TaxTMI 
TaxTMI 
2023 (5) TMI 620
X X X X Extracts X X X X
X X X X Extracts X X X X
.... upon the first notification, the assessee caused an irrevocable letter of credit Dated 18th October, 2003 to be issued, for the purchase of the Imported Machine. This First Notification was subsequently amended by the Central Government through a fresh notification dated November 11, 2003 Notification No 164 of 2003 (hereafter, "Amended Notification"). The Amended Notification shifted the benefit of the concessional rate from "High Speed Cold-Set Web Offset Rotary Printing Machine with minimum speed of 70,000 copies per hour" to "High Speed Coldset Web Offset Rotary Double Width Four Plate Wide Printing Machine with a minimum speed of 70,000 copies per hour". 3. On 09.02.2004, the assessee filed a Bill of Entry claiming the benefit of a 5% concession (under the First Notification). However, owing to the Amended Notification, the assessee was ineligible for the benefit of the previously enjoyed concession, under the First Notification, and was liable to pay customs duty at 39.2% on the value of the Imported Machine amounting to 1,92,54,318. Assesee filed a writ Rs. before the High Court Writ Petition No 298/ 2004 for declaring the Amended Notification ultra vires Section 25(1) of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....interest' is made out. 7. The High Court further noted that the assessee is entitled to claim the benefit of the concessional rate of customs duty paid on the imported goods instead of the higher tariff as sought by the amended notification. The union is aggrieved by the impugned order and has approached this court. II 8. Mr. N. Venkatraman, learned Additional Solicitor General for the Union (hereafter, "ASG") submitted that the impugned order challenges the fundamental powers of the government to issue a notification under Section 25(1) of the Act which may have serious implications on their exercise of power in future. The ASG further submitted that the assessee cannot claim concessions/exemptions in respect of a commodity as a matter of right as the same falls within the policy domain of the government. 9. Learned counsel further submitted that the commodities granted exemption under the amended notification relate to technological advancement and modernization of the industrial sector in the country and thus the element of "public interest" is ingrained in the amended notification. 10. The learned ASG also placed reliance on section 21 of the General Clauses Act, 1897 to a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in "public interest", nor are the same shown to be insufficient to support the exercise of that power. [..]" 13. Learned counsel further submitted that the power of the Central Government under Section 25(1) of the Act to grant or amend an exemption is not unrestricted and the government is duty bound to examine the issue in light of public interest. Reliance was placed on this court's judgment in Indian Express Newspapers (Supra) to contend that the power to grant exemption from payment of the customs duty under section 25(1) of the Act is not a delegated power to tax but a power expressly conferred under the Act and thus principles of administrative law will be applicable. 14. Learned counsel for the assessee also placed reliance on Dai-ichi Karkaria Limited v. Union of India & Ors., (hereafter, "Dai-ichi Karkaria") [(2000) 4 SCC 57] and MRF Ltd. v. Commissioner of Sales Tax (hereafter, "MRF Ltd.") (2006) Supp 6 SCR 417 to argue that in the present case, while amending the First Notification, the government failed to discharge its burden of establishing before the court as to what 'public interest' existed that necessitated government to reduce the extent of exemption and how....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntary affidavit) inter alia, averred as follows : "I further say and submit that the power to grant exemption was utilized in the instant case for the purpose of regulation, control and promotion in the public interest. It is obvious that no representation was held out to the public that the first notification would be continued indefinitely. The tax research unit of the respondent authorities considered the relevant facts and market conditions and upon being satisfied that the first notification required amendment issued the second notification amending the description of the goods in respect of which the exemption was to be prospectively allowed as a matter of fiscal policy. It is submitted that the tax research unit duly assessed the priorities in the matter of grant of exemption and accordingly the second notification was issued. Serial No. 267A of notification No.21/2002-Customs was amended vide Notification No.164/2002-Customs was amended vide notification no.164/2003- Customs dated 11th November, 2003 so as to restrict the benefit of customs duty concession available for* specified printing machinery only to 'high speed cold set web offset rotary double width four plat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom domestic manufacturers of the printing machines prompted recalling the concession does not appear to be tenable because the Indian products have the capacity nor more than 60,000 copies per hour and did not have comparable label of automation of the printing quality as that of the foreign machine imported. It cannot be said that withdrawal of the concession was to facilitate the indigenous manufacturers. Indigenous angle therefore was not germane to withdrawal of exemption and this being the position element of public interest which must govern in the case of grant or withdrawal of the grant is lost. There could hardly remain any distinction between the two types of machines as both were having the same technology. No reasonable differentiation could be made between the two types of machines as both the machines have the same capacity of production and both were to be imported and were not manufactured in the country. Therefore, to our mind the Hon'ble Trial Judge did not commit any illegality in holding that element of public interest could not be perceived in withdrawal of exemption." 20. The assessee is, in the opinion of this court, correct in asserting that every act....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... impugned notifications reducing the exemption to 25% for the aforesaid period" and "failed to discharge its statutory obligation while issuing the impugned notifications. Justifications offered, to say the least, is far too naive to be accepted." 22. In Kasinka (supra), the court again described the power under Section 25 of the Act, and the legitimacy of exercise of grant or withdrawal of exemption and observed that: "[..] The withdrawal of exemption "in public interest" is a matter of policy and the courts would not bind the Government to its policy decisions for all times to come, irrespective of the satisfaction of the Government that a change in the policy was necessary in the "public interest". The courts, do not interfere with the fiscal policy where the Government acts in "public interest" and neither any fraud or lack of bona fides is alleged much less established. The Government has to be left free to determine the priorities in the matter of utilisation of finances and to act in the public interest while issuing or modifying or withdrawing an exemption notification under Section 25(1) of the Act. It needs no emphasis that the power of exemption under Section 25(1) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rospective effect. The retrospective cancellation/withdrawal of an exemption or a reduction in rate tantamounts to levy of a tax, or tax at a higher rate from a date in the past, for which the Government has no power under sub-section (3). [..]" 25. The decision in Mahabir Vegetable Oils (P) Ltd. v. State of Haryana (2006) 2 SCR 1172 is along the same lines as MRF Ltd. (supra), which is that benefits once granted, cannot be divested by a retrospective statute or notification. These decisions, in this court's opinion stand on a different footing, because they primarily concern exercise of statutory power, i.e. withdrawal, in a manner that has an extremely prejudicial or unreasonable impact, which is retrospective in effect. 26. So far as the question of promissory estoppel is concerned, a recent decision of this court, in Prashanti Medical Services & Research Foundation v. Union of India (2019) 9 SCR 828 placed the matter in correct perspective, when it observed that: "26. [..] a plea of promissory estoppel is not available to an assessee against the exercise of legislative power and nor any vested right accrues to an assessee in the matter of grant of any tax concession to him....