The Yemmiganur Spinning Mills Limited And Another v. State Of Andhra Pradesh And Others

1. The petitioners are registered dealers under the Central Sales Tax Act and the Andhra Pradesh General Sales Tax Act dealing in cotton and cotton yarn. By G.O. Ms. No. 167 (Revenue) dated 9th February, 1971, issued under Section 9(1) of the State Act, the State Government granted exemption in the case of sales of hank yarn from the levy of tax under the said Act with effect from 9th February, 1971. The petitioners say that on account of the said exemption, they were not charging or collecting the sales tax from their customers on the sales of the said commodity. However, it appears that the State Government issued another notification in G.O. Ms. No. 437 (Revenue) dated 18th May, 1971, rescinding the said G.O. Ms. No. 167 with effect from 19th April, 1971. The said G.O. was, however, published in the Andhra Pradesh Gazette only on 1st July, 1971. The petitioners say that they knew of the said rescinding G.O. only in the second week of July when a copy of the same was communicated by the Andhra Pradesh Chambers of Commerce and Industry to its members. In the assessment for the relevant year, the petitioners claimed exemption on a turnover of Rs. 10,60,496.00 and Rs. 16,56,083 respectively, representing the turnover of inter-State sales of hank yarn during the period 19th April, 1971, to 30th June. 1971, but the department refused the said exemption with reference to the said G.O. Ms. No. 437. Hence the writ petition.

2. The relief claimed by the petitioners is for a declaration that the said G.O. Ms. No. 437 dated 18th May, 1971, comes into force only on and from the date of its publication in the Andhra Pradesh Gazette, i.e., 1st July, 1971, and, consequently, to restrain the respondents from levying or collecting the Central sales tax on the sales of hank yarn for the period between 19th April, 1971, and 30th June, 1971.

3. Sri P. Venkatarama Reddy, the learned Counsel for the petitioners, contends that under Section 9(1) of the Andhra Pradesh General Sales Tax Act, an exemption can be granted by the State Government by a notification published in the Andhra Pradesh Gazette, which obviously means that the exemption would be effective only from the date of its publication in the Andhra Pradesh Gazette. By virtue of the provisions of the Andhra Pradesh General Clauses Act, the power to rescind an exemption may be conceded to the State Government under the said provision itself. But even a notification rescinding an earlier notification has to be similarly published in the Andhra Pradesh Gazette and would therefore be effective from the date of such publication. He further contends that the power under Section 9 being in the nature of delegated legislation, cannot be given retrospective effect and, particularly, when Section 9 neither expressly nor by necessary implication confers the power to issue a notification with retrospective effect. Sri D.V. Sastry, the learned Government Pleader, however, submits that none can deny the essential requirement of publication in the Gazette, which is expressly provided by the Act. He submits that every notification under Section 9 of the Act, whether prospective or retrospective, has got to be published in the Gazette and that, in fact, G.O. Ms. No. 437 was so published in the Gazette. The main question that is in issue, according to him, in this writ petition is the power of the State Government to give retrospective effect to its notification issued under Section 9. He submits that there is no limitation on the power of the State Government to grant or rescind an exemption with retrospective effect and that, therefore, G.O. Ms. No. 437 is valid even with respect to its retroactivity.

4. Section 9 of the Act reads as follows:

9. Power of State Government to notify exemptions and reductions of tax.--(1) The State Government may, by notification in the Andhra Pradesh Gazette, make an exemption or reduction in rates, in respect of any tax payable under this Act--

(i) on the sale or purchase of any specified class of goods, at all points or at any specified point or points in the series of sales or purchases by successive dealers; or

(ii) by any specified class of persons, in regard to whole or any part of their turnover.

(2) Any exemption from tax or reduction in the rate of tax notified under Sub-section (1)--

(a) may extend to the whole of the State or to any specified area or areas therein;

(b) may be subject to such restrictions and conditions as may be specified in the notification, including conditions as to licences and licence fees.

5. Since the Act itself specifically provides for a notification granting exemption to be published in the Andhra Pradesh Gazette, the learned Government Pleader is right in submitting that there can be no controversy about the necessity of the publication of a notification issued under Section 9 of the Act. The only question therefore that arises for our consideration is whether such a notification or notification rescinding an earlier notification can be given retrospective effect. The learned Counsel for the petitioners relies upon two decisions of this Court reported in R. Srihari Naidu v. Government of Andhra Pradesh (1969) 1 An. W.R. 181 and R. Narayana Reddy v. State of Andhra Pradesh (1969) 1 An. W.R. 77, besides the decision of the Supreme Court in Income-tax Officer, Alleppey v. M.C. Ponnoose [1970] 75 I.T.R. 174 (S.C.).

6. Now, for an effective administration of law, it is essential to observe the rule that ignorance of law is no excuse. But before the knowledge of law is attributed to every member of the public, the law must be published or promulgated for general information. It is interesting to note in this connection some instances given by C.K. Allen of English Judges in fourteenth century refusing to take notice of certain statutes on the ground that they have not been apprised of such a statute and as saying

"if, indeed, the King should send us word that we are to take this ordinance for law, we will accept it, but never else"

. (See C.K. Allen--Law in the Making, page 444, seventh edition.) Hence the necessity and practice of publication of the statutes arose. Towards the close of eighteenth century, it became obligatory for the printed statutes to be distributed through the realm as speedily as possible after enactment. The advance of the science made the speedy, instant and extensive publication of the statutes easier and very often the deliberations in the course of and the passing of an Act by the Parliament was public knowledge. Another theory expounded by Blackstone was that since the statutes are made by the accredited representatives of the people, they must therefore be taken to know them. In any event no such publicity, or fiction is available in the case of rules and notifications made or issued by a delegate, be it the Government or any other person and since delegated legislation has as much statutory force as the statute, the necessity of publication and promulgation for public information is all the more essential. It is needless to add that in the absence of any special mode of publication prescribed by the statute, the publication can be effected in any other appropriate manner which can be said to be effective and reasonable. We may also note in this connection another argument of the petitioners that sales tax is generally expected to be passed on to the consumer and, therefore, giving retrospective effect to a notification in the nature of the impugned G.O. is unreasonable inasmuch as they could not be required to pay the tax from out of their own income.

7. We may now note the decision of a Bench of this Court reported in R. Srihari Naidu v. Government of Andhra Pradesh (1969) 1 An. W.R. 181. After referring to several decisions, it was held by the Bench that:

The preponderance of the view is that unless a power to give effect retrospectively is conferred for making a rule or issuing a notification, it is not permissible to the delegate to exercise that power retrospectively.

8. It was further held that:

The extent of the powers of the legislature and of the delegate of authority are not co-extensive or similar. In construing the rules made or notifications issued in exercise of the powers vested in the executive authority, the ordinary rule of construction is that effect must be given to them from the date of their promulgation.

9. We may now consider the other decision reported in R. Narayana Reddy v. State of Andhra Pradesh (1969) 1 An. W.R. 77, which was rendered by one of us sitting single (Chinnappa Reddy, J.). After referring to the observations of Bose, J., in Harla v. State of Rajasthan A.I.R. 1951 S.C. 467, it was observed that:

The idea that a person may be governed by a law that cannot be known by him because it is not published or promulgated is revolting to judicial conscience and civilised thought. It has with it a strong odour or totalitarianism and of the gestapo. It is repugnant to the principles of justice, freedom, equality and fraternity, cherished by all lovers of democracy and enshrined in our Constitution.

10. In conclusion, it was stated that:

Subordinate legislation to take effect must be published or promulgated in some suitable manner, whether such publication or promulgation is prescribed by the parent statute or not. It will take effect from the date of such publication or promulgation. Where the parent statute prescribes the mode of publication or promulgation, that mode must be followed, but where the statute is silent, the question arises what is the mode of publication or promulgation to be adopted. The subordinate legislation itself may prescribe the manner of publication, in which case such mode, if adopted may be sufficient, if reasonable. I am guardedly adding the words 'if reasonable' because it is not easy to visualise cases where the mode of publication prescribed by subordinate legislation may be wholly unsuitable. If affixture on the notice board of the Central Secretariat of rules under enactments of universal application in the country is prescribed as the mode of publication, it can never be said to be satisfactory or reasonable mode of publication. If the subordinate legislation does not prescribe a mode of publication or if the subordinate legislation prescribes a plainly unreasonable mode of publication, it will take effect only when it is published, though the channel now customarily recognised in our country as the appropriate channel through which official orders are made known to the public, namely, the official Gazette. In my view, subordinate legislation of a general nature takes effect on the date when it is published in the official Gazette, except where statute provides otherwise or where the subordinate legislation itself provides a different but reasonable mode of publication.

11. The decision reported in Income-tax Officer, Alleppey v. M.C. Ponnoose [1970] 75 I.T.R. 174 (S.C), is again a case where it was held that a notification issued under Section 2(44) of the Income-tax Act investing the Tahsildar with the powers of the Tax Recovery Officer cannot be made retrospectively. Again the distinction between the powers of a sovereign legislature and its delegate was pointed out and held that unless expressly conferred, the delegate cannot issue a notification with retrospective effect. The learned Government Pleader, however, relied upon the decision of a Bench of this Court in P. Basavayya & Sons v. State of Andhra Pradesh [1961] 12 S.T.C. 634, where it was held that a rule framed under Section 19 of the Madras General Sales Tax Act, 1939, can be given retrospective operation. The said decision was however referred to in the subsequent Bench decision in R. Srihari Naidu v. Government of Andhra Pradesh [1969] 1 An. W.R. 181, and it was held that the said case cannot be relied upon as laying down the proposition that when a legislature confers power to make a rule or notification it has by the very use of the words "as if enacted in the Act" delegated one of its sovereign legislative functions, namely, to enact a statute, with retrospective effect. It was also held that there was no discussion in the said case as to the principle upon which the conclusion was based. In view of the principle repeatedly affirmed by the Supreme Court and by this Court that unless empowered expressly or by necessary implication a delegate cannot make a rule or issue a notification with retrospective effect, we are not prepared to treat the decision in P. Basavayya & Sons v. State of Andhra Pradesh [1961] 12 S.T.C. 634, as laying down a contrary principle.

12. We may also refer in this connection to a decision of the Supreme Court reported in Sales Tax Officer v. Timber and Fuel Corporation [1973] 31 S.T.C. 585 (S.C.), which has been cited by the learned Government Pleader himself fairly, stating that though the said decision runs counter to his contention, he thought it his duty to bring the said decision to our notice. We appreciate the same. It was held in the said decision that the power of exemption conferred upon the Government under Section 12 of the Madhya Pradesh General Sales Tax Act, 1958, cannot be used directly or indirectly to levy tax retrospectively. In the said case, when the sales in question took place, the assessee was not liable to pay any tax in respect of those sales inasmuch as the sales effected by him were second sales exempt from tax. But on 1st June, 1963, the Government issued a notification exempting the forest department from paying the sales tax in respect of sales effected by it as from 1st April, 1959, to 2nd November, 1962, and on the basis of the said notification, the sales by the petitioner were sought to be treated as first sales and liable to tax. It was therefore held that the Government had no power to levy tax on the assessee by exercise of its power of exemption retrospectively applicable to another.

13. The learned Government Pleader also contended that since the petitioners have an alternative remedy by way of an appeal, this Court should not interfere by way of certiorari. However, since the assessing authorities cannot go behind the validity of the notification issued under Section 9, we cannot accede to the said contention.

14. For all the reasons mentioned above, we are of the opinion that G.O. Ms. No. 437 dated 18th May, 1971, is effective and enforceable only on and from 1st July, 1971, the date of its publication in the Andhra Pradesh Gazette and not with effect from any earlier date.

15. The writ petition is therefore allowed, but in the circumstances without costs. Advocate's fee Rs. 100.