1984 (12) TMI 65 - SUPREME COURT

Levy of customs duty on newsprint

Whether it is open to the Government to levy any tax on any of the aspects of the press industry?

whether the tax has been shown to be so burdensome as to warrant its being struck down?

Held that:- In view of the intimate connection of newsprint with the freedom of the press, the tests for determining the vires of a statute taxing newsprint have, therefore, to be different from the tests usually adopted for testing the vires of other taxing statutes. In the case of ordinary taxing statutes, the laws may be questioned only if they are either openly confiscatory or a colourable device to confiscate. On the other hand, in the case of a tax on newsprint, it may be sufficient to show a distinct and noticeable burdensomeness, clearly and directly attributable to the tax.While we, therefore, cannot agree with the contention that no tax can be levied on newspaper industry, we hold that any such levy is subject to review by courts in the light of the provisions of the Constitution. On the material now available to us, while it is not possible to come to the conclusion that the effect of the levy is indeed so burdensome as to affect the freedom of the press, we are also not able to come to the conclusion that it will not be burdensome. This is a matter which touches the freedom of the press which is, as we said, the very soul of democracy. This is certainly not a question which should be decided on the mere question of burden of proof. There are factors indicating that the present levy is heavy and is perhaps heavy enough to affect circulation. On such a vital issue, we cannot merely say that the petitioners have not placed sufficient material to establish that the drop in circulation is directly linked to the increase of the levy when, on the side of the Government, the entire exercise is thought to be irrelevant. Hence, there appears to be a good ground to direct the Central Government to reconsider the matter afresh in the light of what has been said here.

We do not, however, see much substance in the contention of some of the petitioners that the classification of the newspapers into small, medium and big newspapers for purposes of levying customs duty is violative of article 14 of the Constitution.

If on such reconsideration, the Government decides that there should be any modification in the levy of customs duty or auxiliary duty with effect from March 1, 1981, it shall take necessary steps to implement its decision. Until such redetermination of the liability of the petitioners and others is made, the Government shall recover only ₹ 550 per MT on imported newsprint towards customs duty and auxiliary duty and shall not insist upon payment of duty in accordance with the impugned notifications. The concessions extended to medium and small newspapers may, however, remain in force. If it is found that any of the petitioners is liable to pay any deficit amount by way of duty, such deficit amount shall be paid by such petitioner within four months from the date on which a notice of demand is served on such petitioner by the concerned authority. Any bank guarantee or security given by the petitioners shall be available for recovery of such deficit amounts and it is found that any of the petitioners is entitled to any refund, such refund shall be made by the Government within four months from the date of such redetermination.