TMI Blog1988 (5) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... , as excisable commodity was brought under Excise Duty with effect from 1st of March 1970 under Item No. 1 -D in the First Schedule to the Central Excises Salt Act, 1944. While the said levy was in force, the Central Government under the provisions of Rule 8 of the Central Excise Rules, 1944 (referred to as the said Rule) issued a Notification No. 201/79-C.E., dated 4-6-1979 as amended from time to time, exempted all excisable goods on which the duty of excise is leviable and in the manufacture of which any goods falling under Item 68 of the First Schedule to the said Act, had been used as raw-materials or component parts from so much of duty of excise leviable thereon as was equivalent to the duty of excise already paid upon the said raw-materials and components upon the terms and conditions mentioned therein. On the basis of the said Notification No. 201/79-C.E., dated 4-6-1979, the petitioner company was availing the benefit of the exemption as a manufacturer of Aerated waters in regard to the bottles and crowns as well as synthetic essence known as 'Non-alcoholic Beverages 'fee' under Item 68 of the First Schedule to the said Act and accordingly the petitioner No. 1 availed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification No. 197/86-C.E., dated 14th March, 1986. Originally the MODVAT scheme covered inputs and final products falling under 37 chapters of Schedule to Central Excise Tariff Act, 1985, vide Notification No. 177/86-C.E., dated 1.3.1986 Chapter 31 was also added by Notification No. 371/86-C.E., dated 29.7.1986 bringing the number of chapters to 38. The excepted Heading Nos. 36.03 and 37.05 were also substituted by Heading Nos. 36.05 and 37.06 by Notification No. 13/87-C.E., dated 23.1.1987 with effect from 10.2.1987. It may be mentioned that the extended MODVAT scheme was introduced by Shri Rajiv Gandhi the Prime Minister and Finance Minister of India in the Budget Speech 1987-88 on 28th February, 1987 in the Parliament, Budget Speech published by the Government of India in this behalf was produced before this Court and the following paragraphs of the said Speech from the Prime Minister and Finance Minister of India referred to are as follows : "The MODVAT introduced in the 1986-87 Budget was a major innovation. We covered 38 chapters of the Excise Tariff last year. I now propose to extend MODVAT to all the remaining chapters except those relating to textiles, tobacco and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Finance Bill, 1987, MODVAT scheme was subsequently extended vide Notification No. 83/87-C.E., dated 1.3.1987 to the goods falling in Chapters in the First Schedule of Central Excise Tariff Act including aerated waters produced and manufactured by the petitioner No.1 on the basis of the aforesaid provisions of law, the petitioner No.1 was availing the benefit of MODVAT scheme from 1st of March 1987. Thereafter, by Notification No. 203/87, dated 9th September, 1987 issued in exercise of the powers conferred by Rule 57A of the said Rules, the Central Government amended the notification extending the benefit of the MODVAT scheme and withdrew the benefit of MODVAT scheme in respect of goods falling under sub-headings No. 2201.11, 2201.12, 2201.19, 2202.11, 2202.12, 2202.13, 2202.14 or 2202.19. The withdrawal of the MODVAT scheme insofar as the aerated concerned has, it is stated seriously affected the petitioners' business in the following manner: 8. When the petitioner was allowed to avail the benefit of MODVAT scheme, the duty was increased from Rs.7.20 per crate to Rs.12/- per crate and the duty payable by the petitioner per crate came to Rs.10.10p (Rs.12/- less Rs. 0.65 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India. (d) That when MODVAT scheme was extended aerated water by the Prime Minister and Finance Minister in the Parliament the same could not be withdrawn by means of a notification issued under Rule 56A of the said Rules. (e) The notification in question was issued in violation of principle of natural justice, in as much as, the petitioners were not heard before the said scheme was withdrawn. 11. Mr. Bhaskar Masoodkar, Senior Advocate appearing on behalf of the petitioners submitted that the Prime Minister and the Finance Minister in his said Budget Speech made a composite promise to the industry in the Parliament and that on the basis of such a composite promise and assurance the petitioner company fixed the price on a long term policy and because of withdrawal of the scheme, the petitioner company is suffering and would be suffering huge loss and injury. It was submitted that the rate of duty was increased from Rs.7/- to 12/- in the said Budget and at the same time relief was given under the scheme under which the petitioner company had to pay only Rs. 10.10p as duty and now after the withdrawal of the said scheme, the petitioner is liable to pay the duty at a higher r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on behalf of the petitioners in support of a question of promissory estoppel is the case of Supreme Court of India in Pournami Oil Mills v. State of Kerala reported in 1987 (27 )E.L.T. 594 (S.C.) =AIR 1987 S.C. 590 wherein the Supreme Court considered the exemption granted under the Kerala Sales Tax Act, 1963. In this case, in exercise of power conferred by Section 10 of the Kerala General Sales Tax Act, 1963, the Government of Kerala granted exemption in respect of taxes payable under the Act on the turnover of the sale of goods produced and sold by the new industrial units under the small scale industries for a period of five years from the date of commencement of sale of such goods by the said units subject to certain conditions and that by the said notification, new industrial units under Small Scale Industries set up after 1.4.1979 was exempted for payment of sales tax for a period of five years from the date of the production. In this context, it was held by the Supreme Court of India that such exemption relating to tax cannot be withdrawn before the expiry of the five years inasmuch as, on the basis of the promise contained in the notification in question small scale co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ister has completed his estimate as probable income and expenditure for the financial year, it is introduced in the Parliament in the form of a statement familiarly known as 'the Budget'. In such speech the Minister develops the Government's views of the resources of the country, communicates calculation of the probable income and expenditure and declares whether the burdens of the people are to be increased or diminished. The economic aspect of the budget is important and taxes are imposed for their economic effects as well as for raising revenue to meet the expenditure for the year. The resolution which form the usual basis of the Finance Minister's statement are the resolutions for the continuance during the financial year of income tax and corporation tax and the imposition of any new duties or alteration of permanent duties necessary for the purpose of adjusting from revenue expenditure of the year and upon this and any other necessary resolutions, the bill is introduced which gives legislative effect to the financial proposal of the Government confined to the financial year. This is the position of the Budget Speech as is evident from Erskine May's Parliamentary Practice, 19t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the rate on the terms in question were increased conditionally upon grant of concession under the MODVAT scheme and secondly, I do not find that there was any alteration of position on the part of the petitioner to their prejudice on the basis of such budgetary statements. The only allegation in the writ petition is that on the basis of such scheme introduced in the Parliament through MODVAT scheme, the petitioners fixed the price on a long term basis. There cannot be any binding and enforceable assurance in the Parliament in our Constitution by any Minister to the manufacturers regarding pricing strategy or there cannot be any assurance that price of a particular commodity should remain fixed and unaltered for some years. On the basis of changing the policy of the Government in fiscal matters, prices are bound to fluctuate and that the petitioners cannot have any right, legal, constitutional or otherwise with regard to a particular fixed price. Accordingly, I hold that merely because the petitioners had increased the price of aerated waters on the basis of the policy of the Central Government, does not and cannot amount to acting to the prejudice and alter the position of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod. Secondly, the most important ingredient of promissory estoppel is that on the basis of the promise persons who seek to enforce promissory estoppel must establish that the party had acted to his prejudice on the basis of such representation. In the instant case, as a matter of fact, there was no question of altering the petitioner's position acting to his detriment on the basis of such promise. It is not unknown or unusual that on the basis of the budgetary changes prices of particular commodities may increase and/or decrease according to policy of the Government. 21. On fact I hold that the principle of promissory estoppel could not be attracted and secondly, I hold that in a matter of granting exemption and/or withdrawing the exemption, a question of promissory estoppel could not be invoked and I fully agree with the view expressed by the full bench of Delhi High Court in the case of Bombay Conductors Electricals Ltd. 22. It is now firmly established principle that there cannot be any estoppel against the legislative power of the Centre and the State and further the Rule Making Authorities and the Authorities who are empowered to issue and/or withdraw the notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent No. 1 by the hostile treatment without their being any rational basis for such discrimination. It is stated that the petitioner no. 1 as manufacturer of aerated waters has been denied equal treatment under the law in violation of provision of Article 14 of the Constitution of India. Article 14 prohibits class legislation and not reasonable classification for the purpose of legislation. In order to throw an effective challenge in this regard, the petitioners had to make out a case that the classification between the aerated waters and other items of food-stuff was not reasonable: Taxing law is no exception to the doctrine of equal protection but if there is no reasonable basis for classification, the law may be struck down but in the instant case, the petitioners have not disclosed any basis for the contention that the classification was arbitrary. It is firmly established principle that onus of proof that a particular act or action is violative of the provision of Article 14, is upon the persons concerned who challenge the same. But unfortunately the petitioners have not been able to discharge the onus of proof that there was unreasonable classification. There is always a presu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion between tea, coffee and rubber on the one hand and areca and pipper on the other hand and as such the said provision was struck down as offending the provision of Article 14 of the Constitution of India. This case has no application to the facts of this case. 25. Reliance was also placed to the decision of the Supreme Court in the case of State of Rajasthan Another v. M/s. Ghasiram Mangilal Others, reported in AIR 1969 l/(II) SC 710. In this case, Supreme Court held that the word 'Bardana' does not mean gunny bags alone but it can also mean boxes, wooden packing, etc. in which merchandise has been packed for the purpose of dispatch from one station to another. In this way, levy of tax on gunny bags and not on other containers did indicate a discrimination for which no reasonable basis for such classification had been suggested and it was held that on that basis, the exception to the exemption in the notification has already been discriminatory and struck down. 26. The next case relied on was a decision of the Supreme Court in the case of Raja Jagannath Baksh Singh v. State of Uttar Pradesh, reported in AIR 1962 (XX) SC 1552. In this case, it was held that taxing statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in any obvious in equality or resulted in unreasonable restriction on the petitioner's right to carry on trade or business guaranteed under Article 19(l)(g) of the Constitution of India. 28. It was further contended that once a concession is granted, cannot be withdrawn or taken away without giving any opportunity of being heard to the petitioner. The principle of natural justice could only be invoked where the decision of any administrative authority or a judicial authority affects any individual, I am unable to uphold the contention of the petitioner that the principle of natural justice is violated by the respondents by withdrawing the concession without giving the petitioners any opportunity of being heard. Giving an opportunity before passing an Act or framing a rule and/or issuing a notification in exercise of statutory power is unknown and it is not the requirement to give any notice before any such statutory notifications are issued to withdraw the concession. Here no individual action is taken against anybody adversely effecting the interest of any party. The principle of natural justice would come into play where anything is decided by any authority before whom ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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