TMI Blog1984 (12) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... that any such levy is subject to review by courts in the light of the provisions of the Constitution. On the material now available to us, while it is not possible to come to the conclusion that the effect of the levy is indeed so burdensome as to affect the freedom of the press, we are also not able to come to the conclusion that it will not be burdensome. This is a matter which touches the freedom of the press which is, as we said, the very soul of democracy. This is certainly not a question which should be decided on the mere question of burden of proof. There are factors indicating that the present levy is heavy and is perhaps heavy enough to affect circulation. On such a vital issue, we cannot merely say that the petitioners have not placed sufficient material to establish that the drop in circulation is directly linked to the increase of the levy when, on the side of the Government, the entire exercise is thought to be irrelevant. Hence, there appears to be a good ground to direct the Central Government to reconsider the matter afresh in the light of what has been said here. We do not, however, see much substance in the contention of some of the petitioners that the class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 975 (Act 51 of 1975), and the levy of auxiliary duty under the Finance Act, 1981, on newsprint as modified by notifications issued under section 25 of the Customs Act, 1962, with effect from March 1, 1981. The first set of writ petitions challenging the above levy was filed in May, 1981. At that time, under the Customs Act, 1962, read with the Customs Tariff Act, 1975, customs duty of 40% ad valorem was payable on newsprint. Under the Finance Act, 1981, an auxiliary duty of 30% ad valorem was payable in addition to the customs duty. But, by notifications issued under section 25 of the Customs Act, 1962, the customs duty had been reduced to 10% ad valorem and auxiliary duty had been reduced to 5% ad valorem in the case of newsprint used for printing newspapers, books and periodicals. During the pendency of these petitions, while the Customs Tariff Act, 1975, was amended levying 40%, ad valorem plus Rs. 1,000 per MT as customs duty on newsprint, the auxiliary duty payable on all goods subject to customs duty was increased to 50% ad valorem. But, by reason of notifications issued under section 25 of the Customs Act, 1962, customs duty at a flat rate of Rs. 550 per MT and auxiliary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circulation of newspapers which are highly critical if the performance of the administration. Incidentally, the petitioners have contended that the classification of newspapers into small, medium and big for purposes of levy of import duty is violative of article 14 of the Constitution. The petitioners have appended to their petitions, a number of annexures in support of their pleas. On behalf of the Union Government, a counter-affidavit is filed. The deponent of the counter-affidavit is R. S. Sidhu, Under Secretary to the Government of India, Ministry of Finance, Department of Revenue. In paragraph 5 of the counter-affidavit, it is claimed that the Government had levied the duty in the public interest to augment the Revenue of the Government. It is stated that when exemption is given from the customs duty, the executive has to satisfy itself that there is some other corresponding public interest justifying such exemption and that, in the absence of any such public interest, the executive has no power to exempt and that it has to carry out the mandate of Parliament which has fixed the rate of duty by the Customs Tariff Act, 1975. It is also claimed that the classification of news ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported goods suffered basic regulatory and auxiliary customs duty, there was no such levy on newsprint in spite of severe foreign exchange crisis which arose on the devaluation of the Indian rupee in 1966. But on account of the financial difficulties which the country had to face as a consequence of the Bangladesh War in 1971, a regulatory duty of 2 1/2% was levied on newsprint imports to meet the difficult situation by the Finance Act of 1972. The price of newsprint in the year 1971-72 was Rs. 1,134 per MT. The above 2 1/2% ad valorem regulatory duty was abolished by the Finance Act of 1973 and was converted into 5% auxiliary duty by the said Act. This levy of 5% was on all goods including newsprint imported into India. On April 1, 1974, under the Import Control Order issued under section 3 of the Imports and Exports Control Act, 1947, import of newsprint by private parties was banned and its import was canalised through the State Trading Corporation of India. In 1975, the Customs Tariff Act, 1975, came into force. By this Act, the Indian Tariff Act, 1934, was repealed. Under section 2 read with Heading No. 48.01/21 of the First Schedule to the Customs Tariff Act, 1975, a levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent. ad valorem was exempted in the case of newsprint. The net result was that a total duty of 15 per cent. ad valorem came to be imposed on newsprint for the year 1981-82. The explanation given by the Government in support of the above notification was as follows "Customs duty on newsprint : Originally, import of newsprint did not attract any customs duty. The Government of India abolished the customs duty on newsprint after the devaluation of the rupee on the recommendation of the Inquiry Committee on Small Newspapers (1965). The Committee had mentioned in its report that 90% of the newsprint in international trade was free from customs duty and had recommended complete abolition of customs duty on newsprint. However, during the Bangladesh crisis in 1971, a 2 1/2% ad valorem regulatory duty was imposed on newsprint imports. Subsequently, this was abolished on April 1, 1973, and in its place, a 5% auxiliary customs duty on newsprint imports was proposed in the Union Budget Proposals for 1973-74. While no customs duty was levied on newsprint because of the exemption granted by Customs Notification No. 235/F. No. 527/1/76-CUS(TU) dated August 2, 1976, of the Department of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of more than 15,000 but less than 50,000 are classified as medium and those with a circulation of over 50,000 are called big newspapers. Therefore, the small newspapers with a circulation of 15,000 and less will not pay any customs duty, those with a circulation between 15,000 and 50,000 will pay customs duty of 5 per cent. and those with a circulation of over 50,000 will pay 15 per cent. Suitable financial arrangements will be worked out as between the Government and the State Trading Corporation to enable the STC to give effect to these concessions. As hon'ble members are aware, the categorisation of newspapers as small, medium and big in terms of circulation is already well understood in the industry and is being followed by the Ministry of Information and Broadcasting for purposes of determining initial allocation of newsprint and for setting the rates of growth of consumption of newsprint by various newspapers from year to year. The State Trading Corporation will, for purposes of the present scheme, follow the same categorisation of newspapers into small, medium and big. These arrangements will, in effect, provide a relief of about Rs. 5.86 crores to small and medium newsp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of goods mentioned in the First Schedule to the Customs Tariff Act, or in that Schedule as amended from time to time, there shall be levied and collected as an auxiliary duty of customs an amount equal to thirty per cent. of the value of the goods as determined in accordance with the provisions of section 14 of the Customs Act, 1962 (52 of 1962) (hereinafter referred to as the Customs Act). " The above rate of auxiliary duty was to be in force during the financial year 1982-83 and it was open to the Government to grant exemption from the whole or any part of it under section 25 of the Customs Act, 1962. Section 45 of the Finance Act, 1983, imposed fifty per cent. of the value of the goods as auxiliary duty in the place of thirty per cent. imposed by the Finance Act, 1982. But, by notifications issued on February 28, 1982, under section 25(2) of the Customs Act, 1962, which were issued in supersession of the notification dated March 1, 1981, Rs. 550 per tonne was imposed as customs duty on newsprint and auxiliary duty was fixed at Rs. 275 per tonne. In all, Rs. 825 per tonne of newsprint has to be paid as duty. The high seas sale price of newsprint had by that time gone up t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n v. State of Delhi [1950] SCR 605 and Bennett Coleman Co. V. Union of India [1973] 2 SCR 757). The material part of article 19 of the Constitution reads " 19. (1) All citizens shall have the right (a) to freedom of speech and expression;... (g) to practice any profession, or to carry on any occupation, trade or business. (2) Nothing in sub-clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restriction on the exercise of the right conferred by the said sub-clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence... (6) Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevents the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said subclause... " The freedom of the press, as one of the members of the Constituent Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Madras [1950] SCR 594 and Brij Bhushan's case [1950] SCR 605, this court firmly expressed its view that there could not be any kind of restriction on the freedom of speech and expression other than those mentioned in article 19(2) and thereby made it clear that there could not be any interference with that freedom in the name of public interest. Even when clause (2) of article 19 was subsequently substituted under the Constitution (First Amendment) Act, 1951, by a new clause which permitted the imposition of reasonable restrictions on the freedom of speech and expression in the interests of sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence, Parliament did not choose to include a clause enabling the imposition of reasonable restrictions in the public interest. Article 19 of the Universal Declaration of Human Rights, 1948, declares: " Every one has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hts " in the International Dimensions of Human Rights (Edited by Karel Vasak) Vol. 1, at pages 155-156, state thus: " (ii) Freedom of opinion, expression, information and communication. A pre-eminent human right, in so far as it allows everyone to have both an intellectual and political activity, freedom of expression in the broad sense actually includes several specific rights, all linked together in a 'continuum' made increasingly perceptible by modern technological advance. What is primarily involved is the classic notion of freedom of opinion, that is to say, the right to say what one thinks and not to be harassed for one's opinions. This is followed by freedom of expression, in the limited sense of the term, which includes the right to seek, receive and impart information and ideas, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media of one's choice. When freedom of expression is put to use by the mass media, it acquires an additional dimension and becomes, freedom of information. A new freedom of being recognised which is such as to encompass the multiform requirements of these various elements, while incorporatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he right to privacy, the right to participate in public communication-all elements of a new concept, the right to communicate. In developing what might be called a new era of social rights, we suggest all the implications of the right to communicate be further explored. Removal of Obstacles : Communication, with its immense possibilities for influencing the minds and behaviour of people, can be a powerful means of promoting democratization of society and of widening public participation in the decision-making process. This depends on the structures and practices of the media and their management and to what extent they facilitate broader access and open the communication process to a free interchange of ideas, information and experience among equals, without dominance of discrimination." In today's free world, freedom of the press is the heart of social and political intercourse. The press has now assumed the role of the public educator making formal and non-formal education possible in a large scale, particularly in the developing world, where television and other kinds of modern communication are not still available for all sections of society. The purpose of the press is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in democratic society and in particular of the apex court of the U.S.A. in upholding the freedom of speech and expression writes : " The objection that our judicial institutions lack the political power and prestige to perform an active role in protecting freedom of expression against the will of the majority raises more difficult questions. Certainly judicial institutions must reflect the traditions, ideals and assumptions, and in the end, must respond to the needs, claims and expectations, of the social order in which they operate. They must not, and ultimately cannot, move too far ahead or lag too far behind. The problem for the Supreme Court is one of finding the proper degree of responsiveness and leadership, or perhaps better, of short-term and long-term responsiveness. Yet in seeking out this position, the court should not underestimate the authority and prestige it has achieved over the years. Representing the 'conscience of the community', it has come to possess a very real power to keep alive and vital the higher values and goals toward which our society imperfectly strives... Given its prestige, it would appear that the power of the court to protect freedom of expressi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt was of the opinion that the right of freedom of speech and press includes not only the right to utter or to print, but the right to read. " Justice Mathew proceeded to observe (at pp. 819-820; at p. 143 of 1973 AIR): "Under article 41 of the Constitution, the State has a duty to take effective steps to educate the people within limits of its available economic resources. That includes political education also. Public discussion of public issues together with the spreading of information and any opinion on these issues is supposed to be the main function of newspaper. The highest and lowest in the scale of intelligence resort to its columns for information. Newspaper is the most potent means for educating the people as it is read by those who read nothing else and, in politics, the common man gets his education mostly from newspaper. The affirmative obligation of the Government to permit the import of newsprint by expending foreign exchange in that behalf is not only because the press has a fundamental right to express itself, but also because the community has a right to be supplied with information and the Government a duty to educate the people within the limits of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. It has been truly said that is the mother of all other liberties. The press as a medium of communication is a, modern phenomenon. It has immense power to advance or thwart the progress of civilization. Its freedom can be used to create a brave new world or to bring about universal catastrophe. 17. Freedom of speech presupposes that right conclusions are more likely to be gathered out of a multitude of tongues than through any kind of authoritative selection. It rests on the assumption that the widest possible dissemination of information from as many diverse and antagonistic sources as possible is essential to the welfare of the public. It is the function of the Press to disseminate news from as many different sources and with as many different facets and colours as possible. A citizen is entirely dependant on the Press for the quality, proportion and extent of his news supply. In such a situation, the exclusive and continuous advocacy of one point of view through the medium of a newspaper which holds a monopolistic position is not conducive to the formation of a healthy public opinion. If the newspaper industry is concentrated in a few hands, the chance of an idea antagonist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when it desired to do so before the Order impugned in that case was passed, could do so thereafter only with permission of the Government. The contention of the petitioner in that case was that the impugned Act and the impugned Order were pieces of legislation designed to curtail the circulation of the newspaper as the increase in the price of the paper would adversely affect its circulation and they directly interfered with the freedom of the press. The validity of these pieces of legislation was challenged on the ground that they violated article 19(1)(g) of the Constitution. The Union Government contested the petition. It pleaded that the impugned Act and the order had been passed with a view to preventing unfair competition among newspapers and also with a view to preventing the rise of monopolistic combines so that newspapers might have fair opportunities of free discussion. It was also contended that the impugned Act and the impugned Order have been passed in the public interest and the petitioner's business being a trading activity falling under article 19(1)(g) of the Constitution any restriction imposed by the said Act and the Order was protected by article 19(6) of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... object was to suppress monopolies and prevent unfair practices is of no assistance. The legitimacy of the result intended to be achieved does not necessarily imply that every means to achieve it is permissible ; for even if the end is desirable and permissible, the means employed must not transgress the limits laid down by the Constitution. If they directly impinge on any of the fundamental rights guaranteed by the Constitution it is no answer when the constitutionality of the measure is challenged that apart from the fundamental right infringed the provision is otherwise legal." We have so far seen the importance of the freedom of speech and expression which includes the freedom of the press. We shall now proceed to consider whether it is open to the Government to levy any tax on any of the aspects of the press industry. IV. Do newspapers have immunity from taxation ? Leaving aside small newspaper establishments whose circulation may be less than about I 0,000 copies a day, all other bigger newspaper establishments have the characteristics of a large industry. Such bigger newspaper concerns are mostly situated in urban areas occupying large buildings which have to be provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the press, if the House were to decide today that newspapers will be free from all such taxes. Of course, that is what it should be because in no free country with a democratic Government, we have any such taxes as the sales tax or the advertisement tax... I claim that newspapers do deserve a distinctive treatment. They are not an industry in the sense that other industries are. This has been recognised all over the world. They have a mission to perform. And I am glad to say that the newspapers in India have performed that mission of public services very creditably and we have reason to feel proud of it. I would, therefore, expect this House and my friend, Mr. Sidhva, to bear it in mind at the time when God forbid, any proposal comes before Parliament for taxation. That would be the time for them to oppose it. Sir, after all, this is an enabling clause. It does not say that there shall be sales and advertisement tax imposed on newspapers. It does not commit the House today to the imposition of a tax on the sales of or a tax on advertisements published in newspapers. All that we have emphasised is that newspapers as such should be taken away from the purview of the Provincial Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l guarantee of freedom of speech and of the Press are subject to the proper exercise of the Government's Power of taxation, and reasonable license fees may be imposed on trades or occupations concerned with the dissemination of literature or ideas. As a general rule, the constitutional guarantees of freedom of speech and of the press are subject to the proper exercise of the government's power of taxation, so that the imposition of uniform and non-discriminatory taxes is not invalid as applied to persons or organisations engaged in the dissemination of ideas through the publication or distribution of writing. The guaranty of freedom of the press does not forbid the taxation of money or property employed in the publishing business, or the imposition of reasonable licenses and license fees on trades or occupations concerned with the dissemination of literature or ideas. A licence or license tax to permit the enjoyment of freedom of speech and freedom of press may not, however, be required as a form of censorship, and where the purpose of the tax or license is not for revenue, or for reasonable regulation, but is a deliberate and calculated device to prevent, or to curtail the opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst social control, unless such social control is reasonable either because of a constitutional exercise of the police power, or of the power of taxation or of the power of eminent domain. " If any legislation delimiting personal liberty is held to be outside of all three of these categories, it is taking away of personal liberty without due process of law and is unconstitutional. The police power, taxation and eminent domain are all forms of social control which are essential for peace and good government. " The police power is the legal capacity of the sovereignty or one of its governmental agents, to delimit the personal liberty of persons by means which bear a substantial relation to the end to be accomplished for the protection of social interests which reasonably need protection. Taxation is the legal capacity of sovereignty or one of its governmental agents to exact or impose a charge upon persons or their property for the support of the Government and for the payment for any other public purposes which it may constitutionally carry out. Eminent domain is the legal capacity of sovereignty or one of its governmental agents, to take private property for public use upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough framed in general terms, may Place any substantial burden on expression because of their Peculiar impact in that area. Thus the enforcement of a tax or corporate registration statute by requiring disclosure of membership in an association, where such disclosure would substantially impair freedom of expression, should be found to violate first amendment protection. (underlining by us) This view appears to have been accepted by our Second Press Commision in its Report (Vol. 1) at page 35. The Commission observes: "21. Economic and tax measures, legislation relating to social welfare and wages, factory laws, etc., may have some effect upon freedom of the press when applied to persons or institutions engaged in various forms of communication. But where the burden placed on them is the same as that borne by others, engaged in different forms of activity, it does not constitute abridgment of freedom of the press. The use of such measures, however, to control the 'content' of expression would be clearly impermissible. " In Alice Lee Grosjean, Supervisor of Public Accounts for the State of Louisiana v. American Press Company, (297 US 233 ; 80 L Ed 660) in which the appellants ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the constitutional guarantee. A free press stands as one of the great interpreters between the government and the people. To allow it to be fettered is to fetter ourselves. " (underlining by us) The levy imposed by Louisiana was quashed by the Supreme Court of the United States of America in the above case on the ground that it violated the First Amendment to the Constitution of the United States of America, since it was of the view that the tax levied in this case was device to limit the circulation of information. The court, however, did not say that no tax could be levied on the press in any event. In Robert Murdock, Jr. v. Commonwealth of Pennsylvania (City of Jeannette) (319 US 105 ; 87 L Ed. 1292) the Supreme Court of the United States of America declared as unconstitutional and violative of the First Amendment to the Constitution of the United States of America which guaranteed freedom of speech and expression, an ordinance which imposed license tax on persons canvassing for and soliciting within the City of Jeannette, orders for goods, paintings, pictures, wares or merchandise of any kind or persons delivering such articles under orders so obtained or solicited. The pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depend for their exemptions from taxation upon State constitutions or general statutes, not upon the Federal Constitution. Gibbons v. District of Columbia (116 US 404, 29 L Ed 680, 6 S Ct 427). This court has held that the chief purpose of the free press guarantee was to prevent previous restraints upon publication. Near v. Minnesota, (283 US 697, 713, 75 L Ed 1357, 1366 ; 51 S Ct 625). In Grosjean v. American Press Co. (297 US 233, 250, 80 L Ed 660, 668; 56 S Ct 444), it was said that the predominant purpose was to preserve 'an untrammelled press as a vital source of public information'. In that case, a gross receipts tax on advertisements in papers with a circulation of more than twenty thousand copies per week was held invalid because ' a deliberate and calculated device in the guise of a tax to limit the circulation...' There was this further comment: ' It is not intended by anything we have said to suggest that the owners of newspapers are immune from any of the ordinary forms of taxation for support of the Government. But this is not an ordinary form of tax, but one single in kind, with a long history of hostile misuse against the freedom of the press.' (Id. 297 US 250; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regulation is capable of abuse. Each one, to some extent, prohibits the free exercise of religion and abridges the freedom of the press, but that is hardly a reason for denying the power. If the tax is used oppressively, the law will Protect the victims of such action." (underlining by us) Justice Frankfurter, who also dissented from the majority, observed at pages 1310 and 1311 thus: " It cannot be said that the petitioners are constitutionally exempt from taxation merely because they may be engaged in religious activities or because such activities may constitute an exercise of a constitutional right ...... Nor can a tax be invalidated merely because it falls upon activities which constitute an exercise of a constitutional right. The First Amendment of course protects the right to publish a newspaper or a magazine or book. But the crucial question is how much protection does the Amendment give, and against what is the right protected ? It is certainly true that the protection afforded the freedom of the press by the First Amendment does not include exemption from all taxation. A tax upon news paper publishing is not invalid simply because it falls upon the exercise of a con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be held to be inconsistent with or in contravention of this section to the extent that the law in question makes provision-(a) that is reasonably required-(i) in the interests of defence, public safety, public order, public morality or public health ; or (ii) for the purpose of protecting the reputations, rights and freedoms of other persons, or the private lives of persons concerned in legal proceedings, preventing the disclosure of information received in confidence, maintaining the authority and independence of the courts, or regulating telephony, telegraphy, posts, wireless broadcasting, television or other means of communication, public exhibitions or public entertainments; or (b) that imposes restrictions upon public officers. " Lord Fraser who delivered the judgment of the Privy Council upheld the levy of the licence fee as being reasonably required in the interests of defence and for securing public safety, etc., referred to in section 10(2)(a)(i) of the Constitution of Antigua. The learned Lord observed in that connection thus (p. 243 of [1975] 3 WLR): " Revenue requires to be raised in the interests of defence and for securing public safety, public order, public mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Government is likely to use it to make the press subservient to the Government. It is argued that when once this power is conceded, newspapermen will have to run after the Government and hence it ought not to be done. This raises a philosophical question-Press versus Government. We do not think, it is necessary for the press to be subservient to the Government. As long as " this court sits " newspapermen need not have the fear of their freedom being curtailed by unconstitutional means. It is, however, good to remember some statements made in the past by some wise men connected with newspapers in order to develop the culture of an independent press. Hazlitt advised editors to stay in their garrets and avoid: exposing themselves to the subtleties of power. Walter Lippman in his address to the International Press Institute some years ago said that the danger to the independence and integrity of journalists did not come from the pressures that might be put on them; it was that they might be captured and captivated by the company they keep. Arthur Krock after 60 years of experience said that " it is true that in most cases, the price of friendship with a politician is so great for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, trade, business and industry. Hence, tax is leviable on newspaper industry. But when such tax transgresses into the field of freedom of expression and stifles that freedom, it becomes unconstitutional. As long as it is within reasonable limits and does not impede freedom of expression, it will not be contravening the limitations of article 19(2). The delicate task of determining when it crosses from the area of profession, occupation, trade, business or industry into the area of freedom of expression and interferes with that freedom is entrusted to the courts. The petitioners, however, have placed strong reliance on the Sakal's case [1962] 3 SCR 842 ; AIR 1962 SC 305 and Bennett Coleman's case [1973] 2 SCR 757, in support of their case that any tax on newsprint which is the most important component of a newspaper is unconstitutional. They have drawn our attention to the following passage in the decision in Sakal's case [1962] 3 SCR 842; AIR 1962 SC 305, 313, which is at page 863: " It may well be within the power of the state to place in the interest of the general public, restrictions upon the right of a citizen to carry on business but it is not open to the State to ach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of expression. It also held that such restriction of pages resulted in reduction of advertisement revenue and thus adversely affected the capacity of a newspaper to carry on its activity which is protected by article 19(1)(a) of the Constitution. We have carefully considered the above two decisions. In the first case, the court was concerned with the newspaper price-page policy and, in the second, the newsprint policy imposed by the Government had been challenged. Neither of them was concerned with the power of Parliament to levy tax on any goods used by the newspaper industry. As we have observed earlier, taxes have to be levied for the support of the Government and newspapers which derive benefit from the public expenditure cannot disclaim their liability to contribute a fair and reasonable amount to the public exchequer. What may, however, have to be observed in levying a tax on newspaper industry is that it should not be an overburden on newspapers which constitute the Fourth Estate of the country. Nor should it single out the newspaper industry for harsh treatment. A wise administrator should realise that the, imposition of a tax like the customs duty on newsprint is an impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinary taxing statutes, the laws may be questioned only if they are either openly confiscatory or a colourable device to confiscate. On the other hand, in the case of a tax on newsprint, it may be sufficient to show a distinct and noticeable burdensomeness, clearly and directly attributable to the tax. While we, therefore, cannot agree with the contention that no tax can be levied on newspaper industry, we hold that any such levy is subject to review by courts in the light of the provisions of the Constitution. V. Are the impugned notifications issued under section 25 of the Customs Act, 1962, beyond the reach of the Administrative Law? It is argued on behalf of the Government that a notification issued under section 25(1) of the Customs Act granting, modifying or withdrawing an exemption from duty being in the nature of a piece of subordinate legislation, its validity cannot be tested by the court by applying the standards applicable to an administrative action. Reliance is placed on the decision of this court in Narinder Chand Hem Raj v. Lt. Governor, Administrator, Union Territory, Himachal Pradesh [1972] 1 SCR 940, in support of the above contention. In that case, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that it had such a power. The power to impose tax is undoubtedly a legislative power. That power can be exercised by the legislature directly or subject to certain conditions, the legislature may delegate that power to some other authority. But the exercise of that power, whether by the legislature or by its delegate, is an exercise of legislative power. The fact that the power was delegated to the executive does not convert that power into an executive or administrative power. No court can issue a mandate to a legislature to enact a particular law. Similarly, no court can direct a subordinate legislative body to enact or not to enact a law which it may be competent to enact. The relief as framed by the appellant in his writ petition does not bring out the real issue calling for determination. In reality he wants this court to direct the Government to delete the entry in question from Schedule and include the same in Schedule B. Article 265 of the Constitution lays down that no tax can be levied and collected except by authority of law. Hence, the levy of a tax can only be done by the authority of law and not by any executive order. Unless the executive is specifically empowered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. Subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition, it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. In England, the judges would say " Parliament never intended authority to make such rules. They are unreasonable and ultra vires ". The present position of law bearing on the above point is stated by Diplock L.J. in Mixnam's Properties Ltd. v. Chertsey, U. D. C. [1964] 1 QB 214, 237, thus: " The various special grounds upon which subordinate legislation has sometimes been said to be void... can, I think, today be properly regarded as being particular applications of the general rule that subordinate legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislation must be confined to the grounds on which plenary legislation may be questioned, to the ground that it is contrary to the statute under which it is made, to the ground that it is contrary to other statutory provisions or that it is so arbitrary that it could not be said to be in conformity with the statute or that it offends article 14 of the Constitution. That subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned has been held in Tulsipur Sugar Co. Ltd. v. Notified Area Committee, Tulsipur [1980] 2 SCR 1111, Rameshchandra Kachardas Porwal v. State of Maharashtra [1981] 2 SCR 866 and in Bates v. Lord Hailsham of St. Marylebone [1972] 1 WLR 1373. A distinction must be made between delegation of a legislative function in the case of which the question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary powers. In the latter case, the question may be considered on all grounds on which administrative action may be questioned, such as, non-application of mind, taking irrelevant matters into consideration, failure to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority. Warrington L.J. in Short v. Poole Corporation [1926] Ch 66, gave the example of the red-haired teacher, dismissed because she had red-hair. That is unreasonable in one sense. In another sense, it is taking into consideration extraneous matters. It is so unreasonable that it might almost be described as being done in bad faith ; and, in fact, all these things run into one another. " Hence, the claim made on behalf of the Government that the impugned notifications are beyond the reach of the administrative law cannot be accepted without qualification, even though all the grounds that may be urged against an administrative order may not be available against them. Now the notifications issued on March 1, 1981, and February 28, 1982, under section 25 of the Customs Act, 1962, which grant exemptions from payment of certain duty beyond what is mentioned in them are issued by the executive Government. They were issued in substitution of earlier notifications which had granted total exemption. Such notifications have to be issued by the Government after takin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neous considerations which it ought not to have taken into account, then the decision cannot stand. No matter that the statutory body may have acted in good faith; nevertheless the decision will be set aside. That is established by Padfield v. Minister of Agriculture, Fisheries and Food [1968] AC 997, which is a landmark in modern administrative law." In any event, any notification issued under a statute also being law " as defined under article 13(3)(a) of the Constitution, is liable to be struck down if it is contrary to any of the fundamental rights guaranteed under Part III of the Constitution. VI. Has there been proper exercise of Power under section 25(1) of the Customs Act, 1962 ? Freedom of the press as the petitioners rightly assert means freedom from interference from authority which would have the effect of interference with the content and circulation of newspapers. The most important raw material in the production of a newspaper is the newsprint. The cost and availability of newsprint determine the price, size and volume of the publication and also the quantum of news, views and advertisements appearing therein. It is not disputed that the cost of newsprint wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alive has led to consideration of various schemes. Direct grants to papers in need are made in seven European nations. Smaller newspapers and some parts of the 'quality' or 'specialized' press have experienced difficulties from a contraction of operations and size, which has led to limitations on the variety of information sources. This has induced many Governments to examine the possibility of subsidies to help keep newspapers alive or to establish new ones, in monopoly circulation areas and to promote plurality and variety in general. " If any duty is levied on newsprint by Government, it necessarily has to be passed on to the purchasers of newspapers, unless the industry is able to absorb it. In order to pass on the duty to the consumer, the price of newspapers has to be increased. Such increase naturally affects the circulation of newspapers adversely. In Sakal's case, AIR 1962 SC 305, 312, this court has observed thus: " The effect of raising the selling price of newspaper has been considered by the Press Commission. In paragraph 164 of the Report, it is observed : ' The selling price of a paper would naturally have an important effect on its circulation. In this con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axes on knowledge, ' and also by the introduction of a cheap postal system... To Lord Lytton, the novelist and politician and, subsequently, to Milner Gibson and Richard Gobden, is chiefly due the credit of grappling with this question in Parliament to secure, first, the reduction of the tax to a penny in 1836, and then its total abolition in 1855. The number of newspapers established from the early part of 1855, when the repeal of the duty had become a certainty, and continuing in existence at the beginning of 1857, amounted to 107; 26 were metropolitan and 81 provincial. The duties on paper itself were finally abolished in 1861. The abolition of the stamp taxes brought about such reductions in the prices of newspapers that they speedily began to reach the many instead of the few. Some idea of the extent of the tax on knowledge imposed in the early 19th century may be gathered from the fact that the number of stamps issued in 1820 was nearly 29,400,000, and the incidence of the advertisement tax, fixed at 3s. 6d. in 1804, made it impossible for the newspaper owner to pass on the stamp tax to the advertiser. In 1828, the proprietors of the Times had to pay the State more than p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Customs Tariff Act, 1975. Then again in 1982, by the Finance Act, 1982, an extra levy of Rs. 1,000 per tonne was imposed in addition to the original 40% ad volorem duty, even though under the exemption notification, the basic duty had been fixed at 10% of the value of the imported newsprint. No information is forthcoming from the Government as to whether there was any material which justified the said additional levy. It is also not clear why this futile exercise of levying an additional duty of Rs. 1,000 per tonne was done when under the notification issued under section 25 of the Customs Act, 1962, on March 1, 1981, which was in force then, customs duty on newsprint above 10% ad valorem had been exempted. As mentioned elsewhere in the course of this judgment while levying tax on an activity which is protected also by article 19(1)(a), a greater degree of care should be exhibited. While it is indisputable that the newspaper industry should also bear its due share of the total burden of taxation along with the rest of the community when any tax is specially imposed on newspaper industry, it should be capable of being justified as a reasonable levy in court when its validity is ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper industry till March 1, 1981, and imposing 15% duty on newsprint. The petitioners have alleged that the imposition of customs duty has compelled them to reduce the extent of the area of the newspapers for advertisements which supply a major part of the sinews of a newspaper and consequently has adversely affected their revenue from advertisements. It is argued by them relying upon the ruling in Bennett Coleman's case [1973] 2 SCR 757, that article 19(1)(a) is infringed thereby. Our attention is drawn to the following passages in Bennett Coleman's case [1973] 2 SCR 757, which are at pages 777-778 and at page 782: " Publication means dissemination and circulation. The press has to carry on its activity by keeping in view the class of readers, the conditions of labour, price of material, availability of advertisements, size of paper and the different kinds of news comments and views and advertisements which are to be published and circulated. The law which lays excessive and prohibitive burden which would restrict the circulation of a newspaper will not be saved by article 19(2). If the area of advertisement is restricted, price of paper goes up. If the price goes up, circulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Lewis J. Valentine v. F. J. Chrestensen (86 L Ed 1262) observed at pages 687-689, thus : " It cannot be said that the right to publish and distribute commercial advertisements advertising an individual's personal business is a part of freedom of speech guaranteed by the Constitution. In Lewis J. Valentine v. F. J. Chrestensen (86 L Ed 1262), it was held that the constitutional right of free speech is not infringed by prohibiting the distribution in city streets of handbills bearing on one side a protest against action taken by public officials and on the other advertising matter. The object of affixing of the protest to the advertising circular was the evasion of the prohibition of a city ordinance forbidding the distribution in the city streets of commercial and business advertising matter. Mr. justice Roberts, delivering the opinion of the court, said : `This court has unequivocally held that the streets are proper places for the exercise of the freedom of communicating information and disseminating opinion and that, though the states and municipalities may appropriately regulate the privilege in the public interest, they may not unduly burden or prescribe its emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequent decisions. We shall refer only to two of them. In his concurring judgment in William B. Cammarano v. United States of America (358 US 498 ; 3 L Ed 2d 462), justice Douglas said " Valentine v. Chrestensen (86 L Ed 1262) held that business of advertisements and commercial matters did not enjoy the protection of the First Amendment made applicable to the States by the Fourteenth. The ruling was casual, almost off hand. And it has not survived reflection ". In Jeffrey Gole Bigelow v. Commonwealth of Virginia (421 US 809; 44 L Ed 2d 600, 610), the American Supreme Court held that the holding in Lewis J. Valentine v. F. J. Chrestensen (86 L Ed 1262) was distinctly a limited one. In view of the foregoing, we feel that the observations made in the Hamdard Dawakhana's case [1960] 2 SCR 671, are too broadly stated and the Government cannot draw much support from it. We are of the view that all commercial advertisements cannot be denied the protection of article 19(1)(a) of the Constitution merely because they are issued by businessmen. In any event, the Government cannot derive any assistance from this case to sustain the impugned notifications. It was next urged on behalf of the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t activity. There exists no analogy between article 289(1) and article 19(l)(a) and (2) of the Constitution. Hence, the levy cannot be justified merely on the ground that it was not on any property of the publishers of newspapers. Our attention has been particularly drawn to the statement of the Finance Minister that one of the considerations which prevailed upon the Government to levy the customs duty was that the newspapers contained "piffles". A " piffle " means foolish nonsense. It appears that one of the reasons for levying the duty was that certain writings in newspapers appeared to the Minister as " piffles ". Such action is not permissible under our Constitution for two reasons: (i) that the judgment of the Minister about the nature of writings cannot be a true description of the writings, and (ii) that even if the writings are piffles, it cannot be a ground for imposing a duty which will hinder circulation of newspapers. In this connection, it is useful to refer to the decision of the American Supreme Court in Robert E. Hannegan v. Esquire, Inc. (327 US 146 ; 90 L Ed 586), in which it was held that a publication could not be deprived of the benefit of second class mailin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circulation of newspapers is not affected prejudicially, the latter is impermissible under the Constitution as the levy is being made on a consideration which is wholly outside the constitutional limitations. The Government cannot arrogate to itself the power to prejudge the nature of contents of newspapers even before they are printed. Imposition of a restriction of the above kind virtually amounts to conferring on the Government the power to precensor a newspaper. The above reason given by the Minister to levy the customs duty is wholly irrelevant. To sum up, the counter-affidavit filed on behalf of the Government in these cases does not show whether the Government ever considered the relevant matters. It says that the extent of burden on the newspaper industry imposed by the impugned levy is irrelevant. It says that the position that foreign exchange reserve is comfortable is not relevant. It does not say that the increasing cost of imported newsprint was taken into consideration. The Finance Minister says that the levy was imposed because he found " piffles " in some newspapers. There is no reference to the effect of the implementation of the Palekar Award on the newspape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as essential to that freedom as the liberty of publication. Indeed without circulation the publication would be of little value ". ' Similar thoughts were expressed by Black J., in his judgment, in Martin v. City of Struthers ([1943] 319 US 141), When he said: 'Freedom to distribute information to every citizen wherever he desires to receive it is so clearly vital to the preservation of a free society that, putting aside reasonable police and health regulations of time and manner of distribution, it must be fully preserved'." We respectfully endorse the high principle expounded by the Privy Council in the above case. Moreover, in the absence of a proper examination of all relevant matters, it is not possible to hold that the effect of the levy is minimal. In fact, the impact of the impugned levy in these cases is not minimal at all. For example, The Tribune Trust had to pay Rs. 18.7 lakhs and The Statesman Ltd. has to pay Rs. 35.9 lakhs by way of customs duty on newsprint imported during 1983-84. Other big newspapers have also to pay large sums by way of customs duty annually. The question in the present cases is whether the tax has been shown to be so burdensome as to war ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rop in circulation is directly linked to the increase of the levy when, on the side of the Government, the entire exercise is thought to be irrelevant. Hence, there appears to be a good ground to direct the Central Government to reconsider the matter afresh in the light of what has been said here. VII. Is the classification of newspapers made for the Purpose of exemption violative of article 14 ? We do not, however, see much substance in the contention of some of the petitioners that the classification of the newspapers into small, medium and big newspapers for purposes of levying customs duty is violative of article 14 of the Constitution. The object of exempting small newspapers from the payment of customs duty and levying 5% ad valorem (now Rs. 275 per MT) on medium newspapers while levying full customs duty on big newspapers is to assist the small and medium newspapers in bringing down their cost of production. Such papers do not command large advertisement revenue. Their area of circulation is limited and majority of them are in Indian languages catering to rural sector. We do not find anything sinister in the object nor can it be said that the classification has no nexus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... still exists. It is true that in Devadasan's case [1964] 4 SCR 680; AIR 1964 SC 179, the final order of this court was in these terms: `In the result, the petition succeeds partially and the carry forward rule as modified in 1955 is declared invalid.' That, however, does not mean that this court held that the 1952 rule must be deemed to exist because this court said that the carry forward rule as modified in 1955 was declared invalid. The carry forward rule of 1952 was substituted by the carry forward rule of 1955., On this substitution, the carry forward rule of 1952 clearly ceased to exist because its place was taken by the carry forward rule of 1955. Thus, by promulgating the new carry forward rule in 1955, the Government of India itself cancelled the carry forward rule of 1952. When, therefore, this court struck down the carry forward rule as modified in 1955, that did not mean that the carry forward rule of 1952 which had already ceased to exist, because the Government of India itself cancelled it and had substituted modified rule in 1955 in its place, could revive. We are, therefore, of the opinion that after the judgment of this court in Devadasan's case [1964] 4 SCR 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot intend any hiatus when neither the Government rules nor the municipal rules would be in the field. Therefore, it is clear that if the bye-laws made by the respondent-municipality could not be legally in force -for some reason or the other, for instance, for not having been validly made, the Government rules would continue to operate as it cannot be said that the Municipality had put into force their independent bye-laws'. The trial court, as also the District Court, were, therefore, perfectly right in holding that the respondent-municipality could levy and collect octroi duty from the appellant-firm under the Government rules. There was no question of the Government rules being revived, as in the absence of valid rules of the respondent-municipality, they continued to operate. The submission of counsel in this behalf, therefore, cannot be sustained." In the cases before us, we do not have rules made by two different authorities as in Mulchand's case, AIR 1970 SC 685, and no intention on the part of the Central Government to keep alive the exemption in the event of the subsequent notification being struck down is also established. The decision of this court in Koteswar Vittal K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Customs Tariff Act, 1975, itself. But we are of the view that it is unnecessary to quash it because of the pattern of the legislative provisions levying customs duty which authorise the Government in appropriate cases either to reduce the duty or to grant total exemption under section 25 of the Customs Act, 1962, having regard to the prevailing circumstances and to vary such concessions from time to time. The Governmental practice in the matter of customs duties has made the law imposing customs virtually a hovering legislation. Parliament expects the Government to review the situation in each case periodically and to decide what duty should be levied within the limit prescribed by the Customs Tariff Act, 1975. Hence, the validity of the provision in the Customs Tariff Act, 1975, need not be examined now. Since it is established that the Government has failed to discharge its statutory obligations in accordance with law while issuing the impugned notifications issued under section 25 of the Customs Act, 1962, on and after March 1, 1981, the Government should be directed to re-examine the whole issue relating to the extent of exemption that should be granted in respect of im ..... X X X X Extracts X X X X X X X X Extracts X X X X
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