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M/s. Oil Palm Developers & Processors Association and others Versus State of Andhra Pradesh

Fixation of price - whether the impugned G.O.Ms. fixing price of Oil Palm FFBs is violative of Art.14 of the Constitution - Held that:- Relevant considerations of OER of Oil Palm Processing Unit in the State of Andhra Pradesh for fixing price of FFBs of Oil Palm in the said State which is indicated by Section 11(2) and Section 12 of the Act, were not taken into account while issuing the impugned G.O. Also the advice of the Union of India contained in the letter F.No.12-22/2010 (TMOP) dt.13.08.20 .....

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na State as basis for price fixation of Oil Palm FFBs in State of Andhra Pradesh after the two states of Telangana and residuary State of Andhra Pradesh came into existence from 2.6.2014 with well defined boundaries. This is an irrelevant consideration and ought to have been eschewed by 1st respondent from consideration.

Thus, the price fixation of Oil Palm FFBs in the State of Andhra Pradesh for the Oil Year 01.11.2014 to 31.10.2015 based on the OER of the Oil Palm Processing Unit at .....

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Agriculture and Co-operation (Horti.& Seri) Department dt.18.2.2015, cannot be countenanced.

The contention of the 5th respondent that the Oil Palm Processing Unit at Aswaraopet had the latest equipment which is not there at Pedavegi also cannot be countenanced since this is not the reason assigned in the impugned G.O. or in the counter-affidavit filed by the 1st respondent.

In this view of the matter, the Writ Petition is allowed and a Writ of Mandamus is issued declaring .....

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n eight (08) weeks from the date of receipt of a copy of this order. - W.P. No.9376 of 2015 - Dated:- 15-12-2015 - SRI M.S.RAMACHANDRA RAO, J. For The Petitoner : Sri E.Manohar, learned Senior Counsel for Sri Challa Gunaranjan For The Respondent : Sri P.B.Vijay Kumar, Government Pleader for Agriculture., Sri S.Appadhara Reddy ORDER: Heard Sri E.Manohar, learned Senior Counsel, appearing for Sri Challa Gunaranjan, learned counsel for the petitioners, learned Government Pleader for Agriculture, ap .....

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amp; Sericulture) Department. 4. Under this G.O.Ms, the State Government had adopted a formula for pricing of oil palm fresh fruit bunches (FFBs) for the oil year from 01-11-2014 to 31-10- 2015 in exercise of powers conferred under Section 13 (1) of the Andhra Pradesh Oil Palm (Regulation of Production and Processing) Act, 1993 (for short the Act ). 5. The said Act was enacted to provide for regulation and cultivation of oil palm for orderly growth and processing thereof and for matters connecte .....

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the Government any measures that will suit the orderly development of the oil palm cultivation and industry; f) Such other matters as may be prescribed. 6. Section 8 thereof contemplates appointment of an officer as an Oil Palm Commissioner and Section 5 empowers him to declare areas specified in a notification issued by him attached to a processing factory as a zone. 7. Section 10 directs the occupier of the factory, where manufacturing process connected with the processing of oil palm FFB is c .....

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actory in the concerned factory zone declared under that provision to buy all the oil palm FFB produced by all the oil palm growers or their Companies/Societies in that factory zone as are offered for sale by them at a price which shall not be less than the price fixed by the authority empowered to fix the price under this Act. Section 12 provides for consequences of such failure to buy. 9. Section 13 empowers the State Government to fix the minimum price of oil palm FFBs or in the alternative t .....

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Pradesh under the AP Re-Organization Act, 2014 (Central Act 6 of 2014), the AP Oil Fed Unit at Aswaraopet in Khammam District fell in the State of Telangana post 02-06-2014, the notified date under that Act, and the AP Oil Fed Unit at Pedavegi, West Godavari District fell within the residuary State of Andhra Pradesh. 12. Vide G.O.Ms.No.22, Agriculture and Cooperation (Agri.I) Department dt.20-05-2015, AP Oil Fed, which was listed at serial No.45 in IX Schedule to the AP Reorganization Act, 2014 .....

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mula for pricing FFBs of Oil Palm to the Commission for Agricultural Costs and Prices (CACP), which had a mandate to fix MSP of 24 agricultural commodities. Suggestions were made to the said committee. After obtaining inputs from all the stake holders, CACP submitted a report in January 2012 to 4th respondent proposing formula for pricing for FFBs. 14. In its report, it recommended that formula for pricing of FFBs be fixed at 13.54% of net Crude Palm Oil (for short CPO ) weighted average price p .....

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orwarded the said report to the petitioners as well as 5th respondent farmers association seeking remarks on recommendations of CACP. 16. Petitioners contend that even though they objected to the recommendations of the CACP, ignoring the said objections, the 1st respondent by letter dt.18-05- 2012, informed 4th respondent that the recommendations of CACP were acceptable to the State Government and requested to take appropriate action. 17. The 4th respondent, acting upon the recommendations of th .....

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It further stated the OER would be determined as per actual Oil Content Extracted in the past by the processing industry, as established by the State Government concerned. 18. Consequently, 1st respondent issued G.O.Ms.No.110 dt.13-12-2013 specifying the formula for pricing of oil palm FFBs as recommended by 4th respondent and this formula was given effect to in Oil Year 2013-14 i.e. from 01-11-2013 till 31-10-2014. This has been challenged by the petitioners in W.P.No.30276 of 2014 and is pend .....

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Oil Fed (Pedavegi) unit, the petitioners requested to take the actual OER as obtained during the year 2013-14 in AP Oil Fed (Pedavegi) mill which is 16.57% stating that this is in line with the CACP report. 21. The Committee however decided in the said meeting that the OER at 17.55% as obtained in AP Oil Fed, at Ashwaraopeta, Telangana State during the Oil Year 2013-14 should be taken into account while fixing the price of Oil Palm FFbs in the residuary State of Andhra Pradesh for Oil Year 2014- .....

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This is however disputed by the respondents who allege that the members of 1st petitioner Association, and in particular its representatives, had agreed to the OER of 17.55% as obtained in AP Oil Fed, at Ashwaraopeta, Telangana State as the basis for fixing for FFB price for the State of Andhra Pradesh also. 24. Petitioners contend that alternatively they agreed for an OER of 17.4% obtained in the erstwhile State of Andhra Pradesh for the year 2012-13 as the basis for price fixation for the year .....

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icated that a decision was taken to fix the price of the Oil Palm FFBs for the oil year 2014-15 to the following effect: 13.20 percent of net Crude Palm Oil (CPO) weighted average price (based on the actual, average OER of 17.55% recovered for the oil year 2013-14 by the APOILFED Aswaraopet Unit) plus 75.25 percent on 9% recovery of palm kernel nuts weighted average price, realized by APOILFED. 26. The minutes of the meeting indicate that one R.R.Govindan, representing the 3rd petitioner which i .....

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said minutes specifically record the demand of the petitioners that OER of Pedavegi unit of APOILFED should be taken into account, it is doubtful to say that members of the 1st petitioner association agreed to the decision by the committee to take into account the OER of the APOILFED, Aswarraopet unit as the basis for fixing the price of Oil Palm FFBs in the State of Andhra Pradesh. 28. Basing on the alleged consensus in the meeting held on 6.1.2015 between the members of 1st petitioner associa .....

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pet Unit) plus 75.25 percent on 9% recovery of palm kernel nuts weighted average price, realized by APOILFED. The G.O.Ms further states that the 17.55% OER obtained by the Oil Palm Processing Unit, Aswaraopet of APOILFED during the Oil Year 2013-14 is taken as the basis for fixing the price of the Oil Palm FFBs in the residuary State of Andhra Pradesh is being taken since the APOILFED was not yet bifurcated. CONTENTIONS OF PETITIONERS 29. Petitioners contend that the impugned G.O.Ms.No.2 dt.18-0 .....

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articularly the OER of Oil Palm Processing Unit at Pedavegi in West Godavari District which falls in the residuary State of Andhra Pradesh), is arbitrary, illegal and contrary to the recommendations of the CACP report which had been accepted by the erstwhile Government of Andhra Pradesh by the letter dt.18-05-2012. They point out that in the Lr.No.F.No.12- 22/2010-TMOP dt.13.8.2013 received from the Under Secretary of the Govt. of India, Ministry of Agriculture, Dept. of Agriculture and Co-Op, N .....

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rs under Articles 14 and 19 (1) (g) of the Constitution of India. 30. The principle contention of the petitioners is that the price fixation of oil palm FFBs under Section 13 (1) of the Act could be done by 1st respondent taking into consideration only the relevant factors and inasmuch as the OER of AP Oil Fed Mill at Pedavegi in the State of Andhra Pradesh was not considered and on the other hand OER of AP Oil Fed, Aswaraopet, Telangana State was considered, contrary to the report of CACP, the .....

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h. Alternatively they also contended that the 1st respondent, at least should have accepted offer of the petitioners to take the OER at 17.4% obtained by the erstwhile State of Andhra Pradesh for the year 2012-2013 as the basis for price fixation for 2014-15. Petitioners contend that they would incur huge loss if the FFB price, as fixed under the said G.O., is applied since certain costs, which require to be taken into consideration while arriving at formula, were not taken into account and it w .....

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aranteed by Article 14 of the Constitution of India. According to him, once the Government of India through the CACP directed that the OER to be determined as per the actual oil content extracted in the past by the processing industry established by the State Government concerned, after 02- 06-2014 (when the erstwhile combined State of Andhra Pradesh was divided into the State of Telangana and the residuary State of Andhra Pradesh), the 1st respondent ought not to have taken into account the OER .....

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the OER include climatic parameters, source of planting material, management practices, harvesting standard, method of FFB procurement etc. care and maintenance of machinery, mechanisms to recover oil from waste stems, control of spillage, proper steam supply and maintenance required temperature in all processing lines etc. He pointed out that the conditions as to climate or soil vary much between the State of Telangana and the State of Andhra Pradesh and when there are several private and publi .....

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12, there is a penalty if this is violated by the occupier of the factory. He therefore contended that the grower of oil palm FFBs is bound to sell only to the occupier of factory in the factory zone and not to anybody outside the zone, and in these circumstances, it is not open to the respondent Nos.1 to 4 to take into account the OER of a processing plant not only not located in the factory zone but also not located within the residuary State of Andhra Pradesh and take into account the OER of .....

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) 2 S.C.C. 720 in this regard. CONTENTIONS OF RESPONDENTS 32. The learned Government Pleader on the other hand refuted the above contentions. While admitting that zones were allotted by the Government to the entrepreneurs in the oil palm industry and opportunity was given to them to develop and establish oil palm plantations in the allotted zones, she contended that the oil palm FFBs price fixed under the impugned G.O. cannot be assailed since it was done strictly in accordance with Section 13 o .....

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the Under Secretary, Government of India, Ministry of Agriculture, Agriculture and Cooperation Department, was to be determined as per the actual oil content extracted in the past by the processing centre as established by the State Government concerned. She relied upon the decision alleged to have been taken in the meeting held on 06-01- 2015 between members of the petitioner Association, members of the 5th respondent and the Hon ble Minister for Agriculture and Horti Culture and stated that o .....

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he oil year 2013-14. The learned Government Pleader further justified this by saying that the APOILFED organization had not been bifurcated formally by the time the impugned G.O. was issued in February,2015 and the said bifurcation took place subsequently Vide G.O.Ms.No.22, Agriculture and Cooperation (Agri-I) Department dt.20-05-2015. She contended that all the views and contentions of the petitioners as well as 5th respondent members were taken into consideration. She denied that without appli .....

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unit was not bifurcated at the time of issuance of the G.O. It was also contended that the formula adopted by 1st respondent is not beneficial to the farmers but they were forced to accept the price fixed by the Government even though it is to their disadvantage. It is contended that farmers have no other alternative except to offer FFBs to the petitioners units as per the rate fixed by the Government, that the price of oil palm FFBs is not constant and keeps changing from month to month and it .....

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es. 36. Under Section 13 of the Act undoubtedly the 1st respondent can fix the minimum price of Oil Palm FFBs and this includes the authority to fix the formula for determination of the price of the Oil Palm FFBs. Both the petitioners as well as respondents do not dispute the fact that the Government of India had constituted the CACP to recommend the formula for pricing of FFBs of Oil Palm and that the said Commission had comprehensively studied the entire issue and had recommended a suitable fo .....

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CP submitted to the said department on oil palm. It is not disputed that the CACP recommended the price policy in the following terms: 1. (i) It is recommended that formula for pricing of Fresh Fruit Bunches (FFBs) be fixed at 13.54 percent of net Crude Palm Oil (CPO) weighted average price plus 75:25 percent on 9% recovery of palm kernel nuts weighted average price. This is based on estimated cost of cultivators at 75:25 percent in the total cost of production of COP from farm level to factory .....

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oss all the states. 38. The recommendation of the CACP was accepted by the residuary State of Andhra Pradesh vide D.O.Lr.No.1687/Horti/ A2/2012 dt.18-05-2012 addressed by the Principal Secretary to Government, Agriculture and Cooperation Department to the Additional Secretary, Ministry of Agriculture, Union of India, Department of Agriculture and Cooperation, New Delhi. 39. Thereafter, by a letter No.F.No.12-22/2010 (TMOP)-407 dt.13.8.2013, the Under Secretary to the Government of India, Ministr .....

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n in OER would result in change in the pricing formula in respect of percent of net CPO weighted average price to be paid to the oil palm growers as per enclosed table at Annexure. The OER would be determined as per actual oil content extracted in the past by the processing industry, as established by the State Governments concerned. (emphasis supplied) 40. In the light of the above proceedings, the question which arises for consideration is: whether 1st respondent is entitled to take into accou .....

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rugs (Prices Control) Order, 1979 which contained provisions for fixing maximum selling prices of indigenously manufactured bulk drugs and retail prices of formulations. It held that price fixation is more in the nature of Legislative activity than any other and that a price fixation measure does not concern itself with the interest of an individual manufacturer or producer. It held that it is general in relation to a particular commodity or class of commodities or transactions and it is a direc .....

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und that there is violation of the right guaranteed by Article 14 of the Constituting of India. It observed: 31. We mentioned that the price fixed by the Government may be questioned on the ground that the considerations stipulated by the order as relevant were not taken into account. It may also be questioned on any ground on which a subordinate legislation may be questioned, such as, being contrary to constitutional or other statutory provisions. It may be questioned on the ground of a denial .....

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ing the price of levy record under the provisions of the Essential Commodities Act, 1955 by the Central Government, and reiterating that the judicial review is not concerned with the matters of economic policy since the Court does not have expertise and cannot substitute its judgment for that of the legislature or its agents, nevertheless the Supreme Court observed that price fixation can still be challenged on the ground that it does not satisfy the test of reasonableness. It held that the Cour .....

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Syndicate Ltd. [at SCR pp. 961, 962; SCC p. 636, para 13]. The government cannot fix any arbitrary price. It cannot fix prices on extraneous considerations: Renusagar. 46. Any arbitrary action, whether in the nature of a legislative or administrative or quasi-judicial exercise of power, is liable to attract the prohibition of Article 14 of the Constitution. As stated in E.P. Royappa v. State of Tamil Nadu equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic .....

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terms and subordinate to its objects. The delegate must act in good faith, reasonably, intra vires the power granted, and on relevant consideration of material facts. All his decisions, whether characterised as legislative or administrative or quasi-judicial, must be in harmony with the Constitution and other laws of the land. They must be reasonably related to the purposes of the enabling legislation . See Leila Mourning v. Family Publications Service. If they are manifestly unjust or oppressi .....

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d faith. It is not only sufficient that an instrument is intra vires the parent Act, but it must also be consistent with the constitutional principles: Maneka Gandhi v. Union of India (SCC pp. 314-15). … … … … … … 57. Judicial review is not concerned with matters of economic policy. The court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either. The court does not supplant the feel of the .....

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(SCC p. 479, para 4) ... the court does not act like a chartered accountant nor acts like an income tax officer. The court is not concerned with any individual case or any particular problem. The court only examines whether the price determined was with due regard to considerations provided by the statute. And whether extraneous matters have been excluded from determination. 58. Price fixation is not within the province of the courts. Judicial function in respect of such matters is exhausted whe .....

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e Central Government. Such matters do not ordinarily attract the power of judicial review. (emphasis supplied) 43. Keeping in mind the above principles, I will now consider the question framed in this case. 44. It is not disputed that growers of oil palm FFBs are compelled under Section 11 of the Act to sell their produce only to the occupier of the factory located within the factory zone specified under Section 11(1) of the Act. Thus a grower of palm produce oil palm FFBs cannot sell his produc .....

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of CACP). The CACP report mentions the determinants of OER include climatic parameters, source of planting material, management practices, harvesting standard, method of FFB procurement etc. care and maintenance of machinery, mechanisms to recover oil from waste steams, control of spillage, proper steam supply and maintenance required temperature in all processing lines etc. Thus, both plantation parameters and processing efficiency affects OER. 46. Therefore, if one keeps in mind Section 11 of .....

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ter F.No.12- 22/2010 (TMOP-376) dt.13-08-2013 while forwarding the recommended formula for pricing of FFBs of oil palm, suggested that the OER should be determined as per actual content extracted in the past by the processing in d u s try as established by the State Government concerned, and this recommendation of the Government of India was accepted by 1st respondent. This indicates that the Union of India also felt that the OER of an Oil Palm Processing Unit of the State concerned would be a g .....

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18-02- 2015 was issued, the 1st respondent cannot take into account the OER of Aswaraopet Oil Palm processing unit which falls in the State of Telangana (after 02-06-2014 when the combined State of Andhra Pradesh was divided into the State of Telangana and the residuary State of Andhra Pradesh) for fixing the price of FFBs of Oil Palm in the residuary State of Andhra Pradesh. In my opinion, it is impermissible to ignore the OER of the Oil palm processing unit located in Pedavegi in West Godavari .....

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nder Secretary, Ministry of Agriculture, Department of Agriculture and Cooperation that the OER as per actual Oil Content extracted in the past by the Processing Industry established by the State Government concerned, was clearly ignored. 50. I am of the opinion that the non-bifurcation of the APOILFED by the date G.O.Ms No.2 Agriculture and Co-operation (Horti.& Seri) Department dt.18.2.2015 was issued cannot be the reason for taking the OER of the Aswarraopet Unit in Telangana State as bas .....

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be inspired by reason but not arbitrariness or extraneous considerations and if it is arbitrary, it would attract the prohibition of Article 14 of the Constitution of India. 52. Thus, the price fixation of Oil Palm FFBs in the State of Andhra Pradesh for the Oil Year 01.11.2014 to 31.10.2015 based on the OER of the Oil Palm Processing Unit at Aswaraopet, Khammam District, State of Telangana vide G.O.Ms No.2 Agriculture and Cooperation (Horti.& Seri) Department dt.18.2.2015 is based on the i .....

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, the representative of the 1st petitioner and 3rd petitioner, had not signed on the actual minutes of the meeting and his (R.R. Govindan s) signature appears only in the attendance sheet annexed to the said minutes. The said minutes appear to have been prepared on 13.01.2015 (this date is put by the Secretary, (Hort. and Seri), Agriculture and Cooperation Department) long after the said meeting. In fact the specific plea of petitioners is that the minutes were not supplied to them immediately a .....

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il Palm Processing Unit, Pedavegi, in the West Godavari District should be taken into account as per Government of India guidelines or 17.40% which was fixed for the previous Oil Year should be taken into consideration. Therefore it is difficult to accept the plea of respondent no.1 that petitioners had agreed in the meeting held on 6.1.2015 for taking of the OER of the Oil Palm Processing Unit at Aswaraopet, Khammam District, State of Telangana as the basis for fixation of Oil Palm FFBs in the .....

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d action imparts certainty and honesty to human affairs. If a person makes a representation to another, on the faith of which the latter acts to his prejudice, the former cannot resile from the representation made by him. He must make it good. This principle can have no application to representations made regarding the assertion or enforcement of fundamental rights. For example, the concession made by a person that he does not possess and would not exercise his right to free speech and expressio .....

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ferment of fundamental rights is not only to benefit individuals but to secure the larger interests of the community. The Preamble of the Constitution says that India is a democratic Republic. It is in order to fulfil the promise of the Preamble that fundamental rights are conferred by the Constitution, some on citizens like those guaranteed by Articles 15, 16, 19, 21 and 29 and, some on citizens and non-citizens alike, like those guaranteed by Articles 14, 21, 22 and 25 of the Constitution. No .....

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o his precious personal freedoms on promise of transitory, immediate benefits. Therefore, notwithstanding the fact that the petitioners had conceded in the Bombay High Court that they have no fundamental right to construct hutments on pavements and that they will not object to their demolition after October 15, 1981, they are entitled to assert that any such action on the part of public authorities will be in violation of their fundamental rights…. (emphasis supplied) Therefore the conten .....

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Highlight: Classification printed computer stationary/manifold Business Forms - to be classified under Chapter Heading 4820.00 or under Chapter Heading 4901.90 - items like A4 sheets, advertisement and job card to be classified under Chapter 49

Article: RCM Applicability to persons not liable to get registered us 23(1)

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

News: GST Refund - Blockage of Working Capital of Exporters - earlier also there was a normal blockage of funds for a period of 5-6 months at least

News: Clarification about Transition Credit - ₹ 1.27 lakh crore of credit of Central Excise and Service Tax was lying as closing balance as on 30th June, 2017 - claim of credit of ₹ 65,000 crore is not unexpected

Article: 20 Things You must know about E Way Bills in GST Law

Article: MISTAKES IN DRAFTING

Highlight: The Customs and Central Excise Duties Drawback Rules, 2017 and All Industry Rates (AIRs) of Drawback related changes -reg. - Circular

Highlight: The definition of "subsidiary company" or "subsidiary" u/s 2(87) of the Companies Act, 2013 shall come into force w.e.f. 20-9-2017

Highlight: Central Government notified the All Industry Rates of Duty Drawback Schedule w.e.f. 1.10.2017 - Notification

Notification: All Industry Rates of Duty Drawback Schedule w.e.f. 1.10.2017

Circular: Investment by Foreign Portfolio Investors in Corporate Debt Securities Review

Notification: Exemptions on supply of services under UTGST Act

Notification: Rates for supply of services under UTGST Act

Notification: Exemptions on supply of services under IGST Act

Notification: Rates for supply of services under IGST Act

Notification: List of Exempted supply of services under the CGST Act

Notification: Rates for supply of services under CGST Act

Highlight: Acceptance of deposits by companies from its members - conditions relaxed in case of Specified IFSC Public company and a private company - Rule 3 amended

Notification: Rate of exchange of conversion of the foreign currency with effect from 8th September, 2017

News: Tax Payers Advised To Confirm Identities Of Income Tax Search Authorities

Notification: Amendment in Appendix 3 (SCOMET items) to Schedule- 2 of ITC (HS) Classification of Export and Import Items 2012

Notification: The Customs and Central Excise Duties Drawback Rules, 2017



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