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Category: Excessive Legislation

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Excessive Legislation

D.N. Ghosh and Others v. Additional Sessions Judge and Others AIR 1959 Cal 208

D.N GHOSH AND OTHERS V. ADDITIONAL SESSION JUDGE AND OTHERS

D.N. Ghosh and Others v. Additional Sessions Judge and Others AIR 1959 Cal 208

ISSUE:

  • Whether the delegation of power by the Legislature to a non-legislative body to make rules and regulations is an unconstitutional exercise of delegated power?

RULE:

  • Exclusion of evidence crucial to a defendant’s case can be challenged if its exclusion lacks a valid legal basis, as this undermines the right to a fair trial.

FACTS:

  • Petitioners are owners of coal fields (“Diguli Colliery”) Burdwan. Due to non-profitability, the petitioners entered into an agreement with Sri A.K. Goswami.
  • The agreement was aimed at more efficient operation of the property. Goswami was responsible for the operations of the colliery.
  • Clause 7 of the Agreement laid down that Goswami was to pay 66-2/3% of the net profits every six months to the petitioners.
  • Additionally, if profits exceeded Rs. 1000 per month, Goswami would be entitled to a further 10% of the profits.
  • Thereafter, the Coal Mines Provident Fund & Bonus Schemes Act 1948 (“Act”) came into operation.
  • Section 3 of the Act empowers the Central Government to create a Coal Mines Provident Fund Scheme for employees.
  • Pursuant this, the Indian Government framed the Scheme which specified employer contributions, the rate and manner of contributions and how they could be recovered. Clause 70 prescribes the circumstances under which a person may be punishable.
  • A complaint was lodged against the petitioners for violation of the provisions of the Act and the Scheme.
  • The Magistrate convicted the petitioners under Section 245 of the Code of Criminal Procedure. On appeal, the petition was dismissed by the Additional Sessions Judge.
  • The petitioners contend that the power to impose penalty for violation of the provisions constitutes improper delegation and is therefore void.

HELD:

  • The Calcutta High Court held that Section 9 is not ultra vires and Section 70 of the Scheme does not constitute an unconstitutional exercise of a delegated power.
  • The Court noted that while the power to prescribe penalties and enforce them was delegated to the Government, the Legislature had fixed the limits for the penalties and laid down the standards to be followed.
  • The Court emphasized that the Legislature maintained sufficient control over the delegation, ensuring it did not exceed the permissible limits of delegation.
  • Consequently, the appeal failed and was dismissed.
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Excessive Legislation

Devi Das Gopal Krishnan and Ors. v. State of Punjab and Ors. AIR 1967 SC 1895

DEVI DAS GOPAL KRISHNAN AND ORS V. STATE OF PUNJAB AND ORS.

Devi Das Gopal Krishnan and Ors. v. State of Punjab and Ors. AIR 1967 SC 1895

ISSUE:

  • Whether Section 5 of the East Punjab General Sales Tax Act, 1948, as originally enacted, was void?
  • Whether the imposition of purchase tax under the amended Act violates Article 14 of the Indian Constitution?
  • Whether Section 5 of the Act is void for conferring legislative power on the provincial Government, thereby constituting excessive delegation?

RULE:

  • A delegated legislation must provide clear legislative guidance and cannot confer unfettered discretion on the executive to levy taxes.
  • Taxes imposed on goods must not amount to an unreasonable restriction on the fundamental right to trade under Article 19(1)(g).

FACTS:

  • The Supreme Court’s decision addressed multiple civil appeals arising under the Punjab General Sales Tax Act, 1948 (“Act”), relating to oil seeds, iron and cotton.
  • The amendment to the Act imposed a purchase tax of 2% for the use in the manufacture of goods for sale.
  • Assessees in Civil Appeals Nos. 526, 527 and 529 of 1964 owned oil mills in Punjab. They purchased oil seeds, crushed them in their oil mills, and sold the oil and the residual oil-cake. The assessees were served notice for the failure to pay purchase tax for the purchase of oil seeds.
  • Assessees in Civil Appeals Nos. 39 to 43 of 1965 were rolling steel manufacturers who purchased steel scrap and ingots to produce rolled steel sections for sale. The assessing officer imposed a 2% purchase tax on their purchases.
  • Assessees in Civil Appeals Nos. 81 and 540 of 1965 were engaged in cotton-based manufacturing operations including yarn and textile production. They were assessed for purchase tax on cotton.
  • All the appellants filed petitions before the Punjab and Haryana High Court under Article 226 of the Indian Constitution. The High Court heard and dismissed the petitions. As a result, the assessees appealed to the Supreme Court.

HELD:

  • The Supreme Court held that Section 5 of the Act, prior to its amendment, was void because it conferred uncontrolled power on the provincial Government to levy tax without providing any legislative guidance.
  • The Court rejected the contention of excessive delegation stating that the conferment of reasonable discretion for fixing tax rates in fiscal statutes is permissible.
  • Section 5 of the Act specified a maximum rate of 2 pieces in a rupee. The discretion to fix the rate between 1 piece and 2 pieces in a rupee is so minimal and insignificant that it does not exceed the permissible limits. Therefore, the amendment to Section 5 was deemed valid.
  • The Court further held that Article 14 of the Constitution was not violated as the Legislature imposes purchase tax on goods before they lose their identity and are transformed into a different product. Where no manufacturing process occurs, and the goods retain their original form, the taxable event is the sale, not the purchase.
  • The Supreme Court dismissed the appeals and upheld the validity of the purchase tax provisions, affirming the judgments of the High Court.
Categories
Excessive Legislation

Industrial Union Department, AFL-CIO v. American Petroleum Institute [1980] 448 U.S. 607

INDUSTRIAL UNION DEPARTMENT V. AMERICAN PETROLEUM INSTITUTE

Industrial Union Department, AFL-CIO v. American Petroleum Institute [1980] 448 U.S. 607

ISSUE:

  • Whether the Occupational Safety and Health Administration (“OSHA”) exceeded its authority by implementing a benzene exposure standard without adequate proof of a significant risk to workers?

RULE:

  • Under the Occupational Safety and Health Act, OSHA can only impose workplace safety standards if it identifies a “significant risk” of material health impairment and supports the standard with substantial evidence.

FACTS:

  • The Occupational Safety and Health Administration (OSHA) implemented a new benzene exposure limit for workers, setting a significantly lower threshold from 10 per million parts of air (ppm) to 1 ppm.
  • However, OSHA did not present clear data proving that exposure at the prior threshold posed a substantial health risk.
  • The defendant American Petroleum Institute (“API”) challenged OSHA’s new standard, arguing that it was too stringent and lacked scientific backing.
  • API further contended that OSHA’s action exceeded its regulatory powers by failing to prove the existence of a significant risk requiring such a reduction.
  • The Court of Appeals held the standard invalid as it was based on findings that were unsupported by the administration.

HELD:

  • The U.S. Supreme Court held that OSHA had overstepped its authority by setting a standard without adequately demonstrating a significant risk, ruling that regulatory actions should be based on substantiated evidence of necessity.
  • The Court further noted that OSHA had not shown the 1 ppm exposure limit was “reasonably necessary or appropriate to provide safe and healthful employment” as required by Section 3(8) of the Act. The Court emphasized that Congress had not delegated unbridled discretion to OSHA to regulate without demonstrating a direct link between exposure levels and significant risk.
  • The Supreme Court affirmed the judgment of the Court of Appeals.
Categories
Excessive Legislation

Khemka and Company (Agencies) Pvt. Ltd. vs. State of Maharashtra and Ors, AIR 1975 SSC 1549

KHEMKA & CO. (AGENCIES) PVT. LTD. AND ORS V. STATE OF MAHARASHTRA AND ORS.

Khemka and Company (Agencies) Pvt. Ltd. v. State of Maharashtra and Ors, AIR 1975 SSC 1549

ISSUE:

  • Whether assessees under the Central Sales Tax Act 1956 (“Central Act”) could be made liable for penalty under the provisions of the State Sales Tax Act (“State Act”)?

RULE:

  • The doctrine of ejusdem generis states that where general words follow specific words, the general words are to be construed as limited and apply only to the same kind/class as mentioned. Courts have to find genus – the common strand of characteristics.

FACTS:

  • Two civil appeals arising from the imposition of penalties under the State Sales Tax Act were brought before the Supreme Court.
  • The assessees were governed by the provisions of the Central Act. However, the Assistant Commissioner of Sales Tax levied penalties under the State Sales Tax Act due to default in payment of taxes within the prescribed time.
  • The petitioners argued that the Central Act did not contain any provisions for the imposition of penalty for delay or default in tax payment rendering the imposition of penalty under the State Act illegal.
  • The Department of Revenue countered that Section 9(2) of the Central Act encompassed penalties imposed under both the Central and State Acts.
  • The Bombay Sales Tax Tribunal and the Bombay High Court ruled in favour of the Department of Revenue, while the Mysore High Court decided the case in favour of the petitioners.
  • Both the appeals from Bombay and Mysore were consolidated and brought before the Supreme Court via special leave.

HELD:

  • The Supreme Court held that the penalty provision in the State Act cannot be applied to impose a penalty for tax payable under the Central Act.
  • The Court applied the doctrine of ejusdem generis to decipher that liability for tax and penalty under the State Act cannot be extended to the provisions of the Central Act.
  • Only the penalty provisions contained in the Central Act are applicable to transactions governed by the Central Act. The mere existence of similar provisions in the State Act does not permit the application of such provisions to dealers under the Central Act.
  • The Court accepted the Appellant’s appeal and held that the Tribunal was wrong in holding that the penalty could be levied under the State Act.
Categories
Excessive Legislation

Madhya Pradesh High Court Advocates Bar Association v. Union of India AIR 2022 SC 2713

MADHYA PRADESH HIGH COURT ADVOCATES BAR ASSOCIATION V. UNION OF INDIA

Madhya Pradesh High Court Advocates Bar Association v. Union of India AIR 2022 SC 2713

ISSUE:

  • Whether the National Green Tribunal Act, 2010 (“Act”) infringes upon the jurisdiction of the High Courts under Articles 226 and 227 of the Constitution of India?
  • Whether the provision of a direct appeal to the Supreme Court from the National Green Tribunal (NGT) is constitutionally valid?
  • Whether Section 3 of the Act is ultra vires to the Constitution due to excessive delegation of legislative power?

RULE:

  • The delegation of legislative power is permissible if it is necessary to fulfil the objectives of a statute, but the delegation must not result in excessive delegation or a transfer of core legislative functions to the executive.
  • The jurisdiction of High Courts can be restricted in matters where specialized tribunals have been created for adjudication of complex subject matters. However, the jurisdiction of High Courts cannot be completely ousted by the creation of such tribunals.

FACTS:

  • The Madhya Pradesh High Court Advocates Bar Association filed a petition challenging the National Green Tribunal Act, 2010 (“Act”), arguing that Sections 14 and 22 of the Act undermine the jurisdiction of the High Courts under Articles 226 and 227.
  • The petitioners contend that by excluding the jurisdiction of the High Courts in environmental matters, the Act limits access to justice and violates constitutional principles.
  • The petitioners also contested the provision under Section 22 of the NGT Act as it bypasses the High Courts, and in the absence of an appeal mechanism, there is a limitation of the judicial review process.

HELD:

  • The Supreme Court held that Sections 14 and 22 of the NGT Act did not oust the jurisdiction of the High Courts under Articles 226 and 227 as they have the power to issue writs.
  • The Court upheld the provision for a direct appeal to the Supreme Court under Section 22 of the Act. It clarified that although the statute provides for a direct appeal to the Supreme Court, the remedies under Articles 226 and 227 before the High Court remain intact and are not extinguished. In light of such choices being available to a litigant, there is no rational justification to strike down the Section. The Court ruled that Section 3 of the NGT Act did not amount to excessive delegation.
  • It found that the delegation of power to the Union Government for the establishment of NGT benches was within permissible limits. The delegation was guided by the framework set by the Parliament, objectives of the Act and the Supreme Court’s directions.
  • The petition was dismissed and the Act was upheld.