TMI Blog2008 (5) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... firm and Appellant No. 2 is its partner. Appellant No. 1 used to export garments and textiles to various countries. It allegedly could not repatriate the value of goods from the export proceeds. According to the appellants, whereas export to developed economies like US, UK, Europe and Japan, on credit basis, does not undergo severe competition and very minimal profit margin can be maintained, export to the less developed countries or the countries with poor legal system earn greater profit margin. 4. Appellants' business allegedly came to a standstill because of its inability to repatriate export proceeds to the tune of 16.5 crores from a few overseas buyers. A notice was issued by the Enforcement Directorate under Sections 18(2) and 18(3) of the Act alleging that in view of their failure to repatriate the entire sale proceeds of the exports which the appellants have made during 1997-98, the said provision is attracted. They, in the cause shown, allegedly furnished details of repatriation they could bring about as also the steps taken by them in that behalf. They applied for extension of time through the authorized dealer, viz., the Canara Bank. However, with the passa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n exporter and, thus, the same is violative of Article 14 of the Constitution of India. It was urged that validity of the said provision must be judged on the touchstone of commercial considerations inasmuch as whether an exporter may not be able to repatriate the export proceeds particularly when such exports are made to the developing countries. The learned counsel would contend that all traders in terms of the provisions of the Income Tax Act, 1961 make a provision for bad debt. When a trader suffers loss, it is permissible to make a provision for writing off such bad debts. It was furthermore urged that in terms of the provisions of the Income Tax Act, the accounts are required to be audited by a Chartered Accountant and, thus, the impugned law being contrary to the accounting practice should not be sustained. Such repatriation of exports proceeds, thus, being uncertain, it was urged, the impugned provisions as also the Constitution 39 th Amendment Act cannot be sustained. 9. Mr. G. E. Vahanvati, learned Solicitor General appearing on behalf of the respondents, on the other hand, would submit that a domestic trader and an exporter belong to different classes and such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India. In terms of Article 31B of the Constitution of India inter alia none of the Acts specified in the Ninth Schedule is ultra vires even if it is inconsistent with or takes away or abridges any of the rights conferred by any provisions of Part III of the Constitution of India. 12. Appellants have questioned the validity of the Act only on the ground of infringement of Article 14 of the Constitution of India. Apart from the fact that the Act is protected under Article 31B of the Constitution of India having been placed in the Ninth Schedule thereof, even otherwise, we do not find any reason to arrive at a conclusion that the Act is ultra vires Article 14 of the Constitution of India. A discrimination on the ground of valid classification which answers the test of intelligible differentia does not attract the wrath of Article 14 of the Constitution of India. Hardship, by itself, may not be a ground for holding the said provision to be unconstitutional. In Ajoy Kumar Banerjee v. Union of India [(1984) 3 SCC 127], this Court held: 50. Differentiation is not always discriminatory. If there is a rational nexus on the basis of which differentiation has been made with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitution of India on the premise that charging section provides for levy of tax on sale and consumption of electrical energy, while the exemption provision purports to give power to exempt tax on electricity sold for consumption and makes no corresponding provision for exemption of tax on electrical energy self-generated and consumed. 14. In absence of such factual foundation having been pleaded, we are of the opinion that no case has been made out for declaring the said provision ultra vires the Constitution of India. 15. A domestic trader and an exporter stand on different footings. The said provisions were made when the country was undergoing severe 'foreign exchange crunch'. The Parliament in its wisdom has inserted the said provisions so as to prevent fraud. Sub-section (1) of Section 18 of the Act provides for filing of an application for grant of exemption by the Reserve Bank of India. Refusal to give such an exemption is required to be preceded by reasonable opportunity of making a representation. 16. A legal provision does not become unconstitutional only because it provides for a reverse burden. The question as regards burden of proof is proce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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