ZAIBTUN TEXTILE MILLS LTD. vs CENTRAL BOARD OF REVENUE AND OTHERS

' ZAFFAR HUSSAIN MIRZA, J.-This judgment will dispose of Civil Appeals Nos. K-I, K-48, K-49, K-50, K- 53, K-56, K-61 and K-62 of 1972, in which common questions of law and facts are involved.

' The appellants are the owners of Textile Mills and are aggrieved by the levy and demand of duty on the production capacity of the plants and machinery of their factories by the Central Board of Revenue under section 3(4) of the Central Excises and Salt Act of 1944 (hereinafter to be referred to as the Act). The appellants having failed in their effort to challenge the levy of the tax before the erstwhile Sind and Baluchistan High Court in it' Constitutional jurisdiction, sought leave to appeal from this Court. Le was granted on 17-8-1972 by a Bench of this Court to examine the follow question raised on behalf of the appellants :-

(i) In absence of any guiding principles in the Act it was unconstitutional on the part of the Legislature to delegate its legislative function to the Central Board of Revenue and to empower the Board to determine the production capacity of a Textile Mill.

(ii) Even assuming the validity of the impugned provisions of section 3(4), of the Act, the question was whether the requirements of law as prescribed therein were fulfilled and in particular, whether the rules were not notified by the Central Board of Revenue as required thereunder, which according to the appellants were not in fact notified by the Central Government.

(iii) The law contemplated that the guiding principles upon the basis of which the production capacity was required to be fixed should have come into existence prior to the actual fixation of the production capacity and not simultaneously as was done in the present case.

(iv) The Awan Committee was unauthorisedly constituted as an ad hoc body and it would not, therefore, be legally charged with the duty of. Examining and determining the production capacity of Cotton Textile Mills.

2. The facts material for the purpose of this appeal may be briefly stated. Section 3 of the Act, before it was amended, provided for levy and collection of Excise Duties on Excisable goods in such manner as may be prescribed and at the rates set forth in the First Schedule to the Act. These rates were from time to time altered under the Finance Acts and Ordinances according to the exigencies of the Central Government. In 1966, the Constitution (VI) Amendment Act of 1965 was passed which amended Entry No, 43 of the third Schedule to the Constitution of 1962, by addition of Item (i) thereto, by which the Central Legislature was given power to make laws providing for imposition of taxes and duties on the production capacity of any plant, machinery, undertaking, establishment or installation, in lieu of the duties specified in items (b), (e) and ( f ) of Entry No,

43. Pursuant to this Constitutional amendment the Central Legislature, by Finance Act, 1966 amended subsection (4) of section 3 and added new subsections to this section. The amendments may be reproduced as under ; "(4) With the prior approval of the Central Government, the Central Board of Revenue may, in lieu of levying and collecting under subsection (1) duties of excise on excisable goods, by notification in the official Gasette, levy and collect duties on the production capacity of plaints, machinery, undertakings, establishments or installations producing or manufacturing such goods ; and such notification shall specify-

(a) the guiding principles for the determination of production capacity ;

(b) the production capacity, as determined in accordance with such guiding principles, of the plants, machinery, undertakings, establishments or installations affected by it ;

(c) the duty or the rate of duty on production capacity ; and

(d) the manner of collection of such duty.

(5) The production capacity of any plant or machinery or part thereof specified in a notification under subsection (4) shall, upon an application made to the Central Government within thirty days of the notification by any aggrieved person, be reviewed by a Review Board constituted under subsection (6) to which the application shall be referred ; and the decision of the Review Board shall be final.

(6) The Central Government shall, for the purpose of subsection (5), constitute a Review Board consisting of the following ;

(a) the Secretary to the Government of Pakistan, Ministry of Finance, who shall be the Chairman ;

(b) the Secretary to the Government of Pakistan, Ministry of Commerce ; and

(c) the Secretary to the Government of Pakistan, Ministry of Industries.

(7) The Central Board of Revenue may, by notification in the official Gasette, at any time, cancel a notification under subsection (4) ; and where a notification is so cancelled or, for any reason whatsoever, cannot be given effect to, the duty under subsection (1), in lieu whereof the duty under subsection (4) was levied by such notification, shall be levied and, with necessary adjustment, collected for the financial year during which such notification is cancelled or for the period for which it cannot be given effect to."

3. On the coming in force of these amendments, the Central Government, on the recommendation of or in consultation with Central Board of Revenue appointed a Committee which came to be known as the Awan Committee, with Mr. S. B. Awan, Joint Secretary of the Government of Pakistan as its Chairman and representatives of various departments concerned with levy of Production Capacity Tax as members. This Committee was appointed by means of notification published in the Gazette of Pakistan. This notification further provided that duty on the production capacity of a Cotton Textile Factory as determined by the Awan Committee will be levied under section 3(4) of the Act, but that notified capacity of each individual factory shall be subject to review on application by the manufacturer, by the Review Board constituted under subsection (6) of section 3 of the Act. In this notification the guiding principles to be followed by the Committee for the determination of the production capacity were laid down as under ; "(4) The guiding principles, to be notified under subsection (4) of section 3 of the Act on the basis of which the Committee should determine the production capacity of individual cotton textile factories ; are as follows-

(i) The national average annual production of each statutory category of cotton fabric/cotton yarn on a per loom/spindle basis taking production of the past three years into account.

(ii)Categorywise annual production of the individual units for the past three years or such lesser period as may be available.

(iii) Categorywise annual production of comparable units for the same period.

(iv) Production capacity of an individual unit calculated on the basis of the technically possible maximum production potential of the plant and machinery installed in the unit, if it were to aim, a maximising its profits before tax.

(v) Growth factor, keeping in view the past rate of improvement in production and likely increase in efficiency relating to improvement in technical, managerial, labour and financial factors of individual mills.

(5) The annual production capacity of individual factories shall be expressed for each statutory category of cotton fabrics in terms of square yards, and for each category of cotton yarn in terms of pounds.

(6) For the purpose of determining the liability to duty of a factory, the production capacity of the factory for each excise category of fabrics/yarn, determined on the basis of the above principles, will be multiplied by the statutory rate of excise duty for that category.

(7) The Committee should determine the number of working days/ shifts on the basis of which the annual production capacity of cotton textile factories should be determined. The Committee will also recommend the basis on which abatement in the annual production capacity may be allowed on account of the closure of the factory for reasons beyond its control within the number of working days/shifts reckoned for fixing the annual production capacity of individul factories.

(8) The Committee should also recommend the procedure for the grant of refund in respect of various categories of cotton fabrics and cotton yarn which are exported.

(9) The Committee shall submit its recommendations to the Central Board of Revenue of Ministry of Finance by a date not later than the 15th November, 1967."

' The Committee seems to have worked out the production capacity on the basis of the data collected by it and submitted its report to the Central Board of Revenue, which then scrutinised the case of each factory in the light of the guiding principles and the data furnished by the Awan Committee and then made orders determining the production capacities of all the Mills which were then incorporated in the Excise Duty on Production Capacity (Cotton Fabric) Rules, and the Excise Duty on Production Capacity (Cotton Yarn) Rules of 1968, published in the Gazette of Pakistan, Extraordinary dated 22-4-1968. These rules were to come into force on 1-5-1968. The appellants in these cases, being aggrieved by the determination of the product titan capacities of their Mills, filed Review applications before the Review Board under section 3(5) of the Act. The case of the Government before the High Court was that each petitioner was duly heard with the assistance of its counsel, and in fact in some cases the Board reviewed the production capacity on the basis of the material placed before it by the affected parties. After the disposal of the review petitions filed by the appellants and other textile manufacturers, notices for payment of the production capacity tax as determined by the Central Board of Revenue, and confirmed or reviewed ,by the Review Board were issued. The appellants in this case and in the connected appeals, then filed Constitutional petitions under Article 98 of the Constitution of 1962 before the High Court, seeking to challenge the validity of the amendments in the Act effected by means of the Finance Act, 1966, and the orders of the Central Government and the Central Board of Revenue with regard to the imposition of the production capacity tax. The High Court appears to have taken up the petition filed by the present appellants and the Ismail Textile Mills, in order to dispose of the common questions of law as to the Constitutionality of the impugned amendments in the first place for disposal and also heard the petitioners in other cases on the questions of law common to all the cases.

4. The learned Judges of the Division Bench who heard these cases came to take conflicting views on the Constitutional and legal questions raised in the petitions before them and wrote dissenting opinions separately. In view of this difference of opinion between the learned Judges, the case was placed before Mr. Justice Noorul Arfin (as he then was), who in his judgment, which is impugned in this appeal, summarised the points upon which the two learned Judges differed as under

(1) Whether the Central Legislature by enacting the aforesaid amendments, in section 3 of the Act, by Finance Act, 190, effaced itself or abdicated from its legislative functions or whether this legislation suffers from the defect of impermissible and excessive delegation of legislative powers?

(2) Whether this legislation conferred uncontrolled discretion on the Central Board of Revenue, so that the legislation should not be treated as law on any of the subjects within the legislative sphere of the Central Legislature?

(3) Whether the provisions for levy of excise duties according to production capacity by the Central Board. Of Revenue suffer from uncontrolled power given to the Board that the legislation in question should be held to be void as containing no safeguards for persons affected by such tax?

(4) Whether the functions entrusted to the Central Board of Revenue under the said legislation were not discharged by the Board, but instead were performed by the aforesaid Awan Committee or by the Central Government, thereby resulting in violation of the amended provisions of section 3 of the Act?

(5) 'Whether there was violation of the rules of natural justice in the Central Board of Revenue notifying the guiding principles and the determination of production capacities of each cotton textile fadory and the duty payable by it simultaneously and at one and the same time, without hearing the parties affected thereby, and whether it was necessary for Central Board of Revenue to give such hearing before taking any such action and, whether the parties affected by the Central Board's notification were not given any hearing at all?

' The learned third Judge after examining the contentions and arguments of the counsel for the parties appearing before him, in an elaborate judgment dated 31-12-1970, agreeing with one of the learned Judges who had first heard the petitions, held against the appellants and reached the conclusion that their petition was liable to be dismissed. As already mentioned this decision was taken in two cases (viz. Writ Petition No, 538/1969, out of which the present appeal arises and Writ Petition No, 660/1969). The remaining petitions were referred back to a Division Bench of the High Court for final disposal in accordance with law laid down in the decision relating to the aforesaid two petitions. Accordingly separate orders were passed by a Division Bench, of the High Court dismissing each petition in view of the aforesaid decision.

5. Mr. A. K. Brohi, learned counsel for the appellants, in support of this appeal raised the following contentions :

(i) All the amendments brought in section 3 by means of the Finance Act, 1966, whereby the existing subsection (4) was amended and new subsections (5), (6) and (7) were added, are invalid and colourable exercise of legislative power.'

(ii) In the circumstances of this case, it was incumbant as an essential pre-condition for the Central Board of Revenue to give an opportunity of hearing to the appellants before determining the actual production capacity of their mills. The hearings before the Review Board or the Standing Tribunal did not cure this legal defect.

(iii) The guiding principles contained in clauses (i), (ii) and (v) of rule 3(1) of the Excise Duty on Production Capacity Rules, 1968 are invalid on the ground of unreasonableness.

(iv) Even the mandate contained in the amended legislation, assuming its validity, was not implemented by the Central Board of Revenue but by the Central Government which was not competent authority therein for the purpose.

(v) The guiding principles having been notified simultaneously alongwith the capacity tax levied on the appellants mill, the tax cannot be said have been levied on the basis of the production capacity determined in accordance with these guiding principles.

6. Before examining the contentions advanced before us in support of this appeal, it will be of advantage to state a brief analysis of the questions raised before the High Court and the conclusions arrived at by the learned judge in the impugned judgment. In the High Court, as before us, the learned counsel for the appellants, had sought to make a distinction between the duty imposed under the unamended provisions of the Act and the duty proposed to imposed under the amendments introduced in the Act by the Finance Act, 1966. The argument was, that whereas under the unamended Act, excise duty was chargeable on the actual production, under the impugned amendments the duty was to be levied on the capacity for production of the plant and machinery. There was therefore, according to the submission, a fundamental alteration in the nature of the tax. The impugned legislation was challenged on the ground that Legislature, had abdicated from its essential legislative function in that ;

(i) the amendments in section 3 of the Act conferred unfettered discretion on the Central Board of Revenue to introduce new mode of charging duty or a new duty altogether, on manufacturers,

(ii) the Finance Act, 1966, by which section 3 of the Act was amended, did not contain any standard or guiding principles for imposition of the new duty, but this matter was also left to be determined by the Central Board of Revenue, and

(iii) these amendments empowered the Central Board of Revenue to formulate the standard and guiding principles and impose production capacity tax without giving any hearing to the affected party.

' The amendments were therefore, challenged as invalid on the ground of impermissible delegation.

7. Since the primary attack on the impugned legislation was founded on the rule against delegation of legislative power, the learned Judge undertook what appears from the judgment to be a laborious and extensive examination of the case law relating to delegated legislation in various jurisdictions, namely, under the British Constitutional System, the United States Constitution, the Australian and Indian Constitutions and also the position that obtained in or country as laid down by the Federal Court of Pakistan and the Supreme Court of Pakistan on this subject. The learned Judge stated his conclusions on the law relating to excessive delegation in the following words : "It has thus been seen that wherever Constitutions have followed the British pattern, such as in the British Dominions and Colonies, and the Constitutions, in the Indo-Pak. Sub-continent, the Legislature has never been treated as delegate, or acting under mandate of any superior Legislature or Parliament. The powers of these Legislatures have always been considered to be sovereign powers within the assigned subjects, and to be as plenary and ample as the powers of the British Parliament itself. But this statement of law is subject to one qualification which, as I have noted above, has been recognized in several decisions, that is, that the Legislature should not efface itself and should not abdicate from its essential legislative powers altogether."

' The learned Judge took the view that :

(i) So long as the Legislature retains its powers intact and could, whenever it pleases, destroy the agency on whom it has conferred power to make regulations in the nature of legislation, and to take the matter back into its own hands, it cannot be said that the Legislature has either effaced itself or has abdicated from its legislative powers.

(ii) Whether discretion has been conferred on an external agency to prescribe and determine as to what the law shall be, or such external agency has been entrusted the authority only for execution of the law enacted by the Legislatures. This could be ascertained, according to the learned Judge, by applying the test whether any legislative policy or principle, or standards are discernible from the impugned legislation.

8. In the light of these principles the learned Judge then proceeded to examine the provisions of the impugned enactment and came to the conclusion that the legislation in question was not ultra vires and was validly made. He held that by using the expression "duties on the production capacity", the Legislature declared the primary legislative standard as well as the legislative principles for the guidance of the functionaries who were entrusted with the execution of the legislative policy. In view of the complicated nature of the work involved in determining the production capacity of an industrial unit, the complex nature of which is reflected from the report of the Awan Committee, the learned Judge came to the conclusion that this function could be performed satisfactorily only by persons technically conversant with the textile industry, who could sit constantly in session and devote their time exclusively to the ascertainment of the conditions and factors on the basis of which the production capacity of each cotton textile industrial unit could be determined. On these considerations the learned Judge repelled the contention that the Legislature has effaced itself or abdicated from its essential legislative function in conferring, by the impugned amendments, the power on the Central Board of Revenue to determine the production capacity of the industrial units in accordance with the rules formulated by it

9. The other ground of attack on the impugned enactment advanced before the learned Judge was that, even if the impugned enactment be assumed to be valid, the duty in question was not levied in accordance with the amended provisions of section 3 of the Act. The submission was that it was the Government which published the resolution laying down the guiding principles which were subsequently adopted by the Central Board of Revenue and as such in point of fact it was not the Board but the Government who had framed the guiding principles, which was, however, not the competent authority for this purpose in terms of section 3. This contention was found to be without substance on a factual basis, as the official record showed that the Central Board of Revenue had prepared the draft of the guiding principles and forwarded it to the Ministry of Finance,'

Government of Pakistan, for Central Government's approval with the suggestion that a Committee be appointed to carry out the necessary investigation for "determination of the production capacity of the individual cotton textile factories". Pursuant to this recommendation the Central Government had passed the resolution and appointed the Awan Committee. This resolution was published under the signature of the member of the Central Board of Revenue alongwith that of a Joint Secretary of Government of Pakistan in the Ministry of Finance. In these circumstances and in view of the provisions requiring prior approval of the Central Government, for issue of notification regarding the formulation of guiding principles for the determination of duty on production capacity, the learned Judge concluded that the Central Government was competent to cause investigation of facts and conditions to be made by appointing a Committee for this purpose. The objection that instead of the Central Board of Revenue, the Awan Committee itself determined the production capacity was also found to be without substance as there was nothing in the official file to support this objection. In any case the Central Board of Revenue had demonstrably made alterations and modifications in the production capacity suggested by the Awan Committee. The objection that the guiding principles and the production capacities of individual cotton factories already determined were simultaneously notified and published, instead of the one coming before the other, was also rejected. It was held that this objection cannot be pressed on the principles of natural justice, since this was within the realm of subordinate legislation to which the rules of natural justice are not attracted. Also there was material on record showing that the managements of cotton textile factories including the appellants were in fact heard and consulted by the Avian Committee before the Central Board of Revenue notified the guiding principles, the production capacity of each individual factory and the rates of duty leviable on such factory. But even if they had in fact not been heard, the aggrieved manufacturers had sufficient protection and guarantee of full representation of their point of view by the constitution of a Review Board under subsections (5) & (6) of section 3 of the Act. On the aforesaid findings and conclusions, the learned third Judge dismissed the petition of the appellants, as already stated, which was then followed by individual dismissal orders in the connected petitions filed by others textile manufacturers.

10. In view of the exhaustive and detailed review of the case law from the foreign as well as domestic jurisdictions, on this question by Noorul Arfin, J. It would indeed be an unnecessary and wasteful exercise on my part to cover the same field. I however, feel that it will be useful to refer to some cases from the English and Australian jurisdictions, as well as the cases from or own jurisdiction in which the Courts had the opportunity of dealing with the objection against delegation of law-making powers by parliament to outside authorities.

11. The two theories of Government which formed the basis for the rule that the Congress of the United States cannot delegate legislative power were originally identified with Montesquieu and Locke. The theory of Montesquieu was that of the separation of powers ; abuse of Governmental authority could be inhibited and restrained by distributing that authority among autonomous institutions of Government, legislative,. Executive and judicial, which checked and balanced each other. This theory is not necessarily confined to the Federal system of Government, but addresses itself to Government in general. It is not concerned with the division of governmental authority between the Central and Regional Government.

12. The second theory emanates from the work of John Locke, published in his "Treatises on Civil Government". According to him Government rests on the consent of the governed and the people in establishing institutions of Government had entrusted them with certain powers, and that it would be a breach of that trust for any institution to delegate any power entrusted to it. To quote his theory in his own words : "The legislative cannot transfer the power of making laws to any other hands, for it being but a delegated power from the people, they who have it cannot pass it over to others. The people alone can appoint the form of the commonwealth, which is by constituting the legislative, and appointing in whose bands that, shall be. And when the people have said "We will submit, and be governed by laws made by such men, and in such forms", nobody else can say other men shall make laws for them, nor can they be bound by any laws but such as are enacted by those whom they have chosen and authorised to make laws for them ; Locke (1690), Ch. X.

' The aforesaid principles are the peculiarities of the American Constitutional System based on the Constitutional concepts on which that system is founded, As would be presently pointed out the theory of separation of governmental powers has not been applied in or system with that rigidity which it has received under the American Constitution which contains express provisions distributing the governmental powers between the Legislature, the Executive and the judiciary. In spite of this peculiar Constitutional arrangement, whereby the law-making power vests in the Congress alone, as observed by Noorul Arfin, J. The analysis of the case law, clearly indicates, how the theory of separation of powers and the rule that a delegate may not further delegate powers conferred on it, has been gradually eroded and relaxed, in view of the complexities introduced in the course of history in the affairs of the Government, so that there is a growing tendency to transcend the limitations originally conceived a the exercise of the exclusive power of legislation and delegate to the administrative officials or bodies a substantial part of the law making process in order to fully achieve the consummation of the legislative purpose.

13. The doctrine of delegation has now been authoritatively held not to apply to the colonial Legislatures established under the Acts of the British Parliament prior to the independence and this view still holds the field after the independence in this country under the Constitutions adopted in Pakistan, as it has been held that the powers of the Legislature under the written Constitutions to make laws within the allotted sphere are in the nature of plenary and sovereign power.

14. The power of the colonial Legislatures to delegate legislative authority was challenged in some cases between 1878 and 1885, on the argument that the colonial Legislatures were delegates of the imperial parliament and therefore, could not further delegate the power given to them by that parliament. In Hodge v, Regina the statute under challenge provided for the appointment of Licence Commissioners who were authorised to make regulations governing the conditions and qualifications for obtaining licences to retail liquor and generally regulating licensed, taverns and shops, within the various localities. The argument that these provisions amounted to unlawful delegation of legislative power was rejected by the Privy Council. It was held that the powers of the Legislature established under the mandate from the imperial parliament in the province of Ontario, in regard to the matters for which it was conferred powers, were "not in any sense to be exercised by delegation from or as agents of the imperial parliament, but as authority as plenary and as ample within the limits prescribed by the imperial parliament in the plenitude of its power possessed" and could bestow, authority as the imperial parliament, or the parliament of the dominion, would have had under like circumstances to confide to a municipal corporation or body of its own creation, authority to make by-laws or resolutions as to subjects specified in the enactment and with the object of carrying the enactment into operation and effect. It was observed :- "It is obvious that such an authority is ancillary to legislation, and without it an attempt to provide for varying details and machinery to carry them out might become oppressive, or absolutely fail It was argued at the bar that a Legislature committing important regulations to agents or delegates effaces itself. That is not so. It retains its powers intact, and can, whenever it pleases, destroy the agency it has created and set up another, or take the matter directly into his own hands. How far it shall seek the aid of subordinate agencies, and how long it shall continue them, are matters for each Legislature, and not for Courts of law, to decide."

' In an earlier case, namely, Regina v. Burah it was held by the Privy Council that the Indian Legislature has powers which are expressly limited by the Act of the imperial parliament, but when acting within those limits, it is not in any sense agent on delegate of the imperial parliament, but has and was intended to have, the plenary powers of legislation as large, and of the same nature as those of parliament itself. Similar view was taken in Powell v. Appollo Candle Co.

15. The case which came closest to the case under consideration, was the case of Cobb and Co.

Ltd. v. Kropp , in which the Court was called upon to examine the contention that the impugned legislation had the effect of creating a new legislative power with wide or sovereign authority to make decisions concerning the imposition of taxes and to make decisions as to range the incidence of such taxes. The impugned legislation was the State Transport Facility Act, 1946, in which it was provided that the Act was to be administered by the minister and subject to the minister by the Commissioner for transport. The latter was to be appointed from time to time by the Governor-in-Council. A determination or decision of the Commissioner was to be submitted to the minister for his confirmation. The Commissioner had the duty of regulating and controlling carriage within the State with a view to ensuring that such transport facilities would be available as were reasonably adequate to meet the convenience and requirements of the public for the1 2 3 4 carriage of persons and goods. He had certain powers to licence services for the carriage of passengers and goods and to decide as to the duration and terms and conditions of licences. A licensing fee of the amount or at the rate determined by the Commissioner was payable by every licensee. It was common ground before the Court that the imposition of the fees was to be regarded as constituting taxation. Accordingly it was submitted by the appellants that in legislating in the terms of the Act of 1946 the Queensland Legislature had abrogated its exclusive powers of levying taxation. The circumstance that within the terms of the Act the Commissioner had a discretion which enabled him to decide which transport operators would pay fee and which would not and the circumstance that the Commissioner under certain conditions fixed fees at rates which varied as between one operator and another show, it was submitted, that the Legislature had abrogated the function which was exclusively its own. These contentions of the appellants stated above were repelled and it was observed ; "It is argued that the tax in question has been imposed by the Governor, and not by the Legislature, who alone had power to impose it. Both, the duties levied under the order-in-Council are really levied by the authority of the Act under which the order is issued. The Legislature has not parted with its perfect control over the Governor, and has the power, at any moment, of withdrawing or altering the power which they have entrusted to him."

' Stable, J, observed in his judgment as follows "Obviously parliament cannot directly concern itself with all the multitudinous matters and considerations which necessarily arise for daily and hourly determination within the ramifications of a vast transport system in a great area in the fixing of and collection of licensing fees. So, as I see it on the face of the legislation, parliament has lengthened its own arm by appointing a Commissioner to attend to all these matters, including the fixing and gathering of the taxes which parliament itself has seen fit to impose The Commissioner has not been given any power to act outside the law as laid down by parliament. Parliament has not abducted from any of its own power. It has laid down a framework, a set of bounds, within which the person bolding the office created by parliament may grant, or refrains' from granting licences, and fix, assess, collect or refrain from collecting fees which are taxes."

' In the view of the learned Judges the Legislature were entitled to use any agent or any subordinate agency of any machinery that they considered appropriate for carrying out objects and purposes that they had in mind and which they designated, and that they were entitled to use the Commissioner for transport as their instrument to fix and recover the licence and permit fees.

The conclusion was that what the Legislature created by the passing of the Transport Acts could not reasonably be described as a new legislative power or separate legislative body armed with general legislative authority. In no sense did the Queensland Legislature assign or transfer or abrogate their powers or renounce or abdicate their responsibilities. They did not give away or relinquish their taxing powers. All that was done under and by reason of their authority. For these reasons their Lordships considered that the attack upon validity of the Transport Act was unsustainable.

16. Coming now to the decisions on the subject in or own jurisdiction, the question of excessive delegation was considered first in the case of Sobho Gyanchandani v. Crown . The point arose because the Pakistan Public Safety Ordinance, 1949, at the time of its promulgation was to remain in force for a period of one year, but the Central Government was empowered, by means of a proviso, from time to time, by notification in the official Gazette, to extend the life of the Ordinance for further period of time. The proviso was assailed as invalid and ultra vires on the ground that it conferred legislative powers on an external authority i,e, the Central Government.

' Abdul Rashid, C. J. Upheld the contention and observed :4 "To sum up, 1 am of the view that a Legislature cannot delegate its powers of making, modifying or repealing any law to an external authority. If it does so, it would be creating parallel Legislature. The power of extending the duration of an enactment which would have terminated, but for the interference of the external authority, is the exercise of legislative powers by an external authority and is invalid. Extension of the life of an Act is tantamount to re-enactment. It is open to the Legislature to delegate powers relating to the enforcement of the Act, or its application to particular areas if certain conditions prevail therein, as that merely amounts to conditional legislation. The Judicial Committee of the Privy Council has taken pains to explain in a large number of decisions that the powers delegated by the Legislature to various administrative and executive bodies did not amount to "delegated legislation" and fell within the category of conditional legislation. It is obvious, therefore, that the Privy Council was of the view that if any Legislature delegated legislative functions to an external authority such delegation would be invalid."

' This case was decided under the Government of India Act, 1935 as applicable to Pakistan by virtue of the provisions of the Indian Independence Act, 1947.

17. The next case in which the question of impermissible delegation of legislative powers was considered by this Court was East and West Steamship Co. v. Pakistan . The legislation under challenge was the Control of Shipping Act, 1947 and Muhammad Munir, C. J. Writing for the majority observed : "That the generally accepted position is that no provision of the law can fail within the rule against delegated legislation if it is based on a' policy, discoverable from that provision itself, which has to be implemented by the person against whom the charge of unauthorised legislation is made."

' After undertaking a thorough examination of all the important provisions of the impugned statute it was remarked ; "From these provisions it seems to be perfectly clear that the Act proceeds on a definite policy, namely, the policy of placing the ships, for the period of the emergency, substantially at the disposal of the Government to enable it to direct what classes of cargo or passengers may be carried, to claim priority for Government cargo and passengers, to fix rates and frieghts, and to know the exact position of a Pakistan ship at a particular time so that if any urgency arises it may be called back for home service. This policy could successfully be carried out only if full powers which could not be controlled by rules, were given to the Shipping Authority, and the licensing system contemplated by the Act is merely a means for the Shipping Authority to requisition shipping space to satisfy urgent and exceptional trade needs of the country. Financial injustice to the owners is avoided by the provision for a Board to advise the Central Government in respect of rates."

' In the opinion of the learned Judges if these were the objects intended to be attained by the Act, it was not possible for the Legislature to define with any meticulous details how the Shipping Authority was to act in particular circumstances, and that it was rightly considered to be necessary to leave him a large field of discretion so that he could act freely to meet a situation as it arose.

Since the Legislature could not have possibly anticipated varying trade situations, involved in matter of carriage by sea, it was held, that considerable latitude had to be left to the Shipping Authority to cope with all possible situations. Reference was made to situations which required the vesting of discretion in public boards or officials where it is difficult or impracticabld to lay down a comprehensive rule. On these considerations the argument challenging the validity of the statute on the ground of excessive delegation was rejected.

18. Next comes the case of District Magistrate, Lahore v. Raza Kazim , In this case it was contended that the power given to the Central Government under section 17 of the Arms Act, 1878, to make rules laying down terms and conditions, subject to which licences may be granted, without further5 6 laying down any criterion for the guidance of the rule-making authority or defining the general policy for grant or refusal of such licences, amounts to giving the executive authority the power to legislation. The contention was found to be devoid of force. Hamoodur Rahman, J. (as he then was) writing for the majority of the Judges of the Court, applied the principles laid down in the case of Queen v. Burah, in which it was held that when acting within the limits of the powers given to it by the Act of the Imperial Parliament creating its legislative powers, had plenary powers", so that whilst it could not create "a new legislative power" it could within the limits of its own sphere legislate eithq absolutely or conditionally and in the latter case leave it to some external authority to determine in its discretion the time at which it is to come into operation, the area over which it is to extend and the manner in which it is to be carried into effect. He observed "We see no reason to depart from this long established rule of interpretation of statutes enacted prior to the coming into force of the late (1) PLD 1961 SC 178 Constitution, for, we should avoid, if possible, casting a doubt on a long course of legislation wherein similar provisions have been made.

' Applying this test in the present case we find on examining the language of the Indian Councils Act, 1861, and comparing the legislative powers of the Governor-General in Council under the said Act with the provisions of the Arms Act, that in enacting section 17 of the latter Act that legislative authority could, in no sense of the term, be said to have abdicted or effaced itself or created a new legislative body or legislated beyond its competence. Having regard to the nature of the object sought to be achieved by the legislation it was impossible for the Legislature to attempt to provide for every detail and machinery to carry it into effect, hence, the Legislature, whilst, retaining its legislative powers intact and maintaining its full legislative control authorised the executive merely to determine- the manner of carrying it into effect by rules framed in that behalf."

19. In Muhammad Ismail Co. Etc. v. Chief Cotton Inspector , the next relevant case to come up before this Court, the validity of clause (p) of section 30 of the West Punjab Cotton Control Act, 1949, was assailed on the plea "that this clause" amounted to excessive and unconstitutional delegation of powers to the executive, in so far as it left unguided discretion to the Government to pick and choose, out of several categories of persons mentioned in this clause, for imposition of the fee. The Court, following the rule laid down in Sohbo Gyanchandani's case held, that there was sufficient indication of the policy to be followed by the executive authorities from impugned clause itself, which mentioned the categories of persons on whom the fee may be imposed. In this connection it was further observed : "In the modern administrative complex, some amount of delegation of power is found to be unavoidable considering the very large field of regulation and control that Governments are now- a-days required to cover in the course of implementing their economic and fiscal policies. I do not see that the delegation in the present instance is of such a character as could be assailed as objectionable. The field of choice has been limited by the Legislature itself which has provided the framework within which the executive authority is to function. The delegation is not of an unprecedented kind. For analogy, the provisions of the Sales Tax Act may be referred to, under which Government can exempt certain commodities from the tax. The choice of the commodities to be subjected to the tax is thus left with the executive. I find the following in Willoughby's Constitutional Law of the United States :- 'Generally speaking, it may .Be said that when a power is not peculiarly and distinctly legislative, executive or judicial, it lies within the authority of the Legislature to determine where its exercise shall be vested.'

' It is only the essential legislative power that is incapable of being constitutionally delegated.

Within the framework laid down by the legislating authority, power can be delegated to a subordinate agency to carry into effect the purposes of the enactment by making detailed rules in7 conformity with the` policy thus laid down. I do not think these legal bounds have been exceeded in the present case."

20, The last case which has to be noticed in this connection is, the case of Province of East Pakistan v. Sirajul Hag Patwari 'The legislation under' attack in this case was section 57 of the Electoral College Act, 1964, which was challenged on the doctrine of excessive delegation of legislative powers, in that, power of grouping of the electoral units for purposes of Local Government was delegated to the Provincial Government. The Court upheld the validity of the impugned legislation and repelled the objection raised against it. In this case Hamoodur Rahman, J., (as he then was) undertook, if I may say so with respect, an exhaustive examination of the question of impermissible delegation of legislative powers referring to the manner in and the extent to which this doctrine has been applied in various cases under the American Constitution, under the English and or own system. Noorul Arfin, J. Has summarised the opinions of the learned Judges which were delivered in this case and it would be best to reproduce the same in order to lessen the burden of this judgment Cornelius, C. J. Dealt with these questions as follows :

(1) that the question should be regarded with reference to the background of the Basic Democracies Order and the larger background of legislative technique employed since at least 1885 in giving power to the Provincial Government to delegate its functions of local administration in small pockets, and if so viewed, then it was not imperative for the National Assembly to lay down principles, policies or norms according to which the Provincial Government should act.

(2) for the Legislature to provide in detail for the great number of considerations that would require to be scrutinised, balanced and harmonised on occasions when a new thana or a new district or, much moreso, a new division has to be created would seem to be impossible.

(3) the concept of excessive delegation, which is derived from Judge-made law in the United States, and where now it is losing much of its authority, must be applied in this country with the greatest circumspection, in that laws of the Legislatures in this country are made in continuation of pre-existing laws dating from the early nineteenth century, and that this rule, if it has to be applied should be applied after the fullest consideration of the entire administrative and legislative complex, not only as it exists after the making of the law in question, but with reference to the immediately preceding conditions and in relation to the technique employed

(4) Constitutional restriction on the avoidance of laws should be confined to cases where there has been violation of Article 6 of the Constitution of 1962, and where excessive delegation is pleaded, it should be established that this delegation has led to the defeat of the requirement of "reasonable restriction" in relation to the exercise of a fundamental right.

' Hamoodur Rahman, J. (as he then was) stated it had been the consistent policy of the Legislatures in this country to delegate to the Provincial Government powers to set up and demarcate areas of local authorities, as this function, by its very nature, could not properly be performed by the legislature itself, as the Legislature could not be expected to be aware of the varying local conditions and administrative conveniences pertaining to each individual -local area.

Dealing with the question whether section 57 could be avoided on the ground of impermissible delegation or delegation of an essential legislative function, his Lordship held that this section,.To the extent that it delegated the function of demarcation of local Government areas, has dealt only with administrative functions. On the larger question of impermissible delegation, or delegation of essential legislative functions, his Lordship stated that if the subject-matter of Legislation is within the competence of the Legislature, then it can certainly legislate in any one of the generally accepted forms of legislation, either directly or referentially, absolutely or conditionally, within its own sphere of legislation, and that it has always been recognised under all systems of legislation that the Legislature may well leave it to some external authority to implement its policy or to determine a state of things on which the law intends to make its action depend, or to fix in its8 discretion the time at which the law is to come into operation, the area over which it is to extend and the manner in which it is to be carried into effect. According to his Lordship, the correct rule on this question had been declared by the Judicial Committee of the Privy Council in Rex v. Burrah.

Referring to the American doctrine of delegation of legislative power, his Lordship noted that in the American system itself the doctrine had undergone considerable change and that it has now come to he recognised that there may be practical difficulties for the Legislature in providing for every minute detail, and so legislative power may be exerted through the intervention of a fact- finding administrative instrumentality requisite to the consummation of the legislative object. While agreeing that the Constitution of 1962 divided the Govermental functions into legislative, executive and judicial departments, his Lordship held that it did not necessarily follow from this that the doctrine of excessive and impermissible delegation should be imported into or own constitutional system which has adopted the English pattern and therefore does not contain any rule for exclusiveness of the various Governmental powers but is based on the intermingling of Governmental functions. His Lordship noted with approval the rule laid down by the U. S. Supreme Court in John H. Fahey v. Paul Mallonee where it was held that the absence of explicit standards in the Home Owners Loan Act, 1933, did not render the Statute bad since the provisions of the statute were only of a regulatory nature and did not make penal provisions. The observations of Douglas, J.

In Sunshine Anthracite Coal Company v. Homer Al. Adkins that "delegation by Congress has long been recognised as necessary in order that the exertion of legislative power does not become a futility..." and that "the effectiveness of both the legislative and administrative processes would become undangered if Congess were under the constitutional compulsion of filling in the details beyond the liberal prescription found favour with his Lordship, who further noted that the recent trend in American Jurisprudence with regard to delegation of legislative power showed that the American practice was coming nearer to the English view which view is laid down in Rex v. Burah and has consistently held the field up now in England, in the dominions of the Commonwealth and in the Indo-Pakistan sub-continent. However, his Lordship qualified his view by stating that though the Legislature may validly delegate legislative functions to an external authority, it cannot abdicate altogether from its legislative functions or totally efface itself, but subject to this, if the Legislature has sufficiently expressed its view and exercised its judgment as to the territorial extent, scope and subject-matter of the legislation, the provisions of details, particularly when details are by their very nature incapable of being laid down by the Legislature itself, can well be left to be done by another agency in whom the Legislature places confidence and, further, the power of delegation may vary from case to case according to the scope of the authority of the delegating body, the variety, conditions and circumstances which a particular, law is intended to meet, and the status and authority of the body to which the power is delegated, and according to the nature of the law, that is, whether it is penal or regulatory in character, and that in case of an expert in whom the Legislature has a confidence, a greater latitude may be conferred, upon the Legislature for the purpose of delegating legislative powers, so that the purpose of the legislation may be carried out adequately and effectively.

' Thus, according to Hamoodur Rahman, J. (as he then was)-

(1) the powers of the Legislature in the Indo-Pakistan sub-continent have always been as plenary as the powers of legislation exercised by the British Parliament, and

(2) even essential legislative functions may be delegated to an external authority subject, however, to the condition that the Legislature does not altogether abdicate from its legislative functions or totally efface itself.

' Muhammad Yaqub Ali, J. Dealing with the same question, agreed with the statement in the decision from Ohio Court, Cincinnati W. And Z. R. v. Clinton (already referred to in peceding paragraphs), where it was held that `the true distinction is between the delegation of power to make the law which necessarily involves a discretion as to what it shall be, and conferring authority, or discretion as to its execution to be exercised under and in pursuance of the law.'

' To this, his Lordship added a further rule to then effect that if the law promulgated on a subject is known to have a certain policy, and the outside body to which its execution is entrusted has framed regulations which provide uniformity and ensure against arbitrariness, then the law will not be struck down for excessive delegation. His Lordship observed that the Court's opinion with regard to excessive delegation should he formed not on the mere absence of standards, but on factual lack of procedural safeguards."

21. From the aforesaid analysis of the judgments it would appear that it is too late in the day to maintain that the Legislature cannot delegat authority to subordinate or outside authorities for carrying the laws enacted by it into effect and operation, in view of the long history of legislativ practice committing the rule-making powers having the force of law, to such subordinate functionaries or agencies. As held in Hodge v. Regina by th Privy Council as early as 1883, such power of delegation is inherent and ancillary to legislation. It is also futile to seek and apply the constitutional theories underlying the doctrine of impermissible delegation of legislative 0 power as applied under the American system as these theories were irrelevant in or system (as obtaining under the 1962 Constitution). It is now well established as observed by Hamoodur Rahman, J. (as he then was) in Province of East Pakistan v. Sirajul Haq Patwari that the powers of the Legislatures in the Indo-Pak sub-continent have always been as plenary as those of the British Parliament. Mr. A. K.

Brohi in his argument also did not put his contention as high as to canvass a total absence of power to delegate any part of the legislative function in connection with a particular statute to outside authorities by the Legislature. But his submission was, as mentioned hereinbefore, that the impugned provisions were invalid inasmuch as the Legislature had effaced itself and abdicated its essential legislative function in favour of a subordinate authority i,e, Central Board of Revenue who has been given power to levy and collect the duty in question in all its dimensions, leaving it unfettered discretion to formulate its own policy and standards according to which the tax was to be levied.

22. The question raised in this argument essentially concerns the question of the constitutional limits to legislative power. In other words the question is as to what extent and on what principles delegation of legislative power to outside authorities is permissible under the Constitution. Th Constitution does not expressly lay down and prescribe the limits within which such delegation would be permissible. Nor is there any provision in the Constitution which may define what constitutes the essential legislative function, which may then be kept as a norm to strike down the legislation by which such essential legislative power is entrusted to other agencies. The question whether in a given case the Legislature has incompetently delegated P its power has to be determined by the Courts in the exercise of their judicial power under the Constitution. The cases reviewed in this judgment bear testimony to the fact that the Courts in the various jurisdictions have not been able to evolve a consensus on a fixed rule or test to determine this question. Indeed they illustrate the difficulty with which the objection regarding impermissible delegation of administrative power has been applied in individual cases. No uniform test has been laid down in these cases to determine this objection. In Hodge v. Regina a case from the year 1863 the wide test that where the Legislature retains the power to destroy the agency it has created and set up another or take back the matter directly into its own hands, was applied to resolve this controversy and was reiterated as recently as 1967 in the case of Cobb & Co. Ltd. v. Kropp. Tbis view holds that until the Legislature constitutes another legislative power or separate legislative body armed with general legislative authority, it cannot be said Q that the Legislature has effaced itself. On the other hand in the case of Sobho Gyanchandani the Federal Court of Pakistan held as ultra vires a piece of legislation empowering the executive government to give a fresh lease of life to a temporary enactment passed by the Legislature, on the ground that such power created a parallel Legislature. This objection was found, inapplicable in the case of East & West Steamship Co. On the ground that it would not be possible for the Legislature, in view of the subject-matter of legislation to lay down the details how the outside authority was to act in varying situations, which necessitated the conferring of unfettered discretion to exercise subordinate legislative power. In the case of District Magistrate. Lahore v. Raza Kazim, this Court upheld the validity of a legislation which laid down no criterion for the guidance of rule-making authority or even define the general policy from which guidance could be sought. The objection of excessive delegation was avoided on the ground of plenary powers enjoyed by the Legislature in the matter of legislation. Once again the impossibility of providing for every detail and machinery to carry into effect the object sought to be achieved by the Legislature, was regarded as sufficient ground to uphold the validity of the enactment In this case a view similar to that held in Hodge v. Rhina was taken that the Legislature retains its legislative powers intact to do away with the agency under the enactment. R The case of Muhammad Ismail & Co. Is perhaps the only case in Pakistan which attempted to lay down a general rule for determining the question of impermissible delegation, as it was observed that only "essential legislative power" is incapable of being delegated. In this case also reference was made to the laying down of the policy of the legislation in the enactment for the guidance of the rule- making authorities. In the last case referred to viz : Province of East Pakistan v. Sirajul Haq Patwari also no uniform test could be laid down by the learned Judges delivering their separate opinions but the validity of the impugned enactment was held not open to the objection of impermissible delegation, although it did not in itself lay down any policy or guidelines for the executive authorities to carry into effect the object of the legislation. In this case I would particularly point out what Hamoodur Rahman, J. Held to be in his opinion constitutionally permissible, namely, that the provision for details in a statute, particularly when details are by their very nature incapable of being ascertained by the Legislatur itself, can well be left to be worked out by another agency in whom the Legislature places confidence. In the final analysis this being a question o the vires of the assertion of a constitutional power, has to be decided with reference to limitations placed by the Constitution on the scope of the powers of the Legislature, either expressly or impliedly by necesssa ry intendment. The framers of the 1962 Constitution did not adopt the distribution of powers as found in the. Constitution of the United States with all the implications of that doctrine, but an overall consideration of the provisions of the 1962 Constitution relating to the setting up of the various organs of State, does suggest that they contemplate a scheme for distribution of function of the Government into the three well-known departments, each being r separately charged with the duty and being constituted a repository for the respective power in the relevant field of governmental functions of the State. 'Viewed in this context what the Constitution committed to the Legislature as its primary obligation to be discharged by it with exercise of powers conferred on it, cannot be entrusted by the legislature to another organ of the State or to a body of its own creation. That would negate the very basic arrangement adopted by the Constitution and in its place create, a mode of the discharge of legislative function, in a manner not envisaged therein or contrary to the instrument which constituted it. A reflection of this proposition will be found in the following observations of S. A. Rehman, J. (as he then was) in the judgment of this Court in Faziul Quadar Chowdhary v. Shah Nawaz "The constitution contains a scheme for the distribution of powers between various organs and authorities of the State, and to the superior judiciary is allotted the very responsible though delicate duty of containing all othe u authorities within their jurisdiction, by investing the former with powers to intervene whenever any person exceeds his lawful authority".9

23. This dictum was reiterated in the case of State v. Zia-ur-Rehman . Where with reference to a system based on trichotomy sovereign powers, it was postulated that "then ex necessitate rei from the very nature of things the judicial power must be vested in thejudiciary". Hamoodur Rahman, C.

J. Speaking for the Court further observed : "This power, it is said, is inherent in the judiciary by reason of th system of division of powers itself under which, as Chief Justic Marshal put it, 'the Legislature makes, the executive executes, and the judiciary construes, the law."

24. It will be seen that these observations relate to the judicial branc of the Government, but apply with equal force to the other branches of the Government as well. To my mind the relevance of the rule against delegation of legislative function is confined and based on the aforesaid' constitutional position. But it may be emphasized once again that n specific test can be formulated and laid down for general application in every case which comes up for examination by the Courts in regard to the objection on the ground of impermissible delegation. In the case of Federation of Pakistan v. United Sugar Mills Limited , the Constitution (Fourth Amendment) Act (LXXI of 1975), was challenged as ultra vires on the ground that the legislation constituted a "serious inroad in the judicial power of the High Courts and therefore the principle of separation of powers has received a jolt". The case arose under the 1973 Constitution which has adopted the usual functional division ,of governmental powers between the three separate departments and while repelling the contention this Court made the following observations :- "It is also important to observe that or Constitution, like many other modern written Constitutions, does not provide for rigid separation of powers. Indeed there is no direct provision in that behalf except that the Constitution by various provisions provides for the setting up of the principle institutions for the exercise of the sovereign powers of the State in the appointed field. In actual practice in all modern Governments, separation is only functional to subserve the practical necessity of an efficient and enlightened Government by providing for checks and balances to avoid abuse of public power. Nowhere, so far as I am aware, the principle is pushed to its logical conclusion so as to create watertight compartments within the Government."

' Thus it will be futile to attempt to further narrow down the broad constitutional position mentioned above into the form of fixed and determined rule for ready application. Each case has to be determined in the context of its particular circumstances and considerations, in the background of the broad principles mentioned above.

25. In the light of the legal position discussed above, the question for consideration is whether the mpugned amendments brought in section 3 a the Act were ultra vires the powers of the Central Legislature. It wasl argued that the Legislature had effaced itself and abdicated its power in favour of a subordinate authority viz, the Central Board of Revenue, since the levy, assessment and collection of the duty has been placed within the power of that authority in all its dimensions. It was further submitted that by means of delegation, authority has been given to the Board of Revenue not only to override subsection (1) of section 3, which was the pre-existing charging section but the provisions in question also affirmatively authorised it to impose the duty and to lay down the guiding principles which were to operate as constraints on itself to determine the production capacity. It was further submitted that section 3 as amended comprises two competing systems, one visualised by subsection (1) on the basis of actual production and another by subsection (4) on the basis of production capacity; and the Boird of Revenue has been empowered to choose between these two types of taxes, without the Legislature laying down any guidelines. It was contended that conferment of powers of such amplitude embracing the entire gamut of the taxing power vesting in the Legislature, amounts to handing over the Legislative function itself to be exercised by the Board of Revenue. On the other band the learned Deputy Attorney-General appearing for the respondents submitted that the impugned legislation has in no way, conferred10 11 powers of wider amplitude on the Board of Revenue than already possessed by it under subsection

(1) in the matter of levy and collection of excise duty on' exciseable goods actually produced or manufactured. In this behalf reference was made to the provisions of subsection (1) of section 3 of the Act whereby levy and collection of the excise duty has been entrusted to the Board at the rates set forth in the First Schedule, but under subsection (2) it has been further empowered to fix tariff values of articles enumerated in the First Schedule as chargeable with duty ad valorem. The submission was that similar power was conferred under the amended subsection (4) to levy and collect duties, in lieu of duties chargeable under subsection (1), on the production capacity of plants, machinery, undertakings, etc.

26. After carefully considering the submissions of the learned counsel I have come to the conclusion that there is no force in the contention tha the Legislature has abdicated its function in favour of the Board of Revenu in a tpianner contrary to the constitutional requirements. All that is provided by subsection (4) is to make available to the Federal Government an alternate mode of the imposition of excise duty on the basis of the production capacity of paints and machinery, etc., instead of on the actual production and dutput of goods by such plants and machinery. Having regard to the constitutional amendment amending Entry No, 43 of the Third Schedule of the Constitution (1962) whereby an additional subject for making laws was included to empower the Central Legislature to make laws providing for imposition of taxes and duties on the basis of the production capacity, in lieu of, inter alia, excise duties, it cannot be contended that the Legislature had no authority to authorise the levy and collection of duties on the production capacity. The objection seems to be that it has been left to the discretion of an outside authority to levy either of the duties in its own discretion. No serious exception can be taken in conferment of discretionary power upon officers or functionaries for the exercise of alternate powers according to the exigencies of the situation prevailing at a particular time or place. Invariably the choice between the two courses of action would seem to fall in-field of implementation of the laws made by the Legislature.

27. There is no substance in the submission that the amended section 3 provided for two different competing taxes. The amended Entry No, 43 of the Third Schedule to the Constitution (1962)any empowered the Legislature to provide for capacity tax in lieu of the tax on actual production of goods and by the impugned legislation, the Legislature in pursuance of its legislative policy and by the exertion of its constitutional power, made the law to impose such tax under the authority of th amending Act, leaving it to a body like the Board of Revenue which was already charged with the duty and committed with the power to levy an collect as well as to alter the rates of the existing excise duties. The Boar being a responsible body with the expert knowledge in the workin of the existing scheme, was an appropriate agency in which the Legislatur reposed confidence, to carry out the legislative purpose of levying andj collecting duties on production capacity in lieu of the duties it was empowered under subsection (1) of section 3 to levy and collect. The aspect that the concept of production capacity as the basis for taxes and duties, being a new and untried idea in the realm of taxation, cannot be lost sight of. Apparently the production capacity of plants, machinery, undertakings, establishments and installations, was a complex matter depending on a number of variables and consideration of different factors, like condition of such plants and machinery, working conditions, categorywise national average annual production, past annual production etc. And many other factors arising from time to time, so that in their very- nature laying down of detailed guidelines for determination of such production capacity were ,incapable of being ascertained by the Legislature itself, which could not be expected to undertake such unwieldly and cumbersome task with the limited time at its disposal. In entrusting such a task to a body more suited for such work can the Legislature be said to have effaced itself or abdicated its legislative function ? As already pointed out there is authority for the proposition that in such circumstances, the Legislature will be within its constitutional limits to employ appropriate agency to accomplish its legislative purpose. There can be no manner of doubt that the Legislature intended to introduce the new concept of capacity tax and fulfilled its legislative obligation by making provision for the same in clear and unambigous terms. It, therefore, did not delegate its essential legislative function contrary to the terms of the instrument which had constituted it.

28. The foregoing reasons amply meet the argument that no guidelines or other policy of legislation was laid down in the impugned enactment. However, sufficient safeguards were, nonetheless provided, in that the Central Board of Revenue was required to first lay down the guiding principles for the determination of production capacity and then to determine the same in accordance therewith. Not only that but all this was to be done with the prior approval of the Central Government.

29. Mr. A. K. Brohi referred us to two judgments from the Indian jurisdiction in support of his arguments. In Shama Rao v. Union Territory, Pondicherry , the first case referred to, the Indian Supreme Court held that a State Legislature had effaced itself and abdicated its legislative power in favour of the Legislature of another State, by extending an enactment in force in the latter State, to its own territory at a future date, with all the amendments that may have been effected therein by the latter State Legislature. The ratio of the decision was that the impugned Act was void, in that, the Legislature of the State enacting it not only adopted the Act of the other State but also provided that the Act applicable to its territory shall be the Act amended in future by the other Legislature, when there was nothing for it to predicate what the amended Act would be. This case in fact illustrates the principles discussed in the foregoing part of this judgment as to the application of the doctrine of impermissible legislative delegation, with reference to explicit or implicit limitations provided in the constitutional instrument to which a given Legislature owes its establishment and operation. There, in the cited judgment is a clear case in which the Legislature of one State permitted the other Legislature to determine, in what shape the Act would come in operation, which amounts clearly to self-effacement. This decision, however, has no relevance or application to the case in hand, in which the Legislature has not allowed another body to exercise its essential legislative function, on its behalf as was done in the reported case.

30. The case next referred to was Messrs Devi Das Gopal Krishan etc. v. State of Punjab and others . In this case, the question before the Indian Supreme Court was the vires of section 5 of the East Punjab General Sales Tax Act, 1948 which provided for the levy on the taxable yearly turnover of a dealer, a tax at such rate as the Provincial Government may by notification direct. It was held that the said section conferred an uncontrolled power on the Provincial Government to levy the tax at such rates as the said Government might direct and, therefore the Legislature practically effaced itself in the matter of fixation of rates and gave no guidance anywhere in the Act. Hence the section was declared as void. However, the same section ' as amended by a subsequent Act of the Provincial Legislature of 1952, whereby a maximum limit was prescribed with the result that the rates of taxation could not exceed two piece in a rupee, was found to be valid, on the ground that such amendment manifested a clear guidance. The argument that mere fixing of a maximum limit does not amount to disclosing a policy by the Legislature, was repelled on the ground that as "the Act applied to sales or purchases of different commodities it had become necessary to give some discretion to the Government in fixing the rate". Now the Indian Supreme Court in an earlier ease reported as Corporation of Calcutta and another v. Liberty Cinema aad held that the fixation of the rates of taxes is not of the essence of the legislative power of taxation, and, therefore, the same may be legitimately left by a statute to a non-legislative authority, for there is no distinction in principle between delegation of power to fix rates of taxes to be charged on different classes of goods and power to fix rates simpliciter, if power to fix rates in some cases can be delegated then equally the power to fix rates generally can12 13 14 be delegated. It was further held that while delegating such power to another body, the Legislature must provide guidance for such fixation. But the validity of the guidance cannot be tested by a rigid uniform rule, that must depend upon the object of the Act giving power to fix the rate. The providing of maximum limits of the rates to be imposed was considered only a limit and not a guidance. On these principles, the Court upheld the validity of the power to fix rates of taxes delegated to the Corporation of Calcutta under the Calcutta Municipal Act, 1951, which provided no guidance. In the view taken by the learned Judges, the Act constituted the Corporation as an autonomous body, authorised it to collect taxes for discharging its statutory functions and, therefore, that would be sufficient guidance to make the exercise of its power to fix the rates valid.

This case was relied upon on behalf of the Punjab Government in the 1967 case to defend the unamended section 5 of the Punjab General Sales Tax Act under challenge in that case. The learned Judges approved the principle laid down in the earlier case, but expressed the view that it cannot be held that whenever a statute defines the purpose or purposes for which a statutory authority is constituted and empowers it to levy a tax that statute necessarily contains a guidance to fix the rates. That matter, it was said, depends upon the provisions of each statute. Clearly, therefore, the judgment in question has also not laid down any universal principle for application in all cases of delegated authority even as to the necessity for the Legislature to provide guidance.

The judgment relied upon, therefore, does not advance the case of the appellants. The view taken by this Court, as would appear from the precedents referred to earlier in this judgment, does not bold the laying down of guidance as an essential element in all cases of delegation to non- legislative bodies.

31. In view of the aforesaid discussion, there is no force in th contention that the amendments made by the Central Legislature in section 3 of the Act, by the Finance Act, 1966, are invalid on the ground of impermissible delegation of legislative power. A further consideration which fortifies this conclusion is the unrebutted fact that the Excise Duty on Production E Capacity (Cotton Fabrics)

Rules, 1968 and the Excise Duty on Production Capacity (Cotton Yarn) Rules, 1968, under which the impugned production capacity was determined, were expressed to be made not only under section 3 (4) of the Act, but also under section 37 of the Act, which is the rule-making' clause in the Act. These rules were then said to have been placed before the Central Legislature in accordance with the proviso to section 38 of the Act, as it then stood, and consequently these rules and notifications have effect as if enacted in the Act. The Legislature in point of fact having itself approved the rules, which include not only the guiding principles but also the production capacity of the affected mills, as already determined, it cannot be argued that the legislation suffers from the defect of excessive delegation by vesting uncontrolled authority to an outside body.

32. The second challenge to the levy is based on the ground of violation of the rules of natural justice. The argument is that the determination of any question by quasi-judicial body always postulates a hearing, but in this case the Central Board of Revenue determined the production capacities of the cotton textile factories of the appellants and the duties payable by them, without affording them an opportunity to represent their point of view. This contention was repelled by the third learned Judge of the High Court firstly on the factual ground that the managements of the cotton textile factories were actually heard and consulted by the Awan Committee in respect of the production capacity of each individual factory and the rates of duties leviable on such factories and secondly, on the ground that even if they were not heard before the decision as to the production capacity, there was sufficient provision for hearing the side of the managements of the factories under subsection (5) and (6) of section 3 of the Act which provided for the constitution of a Review Board to hear the review applica- tions of any party aggrieved by the determination of production capacity of any factory. It was conceded before the High Court that review petitions were in fact preferred and disposed of by the Review Board set up under the aforesaid provisions, after hearing the side of the appellants. It was, however, argued that subsequent hearing by the Review Board does not cure the legal infirmity in the impugned levy. It was contended that the amended provisions of section 3 insist that guiding principles shall be invoked for the determination of the duty, which necessarily involves the application of abstract principles to concrete facts and therefore hearing at the threshold was very necessary. There is no doubt that as a general rule no assessee can be made liable for payment of a tax without providing to him th safeguards dictated by the rule of natural justice. It appears that differen fiscal statutes have made different provisions for ensuring and guaranteein the right of hearing to an affected assessee. The question whether the lack of hearing at the initial stage would vitiate the order even if there is subsequent hearing afforded to the affected party at the appellate or revie stage, depends upon the question whether the rule of natural justice is incorporated in the governing statute or is being merely imported on th basis of the common law rule. It is well-established that if the law under which action is taken by an authority expressly provides for notice then non- compliance with such provision would render the action taken or order passed in pursuance of the powers conferred by such law as void, but if there is no express provision to that effect, then the requirements of the rul of natural justice would be sufficiently fulfilled and the defect resulting from not hearing the affected party would stand cured by the subsequen hearing. (See Government of Pakistan v. Messrs Indo-Pakistan Corporation . In the present case, there is no express provision for notice and the scheme of the law envisaged in subsection (4) of section 3 of the Act, seems to be that the Central Board of Revenue with the prior approval of the Central Government would levy duties on the productions capacity of the factories by notification in the official Gazette and if any party is aggrieved by such determination of the production capacity, provision was made in subsection (5) for an application to the Central Government within the specified time for review by a Review Board. Consequently both on facts and in law, the High Court rightly held that no case of violation of the rule of natural justice was made out.

33. The third point raised by the learned counsel in these appeals pertains to the question of unreasonableness of the guiding principles contained in clauses (0, (ii) and (v) of rule 3(1) of the Excise Duty on Production Capacity Rules, 1968. The submission was that these rules do not stand the test of reasonableness and, therefore, must be struck down as invalid. It was submitted that the natural average, referred to in the first guiding principle has no bearing whatsoever on the question of production capacity as different mills have different capacities, different types and models of machinery and function under highly different conditions. As regards the second guiding principle which provides for category wise annual production of the individual units, it was submitted that this was unreasonable, inasmuch as the category wise production and the pattern of production keeps varying depending on the market. Finally, as to the fifth guiding principle mentioned above it was contended that the "growth factor" as postulated therein, is totally irrelevant, if once a plant has been installed, from a technical point of view, as the machinery depreciates and its efficiency diminishes sharply. These in substance were the arguments advanced in order to assail the reasonableness of the impugned principles. It will be appreciated that the questions raised by the learned counsel in these submissions, demand highly technical and expert assistance to resolve, besides being positively, factual in nature. It was, therefore, very necessary for the appellants, if they intended to challenge the vires of these principles contained in rule 3, they should have raised these questions before the High. Court. But it appears that no such attempt was made by them. It will be seen that while setting out the points on which the learned Judges of the Division Bench in the High Court, who initially heard the cases, differed, the third learned Judge did not include this point as a point of difference. There is no reference to any argument on the basis of unreasonableness of the rules in the judgment of A. K. Shaikh, J. (as he15 then was), but there is a reference to such an argument in the judgment of Safdar Shah, J., in paragraph 32 of his judgment. However, the objection raised by the petitioners before the High Court pertained to sub-rule (3) of rule 3, sub-rule (4) of rule 6 and rule 8 of the production capacity rules. No reference to this argument has been made by the learned third Judge. We are, therefore, satisfied that the question sought to be raised under point (iii) before us was not raised befog the learned third Judge in the High Court. Therefore, since it does not raise a pure question of law it is not proper, particularly to view of the factual aspect involved, to permit the appellants to raise this question. A further consideration to disallow this point is the fact that no such argument was raised at the time of the hearing of the petition for special leave as this point is not reflected in the leave granting order.

34. The next point which requires consideration is the question whether even assuming the validity of the impugned provisions of section 3 (4) of the Act, the Central Board of Revenue, who is the competent authority vested with the power to levy the duty in question, has properly levied the same in the circumstances of this case. It was submitted that the requirements of the law as prescribed in the aforesaid 'provisions were not fulfilled, in particular because the rules were not notified by the Central Board of Revenue but were in fact notified by the Central Government.

Reference in this connection was made to the Government publishing the resolution laying down the guiding principles which were subsequently adopted by the Central Board of Revenue. As already pointed out this contention was disposed of in the impugned judgment on a factual basis, namely, the official record showed that the Central Board of Revenue had in fact prepared the draft guiding principles and forwarded the same to the Government for their approval with the suggestion that a Committee be appointed for the purpose of carrying out investigations to determine the production capacity of the textile factories. The appointment of the Awan Committee was the result of this suggestion. Since eventually the duties on the basis of production capacity were leviable with the prior approval of the Central Government, the constitution of the Special Committee for this purpose on the suggestion of the Central Board of Revenue by the Government and the resolution incorporating the guiding principles for the Committee, cannot be assailed as acts beyond the ambit of authority conferred under subsection (4). There is nothing on record before us to rebut the factual aspect referred to by the High Court. The notifications under subsection (4) of section 3 of the Act, L read with section 37 thereof, have been issued under the authority of the Central Board of Revenue, with the prior approval of the Central Government.

Therefore, this contention was rightly rejected by the High Court.

35. Now it only remains to consider the last point raised by the learned counsel. The submission in this behalf was that the plain mewing of the provisions contained in subsection (4) of section 3 of the Act is, that the guiding principles shall be framed and shall pre-exist in law before the actual determination of the production capacity, so that they could be invoked for the said purpose. It was contended that, notwithstanding the said legal position, the production capacities of the individual cotton factories, having been already determined, before the notification of the guiding principles by the Central Board of Revenue, were simultaneously notified alongwith the said guiding principles. The High Court has found that ii fact the Central Board of Revenue had prepared the draft guiding principles initially and the Awan Committee was appointed for the purpose of enquiring into the questions relevant to determine the production capacity of the factories. The High Court also found that there was material on record showing that the managements of cotton textile factories including the appellants were in fact heard and consulted by the Awan Committee before the Central Board of Revenue notified the guiding principles, and the production capacity of each individual factory. I agree with the view taken by the High Court that in the circumstances there has been no breach of any mandatory provision of the law or of the rule of natural justice. In any case there is nothing in subsection (4) of section 3 which expressly requires the notification of the guiding principles before the notification of the production capacity. In the facts, as found by the High Court, as already stated the production of the various textile factories were in fact determined with reference to the guiding principles in the form of a Government Resolution, which were subsequently notified by the Central Board of Revenue. Clearly, therefore, the objection is technical and has no substantial relevance.

36. For the foregoing reasons, these appeals fail and are accordingly dismissed. The parties are however left to bear their own costs.

1883) 3 App. Cas. 117 (1878) 3 App. Cas. 889 (1885) 10 App. Cas. 282 (1967) 1 A C 141 PLD 1952 FC 29 PLD 1958 SC (Pak.) 41 PLD 1966 SC 388 PLD 1966 SC 854 P I, D 1966 SC 105 P I, D 197, SCA 9 P D 1977 SC 397 I R 1967 SC 1480 I R 1967 SC 1895 I R 1965 SC 1107 PLD 1979 SC 723