1983 (8) TMI 66 - HC - Central Excise

Court upholds Finance Act 1982, dismisses writ petitions on retrospective laws

N. RAHMATH AND OTHERS Versus UNION OF INDIA AND OTHERS

N. RAHMATH AND OTHERS Versus UNION OF INDIA AND OTHERS - 1988 (38) E.L.T. 425 (Mad.) Issues Involved:1. Constitutional validity of Section 52 of the Finance Act of 1982.2. Conditions imposed in Notification No. 22/82 [GSR 77(E)/82] dated 23rd February, 1982.3. Alleged violation of Articles 14 and 19(1)(g) of the Constitution of India.4. Legislative competence of Parliament.5. Retrospective application of laws.6. Alleged arbitrary and discriminatory nature of the conditions.7. Application of the principle of promissory estoppel.Detailed Analysis:1. Constitutional Validity of Section 52 of the Finance Act of 1982:The petitioners challenged Section 52 of the Finance Act of 1982 on several grounds, including that it contained a non-obstante clause overriding judicial decisions, particularly the judgment of the High Court in W.P. No. 8845 of 1981. They argued that Parliament usurped judicial power by enacting Section 52 and giving retrospective effect to Notification No. 22/82. The court held that Parliament has the power to enact laws with retrospective effect, especially in the field of taxation, to validate actions that were deemed invalid due to statutory defects. The court referred to several Supreme Court decisions, including Jaora Sugar Mills Ltd. v. State of Madhya Pradesh and Shri Prithvi Cotton Mills Ltd. v. Broach Municipality, to support the validity of retrospective legislation.2. Conditions Imposed in Notification No. 22/82 [GSR 77(E)/82] Dated 23rd February, 1982:The petitioners contended that the conditions imposed in Notification No. 22/82 were arbitrary, unreasonable, and discriminatory. The court noted that the government intended to benefit the cottage industry by providing a concessional rate of excise duty. The retrospective application of the notification was to rectify the defects pointed out by the court in an earlier judgment and to ensure that the benefit of exemption was confined to the intended tiny sector. The court found that the classification based on the output of matches was reasonable and not arbitrary.3. Alleged Violation of Articles 14 and 19(1)(g) of the Constitution of India:The petitioners argued that the retrospective application of the notification violated their fundamental rights under Articles 14 and 19(1)(g) of the Constitution. The court held that merely because a law is retrospective, it does not become unreasonable or arbitrary. The classification of small and big manufacturers for exemption purposes was deemed valid and did not offend Article 14. The court also found that the exemption notification did not impose unreasonable restrictions on the petitioners' right to carry on their trade.4. Legislative Competence of Parliament:The petitioners questioned the legislative competence of Parliament to enact Section 52 of the Finance Act of 1982. The court reaffirmed that Parliament has the power to make laws both prospectively and retrospectively within its legislative field. The court referred to the Supreme Court's decision in Jaora Sugar Mills Ltd. v. State of Madhya Pradesh, which upheld the legislative competence of Parliament to validate past actions through retrospective legislation.5. Retrospective Application of Laws:The petitioners contended that the retrospective application of Notification No. 22/82 was arbitrary and violative of their rights. The court held that retrospective validation is permissible if it seeks to cure defects pointed out by judicial decisions and to carry out the legislative intention. The court cited several Supreme Court decisions, including Shri Prithvi Cotton Mills Ltd. v. Broach Municipality, to support the validity of retrospective legislation.6. Alleged Arbitrary and Discriminatory Nature of the Conditions:The petitioners argued that the conditions imposed in Notification No. 22/82 were arbitrary and discriminatory. The court found that the classification based on the output of matches was reasonable and not arbitrary. The court noted that the government intended to benefit the cottage industry and that the classification was in line with this objective.7. Application of the Principle of Promissory Estoppel:The petitioners contended that the government was estopped from giving retrospective effect to the notification due to the principle of promissory estoppel. The court held that the principle of promissory estoppel does not apply to the legislature and that the legislature has the power to enact laws with retrospective effect. The court referred to the Supreme Court's decision in M.P. Sugar Mills v. State of U.P., which held that the principle of estoppel does not apply to legislative actions.Conclusion:The court dismissed all the writ petitions, upholding the constitutional validity of Section 52 of the Finance Act of 1982 and the conditions imposed in Notification No. 22/82. The court found that the retrospective application of the notification was valid and did not violate the petitioners' fundamental rights under Articles 14 and 19(1)(g) of the Constitution. The court also rejected the application of the principle of promissory estoppel to the legislative action.