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Judgment
R.M. Sahai, J.—I have, carefully, gone through the judgment of brother Thommen, J. I agree with every word that has been said by him. But considering the importance of issues involved I would like to add few' words of my own.
The dispute is about levy of purchase tax on industrial alcohol. The High Court held that the State legislature was competent to enact a law imposing purchase tax on it in exercise of power under Entry 54 of List II. But it struck down the levy as it would disturb price structure regulated by Central Government. It was held that control of alcohol industry having been taken over by the Parliament, for purpose of regulation and development the State stood denuded of its taxing power under Entry 54 of List II to the extent the field of price fixation was covered by the price control order issued by the Government. And the purchase price being component of price fixation which squarely fell within the power of Central Government the imposition of purchase tax amounted to intrusion into the forbidden area of price fixation by Central Government. Support for this was drawn, principally, from the two Constitution Bench decisions in India Cement Ltd. and Others Vs. State Of Tamil Nadu and Others, and Synthetic and Chemicals v. State of U.P. (1990 (1) SCC 1091. The first was relied for the principle that even a taxing legislation by the State could be invalid to the extent it trenched on Central legislation on the same subject. And the latter for the conclusion that, however, sales tax cannot be charged on industrial alcohol in the present case, because under the ethyl Alcohol (price control) orders sales tax cannot be charged by the State on industrial alcohol'. Reliance on Indian Cement Ltd. (supra) was under complete misapprehension. The State in that case attempted to levy cess on royalty. It was held to be invalid. To save it the State attempted to justify it as a tax in exercise of power under Entry 50 of List II. The submission was negatived as the legislative power of State under Entry 50 of List II was 'subject to any limitation imposed by the Parliament by law relating to mineral development'. The Bench held that in view of the Parliamentary legislation under Entry 54 of List I and the declaration made u/s 2 and provisions of Section 9 of the Act the State legislation was overridden to that extent. No such restriction or limitation is placed under Entry 5-1 of List II except that the exercise of power has been made subject to the provisions of Entry 92 of List I.
But the problem has arisen due to the conclusion in the case of Synthetic and Chemicals (supra). The question was if the State legislature could levy vend fee or excise duty on industrial alcohol. The Bench answered the question in the negative as industrial alcohol being unfit for human consumption the State legislation was incompetent to levy any duty of excise either under Entry 51 or Entry 8 of List II of the VIIth Schedule. While doing so the Bench recorded the conclusion extracted earlier. It was not preceded by any discussion. No reason or rationale could be found in the order. This gives rise to an important question if the conclusion is law declared under Article 141 of the Constitution or it is per in curium and is liable to be ignored.
'Incuria literally means 'carelessness'. In practice per in curium appears to mean per ignoratium.' English Courts have developed this principle in relaxation of the rule of stare decisis. The 'quotable in law' is avoided and ignored if it is rendered, in ignoratium of a statute or other binding authority'. 1944 1KB 718 Young v. Bristol Aeroplane Ltd.. Same has been accepted, approved and adopted by this Court while interpreting Article 141 of the Constitution which embodies the doctrine of precedents as a matter of law. In Jaisri Sahu Vs. Rajdewan Dubey and Others, this Court while pointing out the procedure to be followed when conflicting decisions are placed before a Bench extracted a passage from Halsbury Laws of England incorporating one of the exceptions when the decision of an Appellate Court is not binding.
Does this principle extend and apply to a conclusion of law, which was neither raised nor preceded by any consideration. In other words can such conclusions be considered as declaration of law? Here again the English Courts and jurists have carved out an exception to the rule of precedents. It has been explained as rule of sub-silentio. A decision passed sub-silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the Court or present to its mind' (Salmond 12th Edition). In Lancaster Motor Company {London) Ltd. v. Bremith Ltd. 1941 1KB 675, the Court did not feel bound by earlier decision as it was rendered 'without any argument, without reference to the crucial words of the rule and without any citation of the authority'. It was approved by this Court in Municipal Corporation of Delhi Vs. Gurnam Kaur, . The Bench held that, 'precedents sub-silentio and without argument are of no moment'. The Courts thus have taken recourse to this principle for relieving from injustice perpetrated by unjust precedents. A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141 Uniformity and consistency are core of judicial discipline. But that which escapes in the judgment without any occasion is not ratio decedendi. In Shama Rao v. State of Pondicherry AIR 1967 SC 1680 it was observed, 'it is trite to say that a decision is binding not because of its conclusions but in regard to its ratio and the principles, laid down there-in'. Any declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration of law or authority of a general nature binding as a precedent. Restraint in dissenting or overruling is for sake of stability and uniformity but rigidity beyond reasonable limits is inimical to the growth of law.
Effort was made to support the conclusion, indirectly, by urging that the State having raised same objections by way of review petition and the same having been rejected it amounted impliedly as providing reason for conclusion. Law declared is not that can be culled out but that which is stated as law to be accepted and applied. A conclusion without reference to relevant provision of law is weaker than even casual observation. In the order of brother Thommen, the extracts from the judgment of the Constitution Bench quoted in extenso demonstrate that the question of validity of levy of sales and purchase tax was neither in issue nor was it raised nor is there any discussion in the judgment except of course the stray argument advanced by the learned Attorney General to the following effect,
But alcohol not fit for human consumption are not luxury and as such the State Legislatures according to Attorney General will have no power to levy tax on such alcohol.
Sales tax or purchase tax under Entry 54 is levied on sale or purchase of goods. It does not contemplate any distinction between luxury and necessity. Luxuries are separately taxable under Entry 62. But that has nothing to do with Entry 54. What prompted this submission is not clear. Neither there was any occasion nor there is any constitutional inhibition or statutory restriction under the legislative Entry nor does the taxing statute make any distinction between luxuries and necessities for levying tax. In any case the Bench did not examine it nor did it base its conclusion on it. In absence of any discussion or any argument the order was founded on a mistake of fact and, therefore, it could not be held to be law declared. The Bench further was not apprised of earlier Constitution Bench decisions in Hoechst Pharmaceuticals Ltd. and Others Vs. State of Bihar and Others, and Ganga Sugar Corporation Ltd. and Others Vs. State of Uttar Pradesh and Others, which specifically dealt with the legislative competence of levying sales tax in respect of any industry which had been declared to be of public importance. Therefore, the conclusion of law by the Constitution Bench that no sales or purchase tax could be levied on industrial alcohol with utmost respect fell in both the exceptions, namely, rule of sub-silentio and being in per in curium, to io the binding authority of the precedents.
Ethyl alcohol is not fit for human consumption. It is principally used as raw material for manufacture of rubber etc, Since it was of all India importance the activities of which affected the country as a whole, it was declared as of public importance by adding it as item No. (I) under Entry 26 of the first Schedule appended to the Industrial (Development and Regulation) Act, 1951, (hereinafter referred as IDRA). The effect of this declaration was that it stood removed from Entry 24 of List II and allocated to the Central legislature. The control thus vested in the Parliament. But Entry 33 in concurrent list permits both the Parliament and the State Legislature to deal with trade and commerce in it and also regulate production, supply and distribution of goods declared to be of public importance. The State could, therefore, enact law under Entry 33 subject to it that the State legislation could not be repugnant to Central legislation. That is if the field is already occupied by a Central enactment then the State legislation to that extent shall be invalid. (See Ch. Tika Ramji and Others etc. Vs. The State of Uttar Pradesh and Others, and Hoechst Pharmaceuticals Ltd. and Others Vs. State of Bihar and Others,
Can this principle apply to levy of purchase tax by an enactment made in exercise of legislative power under Entry 54 of List II ? Power to tax is a sovereign power. In federal system of governance it is exercised by distribution of power between the Union and the State. Both are supreme in their sphere. That is brought out clearly by Article 246(!) and Article 246(3) of the Constitution. The legislative field for levying tax by Union is set out in Entries 82 to 92 in List I and of State in Entries 45 to 63 in List II of the VIIth Schedule. There is no overlapping. Fields are clearly demarcated, Limitations and restrictions are also mentioned. Unlike general entries power to levy tax cannot be deduced from another Entry as ancillary exercise of power. Since the Concurrent List does not contain any Entry relating to taxing power the concept of occupied field or repugnancy cannot arise. If there is clash between exercise of power under list II and list I then the State legislation may be invalid due to Article 246(1). But since there can be no clash or invalidity in relation to taxing power the question of invalidity can not arise.
Price fixation of ethyl alcohol is an exercise of power for regulating distribution and supply of it. The general entry for regulating distribution and supply is different from exercise of taxing power. The two do not even remotely touch each other. Therefore, if the price goes up in exercise of taxing power then subject to its being arbitrary or confiscatory it could not be struck down as intruding in forbidden field. In Hoechest Pharmaceuticals (supra) this Court while examining the ambit of Entry 54 of List II observed. 'Entry 54 of List II of the Seventh Schedule is only subject to Entry 92A of List I and there can be no further curtailment of the status of power of taxation' Therefore, the entire basis for striking down the levy that even though the State had plenary power to impose tax on sales/purchase of goods can exercise taxing power under Entry 54 of List II so long as it does not militate against the legislative field occupied by the Central Government under the IDR Act or any other enactment made under Entry 52 of List I proceeded on complete misconception of taxing powers of State. In fact as stated earlier the entire theory of occupied field or State legislation being repugnant to Central legislation is available when the two legislatures exercise their powers under Concurrent List. Therefore, the order of the High Court striking down the levy cannot be upheld.
ORDER
For the reasons stated by us in our concurring judgments dated July 18, 1991, we set aside the impugned judgment of the High Court, and the appeal by the State shall accordingly stand allowed. However, we do not make any order as to costs.