TMI Blog2000 (9) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... the object to be achieved, and it is arbitrary. According to the petitioners, a factory, even if it is closed during 1999-2000 will get exemption merely because they have been running the factory for six months during 1998-99. But, on the other hand, a person who was able to run a factory for five months or so during the year 1998-99 and continuously running the factory for the subsequent year, cannot get the benefit of exemption under the impugned Notification. So, according to him, the said restriction cannot be said to encourage to the existing factories, and, if such concession is not given to the factories which are continuously running, they cannot compete with others and survive. 3.The learned Additional Central Government Standing Counsel has submitted that such restriction has been imposed only to encourage the old existing factories. According to him, if the factories had been closed during 1999-2000, there is no necessity to claim any benefit for that year. The intention of the respondents is only to encourage the factories and to make them to continue their production. The learned Addl. Central Government Standing Counsel relying on the counter has further submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e restriction, they are not in a position to claim duty exemption. It is his further submission that the Central Government have no valid reason to introduce such restriction and so it is unreasonable. 8.In the counter filed by the 2nd respondent, the reason for introducing additional requirement for the factory to be working during six months in 1998-99 has been set out in paragraph 4, which reads as follows :- "It can be seen that the classification is rational and the exemption is granted setting out variable criteria for various categories within each class or category of manufacturers, there is no discrimination. The power to grant exemption to Tea factories belonging to cooperative societies in a more liberal fashion is discernible having a definite bearing to the Directive principles of state policy which enjoin under Article 43 that State shall endeavour to promote industries run on cooperative basis in rural areas. While favouring the cooperative societies for claiming exemption, the requirement is that tea shall not be purchased from any grower who has a holding exceeding 10 hectares under tea cultivation. The tea cleared by a bought leaf factory shall avail for exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to economic activities, the Apex Court in the decision in R.K. Garg v. Union of India, AIR 1981 S.C. 2138, has held as follows :- Now while considering the constitutional"7. validity of a statute said to be violative of Article 14, it is necessary to bear in mind certain well established principles which have been evolved by the courts as rules of guidance in discharge of its constitutional function of judicial review. The first rule is that there is always a presumption in favour of the constitutionality of a statute and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles. This rule is based on the assumption, judicially recognised and accepted, that the legislature understands and correctly appreciates the needs of its own people, its laws are directed to problems made manifest by experience and in discrimination are based on adequate grounds. The presumption of constitutionality is indeed so strong that in order to sustain it the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. The Courts cannot, as pointed out by the United States Supreme Court in Secy. of Agriculture v. Central Roig. Refining Co., (1950) 94 L. ed. 381, be converted into tribunals for relief from such cruidities and inequities. There may even be possibilities of abuse, but that too cannot of itself be a ground for invalidating the legislation, because it is not possible for any legislature to anticipate as if by some divine prescience, distortions and abuses of its legislation which may be made by those subject to its provisions and to provide against such distortions and abuses. Indeed, howsoever great may be the care bestowed on its framing, it is difficult to conceive of a legislation which is not capable of being abused by perverted human ingenuity. The Court must therefore adjudge the constitutionality of such legislation by the generality of its provisions and not by its cruidities or inequities or by the possibilities of abuse of any of its provisions. If any cruidities, inequities or possibilities of abuse come to light, the legislature can always step in and enact s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nequal burdens on different persons. It was held in Steelworth Ltd. v. State of Assam, 1962 Supp. 2 SCR 589, that in law of taxation of income it is competent for the legislature to graduate the rate of tax according to the ability to pay. In Ganga Sugar Co. Ltd. v. State of U.P., (1980) 1 SCC 223 : 1980 SCC (Tax) 90 : AIR 1980 SC 286 : (1980) 1 SCR 769 also it has been held that in the matter of taxation laws the court permits a greater latitude to the discretion of the legislature and in Khyerbari Tea Co. v. State of Assam, AIR 1964 SC 925, 941 : (1964) 2 SCA 319, it has been held that in tax matters the State is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably. In Twyford Tea Co. v. State of Kerala, (1970) 1 SCC 189 : (1970) 3 SCR 383, it has been observed that when a statute divides the objects of tax into groups or categories, so long as there is equality and uniformity within each group, the tax cannot be attacked as violative of Article 14, although due to fortuitous circumstances or a particular situation some included within a group may get some advantage over others, provided of course they are not sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments like Customs Act and Customs Tariff Act are not merely taxing statutes but are also potent instruments in the hands of the Government for regulating the economy and the industrial development of the country. The 'economic' ministries and the establishments allied to them keep a close watch on the economy, closely monitoring its behaviour. Power of taxation is one of the weapons in the Government's armoury to regulate the economy. A certain industry may require encouragement while another may not. Yet another sector may require to be controlled - nay, discouraged on some occasions. In an under-developed country like ours, the emphasis is bound to be more on capital goods 'industry rather than on consumer goods' industry. The domestic industry has also to be protected and encouraged in certain situations. In 1986, the Government which expression in this discussion includes the Board - evidently thought that import of 'industrial systems' meant for establishments designed to offer services of any description such as hotels, hospitals, photographic studios, photographic film processing laboratories, etc. needs no encouragement in the shape of concessional customs-tariff and they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion which is impugned, is not on the basis of valid reasonings as set out in the counter. Such reasonings cannot be said to be arbitrary because, the condition is only to help the industry which has been engaged for a long time with tea manufacturing as its principal object. 18.The submission of the learned Counsel appearing for the petitioners is that merely because a factory was running for six months during 1998-99, it cannot be said that they need not continue any such manufacturing thereafter but they are entitled for exemption, cannot be accepted. As the above said condition is only to claim exemption of duty exemption for the year 1999-2000, if a factory is not running during 1999-2000, there is no necessity to claim any exemption, since as they may not have any production. 19.As held by the Apex Court, it is for the Government to classify the category for the purpose of granting duty exemption, but it should be on acceptable principles. In these writ petitions, such classification has been made on valid reasons, and those reasons and classification cannot be held as arbitrary and so the petitioners can not sustain their grievance. 20.For the reasons stated above, I d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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