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M/s. Sri Adinath Traders Versus The Union of India, The Chairman, Central Board of Excise & Customs, The Member, Customs Central Board of Excise & Customs, The Narcotics Commissioner, Central Bureau of Narcotics, M/s. Radhey Shyam Ratanlal, M/s. Hukum Chand Durga Pershad M/s. All India Spices Importers Exporters & Distributors Association, M/s. Astra Management Services Pvt. Ltd.

2016 (3) TMI 794 - MADRAS HIGH COURT

Classification of importers of poppy seeds - cap on import of poppy seeds - CAs there were numerous importers, a policy was evolved to allot specified quantities of imported poppy seeds on ''first come first serve basis'' - Subsequently, the policy changed through public notice by classifying the importer into two categories - Held that:- In the impugned order, majority of the importers would be under the mercy of the few. The classification sought to be made would lead to monopoly, which in tur .....

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continuously imports for a period of two years, would be in a disadvantageous position than the one who did it for the preceding three financial years out of the total five financial years. Therefore, even though there was no import for two financial years out of five financial years, such an importer will gain predominant position as against others. - By applying the decision of the Division Bench of Madras High Court in the case of Hotel & Bar (FL.3) Association of Tamil Nadu Vs. The Secre .....

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importers on artificial classification can be justified in the eye of law. It is further to be seen that the very purpose of classification itself is for the reason that it is impossible to satisfy all the importers. Also the decision aforesaid has not taken into consideration of the concept of ''level playing field''. - Decided in favour of petitioner - W.P.No.29806 of 2015, M.P.Nos.1 to 3 of 2015 and W.M.P.Nos.75 and 76 of 2016 - Dated:- 5-2-2016 - M. M. Sundresh, J. For the Petitioner : Mr.V .....

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He deals with spices, dry fruits, chemicals and other similar items. The poppy seeds are not Narcotic substance, though comes out of poppy plant. They are called ''Khas Khas'' and used widely for cooking in the country. In order to regulate import of poppy seeds, a country cap has been fixed. Accordingly, 50% of the estimated production from Turkey has been determined for cooking for the financial year 2015-2016. This total permissible country cap has to be apportioned between va .....

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the applicants into two categories. Category - A consists of the importers, who have imported poppy seeds from Turkey to India for atleast three financial years during the last five financial years. They would be allotted a quantity from the provisional country cap, which is the average ratio of the import by Category 'A' and Category 'B' of importers in the last 5 financial years. Other importers shall be categorized under Category 'B' and allotted the balance amount of .....

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ghty MT (180 MT) which ever is less. All the applicants are requested to register by submitting their sale contracts in original to the Central Bureau of Narcotics along with applications for the quantities applied for. It was made clear that the registration of sales contract will be only issued for import to the extent of provisional country cap fixed for the financial year 2015-16. If the quantity available for allocation to applicants under category 'A' is insufficient, the selection .....

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tract for a period of two years. The applicants, who have violated condition of minimum of 50% of import of registered quantity are also not eligible for registration of sales contract in pursuant to the impugned public notice dated 14.9.2015. 5. The petitioner, who had applied earlier under the earlier policy of ''first come first served'' has challenged the impugned public notice as violative of Articles 14 and 19(1)(g) of the Constitution of India. It has also been brought to .....

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level playing field and it will lead to trading by the category 'A' importers with the category 'B' importers, inclusive of those who may not get any allotment. There is no justifiable classification having nexus to the object sought to be achieved. All the parties are using the poppy seeds for the very same purpose. There is no differentiation in the eye of law, which could be justified. Merely because some of the importers are doing business for more years, they cannot be given .....

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A' in many cases. In other words, some of the importers in Category 'A' have imported less over the years as against the others in Category -B. Thus, merely based upon number of years of import, the classification made cannot be sustained. In the above said decision, The Karnataka High Court has not considered the scope of Article 14. In support of his contention, the learned Senior Counsel has made reliance upon the following citations: 1. Delhi Development Authority Vs. Joint Actio .....

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l appearing for respondent No.4 and the learned counsel appearing for the private respondents made the following submissions: Since the petitioner has not even made the application, he cannot challenge the impugned notice and as such, the writ petition is not maintainable. The classification is perfectly valid in the eye of law. The provisional cap has been increased subsequently and the object is to make sure that the seed is supplied. It is also meant for import obligation being complied with. .....

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e poppy seeds or ''khas khas'' are being used by the general public covering whole of this country. Therefore, it is immaterial from whom they buy. There is no public interest by allowing to sell only based upon the classification of three years of import for the preceding five financial years. As there is no dispute that all the importers are catering to the needy persons for the very same purpose, such a classification is illusory, artificial and evasive. A classification has t .....

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'. Therefore, there is an element of speculation involved. Either they would be driven out of the market or forced to buy from the traders of importers of Category 'A'. The impugned public notice also provides for debarment and eligibility criteria, when an importer has failed to honour the commitment of import. Therefore, it cannot be said that only category 'A' importers alone would continue the supply. Merely because Category 'A' is importing for more number of yea .....

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port. Such a classification cannot be termed as a valid discrimination. There is no difficulty in appreciating the decision to fix the country cap. In the impugned order, majority of the importers would be under the mercy of the few. The classification sought to be made would lead to monopoly, which in turn, would create an atmosphere of hostile discrimination. The impugned notice also does not reveal any reasons. There is no material to hold that there is a proper distribution of poppy seeds on .....

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erefore, even though there was no import for two financial years out of five financial years, such an importer will gain predominant position as against others. 11. As submitted by the learned Senior Counsel appearing for the petitioner, a perusal of the list of concerns contained in category 'A' and B also would show the discrepancy in the total quantity imported. In some cases, the concerns with lesser import are found in category 'A' for the sole reason of having imported for .....

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p ''non-discrimination''. When a decision becomes unreasonable, affecting the rights of the parties, then, it would certainly affect Article 14 of the Constitution of India. The scope and ambit of Article 14 is well known through the various judgments rendered by the Constitutional Courts. 12. In Hotel & Bar (FL.3) Association of Tamil Nadu Vs. The Secretary to Government & another, (2015-2-L.W.497), a Division Bench of this Court culled out the principle governing Articl .....

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e is not possible. Revenue and economic considerations in taxing statute are permissible classifications. An objective must be a just one. It is a sine qua non for classification. A valid classification is a valid discrimination. A classification without reference to the object sought to be achieved would be hit by Article 14. Such a classification should not be arbitrary, artificial or evasive. In other words, it must confine to rationality. 20. While dealing with the classification qua the con .....

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t is to be ascertained.'' 13. In Subramanian Swamy Vs. Director, Central Bureau of Investigation and another, ((2014) 8 SCC 682), the Apex Court has held as follows: ''58. The Constitution permits the State to determine, by the process of classification, what should be regarded as a class for purposes of legislation and in relation to law enacted on a particular subject. There is bound to be some degree of inequality when there is segregation of one class from the other. However, .....

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ect itself is discriminatory, then explanation that classification is reasonable having rational relation to the object sought to be achieved is immaterial.'' 14. Coming to the doctrine of level playing field, it has been held by the Apex Court in Reliance Energy Ltd. Vs. Maharashtra State Road Development Corporation Limited, ((2007) 8 SCC 1) in the following manner: ''36. We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by con .....

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nine-Judges in the case of I.R. Coelho vs. State of Tamil Nadu (2007) 2 SCC 1, Article 21/14 are the heart of the chapter on fundamental rights. They cover various aspects of life. "Level playing field" is an important concept while construing Article 19(1)(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of "le .....

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n essence, is liberalization of trade. Today India has dismantled licence-raj. The economic reforms introduced after 1992 have brought in the concept of "globalization". Decisions or acts which results in unequal and discriminatory treatment, would violate the doctrine of "level playing field" embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of "equality" should not be read as a stand alone item but it shou .....

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nment, even in contractual matters, fails to satisfy the test of "reasonableness", then such an act or decision would be unconstitutional.'' 15. Therefore, in the light of the above said decisions and applying the same to the facts of the case on hand, this Court is of the view that the impugned public notice cannot be sustained in the eye of law. 16. The submission made by the learned counsel for respondents on the question of maintainability also cannot be countenanced. For c .....

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ier policy, which was subsequently withdrawn. Therefore, this Court holds that the writ petition is certainly maintainable. 17. Much reliance has been made by the learned Senior counsels for the respondents on the decision of the Karnataka High Court. As rightly submitted by the learned Senior counsel appearing for the petitioner, the said decision does not deal in the perspective of Article 14 and 19(1)(g) of the Constitution of India. The only passage, which deals with the merits of the case, .....

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