on alcoholic liquors manufactured or produced in the State.
Countervailing duties can only be levied if similar goods are actually produced or manufactured in the State on which excise duties are being levied.
Thus, countervailing duty paid in the importing State does not ipso facto affect the excise revenue of the exporting State.
The fact that the importer is required to pay counter vailing duty on the imported military rum could, therefore, ipso facto be no ground for opposing the levy of differen tial duty on the excess wastage of exported rum that duty being levied with a view to safeguard the excise revenue of the exporting State.
If the excess wastage was actually lost to consumers while in the importing State no justification of such a duty may arise, that, however, would be an entire ly different question without in any way affecting the competence of the legislature of the exporting State to impose such a duty.
The fact that the exported rum was on payment of export duty or on bond would not again be materi al inasmuch as when the rum meant for export failed to be exported, there may be a presumption, may be rebuttable one, that what is shown as the excess has merged in mass of rum consumed within the State and was not separated from such a mass.
The imposition of differential duty was only deferred to this moment and it still continued to be a duty on pro duction or manufacture of rum.
It could not be regarded as a duty not connected with the taxable event of manufacture or production.
There is also no similarity with the excise duty sought to be levied only on the unlifted quantity of liquor by contractors which was held to be impermissible under Sec tions 28 and 29 of the Act in Excise Commissioner, U.P. vs Ram Kumar, and State of Madhya Pradesh vs Firm Gappulal; , In the instant case the military rum was obtained for the purpose of export and the lower export duty was paid and only when the rum did not result in export the question of imposing the differential duty arose.
The notion of the excise duty being changed or cancelled on account of what transpires later is not foreign to excise law.
Generally speaking 183 the imposing of the differential duty i.e. charging up the duty on the report of the excess wastage is the opposite of the system of drawback prevalent in some systems.
Drawback means the repayment of duties or taxes previously charged on commodities, from which they are relieved on exportation.
For example, in the customs laws of some countries an allow ance is made by the Government upon the duties due on im ported merchandise when the importer, instead of selling it within the country re exports it, and then the difference of duty is refunded, if already paid.
Similarly, in England there is a provision of refund of duties on British wine when the wine incidentally is spoilt or otherwise unfit for use or when delivered to another person has been returned to the maker as so spoilt or unfit.
The system of charging up the duty on the subsequent event of non export can not, therefore, be said to be irrespective of production or manufacture.
In the instant case if it is proved to the satisfaction of the appropriate authorities that countervailing duty had been paid on the entire consignment irrespective of the wastage then the question would arise as to whether the wastage could be ignored altogether by the exporting State as was done by the importing State.
Counsel for the parties had no objection to the idea that if the explanation for wastage was satisfactory and the countervailing duty was paid in the importing State on the entire consignment irre spective of the wastage, there would be room for adjustment by reducing the duty to similar extent.
For the foregoing reasons, the impugned Judgment is set aside and the appeal is allowed, but under the facts and circumstances of the case, without any order as to costs.
Y. Lal Appeal allowed.

summary:
The respondents are manufacturers of high strength spirit.
They also used to manufacture and bottle military rum under a licence and supply the same to the defence personnel inside and outside the State of U.P.
The excise duty on military rum for export was Rs.7 per L.P. Litre while the rate for consumption within the State was Rs.21 per L .P. Litre.
An allowance upto 0.5 per cent for wastage during transit by leakage, evaporation etc.
was provided.
Against a proper permit the respondents supplied rum to the Officer Commanding Rail Road Depot.
A.S.C., Pathankot at the distillery premises and the consignments were taken by the consignees under the seal of the railway authorities to their respective destinations.
By a notification dated March 26, 1979, issued in super session to earlier notification, the Governor was pleased to direct that with effect from April 1, 1970 duty shall be imposed on country spirit at the rates mentioned in the schedule and that the duty was payable before issue from the distillery or bonded warehouse concerned save in the case of issued under bond.
Accordingly a notice was issued to the respondents demanding Rs.4,295.55P on the wastage which was termed as "excess transit wastage" of rum calculated at the maximum rate of Rs.21 per L .P. Litre.
The representation against the demand having been rejected, they filed a writ petition before the High Court challenging the validity of the orders and praying for a mandamus commanding the State of U.P. not to realise or adjust any amount of duty towards wastage from the respondents ' advance duty account and restraining them from giving effect to the impugned orders.
The High Court allowed the respondents ' writ petition holding that the State of U.P. and the Excise authorities were not entitled to levy 169 excise duty on the wastage of liquor in transit.
Hence this appeal by the State.
On the question, whether differential duty is leviable.
under the Act and the Rules.
Allowing the appeal, this Court, HELD: The Act having provided for fixed wastage allow ance also in effect provided that the excess above the allowable wastage will be taxed.
It cannot therefore be said that no such charging up of excise duty on the excess wast age in transit could be validly made.
[179E] Absolute equality and justice is not attainable in taxing laws.
Legislature must be left to decide the State policy within constitutional limitations.
[179F] Rules 636 and 814 are of regulatory character and they are precautionary against perpetration of fraud on the excise revenue of the exporting State.
A statute has to be construed in the light of the mischief it was designed to remedy.
[180D] In the instant case, the military rum was obtained for the purpose of export and the lower export duty was paid and only when the rum did not result in export the question of imposing the differential duty arose.
The notion of the excise duty being changed or cancelled on account of what transpires later is not foreign to excise law.
[182H] Drawback means the repayment of duties or taxes previ ously charged on commodities, from which they are relieved on exportation.
[183B] The system of charging up the duty on the subsequent event of non export cannot, therefore, be said to be irre spective of production or manufacture.
[183C] In the instant case, if it is proved to the satisfaction of the appropriate authorities that counter vailing duty had been paid on the entire consignment irrespective of the wastage then the question would arise as to whether the wastage could be ignored altogether by the exporting State as was done by the importing State.
[183D] A.B. Abdulkadir vs State of Kerala, ; ; Bimal Chandra Banerjee vs State of Madhya Pradesh, 467; State of Mysore & Ors.
vs M/s. D. Cawasji and Co., ; ; M/s. Mohan Meakin Breweries Ltd. vs Excise M/s. Mc Dowell and Co. Ltd. vs Commercial Tax Officer, VII Circle, Hyderabad, ; ; Kalyani Stores vs State of Orissa and Ors., ; ; Excise Commissioner, U.P. vs Ram Kumar, and State of Madhya Pradesh vs Firm Gappulal, ; , referred to.
Ajudhia Distillery Rajaka, Sahaspur vs State of U.P. and Anr., [1980] Taxation Law Repons 2262, overruled.