Lachmi Narain v. Union of India — 1976 AIR 714

Quick Summary

The Central Government extended the Bengal Finance (Sales Tax) Act, 1941 to Delhi with changes. Later, it tried to replace the fixed 3-month notice in Section 6(2) with “reasonable notice” and then withdrew several tax exemptions with short notice.

The Supreme Court held: this change crossed the line. Delegation lets the executive adapt, not rewrite core policy. Since the notice rule is an essential feature, the modification was ultra vires, and the short-notice withdrawals were invalid.

Issues

• Were the changes to Section 6(2) within s.2, Union Territories (Laws) Act, 1950?
• Could the Centre swap a fixed 3-month notice for a vague “reasonable notice”?
• Were exemption withdrawals on short notice legally effective?

Rules

• Modified Section 6: 6(1) lists exempt goods; 6(2) allows the Government to amend the Schedule but only after giving not less than 3 months’ notice in the Official Gazette.
• Delegated powers: Under the UT (Laws) Act, the Centre may extend laws with restrictions/modifications, but cannot change essential legislative policy.

Facts (Timeline)

Arguments

Judgment

The Supreme Court held that the 1957 notification replacing “not less than 3 months’ notice” with “reasonable notice” exceeded the power under s.2 of the UT (Laws) Act. The fixed notice period is an essential feature of Section 6(2) and reflects legislative policy.

Therefore, exemption withdrawals issued with less than three months’ notice were invalid and ineffective.

Ratio Decidendi

(1) Delegated modification cannot alter essential legislative policy. (2) The 3-month notice in Section 6(2) is essential, not procedural. (3) Notifications that rely on an invalid modification are themselves invalid.

Why It Matters

• Draws a bright line between adaptation and policy change in delegated legislation.
• Protects taxpayers from abrupt fiscal changes by upholding fixed notice periods.
• Guides governments on scope of modification when extending laws to Union Territories.

Key Takeaways

• 3-month notice under s.6(2) is non-negotiable without fresh legislation.
• Executive “modification” cannot undo core policy.
• Short-notice withdrawals relying on invalid changes are void.

Mnemonic + 3-Step Hook

Mnemonic: “3M = 3 Months Mandatory”

1. Spot policy: Is the rule core (fixed notice) or mere procedure?
2. Check power: Does delegated power allow changing essentials? (No.)
3. Result: Short-notice withdrawal → invalid.

IRAC Outline

Glossary

Delegated Legislation

Rules/notifications made by the executive under powers given by a statute.

Essential Legislative Policy

Core choices (like fixed notice) that only the legislature can change.

Section 6(2)

Requires ≥ 3 months’ notice before amending the exemption Schedule.

FAQs

Related Cases

• State of U.P. v. Jai Bir Singh — defining sovereign vs. industrial functions.
• Chandra Bhavan Boarding & Lodging v. State of Mysore — delegated powers and reasonableness in wage fixation.

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