IN THE HIGH COURT OF ALLAHABAD AT ALLAHABAD
Writ petition filed under Article 226 of the constitution,
Writ Petition no. XXX/2016
Street Vendors Association…………………………………………..………Petitioner
Vs.
Municipal Corporation…………………………………………………..…Respondent
Memorial on behalf of the Respondent
TABLE OF CONTENTS
TABLE OF CONTENTS...........................................................................................................ii INDEX OF AUTHORITIES....................................................................................................iii STATEMENT OF FACTS........................................................................................................v STATEMENT OF JURISDICTION.........................................................................................vi ISSUE FOR CONSIDERATION............................................................................................vii I.
WHETHER THERE WAS EXCESS DELEGATION OF POWER ENVISAGED BY
MIS-READING OF THE STATUTE?................................................................................vii II.
WHETHER THE ADMINISTRATOR CAN IMPOSE A TAX AT THE UNIFORM
RATE OF 10%?...................................................................................................................vii SUMMARY OF ARGUMENTS............................................................................................viii I.
THERE WAS EXCESS DELEGATION OF POWER ENVISAGED BY MIS-
READING OF THE STATUTE.........................................................................................viii II.
THE ADMINISTRATOR CANNOT IMPOSE A TAX AT THE UNIFORM RATE
OF 10%...............................................................................................................................viii ARGUMENTS ADVANCED...................................................................................................1 PRAYER.................................................................................................................................... 6
2
3
INDEX OF AUTHORITIES
Cases
A. Abdul Farook v. Municipal Council, Perambalur , (2009) 15 SCC 351................................3 A.N. Parasuraman v State of Tamil Nadu, (1989) 4 SCC 683..................................................2 Ahemdabad Urban Development Authority v. Sharad Kumar Jayanti Kumar Pasawalla........5 H.R. Banthia v Union of India, AIR 1970 SC 1453..................................................................1 J.K. Industries Ltd . v Union of India, (2007) 13 SCC 673........................................................1 Jayantilal v. Union of India, AIR 1970 Guj 108........................................................................3 Kerala Samsthana Chethu Thozhilali Union v. State of Kerala, AIR 2006 SC 3480................3 Kerala SEB v. Indian Aluminium Co., AIR 1976 SC 1031........................................................3
Khazan Chand vs. State of J&K.................................................................................................4 M.P. High Court Bar Association v Union of India, (2004) 11 SCC 766.................................1 S. Gopalan vs. State of Madras..................................................................................................4 Sitaram Vishambhar Dayal v State of Uttar Pradesh, AIR 1972 SC 1168...............................2 St. Johns Teachers Training Institute v National Council for Teacher Education, (2003) 3
SCC 321.................................................................................................................................1 State of Kerala vs. K.P. Govindan.............................................................................................4 State of Rajasthan v Basant Nahata, (2005) 12 SCC 77...........................................................2
Zaverbhai amaidas vs. state of Bombay.....................................................................................5 Treatises
I. P. Massey, Administrative Law, (Lucknow: Eastern Book Company, 7 th Edition, 2008)......3
4
M. P. Jain and S. N. Jain, Principles of Administrative Law, G. P. Singh (ed.), (Gurgaon: LexisNexis Butterworths Wadhwa, 6 th Edition, 2010)...........................................................2
WEBSITE
History Of Income Tax In India.................................................................................................4
5
STATEMENT OF FACTS
U.P. State Legislature passed Municipal Corporation Act, 2015 and created a Municipal Corporation for the City of Mirzapur for good governance of the territory
of Mirzapur under the jurisdiction. The Act under section 10 gave power to the corporation to extend to the city of Mirzapur, any law in force in any other Municipal Corporation in the state with such
modifications as it may fit and proper. Municipal Corporation was further authorized by section 12 of the Act to make any
rule or regulation as it may deem proper to effectuate the purpose of the Act. In exercise of its power under section 10 of the Act, Corporation issued notification dated 7th March 2016 to extend to Mirzapur “Street Vendors Rules of 2013”, in force in Lucknow Municipal Corporation, with one modification that Corporation can grant
or revoke license to any vendor at its discretion. Exercising power under section 12, it imposed a tax of 10 % of gross sale of street
vendors. Street Vendors Association has challenged both these measures in a writ proceeding before the High Court at Allahabad as unconstitutional.
Hence the present matter before this Honorable Court
6
STATEMENT OF JURISDICTION
The counsel for the petitioner humbly submits that this Honorable Court has the requisite jurisdiction to hear and adjudicate the present matter under Article 226 of the constitution.
7
ISSUE FOR CONSIDERATION I.
WHETHER THERE WAS EXCESS DELEGATION OF POWER ENVISAGED BY MISREADING OF THE STATUTE?
II.
WHETHER THE ADMINISTRATOR CAN IMPOSE A TAX AT THE UNIFORM RATE OF 10%?
8
SUMMARY OF ARGUMENTS
I
THERE WAS EXCESS DELEGATION OF POWER ENVISAGED BY MIS-READING OF THE STATUTE.
The legislature must first discharge its essential legislative functions like laying down the policy of the law and enacting that policy into a binding rule of conduct and then delegate ancillary or subordinate legislative functions. After laying down policy and guidelines, the legislature may confer discretion on administrative agency to execute the legislative policy and to work out details within the framework of policy and guidelines. The delegation must not be unguided and uncontrolled.
III.
THE ADMINISTRATOR CANNOT IMPOSE A TAX AT THE UNIFORM RATE OF 10%.
In the present factual situation, the municipal corporation pursuant to section 12 imposed a tax of 10% of gross sale of street vendor. Section 12 of the municipal corporation act, 2015 authorizes Municipal Corporation to make rules and regulations as it deem proper to effectuate the purpose of the act. It nowhere authorizes Municipal Corporation to impose tax.
9
ARGUMENTS ADVANCED
1. THE DELEGATION
OF POWER IS UNCONSTITUTIONAL AS IT IS IN EXCESS OF THE
AUTHORITY CONFERRED BY THE ENABLING ACT.
The legislature can delegate legislative power subject to condition of laying down principles, standards and policy subject to which the delegate is to exercise its delegated legislative power. In case the legislature fails to do so, the law made by it delegating legislative power would be invalid. 1 Delegation is valid only when it is confined to legislative policy and guidelines.2 In the case of H.R. Banthia v Union of India3, The Supreme Court declared the provision invalid because it was very wide and suffered from the vice of “excessive delegation”. Whether a particular legislation suffers from “excessive delegation” is a question to be decided with reference to certain factors which may include a) subject matter of law b) provisions of the statute including its preamble c) scheme of the law d) factual and circumstantial background in which the law is enacted. 4 The doctrine envisages that an authority can exercise only so much power as is conferred on it by law. Sometimes it is found that the Enabling or Parent Act is not violative of the Constitution, but the subordinate or delegated legislation made under it violates the provisions of the Constitution. Such
1M.P. High Court Bar Association v Union of n!ia" #2$$4% 11 &CC 766 2 J.K. Industries Ltd . v Union of India" #2$$7% 13 &CC 673 3 H.R. Banthia v Union of India" A' 197$ &C 1453 4St. Johns Teachers Training Institute v National Council for Teacher Education" #2$$3% 3 &CC 321 1
subordinate or delegated legislation will be unconstitutional and void, though the Enabling or Parent Act is perfectly valid. Thus, the subordinate or delegated legislation, (e.g., rules, regulations, by- laws, etc.) made under the Enabling or Parent Act may be unconstitutional while the Enabling or Parent Act is constitutional.
a. THE
MODIFICATION
MADE
BY
THE
ADMINISTRATOR
IS
UNCONSTITUTIONAL .
The legislature must first discharge its essential legislative functions like laying down the policy of the law and enacting that policy into a binding rule of conduct and then delegate ancillary or subordinate legislative functions. After laying down policy and guidelines, the legislature may confer discretion on administrative agency to execute the legislative policy and to work out details within the framework of policy and guidelines. The delegation must not be unguided and uncontrolled. Whether a power delegated by the legislature to the executive has exceeded the permissible limits in a given case depends on its facts and circumstances. It also depends upon the nature of power delegated and the purpose intended to be achieved.5 The Supreme Court declared the Tamil Nadu Private Educational Institutions (Regulation) Act, 1966 as ultra vires because the legislature did not lay down any policy or guidelines with reference to which the power to regulate and control private educational institutions can be exercised by the government.6
If the power to modify the Statute has been delegated to the administrative authority, it cannot be exercised so as to change the policy underlying the parent Statute. The Indian
5Sitaram isham!har "a#al v State of Uttar $radesh" A' 1972 &C 1168 6 %.N. $arasuraman v State of Tamil Nadu" #1989% 4 &CC 683 2
legislature cannot delegate unrestrained uncanalized and unqualified legislative power on an administrative body.7
A. THE RULES WERE NOT CARRYING OUT THE PURPOSE OF THE ACT.
The doctrine of ultra vires states that the delegated legislation, which goes beyond the scope of the parent Act, or in conflict with the delegating legislation, is invalid. 8 The question for the courts to consider is whether there is any nexus between the delegated legislation in question and the purposes underlying the Parent Act. 9 For this purpose, the courts look into the policy and object of the enabling Act. In order to determine whether the rules are within the policy and object of the enabling Act, nexus between the rules and the policy and purpose of the enabling Act is the determining factor. 10 It is for the courts to determine the limits of the power.
The power is to be exercised for promoting the policy and purposes of the Act and, therefore, the power cannot be used for an irrelevant purpose. 11 A rule may be held as ultra vires if it has no nexus with the purpose of the Parent Act, or if it scuttles the same. 12 In Kerala SEB v. Indian Aluminium Co. ,13 Justice Gupta stated that the delegation is unconstitutional when the
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Act contains no specific standard or policy with reference to how the rule making power has to be exercised.
In the present matter, U.P. State Legislature passed Municipal Corporation Act, 2015 and created a Municipal Corporation for the City of Mirzapur for good governance of the territory of Mirzapur to make any rule or regulation for the territory under its jurisdiction, which it deemed necessary and expedient for carrying out the purpose of the Act.
Good governance requires the Government to rise above their political interest and act only in public interest and for welfare of its people. 14 Thus, the policy, which was laid down in the delegating Act, enabled the Municipal Corporation to make rules in the interest of the people. The rules are not aimed at furthering the welfare of the society. The rules are clearly not in consonance with the policy of the Act. The action has no nexus with the purpose of the Act. The object of the rule is not to promote welfare if the society, however, by imposing a steep tax and also having the discretion of revoking the license of the street vendors it is acting against the welfare of the people.
B. IMPOSITION
OF TAX OF 10% OF GROSS SALE IS UNCONSTITUTIONAL.
The origin of the word ‘tax’ is from ‘taxation’, which means an estimate. In India, the system of direct taxation has been in force in one form or another even from ancient times. There are references both in Manu Smriti and Arthasastra to a variety of tax measures. Manu, the ancient stage and the lawgiver, cautioned the king against excessive taxation. Kautilya, the author of Arthasastra, emphasizes on equity and justice in taxation. 15 In our constitution under article 265, if a law does not authorize to impose tax then that law is considered to be in 13 Kerala SEB (. Indian %luminium Co." A' 1976 &C 1$31 14 %. %!dul +aroo, (. -unici'al Council $eram!alur " #2$$9% 15 &CC 351 4
violation of constitution. The delegation of power to impose tax is also not allowed until authorized by law.
THE MUNICIPAL
ACT,
2015,
DOES NOT AUTHORIZE IT TO IMPOSE TAX.
Article 265 of the Constitution embodies an important constitutional principle, that no tax shall be levied or collected except by the authority of the law. The term ‘law’ in this article means statue law, i.e. an Act of the legislature. 16 Accordingly no levy can be imposed either by executive action or by the resolution of the House. 17 Further the law must be a valid law. 18 In Khazan Chand vs. State of J& K 19, the Court observed that power to make law with respect to tax comprehends within it the power to levy that tax and to determine the persons who are liable to pay such tax, the rate at which tax is to paid and the event which will attract liability in respect of such tax. The power to make a law with respect to a tax includes the power to make provisions in relevant statue with respect to all matters ancillary and incidental to the levy, assessment, collection and recovery of tax.
In the present factual situation, the municipal corporation pursuant to section 12 imposed a tax of 10% of gross sale of street vendor. Section 12 of the municipal corporation act, 2015
15Histor f nco+ a n n!ia///.inco+tain!ia.gov.inHistorPr+:1922.A&P" ;ast acc+ss+! on 28th of f+
.). &hu;a." ?Constitution of n!ia@" ast+rn Boo Coan" -uchno/" +!t. +nth" 2$$1. 19=haan Chan! vs. &tat+ of (=" 1984 2 &CC 456. 5
authorizes Municipal Corporation to make rules and regulations as it deem proper to effectuate the purpose of the act. It nowhere authorizes Municipal Corporation to impose tax.
MUNICIPAL CORPORATION
CANNOT MAKE RULES AND REGULATIONS TO IMPOSE TAX.
Rules do not enlarge or restrict the authority to impose tax. The section confers authority. Rules are only regulating the exercise of that power. The imposition of the tax and the regulation of its assessment and collection are totally different matters and they are clearly distinguished.20
Taxes raised by a local authority are not imposed it as a legislature but as a delegate of the legislature. The tax is a valid one if it is one of the taxes the local authority can raise and the delegate imposes it in accordance with the condition laid down by the legislature. The taxes that can be raised in exercise of delegated power are predetermined and procedure is prescribed by the municipal act.
21
A power to Tax or levy any fee cannot be inferred from mere generality of the powers conferred by the enabling enactment. Such power of imposition of tax or fee by Delegated Authority must be very specific and there is no scope of implied authority for imposition of such tax or fee. 22
2$av+r
The impugned section does not specifically provide for the power of municipal corporation to impose tax hence the municipal corporation cannot make rules and regulation pursuant to section 12 and impose tax on street vendors.
PRAYER
Wherefore in the light of the facts stated, issues raised, arguments advanced and authorities cited; it is most humbly prayed before this Honorable Court to:
i)
Allow the petition and pass writ of mandamus;
And pass any other order that it may deem fit to serve the ends of justice, equity and good conscience.
All of which is most humbly and respectfully prayed.
Date: 2nd March, 2016
(Counsel for appellant)
Counsel code: 1073
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