The area of trade, commerce and business is at present under a rigourous administrative regulation. Broad powers to regulate trade and commerce have been conferred on administrative authorities through statutes or rules.

Legislature sometimes leave a large amount of discretion in the hands of administrative authorities. Legislation conferring powers on the executive sometimes is drafted in broad and general terms that it leaves a large area of choice to the administrator to apply the law at his sweet will, and such legislation sometimes does not specify clearly the conditions and circumstances subject to which, and the norms with reference to which, the executive must use the powers conferred on it, which endangers a legal proverb coming true i.e “power corrupts a man and absolute power corrupts a man absolutely.”

The latest example of such legialation can be found in the law implementing E-Trip in Punjab under the Punjab VAT Act, 2005. E-Trip means the reporting of intra-state transactions meant for trade relating to the specified goods on the virtual information collection centre i.e on the official website of the Excise and Taxation Department. In simple terms it is a mandatory reporting of any movement of specified goods within the state meant for trade on the Department’s website before such movement starts.

Specified goods for the purpose of E-trip have been defined u/r 2(hh) of Punjab VAT Act, 2005, which says that specified goods means the goods of certain value for the purpose of rules 64-A and 64-B, respectively, as specified by the Commissioner from time to time.

The commissioner has been given a very wide discretionary power to impose E-trip on any goods and on any value of the goods without any check and control and without any criteria prescribed for exercising such power. Furthermore relevant rules for E-trip i.e rules 64-A and 64-B also confers discretionary power on the Commissioner to also prescribe maximum transition time for delivery of such goods from one destination to another.

Thus Commissioner has been given absolute power not only to regulate the inter-state as well as intra-state movement of goods in terms of its pre-reporting but also regulating the transition time for such movement of goods from one destination to the other.

No doubt conferment of administrative discretionary power is necessary for the smooth implementation of any law, but how much discretion can be conferred on the executive to control and regulate trade and commerce is a question to be asked.

The general principle in this connection should be that the power conferred on the executive should not be arbitrary, unregulated by any rule or principle and that it should not be left entirely to the discretion of any authority to do anything it likes without any check or control by any higher authority.

A law or order which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities cannot but be held to be unreasonable-Dwarka Pd. vs State of U.P. AIR 1954 SC 224.

The law while granting a discretionary power to the executive should also lay down grounds and norms subject to which such discretionary power is to be exercised.

Rule 2(hh) and Rules 64-A and Rules 64-B no where have prescribed such guidelines or grounds or criteria for exercising discretionary power by the Commissioner to specify the goods for the purposes of e-trip. The power given under Rule 2(hh) seems uncontrolled. There seems to be no check on the discretionary power granted to the executive relating to e-trip.

At present E-trip has been imposed on few items only keeping the other items out of its ambit and the limit fixed for the transaction is Rs 50000. What is the criteria for determining this monetary limit or the goods, nobody knows. In the current scenario where the inflation is at its peak, prices of goods rising high, monetary limit of Rs. 50000/- is too small for the businessmen operating at small scale who still may not have any access to computers and internet and thereby adding to their costs and hindering their trade.

Tomorrow e-trip may be implemented on a transaction of Rs. 1000/- also, as no criteria whatsoever has been prescribed for specifying the goods or determinng the monetary limit and the Commissioner also need not have any prior permission of the State Government for regulating the trade and commerce in the grab of implementing etrip on any goods.

There should have been provision laying down the norms or criteria for exercising the power under Rule 2(hh) or under the rules relevant to e-trip or there should have been a check on such absolute power by the State Government.

In nut shell broad powers present possibilities of being misused and exercised in an arbitrary manner. Therefore it becomes necessary to devise proper safeguards against such an eventuality so that injustice is not done, trade and commerce are not effected and the fundamental rights especially of freedom of trade and profession guaranteed under article 19(1)(g) of Constitution remains unaffected. Courts have to play a major role in the process of controlling the functioning of the administration.


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(Author – Amit Bajaj Advocate, Bajaj & Bajaj Advocates, 128, Sangam complex, Milap chowk, Jalandhar City (Punjab), Email: [email protected], M +919815243335)

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  1. vswami says:

    IMPROMPTU (unedited)>

    No second view or opinion, right one at that, is conceivable on the point made that – any unbridled discretion vested explicitly or implicitly by any rule of ‘law’ in any authority, not necessarily only in an administrative or executive authority, is patently harmful to the ideologically desired but pathetically tender and fragile fabric of so called, societal welfare, in its profound sense. Also on the point that, any such discretion has the inevitable potential to prove a perennial breeding ground for the most dreaded evil pervading almost the whole of the Universe i.e. – CORRUPTION.

    According to a different but diagonally opposite school of thought, however, in reality, and in the ultimate analysis, that is an area in which there is any solution sighted even in the far-off horizon. More so, a reasonably satisfactory solution is to be found or truthfully suggested. For, after all, that is a by-product of an individual’s mindset, which is a nature-given faculty, hence, not controllable or amenable to being reset externally. And as such, the idea or ideal of ‘objectivity’ on which any legal system worthy of speaking is supposed to be founded on has always eluded and remained far-fetched.

    For a change, and to digress, recommended to read e.g.:

    Commercial Arguments against Corruption – Indian Corporate Law

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September 2021