V.R. Krishna Iyer JUDGMENT
V.R. Krishna Iyer, J.
1. This heavy bunch of writ petitions impeaching the validity of a tax on foreign liquor raises a few familiar legal riddles. A rupee per bottle sold within every municipal town or city is the impugned levy, meant, according to the Punjab Government, to serve the twin purposes of replenishing the resources of municipal bodies reduced by house tax exemptions and of weaning drinkers from overly consuming foreign liquor as a prohibitionist gesture. To pick the pocket of every spirituous bibber of the higher brackets by a tiny tax may be but a feeble homage to Article 47 of the Constitution, and to finance welfare projects with this tainted tax may be queer Gandhiana. The will to enforce 'dry' sobriety in society and to abolish massive human squaller by fleecing the fat few, is made of sterner stuff, maybe. But matters of means and ends, of policy and morality, are largely for the legislature and validity is the province of the court. We let slip the observation only because, from a certain angle, these dual grounds make odd companions and add to the credibility gap, although our focus is solely on the legality of the levy.
2. It is better to begin with the story of the tax under challenge. The petitioners are all licensees to trade in foreign liquor including Indian made foreign liquor. They are either wholesalers or retailers and pay excise duty and other fees and taxes including sales tax under the general sales tax law which imposes a levy of 10 per cent, on sales of foreign liquor. There are also octroi levies of 10 per cent, and educational tax of 2 per cent, and these add up to a considerable burden; but the commodity taxed is foreign liquor, Indian made or other, whose consumer usually belongs to the well to do sectors .
3. The municipalities of Punjab are governed by two enactments. The numerous little ones are statutory bodies created and controlled by the Punjab Municipal Act, 1911 and the few large ones by the Punjab Municipal Corporation Act, 1976 (the Act, for brevity, hereafter). For our purposes, the provisions run on identical terms and so we will take up the latter statute which compresses into one section a plurality of sections in the former, and set out the common scheme to study the critical issues raised. Arguments have been addressed only on this basis.
4. The immediate facts which have launched the litigative rocket need to be narrated now to get a hang of the core questions in their correct perspective. The State of Punjab, in April 1977, under its statutory power [Section 90(4)] required the various municipal bodies in the State to impose a tax on the sale et al, of foreign liquor at the rate of Re. 1/- per bottle with effect from May 20, 1977. The municipal authorities having tarried too long or totally failed to take action pursuant to this directive, the State directly entered the fiscal arena and issued a Notification under Section 90(5) dated May 31, 1977, which reads thus :
Whereas the Government of Punjab, in exercise of the powers conferred by Sub-section (4) of Section 90 of the Punjab Municipal Corporation Act, 1063-A-PSLG-77/12170, dated 11th April, 1977, required of the Municipal Corporation of Ludhiana in Punjab to impose tax on the sale of "Indian made Foreign Liquor" at the rate of rupee one per bottle, by the 20th May, 1977.
2. An........