Karnataka High Court
M/S V.K. Packers vs Union Of India on 19 September, 2025
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
1
Reserved on : 12.09.2025
Pronounced on :19.09.2025
IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH
DATED THIS THE 19TH DAY OF SEPTEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.100239 OF 2024 (T - RES)
C/W
WRIT PETITION No.106955 OF 2023(T-RES)
WRIT PETITION No.108091 OF 2023(T-RES)
IN WRIT PETITION No.100239 OF 2024
BETWEEN:
M/S. VKG PACKERS
NIPPANI NEHRU CHOWK P.O.
R.S.NO.182, VKG PACKERS,
MAIN ROAD WEST YARAL,
VPV NO.577, SL.NO.69, 699 GODOWN,
CHIKKODI, NIPPANI, BELAGAVI
KARNATAKA - 591 237
REPRESENTED BY ITS PROPRIETOR
MR. VARUN KUMAR.
Digitally signed
by RAKESH S
HARIHAR
... PETITIONER
Location: High
Court of
Karnataka, (BY SRI GAUTHAM BHARADWAJ, ADVOCATE)
Dharwad Bench,
Dharwad
2
AND:
1 . UNION OF INDIA
REPRESENTED BY
THE UNDER SECRETARY
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
ROOM NO.48C, NORTH BLOCK,
NEW DELHI - 110 001.
2 . GST COUNCIL
REPRESENTED BY ITS SECRETARY
5TH FLOOR, TOWER II
JEEVAN BHARTI BUILDING,
JANPATH ROAD,
CONNAUGHT PLACE
NEW DELHI - 110 001.
... RESPONDENTS
(BY SRI K.ARVIND KAMATH, ADDL.SOLICITOR GENERAL OF INDIA
FOR
SRI MRUTYUNJAYA S.HALLIKERI, CGSC FOR R-1;
SRI K.ARVIND KAMATH, ADDL.SOLICITOR GENERAL OF INDIA
A/W
SRI GIRISH HULMANI, ADVOCATE FOR R-2)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH
NOTIFICATION NO.2/2023 DATED 31.03.2023 AND NOTIFICATION
NO.3/2023 DATED 26.07.2023 PUBLISHED BY RESPONDENT NO.1
PRODUCED HEREIN AND ANNEXED AS ANNEXURE-A AND B
RESPECTIVELY.
3
IN WRIT PETITION No.106955 OF 2023
BETWEEN:
GHODAWAT PACKER LLP
HAVING OFFICE AT KOTAGONDHUNSHI
POST. ADARGUNCHI, KUNDAGOL CROSS
BENGALURU ROAD, HUBBALLI
REPRESENTED BY ITS
AUTHORISED SIGNATORY
SUHAS APPASO SURYAWANSHI
AGED ABOUT 43 YEARS,
R/AT MAAULI APARTMENT
LANE NO. 4, STATION ROAD,
JAYASINGPUR - 416101
MAHARASHTRA STATE.
... PETITIONER
(BY SRI G.SHIVADASS, SR.ADVOCATE FOR
SRI PRAVEEN P.TARIKAR, ADVOCATE)
AND:
1 . UNION OF INDIA
THROUGH THE SECRETARY
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
NO.137, NORTH BLOCK,
NEW DELHI - 110 001.
2 . G.S.T.COUNCIL
THROUGH THE SECRETARY
5TH FLOOR, TOWER II
JEEVAN BHARTI BUILDING
JANPATH ROAD, CONNAUGHT PLACE
NEW DELHI - 110 001.
... RESPONDENTS
4
(BY SRI K.ARVIND KAMATH, ADDL.SOLICITOR GENERAL OF INDIA
FOR SRI MRUTYUNJAYA S.HALLIKERI, CGSC FOR R-1;
SRI K.ARVIND KAMATH, ADDL.SOLICITOR GENERAL OF INDIA
A/W SRI GIRISH HULMANI, ADVOCATE FOR R-2)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT
OF CERTIORARI TO QUASH NOTIFICATION NO. 2/2023-
COMPENSATION CESS (RATE) DATED. 31-03-2023 AT ANNEXURE-A
AND NOTIFICATION NO. 3/2023 COMPENSATION CESS (RATE)
DATED. 26-07-2023 PUBLISHED BY RESPONDENT NO. 1
PRODUCED HEREIN AND ANNEXED AS ANNEXURE-B
RESPECTIVELY.
IN WRIT PETITION No.108091 OF 2023
BETWEEN:
M/S.V.K.PACKERS
OFFICE AT:BIROBA MANDIR
37/2, BIROBA MAL, YARNAL ROAD,
CHIKKODI,
NIPPANI, BELAGAVI
KARNATAKA - 591 237
REPRESENTED BY ITS PROPRIETOR
MR. VARUN KUMAR.
... PETITIONER
(BY SRI GAUTHAM BHARADWAJ, ADVOCATE)
5
AND:
1 . UNION OF INDIA
REPRESENATED BY ITS SECRETARY
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
ROOM NO.48C, NORTH BLOCK,
NEW DELHI - 110 001.
2 . GST COUNCIL
REPRESENTED BY THE SECRETARY
5TH FLOOR, TOWER II
JEEVAN BHARTI BUILDING,
JANPATH ROAD,
CONNAUGHT PLACE
NEW DELHI - 110 001.
... RESPONDENTS
(BY SRI K.ARVIND KAMATH, ADDL.SOLICITOR GENERAL OF INDIA
FOR SRI MRUTYUNJAYA S.HALLIKERI, CGSC FOR R-1;
SRI K.ARVIND KAMATH, ADDL.SOLICITOR GENERAL OF INDIA
A/W SRI GIRISH HULMANI, ADVOCATE FOR R-2)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH
NOTIFICATION NO./2023 DATED 31.03.2023 AND NOTIFICATION
NO.3/2023 DATED 26.07.2023 PUBLISHED BY RESPONDENT NO.1
PRODUCED HEREIN AND ANNEXED AS ANNEXURE-A AND B
RESPECTIVELY.
THESE WRIT PETITIONS HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 12.09.2025, COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-
6
CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CAV ORDER
The petitioners, though different in the batch of these
petitions, call in question notification dated 31-03-2023 and its
amended notification dated 26-07-2023, by which the petitioners
are directed to pay compensation cess at Maximum Retail Price
('MRP') as against the transaction value, as determined under
Section 15 of the Central Goods and Services Tax Act, 2017.
For the sake of convenience, the facts obtaining in Writ
Petition No.100239 of 2024, which are similar in other writ petitions
on the question involved in the lis would be narrated.
2. Facts, in brief, germane are as follows: -
2.1. The petitioner is a proprietorship concern engaged in the
business of manufacturing chewing tobacco with lime tube sold
under the brand name 'Royale'. The chewing tobacco pouches
manufactured by the petitioner contained various ingredients such
as tobacco, lime, menthol, glycerin, perfume inter alia. The
petitioner manufactures its products and sells them to various
7
stockists who act as the first intermediary in the supply chain. The
stockists in turn sell the products to the wholesalers who further
sell the products to retailers eventually reaching the consumer.
There are two to three intermediaries before the products reach the
end consumer.
2.2. The Government of India in terms of its 101st
amendment to the Constitution of India on 08-09-2016, paved way
for an integrated regime of indirect taxes on various goods and
services. Pursuant to the said amendment Articles 246-A, 269-A,
279-A, 366(12-A), 366 (26-A) and 366 (26-B) came to be inserted
and Articles 248, 249, 250, 268, 270, 271, 286 and 368 were
suitably amended and certain substitutions and deletions also
ensued. Here comes the genesis of the Goods and Services Tax
from 01-07-2017. Four enactments were notified on the same
day i.e., 01-07-2017 called: (i) Central Goods and Services
Tax Act, 2017 ('CGST Act') (ii) Integrated Goods and
Services Tax Act, 2017 ('IGST Act'); (iii) Union Territory
Goods and Services Tax Act, 2017 (UTGST Act') and (iv)
Goods and Services Tax (Compensation to States) Act, 2017
8
(hereinafter referred to as 'the Compensation Act' for short).
The issue in the lis revolves round the Compensation Act.
2.3. A Circular on 01-02-2022 is notified clarifying the levy of
Basic Excise Duty and National Calamity Contingent Duty on the
MRP. The petitioner's products being goods classified under
Chapter 24 of the Schedule to the Compensation Act become
subject to taxation under two regimes. One, the GST regime and
the other Excise Duty under the Central Excise Act. The
Government of India, in terms of the Circular, directs abatement of
55% on MRP by levying Basic Excise Duty and National Calamity
Contingent Duty. The said circular is indicative that GST and
compensation cess is payable on the transaction value and not on
the retail sale price. When intermediaries such as stockists,
wholesalers and retailers make further sales, they pay GST and
compensation cess at 28% and 142% on their transaction value or
value addition as it is known.
2.4. The impugned notification brings in a substantial change
in the way in which the compensation cess is levied not on the
transaction value, but on the MRP, notwithstanding the fact that
9
there is no change in the levy of GST, as the same is restricted only
to compensation cess. By the impugned notification the petitioner
or persons similarly situated are required to pay compensation cess
at the rate specified on the MRP, which in the case of chewing
tobacco with lime tube is 56%. Prior to the impugned notification, it
is the averment in the petition that the petitioner would pay 28%
GST and compensation cess at 142% of the transaction value. But
now it is constrained to pay compensation cess on the MRP. The
fulcrum of the lis revolves round whether compensation cess is to
be paid on the transaction value or at the MRP.
3.Heard Sri G Shivadass, learned senior counsel appearing for
the petitioners in Writ Petitions No.106955 of 2023 and Sri
Gautham Bharadwaj, learned counsel appearing for the petitioner in
Writ Petition Nos.100239 of 2024 and 108091 of 2023; and
Sri K.Arvind Kamath, learned Additional Solicitor General of India
appearing for the respondents.
4. The learned senior counsel Sri G Shivadass appearing for
the petitioners in one of the writ petitions and Sri Gautham
Bharadwaj, learned counsel appearing for the petitioner in two of
10
the petitions would vehemently contend that compensation cess
which is levied under the GST is a tax. The compensation cess is
imposed in exercise of power under Articles 246-A and 270 of the
Constitution of India. The Compensation Act was enacted to provide
States revenue loss resulting from implementation of the afore-
mentioned four Acts. Therefore, the Compensation Act is an
essential part of the scheme. They would further contend that
compensation cess that is now imposed on MRP is contrary to the
GST enactments itself. Sub-section (3) of Section 15 of the CGST
Act excludes any discount explicitly given on the MRP from the
value of supply. Therefore, no compensation can be calculated on
the MRP when the parent Act itself excludes a discount in
computation of the value of supply. The learned counsels, in unison,
would submit that Section 8(2) of the Compensation Act further
makes it clear that cess can be computed only on the supply of
goods which are specified in the schedule. Therefore, they would
contend that compensation cess can be levied only on the
transaction value and not on the MRP. It is their further submission
that the Compensation Act which defines input tax and taxable
11
supply, clearly show that compensation cess can be levied only on
the transaction value and not the MRP.
5. Per contra, the learned Additional Solicitor General of India
Sri K.Arvind Kamath would vehemently refute the submissions in
contending that the loss to the States was to be augmented by the
Compensation Act. A group of Ministers on capacity-based taxation
and special composition scheme in certain sectors deliberated upon
the issue and drew up a report. The final report was that there
existed greater leakages in the revenue at the later stages of the
supply chain of products and most of the end retailers of these
products are below the threshold limit of mandatory GST
registration. He would contend that with a view to plug leakages
and improve revenue collection, particularly from the evasion prone
commodities like pan masala, gutkha, chewing tobacco, the group
of Ministers inter alia recommended that compensation cess levied
on such evasion prone commodities should be changed from the
current ad valorem tax, to specific tax-based levy, to boost first
stage - manufacture level. Additionally, the specific tax was to be
linked to retail price to maintain revenue boost. It is this that
12
resulted in the impugned notification. It is his submission that the
charging section - Section 8 of the Compensation Act inter alia
permits cess to be levied on supply of goods and services, which is
done by the impugned notification. It is brought to implement the
recommendation of group of Ministers so that the legislatively
prescribed ceiling rate on concerned goods should be linked to the
retail sale price. He would, therefore, contend that the action of the
revenue is in consonance with law and, therefore, this Court in
exercise of its jurisdiction under Article 226 of the Constitution
should not interfere and obliterate a policy, which is in tune with
the Act.
6. I have given my anxious consideration to the submissions
made by the respective learned counsel and have perused the
material on record.
7. The afore-narrated facts are not in dispute. They are a
matter of record. Four enactments are notified on 01-07-2017. The
entire fulcrum of the subject lis revolves around the fourth
enactment i.e., the Compensation Act. Therefore, it becomes
necessary to notice certain provisions of the Compensation Act.
13
The relevant sections that are necessary to be noticed are as
follows:
"2. Definitions.--(1) In this Act, unless the context
otherwise requires,--
... ... ...
(c) "cess" means the goods and services tax
compensation cess levied under Section 8;
(d) "compensation" means an amount, in the form of goods
and services tax compensation, as determined under
Section 7;
(e) "Council" means the Goods and Services Tax Council
constituted under the provisions of Article 279-A of the
Constitution;
... ... ...
8. Levy and collection of cess.--(1) There shall be
levied a cess on such intra-State supplies of goods or services or
both, as provided for in Section 9 of the Central Goods and
Services Tax Act, and such inter State supplies of goods or
services or both as provided for in Section 5 of the Integrated
Goods and Services Tax Act, and collected in such manner as
may be prescribed, on the recommendations of the Council, for
the purposes of providing compensation to the States for loss of
revenue arising on account of implementation of the goods and
services tax with effect from the date from which the provisions
of the Central Goods and Services Tax Act is brought into force,
for a period of five years or for such period as may be
prescribed on the recommendations of the Council:
Provided that no such cess shall be leviable on supplies
made by a taxable person who has decided to opt for
composition levy under Section 10 of the Central Goods and
Services Tax Act.
(2) The cess shall be levied on such supplies of
goods and services as are specified in column (2) of the
Schedule, on the basis of value, quantity or on such basis
at such rate not exceeding the rate set forth in the
corresponding entry in column (4) of the Schedule, as the
14
Central Government may, on the recommendations of the
Council, by notification in the Official Gazette, specify:
Provided that where the cess is chargeable on any
supply of goods or services or both with reference to
their value, for each such supply the value shall be
determined under Section 15 of the Central Goods and
Services Tax Act for all intra-State and inter-State
supplies of goods or services or both:
Provided further that the cess on goods imported into
India shall be levied and collected in accordance with the
provisions of Section 3 of the Customs Tariff Act, 1975 (51 of
1975), at the point when duties of customs are levied on the
said goods under Section 12 of the Customs Act, 1962 (52 of
1962), on a value determined under the Customs Tariff Act,
1975.
... ... ...
THE SCHEDULE
[See Section 8 (2)]
1. In this Schedule, reference to a "tariff item",
"heading", "sub-heading" and "Chapter", wherever they occur,
shall mean respectively a tariff item, heading, sub-heading and
Chapter in the First Schedule to the Customs Tariff Act, 1975
(51 of 1975).
2. The rules for the interpretation of the First Schedule to
the Customs Tariff Act, 1975 (51 of 1975), the section and
Chapter Notes and the General Explanatory Notes of the First
Schedule shall, so far as may be, apply to the interpretation of
this Schedule.
S. Description of supply Tariff item, The maximum rate at which
No. of goods or services heading, sub- goods and services tax
heading, compensation cess may be
Chapter, or collected
supply of goods
or services, as
the case may be
(1) (2) (3) (4)
15
1. Pan Masala. 2106 90 20 Fifty-one per cent. of retail
sale price per unit.
2. Tobacco and 24 Four thousand one hundred
manufactured tobacco and seventy rupees per
substitutes, including thousand sticks or two
tobacco products. hundred and ninety per
cent ad valorem or a
combination thereof, but not
exceeding four thousand one
hundred and seventy rupees
per thousand sticks plus two
hundred and ninety per
cent. ad valorem or hundred
per cent of retail sale price
per unit.
3. Coal, briquettes, 2701, 2702 or Four hundred rupees per
ovoids and similar 2703 tonne.
solid fuels
manufactured from
coal, lignite, whether
or not agglomerated,
excluding jet, peat
(including peat litter),
whether or not
agglomerated.
4. Aerated waters. 2202 10 10 Fifteen per cent. ad valorem.
4-A. Motor vehicles for the 8702 10, Twenty-five per cent. ad
transport of not more 8702 20, valorem.
than thirteen persons, 8702 30 or
including the driver. 8702 90
5. Motor cars and other 8703 Twenty-five per cent. ad
motor vehicles valorem.
principally designed
for the transport of
persons (other than
motor vehicles for the
transport of ten or
more persons,
including the driver),
including station
wagons and racing
16
cars.
6. Any other supplies. Fifteen per cent. ad valorem.
Explanation.--For the purposes of this Schedule,--
(i) "retail sale price" means the maximum price at which the
concerned goods in packaged form may be sold to the
ultimate consumer and includes all taxes, local or
otherwise, freight, transport charges, commission payable
to dealers, and all charges towards advertisement,
delivery, packing, forwarding and the like and the price is
the sole consideration for such sale:
Provided that where the provisions of the Legal
Metrology Act, 2009 (1 of 2010) or the rules made
thereunder or any other law for the time being in force
require to declare on the package, the retail sale price
excluding any taxes, local or otherwise, the retail sale
price shall be construed accordingly;
(ii) where on the package of any concerned goods more than
one retail sale price is declared, the maximum of such
retail sale price shall be deemed to be the retail sale
price;
(iii) where the retail sale price, declared on the package of
any concerned goods at the time of its clearance from the
place of manufacture, is altered to increase the retail sale
price, such altered retail sale price shall be deemed to be
the retail sale price;
(iv) where different retail sale prices are declared on different
packages for the sale of any concerned goods in packaged
form in different areas, each such retail sale price shall be
the retail sale prices for the purposes of determination of
the rate of cess for the said goods intended to be sold in
the area to which the retail sale price relates."
(Emphasis supplied)
17
Section 15 of the CGST Act reads as follows: -
"15. Value of taxable supply.--(1) The value of a
supply of goods or services or both shall be the
transaction value, which is the price actually paid or
payable for the said supply of goods or services or both
where the supplier and the recipient of the supply are not
related and the price is the sole consideration for the
supply.
(2) The value of supply shall include--
(a) any taxes, duties, cesses, fees and charges levied under
any law for the time being in force other than this Act,
the State Goods and Services Tax Act, the Union Territory
Goods and Services Tax Act and the Goods and Services
Tax (Compensation to States) Act, if charged separately
by the supplier;
(b) any amount that the supplier is liable to pay in relation to
such supply but which has been incurred by the recipient
of the supply and not included in the price actually paid or
payable for the goods or services or both;
(c) incidental expenses, including commission and packing,
charged by the supplier to the recipient of a supply and
any amount charged for anything done by the supplier in
respect of the supply of goods or services or both at the
time of, or before delivery of goods or supply of services;
(d) interest or late fee or penalty for delayed payment of any
consideration for any supply; and
(e) subsidies directly linked to the price excluding subsidies
provided by the Central Government and State
Governments.
Explanation.--For the purposes of this sub-section, the
amount of subsidy shall be included in the value of supply of the
supplier who receives the subsidy.
18
(3) The value of the supply shall not include any
discount which is given--
(a) before or at the time of the supply if such discount
has been duly recorded in the invoice issued in
respect of such supply; and
(b) after the supply has been effected, if--
(i) such discount is established in terms of an
agreement entered into at or before the
time of such supply and specifically linked
to relevant invoices; and
(ii) input tax credit as is attributable to the
discount on the basis of document issued
by the supplier has been reversed by the
recipient of the supply.
(4) Where the value of the supply of goods or
services or both cannot be determined under sub-section
(1), the same shall be determined in such manner as may
be prescribed.
(5) Notwithstanding anything contained in sub-section (1)
or sub-section (4), the value of such supplies as may be notified
by the Government on the recommendations of the Council shall
be determined in such manner as may be prescribed.
Explanation.--For the purposes of this Act,--
(a) persons shall be deemed to be "related persons" if--
(i) such persons are officers or directors of one
another's businesses;
(ii) such persons are legally recognised partners in
business;
(iii) such persons are employer and employee;
(iv) any person directly or indirectly owns, controls
or holds twenty-five per cent. or more of the
19
outstanding voting stock or shares of both of
them;
(v) one of them directly or indirectly controls the
other;
(vi) both of them are directly or indirectly controlled
by a third person;
(vii) together they directly or indirectly control a
third person; or
(viii) they are members of the same family;
(b) the term "person" also includes legal persons;
(c) persons who are associated in the business of one
another in that one is the sole agent or sole distributor or
sole concessionaire, howsoever described, of the other,
shall be deemed to be related."
(Emphasis supplied)
Section 2(c) of the Compensation Act defines 'cess', to mean the
goods and services tax compensation cess levied under Section 8.
Section 8 deals with levy and collection of cess. Sub-section (2)
thereof directs that cess shall be levied on supplies of goods and
services as specified in Column No.2 of the Schedule, on the basis
of value, quantity or on such basis not exceeding the rate set forth
in the corresponding entry of Column No.4 of the Schedule.
20
Section 15 of the CGST Act deals with value of taxable supply.
Sub-section (3) thereof mandates that the value of supply shall not
include any discount which is given before or at the time of supply if
such discount has been recorded in the invoice. Sub-section (4)
mandates that where the value of supply of goods or services or
both cannot be determined under sub-section (1), the same shall
be determined in any manner prescribed. Therefore, it becomes
necessary to notice sub-section (1). Sub-section (1) mandates the
value of supply of goods or services or both shall be the transaction
value which is the price actually paid or payable for the said supply
of goods or services or both where the supplier and the recipient of
the supply are not related and the price is the sole consideration of
such supply. What is discernible from a conjoint reading of the
aforesaid provisions is, that cess can be imposed under Section 8 of
the Compensation Act and the value of cess is imposable only under
Section 15 of the CGST Act. Section 15 mandates that the value of
cess to be imposed only on transaction value and not beyond it.
21
8. In exercise of powers conferred under Section 8 of the
Compensation Act, the impugned notification has sprung on
31-03-2023. The preamble of the Notification reads as follows:
"G.S.R..... (E). In exercise of the powers conferred by
sub-section (2) of Section 8 of the Goods and Services Tax
(Compensation to States) Act, 2017 (15 of 2017), the Central
Government, on the recommendations of the Council, hereby
makes the following further amendments in the notification of
the Government of India, in the Ministry of Finance (Department
of Revenue), No.1/2017-Compensation Cess (Rate), dated the
28th June, 2017, published in the Gazette of India, Extraordinary
Part-II, Section 3, Sub-section (i), vide number G.S.R.720(E),
dated the 28th June, 2017, namely...."
Clause 24A is germane to be noticed. It reads as follows:
"24A. 2403 91 00 "Homogenised" or 0.36R per
"reconstituted" tobacco, bearing unit"
a brand name
Clauses 36A and 36B read as follows:
"36A 2403 99 90 All goods, other than pan 0.43R per
masala containing tobacco unit
'gutkha' bearing a brand name
36B 2403 99 90 All goods, other than pan 0.43R per
masala containing tobacco unit"
'gutkha', not bearing a brand
name
Illustration reads as follows:
"Illustration:Calculation of goods and services tax
compensation cess on Pan Masala (Sl.No.1 in the
Schedule above)
22
Rate of goods and services tax compensation cess=0.32R per
unit.
If retail sale price of unit (pouch) of Pan Masala = Rs.10.
goods and services tax compensation cess leviable=0.32R
=0.32*10=₹3.2 per unit (pouch)."
A perusal at the aforesaid notification or its amendment would
clearly indicate that the notification runs counter to Section 8(2) of
the Compensation Act and Section 15 of the CGST Act. Section 15
of the CGST Act clearly holds that value of supply of goods is the
transaction value, which is the price actually paid or payable for
supply of goods. As observed, Section 8(2) of the Compensation Act
includes compensation cess within the value of supply. The proviso
to Section 8(2) of the Compensation Act in unambiguous terms
states that the value of compensation cess chargeable on any
supply shall be determined as per Section 15 of the CGST Act.
Therefore, the notification which brings in value of cess linked to
the MRP and not to transaction value runs counter to the Act.
9. It becomes germane to notice a judgment of the Apex
Court and that of this Court interpreting old regime of two sets viz.,
the Rajasthan Sales Tax Act and the Karnataka Sales Tax Act.
23
9.1. The Apex Court in the case of STATE OF RAJASTHAN v.
RAJASTHAN CHEMISTS ASSOCIATION1, has held as follows:
".... .... ....
44. In the context of the meaning assigned to the
expression "sale of goods" or price or consideration
element of such "sale of goods" as taxable event, the
conclusion that can fairly be reached is that for the taxing
event of sale, if the price is to be the basis for measuring
tax, it must relate to actual transaction of sale that
becomes the subject of tax and not to a different
transaction that may take place in future at a price.
... ... ...
50. Applying the principles enunciated above, the
inevitable conclusion is that when the wholesaler sells
any formulation to a retailer in bulk quantity, taxable
event of sale of goods takes place where the wholesaler
and retailers are the parties to the contract, the goods in
question are the formulations and the consideration is
one which is agreed to between the parties to that
transaction within the limits permissible by law. By
substituting the assumed quantity of goods or a price
which is not the subject-matter of that contract of
completed sale for the purpose of measuring tax, the
legislature assumes existence of contract of sale of drugs
by legal fiction which has not taken place and which
cannot be considered to be a sale in the manner stated in
the Sales Act, which alone can be the subject of tax under
Entry 54 in List II. Substitution of assumed price or the
assumed quantity in place of actual price/quantity in a
completed sale transaction, for the purpose of levy of tax
on the subject-matter of tax results in taking away from
it the character of "sale of goods" as envisaged under the
Sales Act."
(Emphasis supplied)
1
(2006) 6 SCC 773
24
9.2. This Court in the case of ITC LIMITED v. STATE OF
KARNATAKA2, has held as follows:
".... .... ....
11. As stated above, the Supreme Court in
Rajasthan Chemists Association [2006] 147 STC 542 (SC)
; (2006) 6 SCC 773, while considering the validity of a
provision similar to the one impugned herein, has upheld
the view of the Rajasthan High Court that it is not
permissible for the Legislature of a State to levy tax on
the sale of goods by adopting a notional price as a
measure of tax ; such a legislative measure is held to be
outside the ambit of entry 54 of List II of the Seventh
Schedule to the Constitution of India. In my opinion, the
same reasoning applies to the provision impugned herein
as both are similar.
12. In view of the above, sub-section (5) of section 4 of
the KVAT Act, 2003 which provides for levy of tax on the
maximum retail price indicated on the label of the container or
pack thereof, is declared as unconstitutional on the ground that
such a taxing provision is beyond the legislative competence of
the State under entry 54 of List II of the Seventh Schedule to
the Constitution of India."
(Emphasis supplied)
Both the Apex court and this Court have held that it is
impermissible for the legislature to impose tax on a notional price.
Notional price would be the MRP. Therefore, the justification of the
revenue to plug leakage, that happens when the product reaches
the end consumer, or the product that is sold at the time when it
2
2012 SCC OnLine Kar 8765
25
reaches the consumer, cannot mean that power can be exercised
contrary to the CGST Act. The CGST Act clearly holds that it should
be on transaction value. Hitherto, there was only a transaction
value. It cannot now mean by a notification it would be on MRP by
defeating Section 15 of the CGST Act itself.
10. It is trite that a notification issued in terms of the powers
conferred under the parent Act cannot run counter to the said Act.
In that light, I deem it appropriate to refer to the judgment
rendered by this Court in the case of SUDARSHAN V. BIRADAR v.
STATE OF KARNATAKA3, which held as follows:
".... .... ....
11. The power to make Rules is delegated to the State
Governments under Section 30 of the Act. Therefore, the Rules
that are made are delegated legislation. Delegated legislation
can be challenged before the Courts on the ground that it
is ultra vires the parent Act. The Court examining the said
issue can adjudge the legality and validity of the
delegated legislation on the touchstone of the doctrine of
ultra vires. The doctrine of ultra vires has two aspects,
substantive and procedural. When the delegated
legislation travels beyond the scope of the Authority
conferred by or is in conflict with the parent statute, it
becomes invalid on the ground of it being substantive
ultra vires. If any prescribed procedure under the parent
statute is deviated while framing the Rules, in terms of
3
2023 SCC OnLine Kar 178
26
power conferred under the parent Act, such a Rule would
be declared ultra vires the parent Act, for violation of the
procedure that is stipulated under the parent Act for it to
become procedural ultra vires. What is alleged in the case
at hand is substantive ultra vires and not procedural ultra
vires. Whenever any person or body of persons exercising
statutory authority acts beyond the powers conferred
upon it by the statute such acts become ultra vires and
resultantly void. Therefore, substantive ultra vires would
mean delegated legislation goes beyond the scope of the
authority conferred on it by the parent statute. It is the
fundamental principle of law that a public authority
cannot act outside the powers that is conferred upon it.
... ... ...
14. As observed hereinabove, it is trite law that the
Rule making power conferred upon by the parent Act
cannot travel beyond the mandate of the parent Act. The
view of mine in this regard is fortified by the judgment of
the Apex Court in the case of UNION OF INDIA v. A.
SRINIVASAN wherein the Apex Court considers the entire
spectrum of the law rendered from time to time and holds
that a provision therein was contrary to the provision
contained in the enabling Act. The Apex Court has held as
follows:
"21. At this stage, it is apposite to state about the rule-making
powers of a delegating authority. If a rule goes beyond the rule-
making power conferred by the statute, the same has to be
declared ultra vires. If a rule supplants any provision for which
power has not been conferred, it becomes ultra vires. The basic
test is to determine and consider the source of power which is
relatable to the rule. Similarly, a rule must be in accord with
the parent statute as it cannot travel beyond it.
22. In this context, we may refer with profit to the decision
in General Officer Commanding-in-Chief v. Subhash Chandra
Yadav [(1988) 2 SCC 351 : 1988 SCC (L&S) 542 : (1988) 7 ATC
296 : AIR 1988 SC 876] wherein it has been held as follows : (SCC
p. 357, para 14)
"14. ... before a rule can have the effect of a statutory provision,
two conditions must be fulfilled, namely, (1) it must conform to
the provisions of the statute under which it is framed; and (2)
it must also come within the scope and purview of the rule-
27
making power of the authority framing the rule. If either of
these two conditions is not fulfilled, the rule so framed would
be void."
23. In Delhi Admn. v. Siri Ram [(2000) 5 SCC 451 : AIR 2000
SC 2143] it has been ruled that it is a well-recognised principle
that the conferment of rule-making power by an Act does
not enable the rule-making authority to make a rule which
travels beyond the scope of the enabling Act or which is
inconsistent therewith or repugnant thereto.
24. In Sukhdev Singh v. Bhagatram Sardar Singh
Raghuvanshi [(1975) 1 SCC 421 : 1975 SCC (L&S) 101 : AIR 1975
SC 1331] the Constitution Bench has held that : (SCC p. 433, para
18)
"18. ... statutory bodies cannot use the power to make
rules and regulations to enlarge the powers beyond the scope
intended by the legislature. Rules and regulations made by reason
of the specific power conferred by the statute to make rules and
regulations establish the pattern of conduct to be followed".
25. In State of Karnataka v. H. Ganesh Kamath [(1983) 2 SCC
402 : 1983 SCC (Cri) 514 : AIR 1983 SC 550] it has been stated
that : (SCC p. 410, para 7)
"7. ... It is a well-settled principle of interpretation of statutes that
the conferment of rule-making power by an Act does not
enable the rule-making authority to make a rule which travels
beyond the scope of the enabling Act or which is inconsistent
therewith or repugnant thereto."
26. In Kunj Behari Lal Butail v. State of H.P. [(2000) 3 SCC
40 : AIR 2000 SC 1069] it has been ruled thus : (SCC p. 46, para
13)
"13. It is very common for the legislature to provide for a general
rule-making power to carry out the purpose of the Act. When such a
power is given, it may be permissible to find out the object of
the enactment and then see if the rules framed satisfy the test
of having been so framed as to fall within the scope of such
general power confirmed. If the rule-making power is not
expressed in such a usual general form then it shall have to be
seen if the rules made are protected by the limits prescribed
by the parent Act."
27. In St. Johns Teachers Training Institute v. National Council
for Teacher Education [(2003) 3 SCC 321 : AIR 2003 SC 1533] it
has been observed that : (SCC p. 331, para 10)
28
"10. A regulation is a rule or order prescribed by a superior for
the management of some business and implies a rule for general
course of action. Rules and regulations are all comprised in delegated
legislations. The power to make subordinate legislation is
derived from the enabling Act and it is fundamental that the
delegate on whom such a power is conferred has to act within
the limits of authority conferred by the Act. Rules cannot be
made to supplant the provisions of the enabling Act but to
supplement it. What is permitted is the delegation of ancillary
or subordinate legislative functions, or, what is fictionally
called, a power to fill up details."
28. In Global Energy Ltd. v. Central Electricity Regulatory
Commission [(2009) 15 SCC 570] this Court was dealing with the
validity of clauses (b) and (f) of Regulation 6-A of the Central
Electricity Regulatory Commission (Procedure, Terms and
Conditions for Grant of Trading Licence and Other Related Matters)
Regulations, 2004. In that context, this Court expressed thus :
(SCC p. 579, para 25)
"25. It is now a well-settled principle of law that the rule-making
power 'for carrying out the purpose of the Act' is a general
delegation. Such a general delegation may not be held to be laying
down any guidelines. Thus, by reason of such a provision alone, the
regulation-making power cannot be exercised so as to bring into
existence substantive rights or obligations or disabilities which are not
contemplated in terms of the provisions of the said Act."
29. In the said case, while discussing further about the
discretionary power, delegated legislation and the requirement of
law, the Bench observed thus : (Global Energy Ltd. case [(2009)
15 SCC 570], SCC p. 589, para 73)
"73. The image of law which flows from this framework is its
neutrality and objectivity : the ability of law to put sphere of general
decision-making outside the discretionary power of those wielding
governmental power. Law has to provide a basic level of 'legal
security' by assuring that law is knowable, dependable and shielded
from excessive manipulation. In the contest of rule-making,
delegated legislation should establish the structural conditions within
which those processes can function effectively. The question which
needs to be asked is whether delegated legislation promotes rational
and accountable policy implementation. While we say so, we are not
oblivious of the contours of the judicial review of the legislative Acts.
But, we have made all endeavours to keep ourselves confined within
the well-known parameters."
29
30. In this context, it would be apposite to refer to a passage
from State of T.N. v. P. Krishnamurthy [(2006) 4 SCC 517]
wherein it has been held thus : (SCC p. 529, para 16)
"16. The court considering the validity of a subordinate
legislation, will have to consider the nature, object and scheme of the
enabling Act, and also the area over which power has been delegated
under the Act and then decide whether the subordinate legislation
conforms to the parent statute. Where a rule is directly inconsistent
with a mandatory provision of the statute, then, of course, the task of
the court is simple and easy. But where the contention is that the
inconsistency or non-conformity of the rule is not with
reference to any specific provision of the enabling Act, but
with the object and scheme of the parent Act, the court should
proceed with caution before declaring invalidity."
31. In Pratap Chandra Mehta v. State Bar Council of
M.P. [(2011) 9 SCC 573], while discussing about the conferment of
extensive meaning, it has been opined that : (SCC p. 604, para
58)
"58. ... The Court would be justified in giving the provision
a purposive construction to perpetuate the object of the Act,
while ensuring that such rules framed are within the field
circumscribed by the parent Act. It is also clear that it may not
always be absolutely necessary to spell out guidelines for delegated
legislation, when discretion is vested in such delegatee bodies. In
such cases, the language of the rule framed as well as the purpose
sought to be achieved, would be the relevant factors to be considered
by the Court."
(Emphasis supplied)
... ... ...
The Apex Court in a judgment rendered on 16.12.2022 in the
case of KERALA STATE ELECTRICITY BOARD v. THOMAS
JOSEPH has held as follows:
"66. At this stage, it is apposite to state about the rule making
powers of a delegating authority. If a rule goes beyond the rule
making power conferred by the statute, the same has to be
declared invalid. If a rule supplants any provision for which
power has not been conferred, it becomes invalid. The basic
test is to determine and consider the source of power, which is
relatable to the rule. Similarly, a rule must be in accord with the
parent statute, as it cannot travel beyond it.
67. Delegated legislation has come to stay as a necessary
component of the modern administrative process. Therefore, the
30
question today is not whether there ought to be delegated
legislation or not, but that it should operate under proper controls
so that it may be ensured that the power given to the
Administration is exercised properly; the benefits of the institution
may be utilised, but its disadvantages minimised. The doctrine of
ultra vires envisages that a rule making body must function
within the purview of the rule making authority conferred
on it by the parent Act. As the body making rules or
regulations has no inherent power of its own to make rules,
but derives such power only from the statute, it has to
necessarily function within the purview of the statute.
Delegated legislation should not travel beyond the purview
of the parent Act. If it does, it is ultra vires and cannot be
given any effect. Ultra vires may arise in several ways; there
may be simple excess of power over what is conferred by the
parent Act; delegated legislation may be inconsistent with the
provisions of the parent Act or statute law or the general law;
there may be non-compliance with the procedural requirement as
laid down in the parent Act. It is the function of the courts to keep
all authorities within the confines of the law by supplying the
doctrine of ultra vires.
68. In this context, we may refer with profit to the decision
in General Officer Commanding-in-Chief v. Dr. Subhash Chandra
Yadav, (1988) 2 SCC 351, wherein it has been held as follows:--
"14. ....before a rule can have the effect of a statutory
provision, two conditions must be fulfilled, namely, (1) it must
conform to the provisions of the statute under which it is
framed; and (2) it must also come within the scope and
purview of the rule making power of the authority framing the
rule. If either of these two conditions is not fulfilled, the rule
so framed would be void....."
69. In Additional District Magistrate (Rev.) Delhi Admn. v. Siri
Ram, (2000) 5 SCC 451, it has been ruled that it is a well
recognised principle that the conferment of rule-making power by
an Act does not enable the rule-making authority to make a rule
which travels beyond the scope of the enabling Act or which is
inconsistent therewith or repugnant thereto.
70. In Sukhdev Singh v. Bhagatram Sardar Singh
Raghuvanshi, (1975) 1 SCC 421, the Constitution Bench has held
that:
"18.....These statutory bodies cannot use the power to make rules
and regulations to enlarge the powers beyond the scope intended by
the Legislature. Rules and regulations made by reason of the specific
31
power conferred by the statute to make rules and regulations
establish the pattern of conduct to be followed. ..."
71. In State of Karnataka v. H. Ganesh Kamath, (1983) 2 SCC
402, it has been stated that:
"7. .....It is a well-settled principle of interpretation of statutes
that the conferment of rule-making power by an Act does not enable
the rule-making authority to make a rule which travels beyond the
scope of the enabling Act or which is inconsistent therewith or
repugnant thereto."
72. In Kunj Behari Lal Butail v. State of H.P., (2000) 3 SCC 40,
it has been ruled thus:--
"13. It is very common for the legislature to provide for a general
rule-making power to carry out the purpose of the Act. When such a
power is given, it may be permissible to find out the object of the
enactment and then see if the rules framed satisfy the test of having
been so framed as to fall within the scope of such general power
confirmed. If the rule-making power is not expressed in such a usual
general form then it shall have to be seen if the rules made are
protected by the limits prescribed by the parent act......."
73. In St. Johns Teachers Training Institute v. Regional
Director, National Council for Teacher Education, (2003) 3 SCC
321, it has been observed that:
"10. A regulation is a rule or order prescribed by a superior for
the management of some business and implies a rule for general
course of action. Rules and regulations are all comprised in delegated
legislation. The power to make subordinate legislation is derived from
the enabling Act and it is fundamental that the delegate on whom
such a power is conferred has to act within the limits of authority
conferred by the Act. Rules cannot be made to supplant the
provisions of the enabling Act but to supplement it. What is permitted
is the delegation of ancillary or subordinate legislative functions, or,
what is fictionally called, a power to fill up details....."
74. In Global Energy Limited v. Central Electricity Regulatory
Commission, (2009) 15 SCC 570, this Court was dealing with the
validity of clauses (b) and (f) of Regulation 6-A of the Central
Electricity Regulatory Commission (Procedure, Terms and
Conditions for Grant of Trading Licence and other Related Matters)
Regulations, 2004. In that context, this Court expressed as
under:--
"25. It is now a well-settled principle of law that the rule-making
power "for carrying out the purpose of the Act" is a general
delegation. Such a general delegation may not be held to be laying
32
down any guidelines. Thus, by reason of such a provision alone, the
regulation-making power cannot be exercised so as to bring into
existence substantive rights or obligations or disabilities which are not
contemplated in terms of the provisions of the said Act.
75. In the aforementioned case, while discussing further about
the discretionary power, delegated legislation and the requirement
of law, the Bench observed thus:
"73. The image of law which flows from this framework is its
neutrality and objectivity : the ability of law to put sphere of general
decision-making outside the discretionary power of those wielding
governmental power. Law has to provide a basic level of "legal
security" by assuring that law is knowable, dependable and shielded
from excessive manipulation. In the contest of rule-making,
delegated legislation should establish the structural conditions within
which those processes can function effectively. The question which
needs to be asked is whether delegated legislation promotes rational
and accountable policy implementation. While we say so, we are not
oblivious of the contours of the judicial review of the legislative Acts.
But, we have made all endeavours to keep ourselves confined within
the well-known parameters."
76. In this context, it would be apposite to refer to a passage
from State of T.N. v. P. Krishnamurthy, (2006) 4 SCC 517 wherein
it has been held thus:--
"16. The court considering the validity of a subordinate
legislation, will have to consider the nature, object and scheme of the
enabling Act, and also the area over which power has been delegated
under the Act and then decide whether the subordinate legislation
conforms to the parent statute. Where a rule is directly inconsistent
with a mandatory provision of the statute, then, of course, the task of
the court is simple and easy. But where the contention is that the
inconsistency or nonconformity of the rule is not with reference to
any specific provision of the enabling Act, but with the object and
scheme of the parent Act, the court should proceed with caution
before declaring invalidity."
77. In Pratap Chandra Mehta v. State Bar Council of Madhya
Pradesh, (2011) 9 SCC 573, while discussing about the conferment
of extensive meaning, it has been opined that:
"58. ....The Court would be justified in giving the provision a
purposive construction to perpetuate the object of the Act, while
ensuring that such rules framed are within the field circumscribed by
the parent Act. It is also clear that it may not always be absolutely
necessary to spell out guidelines for delegated legislation, when
discretion is vested in such delegatee bodies. In such cases, the
language of the rule framed as well as the purpose sought to be
33
achieved, would be the relevant factors to be considered by the
Court."
78. In Dr. Mahachandra Prasad Singh v. Chairman, Bihar
Legislative Council, (2004) 8 SCC 747, this Court explained the
concept of delegated legislation thus:
"13. .....Underlying the concept of delegated legislation is the
basic principle that the legislature delegates because it cannot
directly exert its will in every detail. All it can in practice do is to lay
down the outline.
This means that the intention of the legislature, as indicated in
the outline (that is the enabling Act), must be the prime guide to the
meaning of delegated legislation and the extent of the power to make
it. The true extent of the power governs the legal meaning of the
delegated legislation. The delegate is not intended to travel wider
than the object of the legislature. The delegate's function is to serve
and promote that object, while at all times remaining true to it. That
is the rule of primary intention. Power delegated by an enactment
does not enable the authority by regulations to extend the scope or
general operation of the enactment but is strictly ancillary. It will
authorise the provision of subsidiary means of carrying into effect
what is enacted in the statute itself and will cover what is incidental
to the execution of its specific provision. But such a power will not
support attempts to widen the purposes of the Act, to add new and
different means of carrying them out or to depart from or vary its
ends. (See Section 59 in chapter "Delegated Legislation" in Francis
Bennion's Statutory Interpretation, 3rd Edn.)......."
79. In McEldowney v. Forde, [1971] A.C. 632 : [1969] 3 WLR
179, Lord Diplock explained the role of the Courts in this area in
the following words:
"The division of functions between Parliament and the courts as
respects legislation is clear. Parliament makes laws and can delegate
part of its power to do so to some subordinate authority. The courts
construe laws whether made by Parliament directly or by a
subordinate authority acting under delegated legislative powers. The
view of the courts as to whether particular statutory or subordinate
legislation promotes or hinders the common weal is irrelevant. The
decision of the courts as to what the words used in the statutory or
subordinate legislation mean is decisive. Where the validity of
subordinate legislation made pursuant to powers delegated by Act of
Parliament to a subordinate authority is challenged, the court has a
threefold task : first, to determine the meaning of the words used in
the Act of Parliament itself to describe the subordinate legislation
which that authority is authorised to make, secondly, to determine
the meaning of the subordinate legislation itself and finally to decide
whether the subordinate legislation complies with that description."
34
80. A delegated power to legislate by making rules or
regulations 'for carrying out the purpose of the Act', is a
general delegation without laying down any guidelines; it
cannot be exercised so as to bring into existence the
substantive rights or obligations or disabilities not
contemplated by the provisions of the Act, 2003 itself. The
Court, considering the validity of a subordinate legislation, will
have to consider the nature, object and scheme of the enabling
Act, and also the area over which power as has been delegated
under the Act and then decide whether the subordinate legislation
conforms to the parent statute.
81. It is important to keep in mind that where a rule or
regulation is directly inconsistent with a mandatory
provision of the statute, then, of course, the task of the
Court is simple and easy. But where the contention is that the
inconsistency or non-conformity of the rule is not with reference to
any specific provision of the enabling Act, but with the object and
scheme of the parent Act, the Court should proceed with caution
before declaring the same to be invalid.
82. Rules or regulation cannot be made to supplant the
provisions of the enabling Act but to supplement it. What is
permitted is the delegation of ancillary or subordinating
legislative functions, or, what is fictionally called, a power
to fill up details.
83. A Constitution Bench of this Court in the case of Sukhdev
Singh (supra), while explaining the fine distinction between a rule
and regulation and also the power of the delegate authority to
frame such rules or regulations has made few very important
observations which we must take notice of and quote as under:
"11. The contentions on behalf of the employees are these.
Regulations are made under the statute. The origin and source
of the power to make regulations is statutory. Regulations are
self-binding in character. Regulations have the force of law
inasmuch as the statutory authorities have no right to make
any departure from the regulations.
12. Rules, regulations, schemes, bye-laws, orders made
under statutory powers are all comprised in delegated
legislation. The need for delegated legislation is that statutory
rules are framed with care and minuteness when the statutory
authority making the rules is after the coming into force of the
Act in a better position to adapt the Act to special
circumstances. Delegated legislation permits utilisation of
35
experience and consultation with interests affected by the
practical operation of statutes.
xxxxxxxxx
14. Subordinate legislation is made by a person or body by virtue
of the powers conferred by a statute. Bylaws are made in the main by
local authorities or similar bodies or by statutory or other
undertakings for regulating the conduct of persons within their areas
or resorting to their undertakings. Regulations may determine the
class of cases in which the exercise of the statutory power by any
such authority constitutes the making of statutory rules.
15. The words "rules" and "regulations" are used in an Act to
limit the power of the statutory authority. The powers of statutory
bodies are derived, controlled and restricted by the statutes which
create them and the rules and regulations framed thereunder. Any
action of such bodies in excess of their power or in violation of the
restrictions placed on their powers is ultra vires. The reason is that it
goes to the root of the power of such corporations and the declaration
of nullity is the only relief that is granted to the aggrieved party.
xxxxxxxxx
18. The authority of a statutory body or public administrative
body or agency ordinarily includes the power to make or adopt rules
and regulations with respect to matters within the province of such
body provided such rules and regulations are not inconsistent with
the relevant law. In America a "public agency" has been defined as an
agency endowed with governmental or public functions. It has been
held that the authority to act with the sanction of Government behind
it determines whether or not a governmental agency exists. The rules
and regulations comprise those actions of the statutory or public
bodies in which the legislative element predominates. These
statutory bodies cannot use the power to make rules and
regulations to enlarge the powers beyond the scope intended
by the Legislature. Rules and regulations made by reason of
the specific power conferred on the statute to make rules and
regulations establish the pattern of conduct to be followed.
Rules are duly made relative to the subject-matter on which
the statutory bodies act subordinate to the terms of the
statute under which they are promulgated. Regulations are in
aid of the enforcement of the provisions of the statute. Rules
and regulations have been distinguished from orders or
determination of statutory bodies in the sense that the orders
or determination are actions in which there is more of the
judicial function and which deal with a particular present
situation. Rules and regulations on the other hand are actions
in which the legislative element predominates.
(Emphasis in original)
36
The Apex Court again considers the entire spectrum of
the law and lays down that Statutory Bodies cannot use
the power to make rules to enlarge the powers beyond
the scope intended by the legislature. Any action of the
State in excess of their power would be declared a nullity
on the ground of it being ultra vires the Act.
(Emphasis supplied)
What unmistakably emerges from the afore-quoted judgment of
this Court is that a delegated legislation in conflict with the parent
Act is ultra vires the said Act and is required to be declared a
nullity. The impugned notification being a delegated legislation,
cannot travel beyond the contours of its parent Act i.e., the
Compensation Act. On this solitary ground, the petitions deserve to
succeed and the impugned notifications to be obliterated.
11. For the aforesaid reasons, the following:
ORDER
(i) Writ Petitions are allowed.
(ii) Notifications dated 31-03-2023 and 26-07-2023 impugned in the writ petitions stand quashed.
37(iii) The quashment of these notifications will not, however, come in the way of the legislature legislating upon the said issue.
Sd/-
(M.NAGAPRASANNA) JUDGE bkp CT:MJ