AI Drafter 
TaxTMI 
TaxTMI 
2013 (11) TMI 482
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....f the Writ Petition No. 523 of 2006 are noted in detail and this writ petition is being taken up as a leading writ petition. The facts of the rest of the writ petitions are being noted in brief. 3. In Writ Petition No. 523 of 2006 the petitioner is a limited company engaged in manufacturing of Mentha Oil, Menthol Powder, Menthol crystal, Dementholized Oil, Peppermint oil and Di-hydromyrcenol and their bye-products. The petitioner's factory is situate in district Rampur established in the year 1997. It is stated in paragraph nos. 10 and 11 of the writ petition that it has been the basic policy of Government of India to make the export competitive and to neutralize the incurrence of custom, excise duties, and other taxes by the schemes known as Duty Drawback Scheme (for short DDS), Advanced Licencing Scheme (for short ALS), Duty Entitlement Pass Book Certificate ( for short DEPB) and Duty Free Replenishment Scheme (for short DFRC). It is alleged that the above schemes are basically introduced to refund the incurrence of the customs, excise duty and taxes on the inputs used in the resultant export product. In paragraph no. 13, it is stated that remission granted under the aforesaid....
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....trospective amendment levying tax on items which was not profit or gain in business is oppressive and unreasonable. (iv) The amendment has been made to overrule the judgment of the Tribunal. The legislature is not competent to overrule the binding verdict of the Tribunal. (v) The option given in the 3rd proviso to Section 80 HHC (3) of the Act is sham and total nonexistent inasmuch as the incentive under DEPB and DFRC was more attractive than duty draw back and as such business would certainly opt a more attractive scheme. Thus the levy is not optional but compulsive . (vi) The amendment is discriminatory between exporter under duty draw back and under DEPB and DFRC . The classification meant under the amended proviso is not based on any intelligible differentia or nexus with the object sought to be achieved. Thus amendment is discriminatory. (vii) The retrospective amendment is confiscatory. (viii) The classification between exporters with less than Rs.10 crore and more than Rs. 10 crore export turnover to be eligible for deduction is wholly irrational or arbitrary. (ix) The incentive/ benefit under DEPB and DFRC scheme is not an income and therefore subjecting i....
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....sides this the demand notice dated 16.3.2006 ( Annexure No.6) has also been challenged. In paragraph 4(d), it has been stated that the petitioner has preferred an appeal against the assessment order and the demand notices. 6 902 of 2006 Validity of Sections 3 & 4 of the Taxation Laws ( Amendment) Act, 2005 has been challenged whereby Sections 28 and 80 HHC of the Act has been amended. The challenge has been made on the ground that the amendment seeks to impose burden retrospectively on the assessees having export turnover exceeding Rs.10 crores. The petitioner also challenged notice of demand dated 24.3.2006 ( Annexure No.4) It has been stated in paragraph No.5(s) that the petitioner has preferred an appeal under the Act against the impugned demand notice. 7 903/2006 Also challenged the validity of Sections 3 & 4 of the Taxation Laws ( Amendment) Act, 2005 and the consequential amendments effect in Section 28 and 80HHC of the Act, questioned. Also challenged notice of demand and assessment order dated 28.2.2006 ( Annexure No.7). It is stated in paragraph no. 4(m) that the petitioner is an exporter having export turnover exceeding of Rs.10 crores. In paragraph no. ....
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....e demand notice and assessment order dated 18.10.2006 ( Annexure No. 4) have been challenged. In paragraph no. 6(r), the petitioner has stated that he has preferred an appeal against the impugned assessment order and demand notice. 14 39 of 2007 Validity of amendment in Section 80 HHC(3) of the Act as well as assessment order dated 27.11.2006 ( Annexure No.1) has been challenged. 15 40 of 2007 Validity of amendment in Section 80 HHC(3) of the Act as well as assessment order dated 27.11.2006 ( Annexure No.1) has been challenged. 16 58 of 2007 Validity of the Taxation Laws (Amendment) Act, 2005 inserting 3rd and 4th Proviso in Section 80HHC and amendment in Section 28 of the Act as well as the demand notice and assessment order dated 26.9.2006 ( Annexure No. 4) have been challenged. In paragraph no. 6(r), the petitioner has stated that he has preferred an appeal against the impugned assessment order and demand notice. Validity of Section 80 HHC(3) of the Act and the assessment orders for the A.Y. 2001-02, 2003-04 and 2004-05 have been challenged. 17 920/2008 Validity of the Taxation Laws (Amendment) Act, 2005 inserting 3rd and 4th Proviso in Sectio....
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....he Gujrat High Court has held the retrospectivity to be unconstitutional. He has also drawn the attention of the Court towards a judgment of Bombay High Court in the case of Vijaya Silk House ( Bangalore) Ltd. Vs. Union of India and others ) ((2012) 349 ITR 566 (Bom)), which has followed the judgement in Avani Exports and others Versus Commissioner of Income Tax (supra) by Gujrat High Court and submits that the retrospective operation of the impugned amendment is unconstitutional, impermissible and violative of Articles 14 and 19(1)(g) of the Constitution of India. In support of his submission Shri Ravi Kant has relied on the following judgments : - (a) (2012) 348 ITR 391 ( Guj) (Avani Exports and others Vs. Commissioner of Income Tax and others). (b) (2012) 349 ITR 566 (Bom) (Vijaya Silk House ( Bangalore) Ltd. Vs. Union of India and others. (c) AIR 1963 Supreme Court 1667 ( Rai Ramkrishna and others Vs. State of Bihar paras 10 and 12) (d) (1989) 3 SCC 488 paras 65 and 66( M/s Ujagar Prints and others Versus Union of India and others ). (e) (1993) 1 SCC 249 para 16 ( Escorts Limited and another Versus Union of India and others ) (f) (2004) 5 SCC 783 paras 12 to 1....
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....n turnover has been held valid by Hon'ble Supreme Court in the following judgments : (a) AIR 1953 SC 252 para 29 ( State of Bombay Vs. United Motors ( India) Ltd.) (b) AIR 1990 SC 913 paras 8, 24, 26 and 34 ( Kerala Hotel and Restaurant Association Vs. State of Kerala). (c) AIR 1974 SC 2272 paras 16 and 17 ( S. Kodar Vs. State of Kerala & Others). (d) AIR 1963 SC 104 para 12 ( British India Corporation Ltd. Vs. Collector of Central Excise). (e) AIR 1990 SC 1637 paras 46, 48 and 54 ( Federation of Hotel and Restaurant Association of India Vs. Union of India & Others). (IV) The impugned amendment extends benefits to exporters having export turnover not exceeding Rs.10 Crore. Those exporters who have export turnover exceeding Rs.10 Crore, have been given an option under Section 80 HHC(3). The penalty and interest have been waived with respect to the income returned/ assessed and attributable to profits on sale of DEPB credits or DFRC under Section 80 HHC and the demand created under Section 80 HHC shall be recovered over a period of five years. (V) The impugned amendment is neither unreasonable nor confiscatory nor violative of Articles 14 and 19 of the Constituti....
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....fits shall be an amount equal to-- (i) eighty per cent thereof for an assessment year beginning on the 1st day of April, 2001; [(ii) seventy per cent thereof for an assessment year beginning on the 1st day of April, 2002; (iii) fifty per cent thereof for an assessment year beginning on the 1st day of April, 2003; (iv) thirty per cent thereof for an assessment year beginning on the 1st day of April, 2004,] and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year.] (2)(a) This section applies to all goods or merchandise, other than those specified in clause (b), if the sale proceeds of such goods or merchandise exported out of India are [received in, or brought into, India] by the assessee [(other than the supporting manufacturer)] in convertible foreign exchange [, within a period of six months from the end of the previous year or, [within such further period as the competent authority may allow in this behalf].] [Explanation.--For the purposes of this clause, the expression "competent authority" means the Reserve Bank of India or such other authority as is authorised under any....
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....ee ; and (ii) in respect of trading goods, be the export turnover in respect of such trading goods as reduced by the direct and indirect costs attributable to export of such trading goods : Provided that the profits computed under clause (a) or clause (b) or clause (c) of this sub-section shall be further increased by the amount which bears to ninety per cent of any sum referred to in clause (iiia) (not being profits on sale of a licence acquired from any other person), and clauses (iiib) and (iiic) of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. [Provided further that in the case of an assessee having export turnover not exceeding rupees ten crores during the previous year, the profits computed under clause (a) or clause (b) or clause (c) of this sub-section or after giving effect to the first proviso, as the case may be, shall be further increased by the amount which bears to ninety per cent of any sum referred to in clause (iiid) or clause (iiie), as the case may be, of section 28, the same proportion as the export turnover bears to the total turnover of the business carried on by the asse....
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.... be, or (b) any sum referred to in clause (iiid) or clause (iiie), as the case may be, of section 28, as applicable in the case of an assessee referred to in the second or the third or the fourth proviso, as the case may be, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee.] Explanation.--For the purposes of this sub-section,-- (a) "adjusted export turnover" means the export turnover as reduced by the export turnover in respect of trading goods ; (b) "adjusted profits of the business" means the profits of the business as reduced by the profits derived from the business of export out of India of trading goods as computed in the manner provided in clause (b) of sub-section (3) ; (c) "adjusted total turnover" means the total turnover of the business as reduced by the export turnover in respect of trading goods ; (d) "direct costs" means costs directly attributable to the trading goods exported out of India including the purchase price of such goods ; (e) "indirect costs" means costs, not being direct costs, allocated in the ratio of the export turnover in respect of trading goods to the total turnove....
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....ng House has not claimed the deduction under this section : Provided that the certificate specified in clause (b) shall be duly certified by the auditor auditing the accounts of the Export House or Trading House under the provisions of this Act or under any other law.] (4B) For the purposes of computing the total income under sub-section (1) or sub-section (1A), any income not charged to tax under this Act shall be excluded.] [(4C) The provisions of this section shall apply to an assessee,-- (a) for an assessment year beginning after the 31st day of March, 2004 and ending before the 1st day of April, 2005; (b) who owns any undertaking which manufactures or produces goods or merchandise anywhere in India (outside any special economic zone) and sells the same to any undertaking situated in a special economic zone which is eligible for deduction under section 10A and such sale shall be deemed to be export out of India for the purposes of this section.] Explanation.--For the purposes of this section,-- (a) "convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the pu....
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.... meaning assigned to it in clause (viii) of the Explanation 2 to section 10A.] Profits and gains of business or profession. Section 28:- The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession",-- [(iiid) any profit on the transfer of the Duty Entitlement Pass Book Scheme, being the Duty Remission Scheme under the export and import policy formulated and announced under section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);] [(iiie) any profit on the transfer of the Duty Free Replenishment Certificate, being the Duty Remission Scheme under the export and import policy formulated and announced under section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) ;] 10. From the pleadings in the writ petitions and the arguments raised by the learned Senior Counsel appearing for the parties give rise to the following issues for adjudication : - (i) whether the amendments made in Section 80HHC by the Taxation Laws (Amendment) Act, 2005 with retrospective effect is within the legislative competence of parliament. (ii) whether the petitioners having export turnov....
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....) it is clear that the deduction under Section 80HHC(1) was available subject to the following conditions : (i) The assessee should be an Indian Company or a person resident in India, (ii) It should be engaged in the business of export out of India of any goods or merchandise to which this Section applies, (iii) Deduction is in accordance with and subject to provision of this Section to be allowed in computing the total income of the assessee. (iv) Deduction is to the extent of profits referred to in sub-Section(1B), derived by the assessee from the export of such goods or merchandise. 13. The explanation (aa) of Section 80HHC defines the words "Export out of India" which exclude any transaction by way of sale or otherwise, in a shop, emporium or any other establishment situate in India, not involving clearance at any customs station as defined in the Customs Act, 1962. 14. The word "export turnover" has been defined in explanation (b) of 80HHC to mean the sale proceeds, received in, or brought into, India by the assessee in convertible foreign exchange in accordance with clause (a) of sub-section (2) of any goods or merchandise to which this section applies which....
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.... are issued for import of inputs, as per SION, having same quality, technical characteristics and specifications as those used in the export products and as indicated in the shipping bills. 19. From the above, it is clear that Duty Draw Back is not the same scheme as the DEPB and DFRC Scheme. 20. When goods are not actually imported under DEPB by the exporters who has earned the credit but he sells DEPB credit to another person then it is called DEPB credit sale. Such sale is neither import nor part of export import. Infact the profits so made on sale of DEPB credit is a premium being simple business profit and not the export profit as in such a case the seller does not earn foreign exchange. The profit in such case does not arise out of export or import activity. This is an activity of trading of licence which has a premium in the market. Thus, the very basic ingredients of Section 80HHC(1) of the Act i.e. "profit derived by the assessee from the export of such goods or merchandise" is absent and no deduction can be claimed under the unamended Section with respect to sale proceeds of DEPB credit sale. It was only because of insertion of 2nd, 3rd and 4th Proviso in Section 80....
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....blem did not arise before 1.4.1998. This problem does not arise after 1.4.2005. In this period of seven years, the relevant sections - I am not getting into an exposition of the law- are section 28 and section 80HHC. These are the two sections which are relevant. Now, the Department's interpretation is that DEPB credit sale - I will explain what it is - is not export profit. What is a DEPB credit sale ? A DEPB credit sale is, that on your DEPB Passbook, if you have certain credits in your favour, you can import items against the credit without paying duty. But you can also sell the credit to another importer . If you actually import, it is part of export - import. If you sell it to another importer and make a profit on that - the premium, it is not export profit. It is a simple business profit because profit because the income you earn is not foreign exchange ; it is an Indian rupee. It does not arise out of export activity or import activity. It arises because you are trading in a 'Licence', which has a premium in the market. So, the Department took the view that it does not fall under section 28 read with section 80HHC. I am not going into sub-sections. Therefore, this is not to ....
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....ters." Naturally, the Department says ; "Do not give exemption to any exporter. We must collect the revenue." Therefore, we have decided that this is not a matter where we can give up revenues completely. At the same time, we must be sympathetic to small exporters. Anyway, we did not take a view. We have referred it to Dr. Rangarajan's Economic Advisory Council. The Economic Advisory Council heard exporters, heard everyone and gave a report to the Prime Minister. What did the Economic Advisory Council recommend? I am reading only the recommendations. "(1) If the export turnover was Rs.10 crore or less, the corresponding income may be treated as exempt. (2) If the export turnover was more than Rs.10 crore, the corresponding income may be exempt provided two conditions are satisfied ; One, if an exporter had claimed DEPB credit and also tax exemption for such DEPB credit, the income should be brought to tax without the benefit of exemption. However, the income should be exempt if the exporter had a choice between draw-back and DEPB and the customs component of the draw back rate was higher than the DEPB rate; (3) No penalty by way of interest or penal interest should be l....
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.... Firestone Ture & Rubber Col. of India P. Ltd. Vs. The Management and others), AIR 1973 SC 1034 para 10 (M/s Hiralal Ratan Lal Vs. The Sales Tax Officer, Section III, Kanpur and another), AIR 1979 SC 1803 para 48 (Organo Chemical Industries and another Vs. Union of India and others), AIR 1989 SC 509 para 6 (The Secretary, Regional Transport Authority, Bangalore and another Vs. D.P. Sharma and another), AIR 1992 SC 1277 para 77 (State of Himachal Pradesh and another Vs. Kailash Chand Mahajan and others), AIR 1998 SC 750 para 20A ( Devadoss (dead) by LRs and another Vs. Veera Makali Amman Koil Athalur) and JT 2005 (12) SC 580 para 76 ( State of Gujarat Vs. Mirzapur Moti Kureshi Kassab Jamat & Ors). 24. Thus, we find that the petitioners who are exporters having export turnover of more than Rs.10 crores were not entitled to the benefit of deduction under the unamended provision of Section 80HHC with respect to DEPB credit sales and DFRC. They became entitled to claim deduction only because of the amended provisions. 25. As already discussed, Section 80HHC is a provision for deduction. As per provisions of sub-Section(1) of Section 80HHC the deduction under this Section is allowa....
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....then it is construed strictly and against the subject but if subject falls in the notification then full play should be given to it. In M/s Sanghvi Reconditioners Pvt. Ltd. Versus Union of India & Others (2010) 261 ELT 03 SC para 17, Saraswati Sugar Mills Vs. Commissioner of C. Ex.Delhi-II, (2011)270 ELT 465 SC para 7 and Sri Niwas Cable Components Vs. State of M.P. (2012 279 ELT 166 para 7 Hon'ble Supreme Court held that exemption notification has to be strictly construed. A person claiming exemption must satisfy that he fulfills the eligibility criteria. In Orient Traders Vs. Comm. Tax Officer, Tirupati (JT 2008 (4) SC 66 para 18 Hon'ble Supreme Court has held the law that it is not open the Courts to add words in the exemption notification to extend benefit to others items which do not finds mentioned in the notification. In Commissioner of Custom (Prev.) Mumbai Vs. M. Ambalal Company (2010) 26 ELT 487 SC para 10 and 12 it was held that if any of the conditions of exemption is not fulfilled the exemption shall not be available. 26. A perusal of the principles of law laid down by Hon'ble Supreme Court in the aforenoted judgments makes it clear that exemption or deduction is pr....
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....ata Iron and Steel Company Ltd. v. State of Bihar, 1958 (9) STC 267 the Hon'ble Supreme Court held that a legislature acting within its own legislative field, has the powers of sovereign legislature, and could make its law prospectively as well as retrospectively. 30. In J.K. Jute Mills Company Ltd. v. State of U.P., AIR 1961 SC 1534 the Supreme Court held that where the legislature has power to enact a law with reference to a topic, it has the competence to legislate and to enact a law, which is either prospective or retrospective. In para 15 the Hon'ble Supreme Court held:- "15. The power of a legislature to enact a law with reference to a topic entrusted to it, is, as already stated, unqualified subject only to any limitation imposed by the Constitution. In the exercise of such a power, it will be competent for the legislature to enact a law, which is either prospective or retrospective. In Union of India v. Madan Gopal, 1954 SCR 541: (AIR 1954 SC 158), it was held by this court that the power to impose tax on income under entry 82 of List I in Schedule VII to the Constitution, comprehended the power to impose income-tax with retrospective operation even for a period prior....
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....t is not unlikely that other bus owners may have made similar payments and the appellants have, therefore, come to this Court because they have made no payments and so, their cases do not fall under S. 23(a) or may be, their cases fall under Section 23(b). The position therefore, is that the retrospective operation of Section 23(a) and (b) covers respectively cases of payments actually made under the provisions of the earlier Act, and cases pending inquiry, and the retrospective operation of Section 3(3) read with Section 1(3) only applies to cases of persons who did not pay the tax during the whole of the period, or whose cases were not pending; and it is this limited class of persons whose interests are represented by the appellants before us. Having regard to the somewhat unusual circumstances which furnish the background for the enactment of the impugned statute, we do not think that we could accept Mr. Setalvad's argument that the retrospective operation of the Act imposes restriction on the appellants which contravene the provisions of Article 19(1) (f) and (g). In our opinion, having regard to all the relevant facts of this case, the restrictions imposed by the said retrospe....
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....ively. 30. It is then faintly suggested that the retrospective operation of S. 3, in substance, changes the character of the tax. The argument is that the proviso to S. 3(2) enables the producer to recover the tax from the purchaser in case the goods are sold to a purchaser before they are carried, whereas such a provision did not exist in the past and in that sense, the retrospective operation changes the character of the tax. We have already noticed that the proviso in question is not retrospective in operation, and so, this argument has to be tested by reference to the remaining portion of S. 3(2). Thus tested, it is difficult to accept it as sound. In this connection, we may refer to the recent decision of this Court in Rai Ram Krishna v. State of Bihar. AIR 1963 SC 1667 where a similar plea was rejected and it was pointed out that this Court has consistently held that the mere fact that a validating statute operates retrospectively does not justify the contention that the character of the tax sought to be recovered by such retrospective operation is necessarily changed." 33. In Epari Chinna Krishna Moorthy v. State of Orissa, AIR 1964 SC 1581 the Supreme Court while deal....
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.... to the consumer has no relevance. When the Court has to consider the legislative competence to enact an Act, which validates levy retrospectively, the challenge to the retrospective levy on the ground that it was in violation of Article 19 (1) (f) and (g) was repelled. 35. In Empire Industries Ltd. v. Union of India, AIR 1986 SC 662, the Supreme Court after noticing that the petitioners have already paid excise duty demanded from them from time to time and they have also gathered duties from consumers, upheld the amendment levying excise duty retrospectively. The Supreme Court observed in paragraphs 49 and 50 as follows:- "49. Imposition of tax by legislation makes the subjects pay taxes. It is well recognised that tax may be imposed retrospectively. It is also well settled that that by itself would not be an unreasonable restriction on the right to carry on business. It was urged, however, that unreasonable restrictions would be there because of the retrospectivity. The power of the Parliament to make retrospective legislation including fiscal legislation are well settled. (See Krishnamurthi and Co. v. State of Madras, (1973) 2 SCR 54: AIR 1972 SC 2455). Such legislation pe....
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....d law with retrospective effect in the light of which earlier judgment becomes irrelevant. (See Sri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality, (1970) 1 SCR 388 : (AIR 1970 SC 192). 66. Such legislative expedience of validation of laws is of particular significance and utility and is quite often applied, in taxing statutes. It is necessary that the legislature should be able to cure defects in statutes. No individual can acquire a vested right from a defect in a statute and seek a windfall from the legislature's mistakes. Validity of legislations retroactively curing defects in taxing statutes is well recognised and Courts except under extraordinary circumstances would be, reluctant to override the legislative judgment as to the need for and wisdom of the retrospective legislation. In Empire Industries Limited v. Union of India 1985 Supp.(1) SCR 292 at p. 327 : (AIR 1986 SC 662 at p. 678) this Court observed : ".......not only because of the paramount governmental interest in obtaining adequate revenues, but also, because taxes are not in the nature of a penalty or a contractual obligation but rather, a means of opportioning the costs of government amongst the w....
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....atute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law. Sometimes the Legislature gives its own meaning and interpretation of the law under which tax was collected and by legislative fiat makes the new meaning binding upon Courts. The Legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the Court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the Legislature and legal and adequate to attain the object of validation. If the Legislature has the power over the subject-matter and competence to make a valid law, it can at any time make such a valid ....
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....ing an egalitarian social order, the respective sovereign functionaries need free play in their joints so that the march of social progress and order remains unimpeded; (ii) in its anxiety to safeguard judicial power, it is unnecessary to be overzealous and conjure up incursion into the judicial preserve invalidating the valid law competently made; (iii) the Court, therefore, needs to carefully scan the law to find out; (a) whether the vice pointed out by the Court and invalidity suffered by previous law is cured complying with the legal and constitutional requirements; (b) whether the Legislature has competence to validate the law; (c) whether such validation is consistent with the rights guaranteed in Part III of the Constitution; (iv) the Court does not have the power to validate an invalid law or to legalise impost of tax illegally made and collected or to remove the norm of invalidation or provide a remedy. These are not judicial functions but the exclusive province of the Legislature. Therefore, they are not encroachment on judicial power; (v) in exercising legislative power, the Legislature by mere declaration, without anything more, cannot directly overrule, revise or overr....
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....ion 80HHC(3) of the Act is wholly impermissible, since all the exporters form one single class, also deserves to be rejected. The 2nd Proviso provides for deduction to exporters having turnover not exceeding Rs.10 crores while 3rd and 4th Proviso provides for deduction to exporters having export turnover exceeding Rs.10 crores. In a taxing statute classification of dealers on the basis of different turnovers for levying varying rates of sales tax is permissible and held to be valid by Hon'ble Supreme Court in various judgments. Reference in this regard may be had to the judgments of Hon'ble Supreme Court in the case of Kerla Hotel and Restaurant Association Versus State of Kerla (AIR 1990 SC 913 and S.Kodar Versus State of Kerla ( AIR 1974 SC 2272 at 2276). In the case of ITO Versus N. Takin Roy Rymbai [(1976) 103 ITR 82 (SC); AIR 1976 SC 670 Hon'ble Supreme Court has held that in the context of taxation laws the mere fact that a tax falls more heavily on some in the same category, is not by itself a ground to render the law invalid. It is only when within the range of its selection, the law operates unequally and cannot be justified on the basis of a valid classification that ther....
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...., it is binding upon us. That decision sets out several propositions delineating the true scope and ambit of Article 14 but not all of them are relevant for our purpose and hence we shall refer only to those which have a direct bearing on the issue before us. They clearly recognise that classification can be made for the purpose of legislation but lay down that: 1. The classification must not be arbitrary but must be rational, that is to say, it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of the legislation. In order to pass the test, two conditions must be fulfilled, namely,(l) that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others and (2) that differentia must have a rational relation to the object sought to be achieved by the Act. 2. The differentia which is the basis of the classification and the object of the Act are distinct things and what is necessary is that there must be a nexus between them. In s....
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....an laws touching civil rights such as freedom of speech, religion etc. It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrine or straight jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. The court should feel more inclined to give judicial deference to legislature judgment in the field of economic regulation than in other areas where fundamental human rights are involved. Nowhere has this admonition been more felicitously expressed than in Morey v. Dond 354 US 457 where Frankfurter, J. said in his inimitable style: In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial difference to legislative judgment. The legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of e....
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.... 41. In Shri Krishna Das Versus Town Area Committee,(1990)3 SCC 645 para31, Hon'ble Supreme Court held that it is for the legislature or the taxing authority to determine the question of need, the policy and to select the goods or services for taxation. The courts cannot review these decisions. When taxes are levied on certain articles or services and not on others it cannot be said to discriminatory. In the Union of India Vs.Paliwal Electricals (P)Ltd. (1996) 3 SCC 407 para 10 the Hon'ble Supreme Court has held as under:- "Generally speaking the Exemption Notification and the terms and conditions prescribed therein represent the policies of the government evolved to subserve public interest and public revenue. A very heavy burden, lies upon the person who challenges them on the ground of Article 14. Unless otherwise established, the court must presume that the said amendment was found by the Central Government to be necessary for giving effect to its policy [underlying the notification] on the basis of the working of the said Notification and that such an amendment was found necessary to prevent persons from taking unfair advantage of the concession" 42. Applying the tests....
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.... 44. In view of the discussions made above, we are of the view that the impugned provisions are not violative of Article 14 of the Constitution of India. The classification as provided in the 2nd, 3rd and 4th proviso are wholly valid and based on intelligible differentia. Issue No. (vii)- Whether the impugned amendment is hit by principles of estoppel :- 45. The next issue is whether the impugned amendment is violative of principles of promissory estoppel. The contention of learned counsel for the petitioner is that they have been deprived of the incentives in the form of deduction by the impugned amendments, which was promised to them under Section 80 HHC of the Act. It is also submitted that the conditions imposed by the 3rd and 4th proviso has deprived them of the benefit of Section 80 HHC which was available to them from the beginning and, therefore, such deprivation is hit by principles of promissory estoppel. 46. In the case of Maharshi Dayanand University Vs. Surjeet Kaur (2010) 11 SCC 159 para 17 and 18 the Hon'ble Supreme Court has held as under : "17. In UT, Chandigarh Vs. Goswami, GDSDC this Court considered the case under the provisions of the Punjab (Dev....
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....ples of promissory estoppel. In view of this settled position of law, we reject the contention of the petitioners that the impugned provision is violative of the principles of promissory estoppel. Presumption of Validity 48. In the case of Charanjit Lal Choudhary Vs. Union of India and others reported in AIR 1951 SC 41 para 10, Hon'ble Supreme Court has held that there is presumption that the legislature understands and correctly appreciates the need of its people. In the case of Union of India Vs. Elphinstone Spinning and weaving Co. Ltd. and Ors. reported in AIR 2001 SC 724 para 9, Hon'ble Supreme Court has laid down the law that the legislature does not exceed its jurisdiction. In the case of State of Bihar and others Vs. Smt. Charusila Dasi reported in AIR 1959 SC 1002 para 14, Hon'ble Supreme Court has laid down the law that there is presumption that the legislature does not intend to exceed its jurisdiction. In the case of Kedar Nath Singh Vs. State of Bihar reported in AIR 1962 SC 955 para 26 Hon'ble Supreme Court held that provision should be construed in the manner as will uphold its constitutionality. In Corporation of Calcutta Vs. Libery Cinema reported in AIR 1965....
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....ld not nullify a judgment of a competent court of law. In the appeals / SLPs/petitions filed against the judgment of the Andhra Pradesh High Court, the legislative competence of the State is involved for consideration. Judicial system has an important role to play in our body politic and has a solemn obligation to fulfil. In such circumstances, it is imperative upon the courts while examining the scope of legislative action to be conscious to start with the presumption regarding the constitutional validity of the legislation. The burden of proof is upon the shoulders of the the incumbent who challenges it. It is true that it is the duty of the constitutional courts under our Constitution to declare a law enacted by Parliament or the State Legislature as unconstitutional when Parliament or the State Legislaturehad assumed to enact a law which is void, either for want of constitutional power to enact it or because the constitutional forms or conditions have not been observed or where the law infringes the fundamental rights enshrined and guaranteed in Part III of the Constitution. 84. As observed by this Court in CST v. Radhakrishnan in considering the validity of a Statute the pr....
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....is declared as void. The same approach holds good while ascertaining the intent and purpose of an enactment or its scope and application." In the same para, this Court further observed as follows: "The Court must recognize the fundamental nature and importance of legislative process and accord due regard and deference to it, just as the legislature and the executive are expected to show due regard and deference to the judiciary. It cannot also be forgotten that our Constitution recognizes and gives effect to the concept of equality between the three wings of the State and the concept of "checks and balances" inherent in such scheme." 49. In the case of Promoters and Builders Association Vs. Pune Municipal Corporation (2007) 6 SCC. 143 para 9, Hon'ble Supreme Court has laid down the law that while exercising legislative function, unless unreasonableness and arbitrariness is pointed out it is not open for the Court to interfere. 50. From these decisions out of the long line of decisions with regard to the presumption of constitutional validity of a legislative enactment representing the will of people referred in preceding paragraphs when applied on the facts of the prese....