TMI Blog1983 (3) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... 82-Customs F. No. BLD (Customs) 82, dated 28th February, 1982, the exemption was withdrawn with respect to the melting scrap of stainless steel. The effect of withdrawal of exemption was that the petitioners in these seven cases became liable to pay duty. at the rate of 40 per cent ad valorem on the melting scrap of stainless steel. The petitioners impugn the notification dated 28th February, 1982, by which the exemption granted in 1977 was withdrawn. It has to be noticed here that the notification of 15th July, 1977, was not a time-bound notification because it did not specify any time-limit during which the exemption granted by it would be available to the importers. 2. The other set of six writ petitions (C.W.P. Nos. 1295 of 1980 1289 of 1980, 1232 of 1980, 1233 of 1980, 1234 of 1980 and 1235 of 1980) raises the question of the validity of the time-bound notification. The exemption from Customs duty was granted for a fixed time and before the expiry of the time it was withdrawn. 3. The arguments addressed to us on both these, sets -were the same It is not disputed that if the challenge to the withdrawal of time-bound notification fails, the petitioners in easel in which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under Secretary to the Government of India." 6. Simultaneously by another notification dated 18th April, 1980 the Central Government in public interest notified that import of aluminium rods and aluminium ingots will also not be liable for payment of any auxiliary duty thereon. 7. The petitioners say that relying on these exemption" notifications they entered into contracts for the purchase of aluminium ingots from abroad so that they may be able to in port without payment of duty the item required by them within the period from 18th April, 1980 to 30th September, 1980. 8. By a notification dated 29th August, 1980, issued in exercise of its powers under sub-section (1) of Section 25 of the Customs Act, 1962 (the Act), the Central Government rescinded the exemption notification as follows : GOVERNMENT OF INDIA Ministry of Finance Department of Revenue New Delhi, the 29th August, 1980 NOTIFICATION Customs G.S.R.-In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution of India. 12. The respondent, Union of India, defends its action on the sole ground of public interest. It says that in order to equalise the sale price of indigenous and imported metal it was necessary in public interest to waive Customs duty and additional duty so that aluminium, imported or indigenous, is available to the consumers at a uniform price. This is why the Cabinet decided to issue the exemption notifications under Section 25(1) of the Act on 18th April, 1980, for the period upto 30th September, 1980, by which time the Government thought there would be clear indication of the likely trends in the supply of power and production of aluminium in the country and of the behaviour of Monsoon on which so much depends. Suddenly it found that the international prices of aluminium were falling steeply. Consequently, import prices became lower than the ex-factory prices of the indigenous metal. In the last week of July, 1980, the affidavit of the Government affirms, the Ministry of Steel and Mines requested for immediate withdrawal of exemption notification. After examining the matter thoroughly the Government issued the notification dated 29th August, 1980, withdrawi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1980 S.C. 1285. 15. After the Second World War a series of cases, stemming from the decision of Denning, J. (as he then was), in High Trees case - (1947) KB 130 began to develop a new doctrine of promissory estoppel. Although this at first was treated as a revolutionary decision, and many lawyers thought it was inconsistent with the true doctrine of consideration, it now seems to have established itself thoroughly as a part of the modern law. Till recently it has continued to be proclaimed that the promissory estoppel cannot give rise to a cause of action but is only available by way of defence, but there are now signs that even this bastion is about to crumble : see Re : Wyvern Developments (1974) I WLR 1097 ; Crabb v. Arun-D.C. (1975) 3. All ER 865. 16. The doctrine has been applied in a large number of cases in India and England. The solutions are varied but the principle on which these are reached is not in doubt : The Court must look at all the circumstances in each case to decide in what way the equity can be satisfied [Plimmer v. Wellington Corporation - (l984) 9 App Cas 699 (714)]. Denning, J., himself discovered this doctrine enunciated by Lord Cairns in Hugh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it emphasises the fact that taxes are compulsory. Taxes are imposed under the authority of the legislature. They are levied by a public body. They are intended for public purposes : see Lawson v. Interior Tree, Fruit and Vegetable Committee of Direction-1931 SCR 357 (Canada), Duff, J. Tax law falls within the domain of public law, i.e., the rules that determine and limit the activities and reciprocal interests of the political community and the members comprising it, as distinguished from relationships between individuals (the sphere of private law). The specific purpose of the relationship between the individuals and the community regulated by tax is the imposition on individuals and corporations of a contribution to cover public expenditure. The taxing power : Predominance of the legislature 20. The limits to the right of the public authority to impose taxes are set by the power that is qualified to do so under the constitutional law. In a democratic system this power is with the legislature, not the executive or the judiciary. Taxation is a prerogative of the legislature. The historical origins of this principle are identical with those of political liberty and representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible thereafter. This is how the legislature reposes sovereign trust in the executive. This is how discretion is confined in the executive. But for all practical purposes it is the legislature which is speaking through the mouth of the executive. Only the organ changes. Delegation of powers 22. Section 25 of the Act is based on this theory of taxation. It delegates power to the Central Government, that is, the executive branch to grant exemption generally from duty whenever it finds it necessary so to do in the public interest, either absolutely or subject to such conditions as may be specified in the notification, or by a special order in each case under circumstances of an exceptional nature. 23. At the same time Section 159 of the Act says that these exemption notifications issued under Section 25 shall be laid before Parliament as soon as may be after their issue and the Parliament may amend or reject them. This shows that the ultimate law-making power is retained by the legislature in its hands. It does not surrender it to the executive, this makes it perfectly clear that Parliament has in no way abdicated the authority, but is keeping strict vigilance and control over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the public must have access to the law. This delegated legislation does not come into force until it is published in the Official Gazette. So that the people know what the law is. 28. The subordinate legislations under the parent Act are like the children of the Act. Where subordinate legislation made immediately under the parent Act confers powers to make laws they are in the form of grand children of the Act. It is called sub-delegated- legislation. But here we are concerned with the children of the Act. Publication is a sure index of their legislative character. 29. This is so far as Section 25(1) is concerned. Whether sub-section (2) which provides for the making of a special order of exemption under circumstances of an exceptional nature to be stated in the order is a legislative order, it is not necessary for us to decide. Because no special orders under sub-section (2) are in question in any of these cases. These are all cases of general orders under Section 25(1). Perhaps a special order under subsection (2) is an executive order. The test suggested is that the meaning of legislative and executive may be determined by reference to the nature of the action. By ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, whether by the legislature or by its delegate is an exercise of a legislative power. The fact that the power was delegated to the executive does not convert that power into an executive or administrative power. No Court can issue a mandate to a legislature to enact a particular law. Similarly, no Court can direct a subordinate legislative body to enact or not to enact a law which it may be competent to enact. 31.In M.P. Sugar Mills - AIR 1979 S.C. 621 (647, 648) the Supreme Court said : There can also be no promissory estoppel against the exercise of legislative power. The legislature can never be precluded from exercising its legislative function by resort to the doctrine of promissory estoppel : vide State of Kerala v. Gwalior. Rayon Silk Mfg. Co. Ltd.-(1974) I SCR 671". Again : There can be no promissory estoppel against the legislature in the exercise of its legislative function . Public interest and estoppel 32. Article 265 of the Constitution lays down that no tax can be levied or collected except by the authority of law. Hence the levy of a tax can only be done by the authority of law and not by an executive order. No taxation without representation . Rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. In that case the company expanded its activities on the assurance of the municipal authority that factories in a specified area within the municipality will be exempted from payment of octroi for seven years. It was held that the authority may be guilty of breach of contract if octroi is levied within this period of seven years. The question in that case was not of taxation but of fixing the local limits of the municipality. It was observed that an equity was raised in favour of the company and the Court would compel the performance of the obligation arising out of the representation of the municipality. Representation, it was held, amounted to a contract. The object of promissory estoppel is to enforce contractual obligations. But taxation is not contract. It is an expression of unilateral will of the legislature. Tax is an exaction by the State in the exercise of its sovereign powers. There are no promises. There are no contractual obligations. If there are any promises they are subject to the overriding public interest. There is plain repugnance between contract and taxation. Taxation is the very antithesis of contract. 37. Indo-Afghan Agencies, (1968) 2 SCR 366 was followe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Privy Council held that it was not open to the Crown to bind itself not to close the club if that course became necessary in the public interest. 40. This principle has been reiterated in Jit Ram s case, AIR 1980 S.C. 1285. Following Excise Commissioner, U.P., AIR 1976 SC 2237, N. Ramanatha, AIR 1973 S.C. 2641 and Gwalior Rayon, AIR 1973 S.C. 2734 the court held that the principle of estoppel is not available against the Government in the exercise of legislative, sovereign or executive power. The court quoted with approval the following observation : It is now well-settled by a catena of decisions that there can be no question of estoppel against the Government in the exercise of its legislative, sovereign or executive powers. Excise Commissioner, U.P. v. Ram Kumar, AIR 1976 S.C. 2237 (2241). 41. It is here that Jit Ram differs from M.P. Sugar Mills. AIR 1979 S.C. 621. We are not, as at present advised, prepared to commit ourselves to the view that the doctrine can never be applied against the executive in all the circumstances in all cases, whether involving public interest or not. But on the authorities it is incontestable that against the Government in the exercise of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finds that it must withdraw the exemption notification at once it can do so. What actuated the Government to take the step of exemption and reimposition was enlightened self-interest, such self-interest as would subserve the common good. The imposition and exemption of customs duty are the chief vehicles of the Government to protect a domestic market and to steady the level of prices. The tariffs are its chosen instruments to shield domestic production from foreign competition. 45. The legislature is in effect saying to the importer, we give you exemption in public interest. But if public interest demands otherwise we will withdraw the exemption . This is implied in the promise. This, to our minds, is the true construction of the statutory notification promulgated under Section 25 of the Act. 46. It was pressed upon us that we should do equity to the petitioners who, it was said, in reliance on the representation made in the notification dated 18th April, 1980, altered their position and acted to their detriment. In our opinion this argument has no merit. The truth is that the doctrine of promissory estoppel has no place in tax law. Promissory estoppel is a child of equity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent from M.P. Sugcr Mills, AIR 1979 S.C .621. 49. Freedom to carry on trade or business [Article 19(1 )(g)]. The courts have decided that imposing restrictions upon business such as import or export of goods will be in the interests of the general public. The system of tariffs and licensing for imports and exports is a reasonable restriction on the right to carry on trade. The Supreme Court has said: In modern times, the export and import policy of any democratic state is bound to be flexible. The needs of the country, the position of foreign exchange, the need to protect national industries and all other relevant considerations have to be examined by the Central Government from time to time and rules in regard to export and import suitably adjusted. It would therefore, be idle to suggest that there should be unfettered and unrestricted freedom of export and import . Bhatnagars and Co. v. Union of India, AIR 1957 S.C. 478. The import and export trade thus involves foreign exchange. It involves our relations with foreign powers. It involves raising tariff walls on the ground of reciprocity and protectionism. The petitioners have not placed any material to persuade us to hold tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime to withdraw the notification of exemption. On 29th August, 1980, the exemption notification was withdrawn. By that time the market had started showing signs of recovery. That there was some delay in rescinding the notification, on one will dispute. This is merely an example of red tapism and bureaucratic delays in the corridors of power. It takes time to comprehend how close one is to ruin. But that alone will not entitle us to strike down the rescinding notification. This does not, in our opinion, afford a ground for judicial review. 55. A public authority exists primarily to regulate social and economic life. So the executive itself issued the exemption notification again on 9th September, 1980, as a sort of corrective action. In the international arena the Government is concerned more with the happenings of the future than with the promises of the past. The crux of the problem is that if the international trade calls for greater freedom and enterprise, it will be against the public interest to curb and confine that freedom by applying the doctrine of estoppel. The imposition, exemption, reimposition and re-exemption of levies are like launching life-boats to save a sinkin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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