Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v Assistant Commissioner of Sales Tax

Facts

The case concerned the constitutionality of a delegation of legislative power in the context of sales tax, the impugned scheme tying the rate of central sales tax to the rate fixed by State law. The challenge was that the delegation was excessive for want of legislative policy and guidelines. Justice K.K. Mathew propounded a new test: so long as the legislature can repeal the enabling Act, it does not abdicate its function and the delegation is valid however broad.

Issues

• What is the correct test for the constitutional validity of delegated legislation: the policy-and-guidelines test or the abdication test.
• Whether delegation is valid merely because the legislature retains power to repeal the enabling Act.

Arguments

Justice Mathew's view was that retention of the power to repeal the enabling Act is sufficient to negate abdication, so any breadth of delegation is permissible. The majority view, led by Justice Khanna, was that the legislature must lay down policy and guidelines and that mere retention of repeal power cannot save an otherwise standardless delegation.

Held

The majority, led by Justice Khanna, declined to accept Justice Mathew's abdication test and reaffirmed the well-established policy-and-guidelines test derived from In re Delhi Laws Act. The Court held that the constitutionality of delegated legislation depends on the legislature having itself laid down the policy and standards within which the delegate must function; the existence of a power to repeal the enabling Act does not by itself validate an excessive delegation. Justice Mathew dissented on the test, later applying his own view in N.K. Papiah & Sons v Excise Commissioner (AIR 1975 SC 1007).

Ratio decidendi

The touchstone for valid delegation of legislative power is whether the legislature has enunciated sufficient policy and guidelines for the delegate; the bare power to repeal the enabling Act (the abdication test) is not the governing criterion.

Significance

The leading authority settling the competing tests for excessive delegation, entrenching the policy-and-guidelines test as the dominant standard and rejecting the abdication test as the controlling rule. It frames subsequent taxing-power cases such as Devi Das v State of Punjab (AIR 1967 SC 1895), Avinder Singh v State of Punjab (AIR 1979 SC 321) and Darshan Lal Mehra v Union of India (AIR 1992 SC 1848).

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