TMI Blog1979 (3) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... of the industries specified in the First Schedule of the Industries (Development and Regulation) Act, 1951. But the specifications relating to jute industry in the First Schedule of the said Act have been from time to time amended/substituted. The Act LXXI of 1956 substituted the First Schedule of the Industries (Development and Regulation) Act, 1951 with effect from 1st of March, 1957. The Heading No. 23 of the First Schedule is as follows :- Textiles (including those dyed, printed or otherwise processed); (1) * * * * (2) made wholly or in part of jute, including jute twine and rope. (3) * * * * (4) * * * * (5) * * * * By the said amending Act of 1956, two Explanations have been also inserted in the First Schedule of the Parent Act. 3. The Central Government by G.S.R. 89(E), dated 18th February, 1976 made and published the Jute Manufactures Cess Rules, 1976. The clause (f) of Rule 2 of the said Jute Manufactures Cess Rules, 1976 defined jute manufactures as `manufactures of jute of Bimlipatam jute or of Mesta fibre of all sorts including : (1) twist, yarn, thread, rope and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals under Clause 15 of the Letters Patent. 7. We have heard these appeals analogously. On behalf of the appellants two sets of submissions have been made by Dr. Debiprasad Pal and Mr. R.N. Bajoria. 8. Mr. Bajoria, learned Advocate for the appellants in F.M.A. No. 910 of 1978, submitted that the Central Government is empowered to levy cess under Section 9 of the Industries (Development and Regulation) Act, 1951 only upon those articles which have been specified in the different items or headings of the First Schedule of the said Act. According to Mr. Bajoria, jute twine and jute yarn have not been specified in Item 23(2) of the First Schedule of the Act and therefore, the impugned assessments of cess under Section 9(1) of the Act read with the Jute Manufactures Cess Rules, 1976 were illegal and without any authority of law. According to Mr. Bajoria Item No. 23(2) relating to Jute Textiles Industry has not been specified either in the Explanation (1) or in the Explanation (2) of the First Schedule of the Industries (Development and Regulation) Act, 1951. Therefore, accessories and intermediate products like yarn and twine used for captive production are not liable to be asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and significantly Section 9(1) of Act 65 of 1951 has not been mentioned therein. 10. Thus, the First Schedule to the Industries (Development and Regulation) Act, 1951 mentions the industries which have become subject to control by the Central Government in terms of the said Act. The Section 2 and the First Schedule to the Act of 1951 are to be read together and the said Schedule serves as a list of specified industries. The articles manufactured or produced by the specified industries have been mentioned in the different headings and sub-headings of the First Schedule in order to identify the particular scheduled industries included therein. But the said enumeration of the articles manufactured or produced do not follow any logical or scientific pattern but are put in merely as devices for convenient grouping of the industries (vide observations of the Supreme Court in Harakchand v. Union of India, A.I.R. 1970 S.C. 1453 at page 1461, paragraph 10 right hand column). The Supreme Court in Harakchand s case, (supra), had rejected the submission that manufacture of gold ornaments does not fall within Item No. 2 semi-manufactures or manufactures under the sub-heading `B Non-f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d industries. Such powers of control by the Central Government include : (i) Regulation of scheduled industries under Chapter III (a) registration of existing industrial undertakings and power to revoke such registration. (b) licencing of new industrial undertakings. (c) licence for producing or manufacturing new articles. (d) powers to cause investigation. (ii) Direct management or control of industrial undertakings by the Central Government in certain cases mentioned in Chapter IIIA. (iii) Management or control of industrial undertakings owned by companies in liquidation under Chapter IIIAA. (iv) Power to provide relief under Chapter IIIAB. (v) Liquidation on reconstruction of companies under Chapter IIIAC. (vi) Control of supply, distribution and price of certain articles under Chapter IIIB etc. 12. The Chapter II of the Act 65 of 1951, inter alia, contains provisions for establishment and constitution of the Central Advisory Council and Development Councils. The Central Government under Section 6(1) may by notified order establish for any scheduled industry or group of scheduled industries a body of persons to be called Development Council. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 9(1) has been restricted only to articles mentioned in Heading 23, sub-heading (2) of the First Schedule of the Act 65 of 1951. In our view, there is no substance in the submission made on behalf of the appellants that no cess under Section 9(1) may be imposed upon goods manufactured or produced in any scheduled industry which have not been mentioned in the relevant heading and/or sub-heading of the First Schedule. Section 9(1) authorized the Central Government to levy and collect cess on all goods manufactured or produced in any scheduled industry as may be specified in this behalf. Section 9(1) makes no reference to the First Schedule. By reason of its inclusion, an industry engaged in manufacturing the articles mentioned in different headings and sub-heading of the First Schedule becomes a industry and subject to control in the manner indicated in the Act. We have already mentioned that the list of articles manufactured by an industry included in the First Schedule is not exhaustive. Thereafter, a scheduled industry may conceivably manufacture or produce not only the articles specified in the First Schedule of the Act but also various other goods both intermediate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower to impose cess upon intermediate products of jute industry. 15. We may now examine the next submission made on behalf of the appellants that under Section 9 of the Act 65 of 1951 the Central Government is empowered to levy cess only according to the value of the goods produced or manufactured by the scheduled industries. The appellants have submitted that the impugned levy of cess according to the weight of the goods notified under Section 9(1) of the Act read with the Jute Manufactures Cess Rules, 1976 was ultra vires. The main part of sub-section (1) of Section 9 of the Act 65 of 1951 does not expressly circumcribe the power of the Central Government to levy and collect cess only according to the value of goods manufactured or produced in any specified scheduled industry. But according to the appellants, such limitation has been imposed by the proviso to sub-section (1) of Section 9 and the Explanation under the said sub-section. According to the proviso no rate of levy shall in any case exceed 12 n.p. percent of the value of the goods . The Explanation under sub-section (1) elucidates the meaning of the expression value . 16. It is undisputed that the effect of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o value and in respect of others according to their weight. For example, the Item 18D of the First Schedule relating to jute twist, yarn, thread, rope and twine etc. etc., excise duty is at a certain rate per metric tonne. Item 22A of the First Schedule of the Central Excises and Salt Act relates to jute manufacturers including manufacturers of Vimplipatam jute or Mesta fibre all sorts not elsewhere specified but excluding the goods specified in (i) and (ii) and excise duty is leviable also according to their weight. Thus in Entries 18D and 22A of the First Schedule of the Central Excises and Salt Act corresponding to Heading 23, sub-heading (2) of the First Schedule of the Act 65 of 1951 cess has been imposed according to weight of the goods. 17. The scheme of Section 9 of the Act 65 of 1951 is slightly different from that of the corresponding provisions of the Central Excises and Salt Act. The Section 9 of the former Act is a composite one. The Section 9(1) of the Act 65 of 1951 is the charging provision and corresponds to Section 3(1) of the Central Excises and Salt Act. But unlike the Central Excises and Salt Act where the First Schedule forming part of the Act itself specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9(1) is imposed according to the weight of the specified goods of a scheduled industry, an element of uncertainty would be introduced and there would always remain a possibility of the said cess exceeding at some point of time 12 n.p. per cent of the value of the goods in question and therefore, the cess would become illegal and irrevocable. According to the learned Advocates for the appellants, the wholesale cash prices of the specified goods of the jute industry very often fluctuate. Therefore, the authority collecting the cess would be required to determine whether or not cess imposed by a Central Government order under Section 9(1) on the weight of the specified goods at a particular point of time exceeded the maximum limit laid down by the proviso to sub-section (1) of Section 9 of Act 65 of 1951. The learned Advocates for the appellants have submitted that the legislature did not intend such an anomalous situation to arise. For the purpose of harmonious working of the different parts of Section 9(1) of the Act 65 of 1951, it should be held that Section 9(1) read with proviso has laid down the cess can be levied only according to the specified goods produced or manufactured b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the main part of sub-section (1) of Section 9 and the proviso thereunder. The Explanation to the main part may apply in case the cess under Section 9(1) is imposed ad valorem. But in case such cess is imposed according to weight of the notified goods, the meaning of the expression `value given in the said Explanation will not be required to be applied. But the said Explanation shall always apply in relation to the proviso under sub-section (1) of Section 9 inasmuch as maximum rate of cess has been stated with reference to the value of the goods. Mr. Bajoria also has argued that the expression `no such rate refers to the rate as may be specified in the notified order under Section 9(1) of the Act. But we hold that this expression `rate does not necessarily imply that the Legislature intended that the cess under Section 9(1) shall be always ad valorem and not according to weight of the goods manufactured or produced in any scheduled industry as may be specified. The expression `such rate in the proviso refers both to cess upon notified goods according to weight and value. In the absence of a clear indication to the contrary, we hold that Section 9(1) does not restrict the power o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of excise duty does not apply to the imposition of cess under Section 9(1). In the first place, the paragraph (3) of the Jute Manufactures Cess Rules, 1944 does not provide that even notifications made under the Central Excise Law Rules, law would automatically apply. The exemption from payment of a duty or tax is a matter of substantive law. The Central Excise Rules has expressly authorized the Central Government to issue notifications exempting payment of excise duty. But the Act 65 of 1951 or the Jute Manufactures Cess Rules does not similarly empower the Central Government to exempt payment of cess upon goods which are specified in a notification under Section 9(1) of the Act 65 of 1951. Since cess under Section 9(1) of Act 65 of 1951 is imposed by specifying in the notification the goods manufactured or produced in a particular scheduled industry, the Central Government if it so chooses, may by a subsequent order exclude a particular good or goods previously specified in an earlier notification. But, until and unless there is such amendment or revocation of a notification under Section 9(1) the goods specified remain subject to cess and no question of exemption from payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bviously refers to the assessment and realization. As already stated, the imposition of cess is made by a notification under Section 9(1) of Act 65 of 1951. The expression `levy in paragraph (3) of the Jute Manufactures Cess Rules does not mean `imposition . 25. In the above view, we hold that in the absence of any substantive provision for exemption of cess under Section 9(1), the appellants cannot claim that they are entitled to exemption from payment of cess upon the goods used for captive production and which have been specified in the notification under Section 9(1) of the Act 65 of 1951. 26. The appellants have further argued that the imposition of cess according to weight of jute, twine and yarn is discriminatory because coarser varieties of jute yarn and twine have greater weight but fetch lesser value. A uniform rate of cess on yarn and twine irrespective of their quality and price would result in imposing greater burden on inferior qualities of twine and yarn. According to the appellants, this involves discrimination because unequals have been equally or similarly treated. In this connection, the learned Advocates rightly submitted that an immunity under Article 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 S.C. 552; Khandige Sham Bhat v. Agricultural Income Tax Officer, A.I.R. 1963 S.C. 591 : New Manek Chowk Spg. and Wvg. Mills Co. Ltd. v. Municipal Corporation of the City of Ahmedabad and Others, A.I.R. 1967 S.C. 1801 and State of Kerala v. Haji K. Kutty, A.I.R. 1969 S.C. 378. These decisions recognized that the power of the Legislature to levy taxes cannot be used arbitrarily and in a manner inconsistent with the fundamental rights guaranteed to the people under the Constitution. No tax may be levied or collected under our constitutional set-up except by authority of law and the law must not only be within the legislative competence of the State, but it must also not be inconsistent with any provision of the Constitution. The validity of a taxing statute is open to question on the ground that it infringes fundamental rights. Therefore, where objects, persons, or transactions essentially dissimilar are treated by the imposition of an uniform tax, discrimination may result, for, refusal to make a rational classification may itself in some cases operate as denial of equality. [Vide State of Kerala v. Haji K. Kutti and Others (supra)]. 29. The Supreme Court in their latter dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industries. Therefore, the proceeds of cess are to be used not for promotion of any particular goods but for the scheduled industry or group of scheduled industries. Therefore, the proceeds of cess are to be used not for promotion of any particular goods but for the scheduled industry as a whole. A scheduled industry as a whole is likely to be benefited by power utilization of the proceeds of cess in the manner laid down in sub-section (4) of Section 9 of the Act 65 of 1951. Further, imposition of cess according to weight basis is an established principle of taxation. The Central Excises and Salt Act has also imposed cess on jute goods specified in Items 18D and 22A of the First Schedule of the Central Excises and Salt Act, 1944. Therefore, imposition of cess according to weight basis cannot be held to be per se arbitrary and discriminatory. It would not be also correct to hold that there is no intelligible basis for imposing cess under Section 9(1) upon all jute goods according to their weight. When a tax or cess may impose higher burden on any particular goods, the same may cause hardship. But, every cause of hardship in the matter of liability to pay tax or cess does not invari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Article and floods this Court with cases of lesser magnitude with illegitimate entry. A substantial question of law of general importance is a sine qua non to certify fitness for hearing by the Apex Court. Nay, more; the question, however, important and substantial, must be of such pervasive import and deep significance that in the High Court s judgment it imperatively needs to be settled at the national level by the highest Bench. The crux of the matter has been correctly set out in a decision. Union of India v. Hafiz Mohd. Said : ILR (1973) 2 Delhi 673, 676 - (AIR 1975 Delhi 77, 79) of the Delhi High Court in words which find out approval : A certificate can be granted only if the case involves a question of law : (i) which is not only substantial but is also of general importance; and (ii) the said question, in our opinion, needs to be decided by the Supreme Court. It has to be noted that all the above requirements should be satisfied before a certificate can be granted. It means that it is not sufficient if the case involves a substantial question of law of general importance but in addition to it the High Court should be of the opinion that such question needs t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
