TaxTMI 
TaxTMI 
2018 (12) TMI 1773
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....titioner says that the scheme, inasmuch as it prescribes mandatory purchase price for monopoly State owned petroleum and petroleum product companies, is arbitrary. 2. The petitioner has set up a "green" plant in the State of Uttarakhand and manufactures a range of chemicals including Mono ethylene Glycol, Diethylene Glycol, Tri ethylene glycol, Fatty Acid Ethoxylates, Fatty Amine Ethoxylates, Alkyl Phenol Ethoxylates, Castor/Natural Oil Ethoxylates, Ethoxylated and Propylated co-polymers, brake fluids, anti-freeze coolants and performance chemicals etc. Its activity is based on use of Ethanol as raw material; not on petroleum based raw material. It claims that such use not only saves valuable foreign exchange, but also is extremely environment friendly. Ethanol is based on recovery from molasses (a dark, viscous liquid made from sugarcane. Its production is a labour-intensive process requiring several steps, including cutting the sugarcane plants, boiling, straining, skimming and re-boiling). The petitioner consumes about 2,40,000 kilo litres of ethanol annually; other major chemical plants, like it are ethanol based and produce articles. Put together, all these consume app....
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.... create supply constraint of ethanol for other industrial use. It is submitted that a similar position was again reiterated by Dr. C. Rangarajan (Chairman, Economic Advisory Council to the PM) in a report that was submitted to the PMO in October, 2012, which stated that all user industries i.e. chemical, alcohol and petroleum should compete for procurement of ethanol. The Senior Counsel submitted that the National Policy on Bio-fuels, the Dr. Saumitra Chaudhuri Report and the Dr. C. Rangarajan report were completely ignored by CCEA while fixing administered price. 5. The petitioners argued that on 29-1-2011, the Ministry of Chemicals and Fertilizers (Respondent No. 2) expressed its serious reservations regarding implementation of EBP on mandatory basis stating that the chemical industry has been suffering from a long time from shortage of ethanol. 6. The basic objective of Ethanol has not been achieved due to shortfall in supply by the ethanol suppliers. Further, there has been more outflow of foreign exchange due to import of ethanol by chemical industry or value-added chemicals which earlier were being produced from ethanol. The petitioners argue that the EBP prog....
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....gn exchange. 9. The petitioners rely upon the note and opinion of the Economic Advisory Council, which considered the draft interim report of the Saumitra Chaudhary Committee. It stated that the Council's report of 10th March, 2011, commented that potentially EBP could be based either on a combination of the need to reduce consumption of fossil fuels and the motivation for this could be concern for the foreign exchange and import bills as also the environment and the need for improving the economics of the sugar industry by identifying a remunerative use for a by-product of the industry. The Council stated that according to the present EBP was based upon the latter consideration. The Council then recommended that the end-use price paid for ethanol by the user should be market determined and not on the basis of helping out an individual set-up; the Council highlighted that this is so in the context of there being a reasonably well-established market for ethanol, both the spirits industry and alcohol based chemical industry. As a consequence, price for the EBP programme should be left to normal commercial process. 10. The petitioners urge that the Committee also noted....
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....r, 2012 that special pricing of the products should not be resorted to by the Central Government, and that rather the chemical, fertilizer and other segments of industry which wish to procure molasses should do so on the basis of a competitive market, the UOI went ahead, and issued a directive on 22-11-2012 with reference to price fixation, for procurement by the PSU oil companies. It is also stated that this was followed up by a Press release dated 7th December, 2012, by the Central Government. 13. Learned Counsel relied on various replies to queries made to Union Ministers in Parliament during the period 2014-18 to say that the EBP never reached its target of 5% blending (of ethanol with petroleum); rather it reached only 3.49% annually in 2015-16 and during the previous years was lower. The total ethanol procurement was also 65.4 crore litres - it did not go up as dramatically as envisioned; in 2010-11 it was 36 crore litres. It was submitted that on the other hand, the price fixation by the Central Government artificially drove up prices of a commodity which could well be procured at a cheaper rate by domestic industry, which due to the constraint of higher prices, was ....
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....ition Commission of India (hereafter referred as "CCI") complaining against the price fixation orders. 17. The Commission was of the opinion that there existed no prima facie case of violation of any of the provisions of either Section 3 or Section 4 of the Competition Act and accordingly closed the matter. Aggrieved by the aforesaid Order of CCI, the petitioner filed an Appeal No. 119 of 2012 (India Glycols Limited v. Indian Sugar Mills Association & Ors.) before the Competitive Appellate Tribunal. That Tribunal, in its order dated 9th December, 2013, dismissed the appeal. Later the petitioner also preferred a Civil Appeal No. 810 of 2014 before the Supreme Court of India, which is sub judice. 18. It is submitted that the Central Government introduced the EBP keeping in mind the beneficial effects it will have on the agricultural sector as well as on the environment. It is further submitted that before the Union Government's decision to implement the EBP consultations were held with the stakeholders and only upon careful consideration of the benefits of the said programme, and the logistical and financial advantages it entailed for a country like India, did the Cen....
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....ent is competent for good reasons to modify or change its policy. 22. Learned Counsel emphasized that it is a settled law that policy decisions of the Government are not to be reviewed by the Courts and that the Courts are to refrain from intervening or venturing into the executive domain of policymaking. Counsel also argued that change in policy based on an established foundation of public interest and in the absence of any allegation that the policy is structured to suit one particular private party or harm a particular private party is impregnable to a challenge. No private right will prevail over a change in policy, structured and mandated in public interest. A change in policy occasioned by application of some principles of public interest cannot be challenged on the ground that it affects private rights of private individuals. 23. It was contended by the respondent that in economic matters especially, the Government enjoys wide latitude of discretion. In such matters, geographical classification which is based on sound rationale and proper reasons is not per se violative of Article 14. In support of this, the respondents relied on Parisons Agrotech (P) Ltd. v.....
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....ndhra Pradesh (except Chittor and Nellore districts) 2. Goa 3. Gujarat 4. Haryana 5. Karnataka 6. Maharashtra 7. Punjab 8. Tamil Nadu (only in districts Coimbatore, Dindigul, Erode, Kanay- kumari, Nilgiri, Ramanathpuram, Tirunelveli, Tuticorin and Virudhunagar) 9. Uttar Pradesh 10. Uttaranchal. Union Territories 1. Daman and Diu 2. Dadra and Nagar Haveli 3. Chandigarh. 2. The Central Government may, suo motu, or on a reference made to it, after due consideration of facts, by an order, modify the areas, and the percentage of ethanol in the ethanol blended petrol that may be supplied, and specify the period for the same. [F.NO. P-45018/28/2....
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....* * * * * * * * *    * * * * * * * * * * 5.10 The blending would have to follow a protocol and certification process, and conform to BIS specification and standards, for which the processing industry and OMCs would need to jointly set up an appropriate mechanism and the required facilities. Section 52 of the Motor Vehicles Act already allows conversion of an existing engine of a vehicle to use biofuels. Engine manufacturers would need to suitably modify the engines to ensure compatibility with biofuels, wherever necessary. * * * * * * * * * *    * * * * * * * * * * Financial and Fiscal Incentives. 5.16 Financial incentives, including subsidies and grants, may be considered upon merit for new and second generation feedstocks; advanced technologies and conversion processes; and, production units based on new and second generation feedstocks. If it becomes necessary, a National Biofuel Fund could be considered for providing such financial incentives. 5.17 As biofuels are derived from renewable biomass resources they will be eligible for various fiscal incentives and concessions availabl....
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....or the implementation of the programme and remove difficulties. (v) A working group of officers from Ministry of Food, Ministry of Petroleum and representatives of oil and sugar industry would be constituted to allocate quantities and locations for supply by the sugar industry as well as reallocations in case of default by some party. The Working Group will also ascertain the possibility of implementation of the programme in States facing problems of availability and other procedural issues, and in case it is not possible to implement the programme then it will recommend accordingly and this will be informed to the CCEA. * * * * * * * * * *    * * * * * * * * * * 3.5 In the meeting held on 1-12-2009, the informal Group of Ministers decided that a price of Rs. 27/litre ex-factory for ethanol may be fixed for a period of three years. This price can thereafter be reviewed by a Committee of Experts to be appointed for this purpose which will review the above price after a period of three years. The Committee should determine the formula/principle which will determine the price for three year period. However, De....
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....rice so determined would be decided by the National Bio-fuel Coordination Committee." 28. It is apparent, therefore, that from inception, the EBP factored in purchase of ethanol by OMCs, which are public sector units, at prices to be decided by the Central Government. This was part of its overall strategy of not only ensuring cleaner fuel, and lowering emission, but increasing eventually bio fuel component to 10%. The material on record shows that from an initial low of about 1.75% in 2009, the EBP achieved upto 3.5% of bio-fuel element in the petroleum sold. The various cabinet notes and decisions also indicate that a key component in EBP and its envisioned success was on the basis of sustained supply of ethanol at prices determined by the Central Government. This, it was felt, would act as incentive to those supply ethanol, for the EBP. The February 2010 minutes suggests that the Saumitra Chowdhury Committee was set up at the behest of the Central Government. 29. The petitioner has placed considerable reliance on the Saumitra Chaudhary report. The relevant extract of that report is as follows : "The Draft Report of the Expert Committee chaired by Dr. Saum....
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....r may be reviewed in the context of high inflation." 32. It is evident from the above extracts that the Central Government over the period of 10 years, had been issuing orders, on various aspects concerning biofuel use in the country, including monitoring the EBP, which was first put into place in 2004. The efficacy of that programme was also subjected to close scrutiny, as was the pricing policy associated with it. During the course of these consultations and policy reviews, the Soumitra Chowdhary Committee, the C. Rangarajan Committee and the Economic Advisory Council recommendations were made; they were considered by the Union. 33. The petitioner's challenge to the EBP is two-fold : a constitutional challenge on the basis that the policy is an unsustainable restriction, as it is not founded even on a statute; and two that its continued existence is arbitrary, since it has the effect of driving up the price of ethanol, which has applications other than for biofuel purposes, especially in the chemical industry. 34. So far as the first ground of challenge (i.e. that the policy is not premised on enacted law), the petitioner relies primarily on Bijoe Emmanuel....
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....selves could not be a valid ground to disallow the appellants to open a shop within the hospital campus. Undoubtedly, the opening of a medical store within the hospital campus will provide a great facility to the patients who may not be having any attendant of their own in the hospital for their assistance at odd hours in the event of an emergency to go out to purchase the medicines. There may be patients having an attendant who may not find it convenient or safe to go out of the campus to purchase the medicines in the night hours. In these facts and circumstances, the paramount consideration should be the convenience of the patients and protection of their interest and not the hardship that may be caused to the medical store keepers who may be having their shops outside the hospital campus. Thus the intention of the appellants to open a medical store within the hospital campus is to salvage the difficulties of the patients admitted in the hospital and this object of the appellants has direct nexus with the Public Interest particularly that of the patients and, therefore, the High Court should not have interfered with the decision of the State Government to settle the holding of a ....
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....ative institutions or public sector undertakings being in public interest, will not be construed as arbitrary so as to give rise to a contention of violation of Article 14 of the Constitution. xxx xxx xxx 19. For the above reasons, we are of the opinion that the High Court was right in coming to the conclusion that by the impugned policy, there was no creation of any monopoly nor is there any violation of Articles 14, 19(1)(g) or 19(6) of the Constitution. In view of the above, we are of the opinion that these appeals should fail and the same are dismissed accordingly. No costs. CA Nos. 3723 and 3744 of 1988 : 20. These appeals are preferred against the judgment and order of the High Court of Punjab and Haryana dated 3-6-1988 made in Civil W.P. No. 6144 of 1987 wherein the High Court was pleased to allow the writ petition filed by the respondents in these civil appeals, quashing the policy decision of the State of Punjab whereby the State had directed its authorities concerned to purchase certain medicines from the public sector undertakings only. We have today in CA Nos. 4550-51 of 1989 held that a similar policy decision issued by the....
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....ility in its approach. In Premium Granites and Anr. v. State of T.N. and Ors. - (1994) 2 SCC 691, the Supreme Court clarified that it is the validity of a policy and not its efficacy that can be challenged : "54. It is not the domain of the court to embark upon unchartered ocean of public policy in an exercise to consider as to whether a particular public policy is wise or a better public policy can be evolved. Such exercise must be left to the discretion of the executive and legislative authorities as the case may be. The court is called upon to consider the validity of a public policy only when a challenge is made that such policy decision infringes fundamental rights guaranteed by the Constitution of India or any other statutory right..." 39. Similarly, in Delhi Science Forum & Ors. v. Union of India & Anr. - (1996) 2 SCC 405, the Court, while rejecting a claim against the opening up of the telecom sector held that Courts are not the forum for debate and discourse over the merits and demerits of a policy; it was also stated that no direction can be given by the Courts, unless the implementation of executive policies, results in infringement of any of the co....