Cus - FM's speech only highlights more important proposals of budget and those are not enactments by Parliament - law as enacted is what is contained in Finance Act: SC
By TIOL News Service
NEW DELHI, JULY 25, 2016: DURING FY 1993-94 and 1994-95, the Petitioner imported eight consignments of goods falling under Tariff Heading 2208.10 of the Customs Tariff namely Compound alcoholic preparations of a kind used for the manufacture of beverages. The Customs authorities provisionally assessed the goods imported and subjected them to a prescribed Tariff rate of duty of Rs.300 per liter or 400%, whichever is higher, & which the petitioner paid.
Between 1994 and 2001 the Petitioner addressed several letters to the CBEC & TRU contending that the rate prescribed is higher than that authorized in the Budget Proposals during financial years 1993-94 and 1994-95.
Eventually, the petitioner approached the Bombay High Court pleading for relief.
The High Court while dismissing the petition inter alia held thus –
Customs - Budgetary Proposals and the speech of the Finance Minister in Parliament introducing them are, not enacted law - Parliament may or may not accept the proposal - The law as enacted is what is contained in the Finance Act after it is legislated upon by Parliament - Court cannot interfere in Government's power to issue notifications: High Court
We reported this order as 2011-TIOL-654-HC-MUM-CUS .
Against this decision, appeals were filed before the Supreme Court.
Elaborate arguments were made by both sides.
The issues that fell for consideration & the views of the apex court are as below -
1) Whether the budget proposals, as alleged by the appellant, are duly passed and approved by the Parliament and whether the tariff rates fixed by the TRU are contrary to the legislative mandate?
++ It is an admitted fact that pursuant to the proposals, the Finance Act was passed by the Parliament wherein for the goods specified under Tariff Sub-Heading 2208.10, particular tariff was specified. We are unable to agree with the argument advanced by the appellant for the reason that he is unable to make note of the difference between a proposal moved before the Parliament and a statutory provision enacted by the Parliament, because the process of Taxation involves various considerations and criteria.
++ The financial proposals put forth by the Finance Minister reflects the governmental view for raising revenue to meet the expenditure for the financial year and it is the financial policy of the Central Government. The Finance Minster's speech only highlights the more important proposals of the budget. Those are not the enactments by the Parliament.
++ The law as enacted is what is contained in the Finance Act. Even assuming that the amount of tax is excessive, in the matters of taxation laws, the Court permits greater latitude to the discretion of the legislature and it is not amenable to judicial review.
2) Whether this Court can direct the Central Government to issue a notification under Section 25(1) of the Customs Act?
++ As per Section 159 of the Act, any notification issued under Section 25 shall be placed before the Parliament and the Parliament may amend or reject the same. This clearly demonstrates that the ultimate law making power is vested with the Legislature. Hence, the allegation of the appellant that the notifications are issued basing on the whims and fancies of the 2nd respondent is misconceived. Whereas, notifications are issued generally in the larger public interest, the Legislature has given the power to exempt duty to the 2nd respondent subject to the amending power.
3) Whether the compound alcoholic preparations of a kind used for the manufacturing of beverages fall under the category of alcoholic beverage?
++ It is not for us to do this exercise. It is always open to the parties to settle the dispute before the appropriate forum if they choose to do so. The issue is accordingly answered.
4) Whether there is any discrimination on the part of the Central Government in issuing a notification under Section 25(1) of the Customs Act in respect of other goods and contrary to Article 14 of the Constitution of India?
++ When the appellant alleges discriminatory action on the part of the respondents, he has to establish that there is no rational basis for making classification between the goods which are notified and the goods of the appellant which are not notified. It is also a firmly established principle that the legislature understands and appreciates the needs of its people . A Taxing Statute can be held to contravene Article 14 of the Constitution if it purports to impose certain duty on the same class of people differently and leads to obvious inequality. Such a material is not placed before us to come to a just conclusion that the action of the respondents is discriminative. Hence, the same is held against the appellant.
The appeals were dismissed as being devoid of any merit.
Encomiums galore:
++ …We would like to record our appreciation for the strenuous efforts put forth by the appellant and the kind of efforts he put in to collect the data. We feel that it is not out of place to mention that the appellant has presented the case like a seasoned professional with utmost skill and knowledge. [Supreme Court]
++ …The Petitioner who has appeared in person has argued his case with considerable objectivity. The research which he has devoted to diverse aspects of the case is noteworthy. [High Court - 2011-TIOL-654-HC-MUM-CUS]
(See 2016-TIOL-114-SC-CUS)
