TaxTMI 
TaxTMI 
2019 (9) TMI 1374
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....d 5402027, both dated 01.03.2018 and Bills of Entry No.5419273, 5419349, 5419387 and 5419452, all dated 02.03.2018 by the respondents asking the petitioner to pay higher rate of duty for clearance of the subject goods and quash the same holding that higher rate of duty is not applicable and consequently direct the respondents to refund the petitioner, an amount of Rs. 2,88,16,200/- with interest paid by the petitioner from the date of deposit till the date of payment. The petitioner in both the petitions is M/s. Ruchi Soya Industries Limited, and it is a public limited company, duly incorporated under the Indian Companies Act. The petitioner company is engaged in the business of solvent extraction, refining of edible oils, manufacture of soya food products, import, export and trading of agri-commodities. The petitioner company has been importing crude vegetable oils in bulk from different parts of the world for the last more than two decades, maintaining various manufacturing units for refining edible oils like refined soya bean oil, refined palmolein, vanaspati and other oils. The petitioner entered into a contract dated 18.01.2018 with its foreign supplier "Just Oil and Gran Pt....
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.... 2000 Metric Tonnes of the subject goods, the petitioner filed four Ex-Bond Bills of Entry No.5419273, 5419349, 5419387 and 5419452, all dated 02.03.2018 for clearance of the subject goods for home consumption. The petitioner pursued the matter with the department for clearance of the subject goods, but to no avail, as the department was insisting upon the petitioner to pay enhanced rate of duty for permitting clearance of the subject goods. It is also contended that the Notification No.29/2018-Cus was published in the Official Gazette only on 06.03.2018 and the same was made available to the public only on 06.03.2018, hence the notified rate is not applicable to the issue on hand. The revenue was not permitting clearance of the subject goods as requested by the petitioner, however, as the subject goods were urgently needed by the petitioner, amongst others, on account of business commitments, and to run the manufacturing units, the petitioner was incurring lot of expenses everyday on various counts, paid duty @ 44% under protest. The main contention of the petitioner is that, when the duty payable on the imported goods is increased and kept in the office of the respondents witho....
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.... the case of goods cleared from a warehouse under Section 68, on the date on which a bill of entry for home consumption in respect of such goods is presented under that section. The respondents admitted about the issue of notification increasing the customs duty on crude palm oil of edible grade from 30% to 44% by amending the principal notification No.50/2017-Cus dated 30.06.2017 by Notification No.29/2018-Customs dated 01.03.2018 exercising power under Section 25(1) of Act 1962. The Principal Notification No.50/2017 dated 30.06.2017 was issued and published on 30.06.2017, in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i). The Notification No.29/2018-Customs dated 01.03.2018 was issued by the Government, Ministry of Finance, Department of Revenue on 01.03.2018 bearing the words "TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION(i)". Thus, the Notification is deemed to have came into effect on 01.03.2018 as it was issued for publication in the official gazette. Sub-section (4) of Section 25 of the Customs Act, substituted by Act 28 of 2016, Section 119(i) of the Finance Act, 2016, for sub-section (4) with effect....
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....h, the contention of the petitioner is baseless and assessment of subject goods at the tariff rate of 44% is in accordance with law and prayed for dismissal of the writ petitions. During hearing, learned counsel for the petitioner contended that, unless the notification is published in the gazette, it is deemed that the notification has not come into force, since the public have no knowledge about issue of such notifications by the authorities for fixing tariff rates under the Act and Section 14(2) specifies as to how notifications are to be issued by the Customs Department, giving effect and the amendment of sub-section (4) of Section 25 is contrary to sub-section (1) and (2A) of Section 25 of the Act. The Apex Court in Union of India v. Param Industries (referred supra), considered the same issue and held against the Union of India, accepting the contention raised in the petition similar to that of the petitioner. Therefore, the notification is deemed to have come into effect, only on the date of publication on the website of customs department, duly signed by the competent authority, affixing digital signature. Till the date of signing on the notification by the competent autho....
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....& (2A) of Section 25 of the Act shall be, unless otherwise provided came into force by the date of issue by the Central Government for publication in the Gazette. The purport of sub-sections (1), (2A) and (4) of Section 25 are inconsistent with one another. In those circumstances, in view of the inconsistency between sub-sections (1), (2A) and (4), introduced by Notification 28 of 2018, has to be struck down. Scope of interpretation of charging or exempting sections of tax laws: The general principles of interpretation cannot be made applicable for interpretation of taxing statute, more particularly, when exemption clauses or charging clauses are to be interpreted, it must be construed strictly. There is vast difference in interpretation of provisions of taxing statute, more particularly, charging and exempting sections in taxing statutes and other legislations. The principles for interpretation of charging sections and exemption in tax laws are laid down in various judgments. But, there is difference of opinion as to the benefit to be given in the event of any ambiguity in the provisions of the Act. In Innamuri Gopalam and Maddala Nagendrudu v. State of A.P (1963) 14 STC 742 (....
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....x Court held that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption. Some of the provisions of an exemption notification may be directory in nature and some are of mandatory in nature. A distinction between provisions of statute which are of substantive character and were built in with certain specific objectives of policy, on the one hand, and those which are merely procedural and technical in their nature, on the other, must be kept clearly distinguished. The principles as regard construction of an exemption notification are no longer res integra. Whereas the eligibility clause in relation to an exemption notification is given strict meaning where for the notification has to be interpreted in terms of its language, once an assessee satisfies the eligibility clause, the exemption clause therein may be construed literally. In the r....
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.... of customs duty leviable on import goods is deemed to have come into force from the date of issue of notification by Central Government for publication in the Gazette. Vires of a provision in the statute can be challenged on limited grounds only when the amended provision is totally inconsistent to the other provisions in the Act or if the amended provision nullifies other provision in the Act or whether the amended provision is contrary to the fundamental right or it is arbitrary or capricious. The Government has to keep in mind that the amended provisions shall never be contrary to other provisions of the Act, while enacting such law by amending the existing provision. Learned counsel for the petitioner contended that sub-section (4) of Section 25 is contrary to sub-sections (1) & (2A) of the Act and the later provision which was amended by Act 28 of 2018 is to be struck down as arbitrary and in support of his contention, learned counsel placed reliance on the judgment of the Supreme Court in Union of India v. Ganesh Raj Bhojraj (referred supra). Earlier, the Central Government while exercising power conferred on the government, amended Section 25 by enhancing the basic duty o....
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....r, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any 26[notifications], orders, rules or bye-laws so 28[issued]." When the rule prescribed specific procedure to be followed, the Central Government has to follow such rules and issue notifications. In the instant case, Section 25(1), (2A) of the Act mandates issue of notification in the official gazette, whereas, sub-section (4) of Section 25 says that notification is deemed to have been came into force when it was issued by the Central Government for publication in the Gazette. In State of Maharashtra v. Mayer Hanse George AIR 1965 SC 722, the Apex Court observed that, there would be no question of individual service of a general notification on every member of the public and all that the subordinate law making body can or need do, would be to publish it in such a manner that persons can, if they are interested, acquaint themselves with its content. In Pankaj Jain Agencies vs. Union of India (UOI) and Ors 1994 ECR 28 (SC), the Supreme Court while relying on the judgment in State of Maharashtra v. Mayer Hanse George (referred supra), held that, The Notifi....
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....en adduced by Revenue, said notification is effective from 17th September, 2015. Thus, in view of the observations of the Apex Court, the judgment of Calcutta High Court cannot be applied to the present facts of the case, consequently, the contention of the learned counsel for the respondents is hereby rejected. Another identical question came up for consideration before Gujarat High Court in Union of India v. M/s M.D. Overseas Limited (referred supra), wherein the Division Bench of Gujarat High Court held that, when notification was published on subsequent day, demanding the importer to deposit the differential customs duty with interest is illegal and the same was quashed. The question before Gujarat High Court is almost identical to the question involved in the present case. However, the judgment of Gujarat High Court in Union of India v. M/s M.D. Overseas Limited (referred supra) is challenged before the Supreme Court vide Diary No.29116 of 2017, the Apex Court while condoning delay, dismissed the appeal at the stage of admission, as they found no legal and valid ground for interference. If, these principles are applied to the present facts of the case, it is difficult to sust....
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....of Section 25(4) as to power to grant exemption from duty are extracted hereunder for better appreciation of the case. Pre-amended Post-amended by Notification 29 of 2018 Section 25(4) Every notification issued under sub-section (1) or sub-section (2A) shall,_ (a) unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette; (b) also be published and offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi Every notification issued under sub-section (1) or sub-section (2A) shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette. Section 25(1) of the Customs Act is not amended and according to Section 25(1) of the Customs Act, if the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to s....
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....n Act cannot be reconciled, as there may be absolute contradiction, it is often said that the last must prevail (vide Wood v. Riley (1867) LR 3 CP 26 and K.M. Nanavati v. State of Bombay AIR 1961 SC 112). But, this should be accepted only in the last resort. As observed by LORD EVERSHED, M.R: "It is no doubt true that if two sections of an Act of Parliament are in truth irreconcilable, then prima facie the later will be preferred. But these are arguments of the last resort. The first duty of the Court must be, if the result is fairly possible, to give effect to the whole expression of the parliamentary intention" (vide Eastbourne Corporation v. Fortes Limited (1959) 2 All ER 102 .g 107 (CA)). In case in which two provisos were somewhat repugnant to each other, LORD MACMILLAN said: "If proviso 2 is repugnant in any way to proviso 1, it must prevail for it stands last in the enactment and so to quote LORD TENTERDEN, C.J., 'speaks the last intention of the makers'. The last word is with the respondent and must prevail" (vide King v. Dominion Engineering Company Limited AIR 1947 PC 94 pg 95). But, the rule that the later section should always be preferred in case it is irreconcilable w....
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....rred and the adverb 'specially' refers to the special purpose of empowerment. One of the reasons given was that a contrary conclusion would impede the efficacy of the provision and introduce inconvenience, friction, confusion and artificiality in the working of the provision. Similar principle was applied by the Supreme Court in construing the fundamental right under Articles 22(1) and (2) of the Constitution; and it was held that the said Article applied to give protection against such arrests as are effected otherwise than under a warrant issued by a Court on the allegation or accusation that the arrested person has committed some criminal or quasi-criminal act and that the physical restraint put upon an abducted person in process of recovering and taking into custody and delivery of the person to the custody of an officer-in-charge of the nearest camp under Section 4 of Abducted Persons (Recovery and Restoration) Act, 1949, is not arrest and detention within the meaning of Article 22(1) and (2). In holding so, S.R. DAS, J, observed: "If two constructions are possible then the court must adopt that which will ensure smooth and harmonious working of the Constitution and eschew the....
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....purpose of enactment introducing any amendment. Moreover, if two constructions are possible then the court must adopt that which will ensure smooth and harmonious working of the enactment and eschew the other which will lead to absurdity or give rise to practical inconvenience or make well-established provision of existing law nugatory. Keeping in view the principles, we would like to examine the inconsistency which may result in absurdity, confusion or friction, contradiction and conflict between two provisions of the section i.e. sub-sections (1), (2A) and (4) of Section 25 of the Act. We have extracted the pre-amended and post-amended provisions of Section 25(4) and even Section 14(2) also made it mandatory for the purpose of Customs Act, 1975 or any other law for the time being in force. Even according to Section 14(2) of the Customs Act, a gazette notification is mandatory fixing the tariff value for any class of import goods. Sub-section (1) of Section 25 remains as it is, on the statute even after amendment to sub-section (4) and the entire Section 25 of the Act deals with power to grant exemption from duty. The Central Government on satisfaction, issue any notification in ....
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....n 25, there is any amount of inconsistency leading to serious absurdity, confusion or friction, contradiction and conflict between its sub-section of same provision. When sub-section (1) made it clear that in the public interest, a notification shall be published in the official gazette granting exemption, only to impute or attribute knowledge to the public about such exemptions. But, whereas, sub-section (4) runs contra to subsection (1), since the amended provisions are deemed to have been came into force when it was issued for publication. Thus, it creates any amount of inconvenience to the public. Therefore, to avoid such serious absurdity, confusion or friction, contradiction and conflict between two sub-sections of Section 25, we find that it is a fit case to declare Notification No.29/2018-Cus dated 01.3.2018 as arbitrary and inconsistent with sub-section (1) & (2A) of Section 25, keeping in view the principles of statutory interpretation laid down by various Courts referred above. Even otherwise, a gazette notification was issued on 06.03.2018. Moreover, the competent officer signed on the notification affixing digital signature on 06.03.2018 only. Therefore, the notificat....
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....ection (1) & (2A) of Section 25 made it mandatory; that grant of exemption from duty in the public interest, it may by notification in the Official Gazette, exempting generally or absolutely, a notification in the gazette is mandatory. Unless, there is a notification in the official gazette, exempting such imported goods either absolutely or conditionally, or subject to conditions, it is not known to the public whether such imported goods are exempted or not. Hence, issue of notification in the official gazette is mandatory to grant exemption from payment of duty. According to Section 25(2A) of the Act, the Central Government may, if it considers it necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order under sub-section (2) insert an explanation in such notification or order, as the case may be, by "notification in the Official Gazette", at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be. But, ....
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....e observations of the Larger Bench of the Apex Court, it is clear that the decision of Government should be predictable and the citizen should know where he is, giving effect on the date of its issue of notification before its publication, such notification is not known to any citizen as to the rate of duty on imported goods, amendment of sub-section (4) of Section 25 of the Act is not only arbitrary exercise of power by Central Government, but also created friction and contradiction between two sub-sections of same section. Learned counsel for the petitioners placed reliance on several judgments of the Apex Court as to the interpretation of statutory provision, so also, the mandatory requirement of notification. The Division Bench of the Apex Court in B.K. Srinivasan v. State of Karnataka (referred supra) had an occasion to deal with the issue of publication of a public notice in the official gazette that the plan and regulations are permanently displayed and are available for inspection by the public with a view to invite comments from the public under Karnataka Town and Country Planning Act, 1961 and the Division Bench held as follows: "There can be no doubt about the proposi....
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.... published in the official gazette vide sub-section (1) and sub-section (2A) of Section 25 of the Customs Act. But, sub-section (4) of Section 25 as amended by Notification No.29 of 2018, almost dispensed with the notification indirectly and frustrating the very intention of Legislature to notify the exemptions in the official gazette. When the law provides issue of notification granting exemptions, or customs duty payable on the imported goods or the tariff rates (vide Section 14(2) and Section 15 of the Act), such notification is deemed to have come into force on the date of publication for the purpose of attributing knowledge to the public, including the subject goods or assesse under the Customs Act. Learned counsel for the petitioners has drawn attention of this Court to the judgment of the Apex Court in Union of India v. M/s. Param Industries Limited (referred supra), wherein the question before the Apex Court was as to the date of notification came into effect. But, this judgment is pertaining to the pre-amended provision of sub-section (4) of Customs Act, since notification was not made available to the public offering for sale, as per sub-section (4)(b) of Section 25 of ....
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....gland (Hailsham edition), page 150 note (r). But even there it was necessary to enact a special Act of Parliament to enable such proclamations to become law by publication in the Gazette though a Royal Proclamation is the highest kind of law, other than an Act of Parliament, known to the Brit- ish Constitution; and even the publication in the London Gazette will not make the proclamation valid in Scotland nor will publication in the Edinburgh Gazette make it valid for England. It is clear therefore that the mere enacting or signing of a Royal Proclamation is not enough. There must be publication before it can become law, and in England the nature of the publication has to be prescribed by an Act of Parliament." Even according to these principles certainly it is difficult to attribute knowledge to the public at large or at least to assesses who are dealing with the imported goods. When the notification was issued and kept in the desk by competent authorities without publication, giving effect to such notification, the same would amount to keeping the assessee in total darkness as to raising demand at the enhanced rate is arbitrary. Learned counsel for the petitioners also drawn at....
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....of exemption or withdrawal of exemption is by way of issuance of notification in the Official Gazette. For bringing Notification into operation, the only requirement of the section is its publication in the Official Gazette and no further publication is contemplated. Apart from prescribed requirement under Section 25, usual mode of bringing into operation such notification followed since years in this country is its publication in the Official Gazette and there is no reason to depart from the same by laying down additional requirement. It is further observed that, it is established practice that the publication in the official gazette, that is, Gazette of India is ordinary method of bringing a rule or subordinate legislation to the notice of the persons concerned. Individual service of a general notification on every member of the public is not required and the interested person can acquaint himself with the contents of the notification published in the gazette. It is the usual mode followed since years and there is no other mode prescribed under the present statute except by the amendment in the year1998 by Bill No. 21 of 1998. The Apex Court also observed as follows: "In our vi....
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....he liability to pay customs duty without regard to the enquiry into the fact whether the notification had actually come to the knowledge of the importer or not. It is not the respondent's case that the relevant Gazette has been published ante-dated. What will be the impact of publication in the Government Gazette though the Gazette in spite of having been published was not available to be seen by the persons affected when criminal consequences are sought to be inflicted - is a question which should in my opinion be left open to be gone into in an appropriate case. Non-availability of Gazette carrying the notification may provide foundation for a defence plea of innocence where mens rea is an ingredient of offence committed by breach of notification. Where mens rea is not an ingredient, want of circulation of Gazette may still be a reason for leniency in punishment. These are the questions which need to be left open." The law declared by various courts is consistent and if a particular provision of law is amended in the enactment, notification in the official gazette for grant of exemption is mandatory and such exemption shall be given effect only from the date of publication i....
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....also drawn attention of this Court to the judgment of the Supreme Court in State of Rajasthan v. Nath Mal and Mitha Mal (referred supra), so also in B.B. Rajwanshi v. State of U.P (1988) 2 Supreme Court Cases 415. But, the principle laid down in the above judgments has no direct application as to the interpretation of taxing statue on account of inconsistency between two sub-sections of same section which deals with the exemption. In view of the law declared by the Courts with regard to interpretation of taxing statutes, it is clear that when the amended provision or any provision of the statute creates serious inconvenience, serious absurdity, confusion or friction, contradiction and conflict between its various provisions, the same is illegal and amendment of sub-section (4) of Section 25 giving effect to the notification from the date of its issue for publication in the gazette is an arbitrary exercise of power by the Legislature and it is totally contrary to the purport of sub-section (1) and sub-section (2A) of Section 25 of the Act, which mandates publication of notification in the official gazette. Therefore, to avoid inconvenience, serious absurdity, confusion or friction,....