TaxTMI 
TaxTMI 
1984 (12) TMI 65
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.... of import duty on newsprint imported from abroad under section 12 of the Customs Act, 1962 (Act 52 of 1962), read with section 2 and Heading No. 48.01/21, sub-heading No. (2), in the First Schedule to the Customs Tariff Act, 1975 (Act 51 of 1975), and the levy of auxiliary duty under the Finance Act, 1981, on newsprint as modified by notifications issued under section 25 of the Customs Act, 1962, with effect from March 1, 1981. 2. The first set of writ petitions challenging the above levy was filed in May, 1981. At that time, under the Customs Act, 1962, read with the Customs Tariff Act, 1975, customs duty of 40% ad valorem was payable on newsprint. Under the Finance Act, 1981, an auxiliary duty of 30% ad valorem was payable in addition to the customs duty. But, by notifications issued under section 25 of the Customs Act, 1962, the customs duty had been reduced to 10% ad valorem and auxiliary duty had been reduced to 5% ad valorem in the case of newsprint used for printing newspapers, books and periodicals. 3. During the pendency of these petitions, while the Customs Tariff Act, 1975, was amended levying 40%, ad valorem plus Rs. 1,000 per MT as customs duty on newsprint, the....
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....t is urged, that the continuance of the levy is violative of article 19(l )(a) and article 19(l )(g) of the Constitution. It is suggested that the imposition of the levy on large newspapers by the executive is done with a view to stifling circulation of newspapers which are highly critical if the performance of the administration. Incidentally, the petitioners have contended that the classification of newspapers into small, medium and big for purposes of levy of import duty is violative of article 14 of the Constitution. The petitioners have appended to their petitions, a number of annexures in support of their pleas. 5. On behalf of the Union Government, a counter-affidavit is filed. The deponent of the counter-affidavit is R. S. Sidhu, Under Secretary to the Government of India, Ministry of Finance, Department of Revenue. In paragraph 5 of the counter-affidavit, it is claimed that the Government had levied the duty in the public interest to augment the Revenue of the Government. It is stated that when exemption is given from the customs duty, the executive has to satisfy itself that there is some other corresponding public interest justifying such exemption and that, in the ab....
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....f its power under section 25 of the Customs Act, 1962. The price of newsprint was Rs. 725 per MT during the year 1965-66 ; but there was sudden spurt in its price in 1966-67 when it rose to Rs. 1,155 per MT. During the period 1966-71, although almost all imported goods suffered basic regulatory and auxiliary customs duty, there was no such levy on newsprint in spite of severe foreign exchange crisis which arose on the devaluation of the Indian rupee in 1966. But on account of the financial difficulties which the country had to face as a consequence of the Bangladesh War in 1971, a regulatory duty of 2 1/2% was levied on newsprint imports to meet the difficult situation by the Finance Act of 1972. The price of newsprint in the year 1971-72 was Rs. 1,134 per MT. The above 2 1/2% ad valorem regulatory duty was abolished by the Finance Act of 1973 and was converted into 5% auxiliary duty by the said Act. This levy of 5% was on all goods including newsprint imported into India. On April 1, 1974, under the Import Control Order issued under section 3 of the Imports and Exports Control Act, 1947, import of newsprint by private parties was banned and its import was canalised through the Sta....
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....ent. ad valorem. The effect of the said notification was that publishers of newspapers had to pay ten per cent. ad valorem customs duty on imported newsprint. By another notification issued at about the same time, auxiliary duty imposed by the Finance Act of 1981 above 5 per cent. ad valorem was exempted in the case of newsprint. The net result was that a total duty of 15 per cent. ad valorem came to be imposed on newsprint for the year 1981-82. 9. The explanation given by the Government in support of the above notification was as follows Customs duty on newsprint: Originally, import of newsprint did not attract any customs duty. The Government of India abolished the customs duty on newsprint after the devaluation of the rupee on the recommendation of the Inquiry Committee on Small Newspapers (1965). The Committee had mentioned in its report that 90% of the newsprint in international trade was free from customs duty and had recommended complete abolition of customs duty on newsprint. However, during the Bangladesh crisis in 1971, a 2 1/2% ad valorem regulatory duty was imposed on newsprint imports. Subsequently, this was abolished on April 1, 1973, and in its p....
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....owever, pay a price which will reflect the full duty burden of 15 per cent. ad valorem. There is a definition of small, medium and big newspapers in the Press Council. At the moment, the present definition is that those which have circulation of 15,000 or less are classified as small, those with a circulation of more than 15,000 but less than 50,000 are classified as medium and those with a circulation of over 50,000 are called big newspapers. Therefore, the small newspapers with a circulation of 15,000 and less will not pay any customs duty, those with a circulation between 15,000 and 50,000 will pay customs duty of 5 per cent. and those with a circulation of over 50,000 will pay 15 per cent. Suitable financial arrangements will be worked out as between the Government and the State Trading Corporation to enable the STC to give effect to these concessions. As hon'ble members are aware, the categorisation of newspapers as small, medium and big in terms of circulation is already well understood in the industry and is being followed by the Ministry of Information and Broadcasting for purposes of determining initial allocation of newsprint and for setting the rates of growth of con....
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....isions of section 14 of the Customs Act, 1962 (52 of 1962) (hereinafter referred to as the Customs Act). " 16. The above rate of auxiliary duty was to be in force during the financial year 1982-83 and it was open to the Government to grant exemption from the whole or any part of it under section 25 of the Customs Act, 1962. 17. Section 45 of the Finance Act, 1983, imposed fifty per cent. of the value of the goods as auxiliary duty in the place of thirty per cent. imposed by the Finance Act, 1982. 18. But, by notifications issued on February 28, 1982, under section 25(2) of the Customs Act, 1962, which were issued in supersession of the notification dated March 1, 1981 Rs. 550 per tonne was imposed as customs duty on newsprint and auxiliary duty was fixed at Rs. 275 per tonne. In all Rs. 825 per tonne of newsprint has to be paid as duty. The high seas sale price of newsprint had by that time gone up to above Rs. 5,600 per tonne. 19. What is of significance is that when the Government was of the view that the total customs duty on newsprint in the public interest should be not more than 15 per cent. and when these writ petitions questioning even that 15 per cent. levy wer....
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....ession;...(g) to practice any profession, or to carry on any occupation, trade or business. (2) Nothing in sub-clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restriction on the exercise of the right conferred by the said sub-clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence... (6) Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevents the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause... 24. The freedom of the press, as one of the members of the Constituent Assembly said, is one of the items around which the greatest and the bitterest of constitutional struggles have been waged in all countries where liberal Constitutions prevail. The said freedom is attained at considerable sac....
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....han those mentioned in article 19(2) and thereby made it clear that there could not be any interference with that freedom in the name of public interest. Even when clause (2) of article 19 was subsequently substituted under the Constitution (First Amendment) Act, 1951, by a new clause which permitted the imposition of reasonable restrictions on the freedom of speech and expression in the interests of sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence, Parliament did not choose to include a clause enabling the imposition of reasonable restrictions in the public interest. 25. Article 19 of the Universal Declaration of Human Rights, 1948, declares: Every one has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers. 26. Article 19 of the International Covenant on Civil and Political Rights, 1966, reads Article 19 1. Everyone shall have ....
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.... (ii) Freedom of opinion, expression, information and communication. A pre-eminent human right, in so far as it allows everyone to have both an intellectual and political activity, freedom of expression in the broad sense actually includes several specific rights, all linked together in a 'continuum' made increasingly perceptible by modern technological advance. What is primarily involved is the classic notion of freedom of opinion, that is to say, the right to say what one thinks and not to be harassed for one's opinions. This is followed by freedom of expression, in the limited sense of the term, which includes the right to seek, receive and impart information and ideas, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media of one's choice. When freedom of expression is put to use by the mass media, it acquires an additional dimension and becomes, freedom of information. A new freedom of being recognised which is such as to encompass the multiform requirements of these various elements, while incorporating their at once individual and collective character, their implications in terms of both 'righ....
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.... communication-all elements of a new concept, the right to communicate. In developing what might be called a new era of social rights, we suggest all the implications of the right to communicate be further explored. Removal of Obstacles. Communication, with its immense possibilities for influencing the minds and behaviour of people, can be a powerful means of promoting democratization of society and of widening public participation in the decision-making process. This depends on the structures and practices of the media and their management and to what extent they facilitate broader access and open the communication process to a free interchange of ideas, information and experience among equals, without dominance of discrimination." 31. In today's free world, freedom of the press is the heart of social and political intercourse. The press has now assumed the role of the public educator making formal and non-formal education possible in a large scale, particularly in the developing world, where television and other kinds of modern communication are not still available for all sections of society. The purpose of the press is to advance the public interest by ....
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.... particular of the apex court of the U.S.A. in upholding the freedom of speech and expression writes : " The objection that our judicial institutions lack the political power and prestige to perform an active role in protecting freedom of expression against the will of the majority raises more difficult questions. Certainly judicial institutions must reflect the traditions, ideals and assumptions, and in the end, must respond to the needs, claims and expectations, of the social order in which they operate. They must not, and ultimately cannot, move too far ahead or lag too far behind. The problem for the Supreme Court is one of finding the proper degree of responsiveness and leadership, or perhaps better, of short-term and long-term responsiveness. Yet in seeking out this position, the court should not underestimate the authority and prestige it has achieved over the years. Representing the 'conscience of the community', it has come to possess a very real power to keep alive and vital the higher values and goals toward which our society imperfectly strives... Given its prestige, it would appear that the power of the court to protect freedom of expression is unlikel....
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.... In Griswold v. Connecticut (381 US 479, 482), the U.S. Supreme Court was of the opinion that the right of freedom of speech and press includes not only the right to utter or to print, but the right to read. Justice Mathew proceeded to observe (at pp. 819-820; at p. 143 of 1973 AIR): Under article 41 of the Constitution, the State has a duty to take effective steps to educate the people within limits of its available economic resources. That includes political education also. Public discussion of public issues together with the spreading of information and any opinion on these issues is supposed to be the main function of newspaper. The highest and lowest in the scale of intelligence resort to its columns for information. Newspaper is the most potent means for educating the people as it is read by those who read nothing else and, in politics, the common man gets his education mostly from newspaper. The affirmative obligation of the Government to permit the import of newsprint by expending foreign exchange in that behalf is not only because the press has a fundamental right to express itself, but also because the community has a right to be supplied wit....
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....liberty. It occupies a preferred position in the hierarchy of liberties giving succour and protection to other liberties. It has been truly said that is the mother of all other liberties. The press as a medium of communication is a, modern phenomenon. It has immense power to advance or thwart the progress of civilization. Its freedom can be used to create a brave new world or to bring about universal catastrophe. 17. Freedom of speech presupposes that right conclusions are more likely to be gathered out of a multitude of tongues than through any kind of authoritative selection. It rests on the assumption that the widest possible dissemination of information from as many diverse and antagonistic sources as possible is essential to the welfare of the public. It is the function of the Press to disseminate news from as many different sources and with as many different facets and colours as possible. A citizen is entirely dependant on the Press for the quality, proportion and extent of his news supply. In such a situation, the exclusive and continuous advocacy of one point of view through the medium of a newspaper which holds a monopolistic position is not conducive to the form....
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....rease the price, it had to reduce the total number of pages to 24. The petitioner which could publish any number of supplements as and when it desired to do so before the Order impugned in that case was passed, could do so thereafter only with permission of the Government. The contention of the petitioner in that case was that the impugned Act and the impugned Order were pieces of legislation designed to curtail the circulation of the newspaper as the increase in the price of the paper would adversely affect its circulation and they directly interfered with the freedom of the press. The validity of these pieces of legislation was challenged on the ground that they violated article 19(1)(g) of the Constitution. The Union Government contested the petition. It pleaded that the impugned Act and the order had been passed with a view to preventing unfair competition among newspapers and also with a view to preventing the rise of monopolistic combines so that newspapers might have fair opportunities of free discussion. It was also contended that the impugned Act and the impugned Order have been passed in the public interest and the petitioner's business being a trading activity fallin....
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.... immediate effect of the Act taken along with the impugned order was to interfere with the freedom of circulation of newspapers, the circumstance that its object was to suppress monopolies and prevent unfair practices is of no assistance. The legitimacy of the result intended to be achieved does not necessarily imply that every means to achieve it is permissible ; for even if the end is desirable and permissible, the means employed must not transgress the limits laid down by the Constitution. If they directly impinge on any of the fundamental rights guaranteed by the Constitution it is no answer when the constitutionality of the measure is challenged that apart from the fundamental right infringed the provision is otherwise legal. 40. We have so far seen the importance of the freedom of speech and expression which includes the freedom of the press. We shall now proceed to consider whether it is open to the Government to levy any tax on any of the aspects of the press industry. IV Do newspapers have immunity from taxation? 41. Leaving aside small newspaper establishments whose circulation may be less than about I 0,000 copies a day, all other bigger newspaper es....
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.... the State Legislatures to levy sales tax on sale of newspapers and tax on advertisements in newspapers. He said: No one would be happier than myself and my friends belonging to the press, if the House were to decide today that newspapers will be free from all such taxes. Of course, that is what it should be because in no free country with a democratic Government, we have any such taxes as the sales tax or the advertisement tax. I claim that newspapers do deserve a distinctive treatment. They are not an industry in the sense that other industries are. This has been recognised all over the world. They have a mission to perform. And I am glad to say that the newspapers in India have performed that mission of public services very creditably and we have reason to feel proud of it. I would, therefore, expect this House and my friend, Mr. Sidhva, to bear it in mind at the time when God forbid, any proposal comes before Parliament for taxation. That would be the time for them to oppose it. Sir, after all, this is an enabling clause. It does not say that there shall be sales and advertisement tax imposed on newspapers. It does not commit the House today to the im....
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....ent in the United States of America to levy taxes on and to provide for the licensing of newspapers, Corpus Juris Secundum (Vol. 16) says at page 1132 as follows: 213. (13) Taxing and Licensing The constitutional guarantee of freedom of speech and of the Press are subject to the proper exercise of the Government's Power of taxation, and reasonable license fees may be imposed on trades or occupations concerned with the dissemination of literature or ideas. As a general rule, the constitutional guarantees of freedom of speech and of the press are subject to the proper exercise of the government's power of taxation, so that the imposition of uniform and non-discriminatory taxes is not invalid as applied to persons or organisations engaged in the dissemination of ideas through the publication or distribution of writing. The guaranty of freedom of the press does not forbid the taxation of money or property employed in the publishing business, or the imposition of reasonable licenses and license fees on trades or occupations concerned with the dissemination of literature or ideas. A licence or license tax to permit the enjoyment of freedom of s....
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....ised the power of the State to levy taxes on newspaper establishments, of course, subject to judicial review by courts by the application of the due process of law principle. " Due process of law does not forbid all social control; but it protects personal liberty against social control, unless such social control is reasonable either because of a constitutional exercise of the police power, or of the power of taxation or of the power of eminent domain. " If any legislation delimiting personal liberty is held to be outside of all three of these categories, it is taking away of personal liberty without due process of law and is unconstitutional. The police power, taxation and eminent domain are all forms of social control which are essential for peace and good government. " The police power is the legal capacity of the sovereignty or one of its governmental agents, to delimit the personal liberty of persons by means which bear a substantial relation to the end to be accomplished for the protection of social interests which reasonably need protection. Taxation is the legal capacity of sovereignty or one of its governmental agents to exact or impose a charge upon persons or their p....
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....to a substantially larger group than that engaged in expression. Thus a special tax on the Press alone, or a tax exemption available only to those with particular political views or associations, would not be Permitted. Second, neither the substantive nor procedural Provisions of the measure, even though framed in general terms, may Place any substantial burden on expression because of their Peculiar impact in that area. Thus the enforcement of a tax or corporate registration statute by requiring disclosure of membership in an association, where such disclosure would substantially impair freedom of expression, should be found to violate first amendment protection. (underlining by us) 49. This view appears to have been accepted by our Second Press Commision in its Report (Vol. 1) at page 35. The Commission observes: 21. Economic and tax measures, legislation relating to social welfare and wages, factory laws, etc., may have some effect upon freedom of the press when applied to persons or institutions engaged in various forms of communication. But where the burden placed on them is the same as that borne by others, engaged in different forms of activity, it does ....
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....t takes money from the Pockets of the appellees. If that were all, a wholly different question would be Presented. it is bad because, in the light of its history and of its Present setting, it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the Public is entitled by virtue of the constitutional guarantee. A free press stands as one of the great interpreters between the government and the people. To allow it to be fettered is to fetter ourselves. (underlining by us). 51. The levy imposed by Louisiana was quashed by the Supreme Court of the United States of America in the above case on the ground that it violated the First Amendment to the Constitution of the United States of America, since it was of the view that the tax levied in this case was device to limit the circulation of information. The court, however, did not say that no tax could be levied on the press in any event. 52. In Robert Murdock, Jr. v. Commonwealth of Pennsylvania (City of Jeannette) (319 US 105 ; 87 L Ed. 1292) the Supreme Court of the United States of America declared as unconstitutional and violative of the First Amendment ....
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....om taxation, and this statement is equally true of the other State constitutional Provisions. It may be concluded that neither in the State or the Federal Constitutions was general taxation of church or Press interdicted. Is there anything in the decisions of this court which indicates that church or press is free from the financial burdens of Government? We find nothing. Religious societies depend for their exemptions from taxation upon State constitutions or general statutes, not upon the Federal Constitution. Gibbons v. District of Columbia (116 US 404, 29 L Ed 680, 6 S Ct 427). This court has held that the chief purpose of the free press guarantee was to prevent previous restraints upon publication. Near v. Minnesota, (283 US 697, 713, 75 L Ed 1357, 1366 ; 51 S Ct 625). In Grosjean v. American Press Co. (297 US 233, 250, 80 L Ed 660, 668; 56 S Ct 444), it was said that the predominant purpose was to preserve 'an untrammelled press as a vital source of public information'. In that case, a gross receipts tax on advertisements in papers with a circulation of more than twenty thousand copies per week was held invalid because ' a deliberate and....
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....adily to restrict the dissemination of ideas. This must be conceded; but the possibility of misuse does not make a tax unconstitutional. No abuse is claimed here. The Ordinances in some of these cases are the general occupation license type covering many businesses. In the Jeannette prosecutions, the Ordinance involved lays the usual tax on canvassing or soliciting sales of goods, wares and merchandise. It was passed in 1898. Every power of taxation or regulation is capable of abuse. Each one, to some extent, prohibits the free exercise of religion and abridges the freedom of the press, but that is hardly a reason for denying the power. If the tax is used oppressively, the law will Protect the victims of such action. (underlining by us). 56. Justice Frankfurter, who also dissented from the majority, observed at pages 1310 and 1311 thus: It cannot be said that the petitioners are constitutionally exempt from taxation merely because they may be engaged in religious activities or because such activities may constitute an exercise of a constitutional right. Nor can a tax be invalidated merely because it falls upon activities which constitute an exerc....
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....71. Section 10 of the Constitution of Antigua read as follows (at p. 240 of 3 WLR): 10. (1) Except with his own consent, no person shall be hindered in the enjoyment of his freedom of expression, and for the purposes of this section the said freedom includes the freedom to hold opinions and to receive and impart ideas and information without interference, and freedom from interference with his correspondence and other means of communication. (2) Nothing contained in or done under the authority of any law shall be held to be inconsistent with or in contravention of this section to the extent that the law in question makes provision-(a) that is reasonably required-(i) in the interests of defence, public safety, public order, public morality or public health ; or (ii) for the purpose of protecting the reputations, rights and freedoms of other persons, or the private lives of persons concerned in legal proceedings, preventing the disclosure of information received in confidence, maintaining the authority and independence of the courts, or regulating telephony, telegraphy, posts, wireless broadcasting, television or other means of communication, public exhibitions or p....
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....levy of fee on the publisher of a newspaper, but it would be open to challenge if the real reason for its imposition was not the raising of revenue but the preventing of the publication of newspapers. 62. At this stage, it is necessary to refer to a forceful argument addressed before us. It was urged on behalf of the petitioners that the recognition of the power of the Government to levy taxes of any kind on the newspaper establishments would ring in the death-knell of the freedom of press and would be totally against the spirit of the Constitution. It is contended that the Government is likely to use it to make the press subservient to the Government. It is argued that when once this power is conceded, newspapermen will have to run after the Government and hence it ought not to be done. This raises a philosophical question-Press versus Government. We do not think, it is necessary for the press to be subservient to the Government. As long as " this court sits " newspapermen need not have the fear of their freedom being curtailed by unconstitutional means. It is, however, good to remember some statements made in the past by some wise men connected with newspapers in order to d....
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....d expression guaranteed under article 19(1)(a) and the freedom to engage in any profession, occupation, trade, industry or business guaranteed under article 19(1)(g) of the Constitution; the first, because it is concerned with the field of expression and communication and, the second, because communication has become an occupation or profession and because there is an invasion of trade, business and industry into that field where freedom of expression is being exercised. While there can be no tax on the right to exercise freedom of expression, tax is leviable on profession, occupation, trade, business and industry. Hence, tax is leviable on newspaper industry. But when such tax transgresses into the field of freedom of expression and stifles that freedom, it becomes unconstitutional. As long as it is within reasonable limits and does not impede freedom of expression, it will not be contravening the limitations of article 19(2). The delicate task of determining when it crosses from the area of profession, occupation, trade, business or industry into the area of freedom of expression and interferes with that freedom is entrusted to the courts. 64. The petitioners, however, have pl....
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....aper or new edition could be started by a common ownership unit even within the authorised quota of newsprint, (ii) that there was a limitation on the maximum number of pages, no adjustment being permitted between circulation and pages so as to increase pages, (iii) that a big newspaper was prohibited and prevented from increasing the number of pages, page area, and periodicity by reducing circulation to meet the requirement even within its admissible quota, etc. The majority held that the fixation of page limit had not only deprived the petitioners of their economic vitality but also restricted their freedom of expression. It also held that such restriction of pages resulted in reduction of advertisement revenue and thus adversely affected the capacity of a newspaper to carry on its activity which is protected by article 19(1)(a) of the Constitution. 66. We have carefully considered the above two decisions. In the first case, the court was concerned with the newspaper price-page policy and, in the second, the newsprint policy imposed by the Government had been challenged. Neither of them was concerned with the power of Parliament to levy tax on any goods used by the newspaper i....
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....s they were found to be in the public interest. But in the cases before us, the court is called upon to reconcile the social interest involved in the freedom of speech and expression with the public interest involved in the fiscal levies imposed by the Government specially because newsprint constitutes the body, if expression happens to be the soul. 67. In view of the intimate connection of newsprint with the freedom of the press, the tests for determining the vires of a statute taxing newsprint have, therefore, to be different from the tests usually adopted for testing the vires of other taxing statutes. In the case of ordinary taxing statutes, the laws may be questioned only if they are either openly confiscatory or a colourable device to confiscate. On the other hand, in the case of a tax on newsprint, it may be sufficient to show a distinct and noticeable burdensomeness, clearly and directly attributable to the tax. 68. While we, therefore, cannot agree with the contention that no tax can be levied on newspaper industry, we hold that any such levy is subject to review by courts in the light of the provisions of the Constitution. V Are the impugned notifications issu....
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....e contention of the Government. The court said (p. 945): Our attention has not been drawn to any provision in that Act empowering the Government to exempt any assessee from payment of tax. Therefore, it is clear that the appellant was liable to pay the tax imposed under the law. What the appellant really wants is a mandate from the court to the competent authority to delete the concerned entry from Schedule and include the same in Schedule B. We shall not go into the question whether the Government of Himachal Pradesh on its own authority was competent to make the alteration in question or not. We shall assume for our present purpose that it had such a power. The power to impose tax is undoubtedly a legislative power. That power can be exercised by the legislature directly or subject to certain conditions, the legislature may delegate that power to some other authority. But the exercise of that power, whether by the legislature or by its delegate, is an exercise of legislative power. The fact that the power was delegated to the executive does not convert that power into an executive or administrative power. No court can issue a mandate to a legislature to enact a particula....
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....oration Act, 1957, observed thus (at p. 1247 of 1968 AIR): Finally there is another check on the power of the Corporation which is inherent in the matter of exercise of power by subordinate public representative bodies, such as municipal boards. In such cases, if the act of such a body in the exercise of the power conferred on it by the law is unreasonable, the courts can hold that such exercise is void for unreasonableness. This principle was laid down as far back as 1898 in Kruse v. Johnson [1898] 2 QBD 91. 72. But it appears that the principle enunciated in Kruse v. Johnson [1898] 2 QBD 91, is not being applied so stringently in England now. 73. A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. Subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition, it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation.....
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....assed by commercial undertakings under statutory power, although cases reported during the present century suggest that the distinction between elected authorities and commercial undertakings, as explained in Kruse v. Johnson [1898] 2 QBD 91, might not now be applied so stringently. (iv) As far as subordinate legislation of non-statutory origin is concerned, this is virtually obsolete, but it is clear from In re French Protestant Hospital [1951] Ch 567, that it would be subject to strict control." (See also H.W.R. Wade: Administrative Law (5th Edn.), pp. 747-748). 75. In India, arbitrariness is not a separate ground, since it will come within the embargo of article 14 of the Constitution. In India, any enquiry into the vires of delegated legislation must be confined to the grounds on which plenary legislation may be questioned, to the ground that it is contrary to the statute under which it is made, to the ground that it is contrary to other statutory provisions or that it is so arbitrary that it could not be said to be in conformity with the statute or that it offends article 14 of the Constitution. 76. That subordinate legislation cannot be questioned on t....
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....way " means as follows (at p. 229): It is true the discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word 'unreasonable' in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting 'unreasonably'. Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority. Warrington L.J. in Short v. Poole Corporation [1926] Ch 66, gave the example of the red-haired teacher, dismissed because she had red-hair. That is unreasonable in one sense. In another sense, it is taking into consideration extraneous matters. It is so unreasonable....
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....able thereon. The Central Government may if it is satisfied that in the public interest so to do exempt from the payment of duty by a special order in each case under circumstances of an exceptional nature to be stated in such order any goods on which duty is leviable. The power exercisable under section 25 of the Customs Act, 1962, is no doubt discretionary; but it is not unrestricted. It is useful to refer here to the observations of Lord Denning M. R. in Breen v. Amalgamated Engineering Union [1971] 2 QB 175, at page 190, which read thus: The discretion of a statutory body is never unfettered. It is a discretion which is to be exercised according to law. That means at least this: the statutory body must be guided by relevant considerations and not by irrelevant. If its decision is influenced by extraneous considerations which it ought not to have taken into account, then the decision cannot stand. No matter that the statutory body may have acted in good faith; nevertheless the decision will be set aside. That is established by Padfield v. Minister of Agriculture, Fisheries and Food [1968] AC 997, which is a landmark in modern administrative law." 81. In any event, an....
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....papers. 83. In Chapter 4 of the same Report at page 100, the International Commission has observed thus: While newspapers which are commercial enterprises expect to sustain themselves by sales and advertising, they are not always viable on this traditional basis. Capital and profits from other media and from business in general are often injected into the newspaper industry. In many cases, the financing or at least the deficits are covered by Governments or political bodies. Assistance from the State has taken various forms, including tax concessions not enjoyed by other industries, reduced postal and telephone rates, guaranteed Government advertising and subsidies to the price of newsprint. Although the press is suspicious of Government involvement in its affairs, a desire to preserve variety by keeping the weaker papers alive has led to consideration of various schemes. Direct grants to papers in need are made in seven European nations. Smaller newspapers and some parts of the 'quality' or 'specialized' press have experienced difficulties from a contraction of operations and size, which has led to limitations on the variety of information sour....
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....is based upon the evidence of a very large number of individuals and representatives of associations. We would, therefore, be justified in relying upon it and holding that raising the price of newspaper even by a small amount such as one np. in order that its present size be maintained would adversely affect its circulation. 86. This is not a novel phenomenon. A stamp tax on newspapers came to be levied in England in 1712. It virtually crippled the growth of the English Press and thus became unpopular. There was a lot of agitation against the said tax. But on its abolition in 1861, the circulation of newspapers increased enormously. The following account found in the Encyclopaedia Britannica (1962), vol. 16, at page 339, is quite instructive: Abolition of 'Taxes on Knowledge'.- The development of the press was enormously assisted by the gradual abolition of the ' taxes on knowledge, ' and also by the introduction of a cheap postal system. To Lord Lytton, the novelist and politician and, subsequently, to Milner Gibson and Richard Gobden, is chiefly due the credit of grappling with this question in Parliament to secure, first, the reducti....
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.... imposing customs duties and the manner in which it is operated, to a certain extent, exposes the citizens who are liable to pay customs duties to the vagaries of executive discretion. While Parliament has imposed duties by enacting the Customs Act, 1962, and the Customs Tariff Act, 1975, the executive Government is given wide power by section 25 of the Customs Act, 1962, to grant exemptions from the levy of customs duty. It is ordinarily assumed that while such power to grant exemptions is given to the Government, it will consider all relevant aspects governing the question whether exemption should be granted or not. In the instant case, in 1975, when the Customs Tariff Act, 1975, was enacted, 40% ad valorem was levied on newsprint, even though it had been exempted from payment of such duty. If the exemption had not been continued, newspaper publishers had to pay 40% ad valorem customs duty on the coming into force of the Customs Tariff Act, 1975. Then again in 1982, by the Finance Act, 1982, an extra levy of Rs. 1,000 per tonne was imposed in addition to the original 40% ad volorem duty, even though under the exemption notification, the basic duty had been fixed at 10% of the val....
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....ns levying 15% duty. Secondly, no newspaper owner can import newsprint directly. Newsprint import is canalised through the State Trading Corporation. If excessive import of newsprint adversely affects foreign exchange reserve, the State Trading Corporation may reduce the import of newsprint and allocate lesser quantity of imported newsprint to newspaper establishments. There is, however, no need to impose import duty with a view to curbing excessive import of newsprint. In the Finance Minister's speech, there is no reference to the capacity of the newspaper industry to bear the levy of 15% duty. In the counter-affidavit, it is asserted that the extent of burden faced by the newspaper industry in India is irrelevant to the levy of import duty on newsprint. This clearly shows again that the Government had not also considered a vital aspect of the question before withdrawing the total exemption which was being enjoyed by a newspaper industry till March 1, 1981, and imposing 15% duty on newsprint. 89. The petitioners have alleged that the imposition of customs duty has compelled them to reduce the extent of the area of the newspapers for advertisements which supply a major part ....
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.... the above contention, the Government, relying on the decision in Hamdard Dawakhana (Wakf) v. Union of India [1960] 2 SCR 671, has pleaded in defence of its action that the right to publish commercial advertisement is not part of freedom of speech and expression. We have carefully considered the decision in Hamdard Dawakhana's case [1960] 2 SCR 671. The main plank of that decision was that the type of advertisement dealt with there did not carry with it the protection of article 19(1)(a). On examining the history of the legislation, the surrounding circumstances and the scheme of the Act which had been challenged there, namely, the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954 (21 of 1954), the court held that the object of that Act was the prevention of self-medication and self-treatment by prohibiting instruments which may be used to advocate the same or which tended to spread the evil. The court relying on the decision of the American Supreme Court in Lewis J. Valentine v. F. J. Chrestensen (86 L Ed 1262) observed at pages 687-689, thus : It cannot be said that the right to publish and distribute commercial advertisements advertising an individua....
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....ith a view to earning profits, e.g., the business of betting and gambling will not be protected as falling within the guaranteed right of carrying on business or trade, so it cannot be said that an advertisement commending drugs and substances as appropriate cure for certain diseases is an exercise of the right of freedom of speech. 91. In the above said case, the court was principally dealing with the right to advertise prohibited drugs, to prevent self-medication and self-treatment. That was the main issue in the case. It is no doubt true that some of the observations referred to above go beyond the needs of the case and tend to affect the right to publish all commercial advertisements. Such broad observations appear to have been made in the light of the decision of the American Court in Lewis J. Valentine v. F. J. Chrestensen (86 L Ed 1262). But it is worthy of notice that the view expressed in this American case has not been fully approved by the American Supreme Court itself in its subsequent decisions. We shall refer only to two of them. In his concurring judgment in William B. Cammarano v. United States of America (358 US 498 ; 3 L Ed 2d 462), justice Douglas said " Valen....
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....on behalf of a State or any operations connected therewith or any property used or occupied for the purposes of such trade or business or any income accruing or arising in connection therewith and the other provisions of the Constitution which enabled the Union to levy different kinds of taxes, customs duty levied on the importation of the goods was only a tax levied on international trade and not on property. The court further held that the immunity granted under article 289(1) in favour of the States had to be restricted to taxes levied directly on property and even though customs duties had reference to goods and commodities, they were not taxes on property, and hence not within the exemption in article 289(1). The above decision is again of very little assistance to the Government, since it cannot be denied that the levy of customs duty on newsprint used in the production of newspapers is restriction on the activity of publishing a newspaper and the levy of customs duties had a direct effect on that activity. There exists no analogy between article 289(1) and article 19(l)(a) and (2) of the Constitution. Hence, the levy cannot be justified merely on the ground that it was not o....
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....asic values implicit in the requirements of the Fourth condition can be served only by uncensored distribution of literature. From the multitude of competing offerings the public will pick and choose. What seems to one to be trash may have for others fleeting or even enduring values. 94. Matters concerning the intellect and ethics do undergo fluctuations from era to era. The world of mind is a changing one. It is not static. The streams of literature and of taste and judgment in that sphere are not stagnant. They have a quality of freshness and vigour. They keep on changing from time to time, from place to place and from community to community. 95. It is one thing to say that in view of considerations relevant to public finance which require every citizen to contribute a reasonable amount to public exchequer, customs duty is leviable even on newsprint used by newspaper industry and an entirely different thing to say that the levy is imposed because the newspapers generally contain " piffles ". While the former may be valid if the circulation of newspapers is not affected prejudicially, the latter is impermissible under the Constitution as the levy is being made on a considera....
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.... which no state, nor all together, not the nation itself, can prohibit, restrain or impede. If the restraint were smaller than it is, it is from petty tyrannies that large ones take root and grow. This fact can be more plain than when they are imposed on the most basic rights of all. Seedlings planted in that soil grow great and, growing, break down the foundations of liberty. 98. In the above decision, the Privy Council cited with approval the view expressed by this court in Romesh Thappar's case [1950] SCR 594 and the U.S. court in Martin v. City of Struthers (1943] 319 US 141. The Privy Council observed thus ([1967] AC 115, 134): A measure of interference with the free handling of the newspaper and its free circulation was involved in the prohibition which the circular imposed. It was said in an Indian case (Romesh Thappar v. State of Madras [1950] SCR 594): There can be no doubt that freedom of speech and expression includes freedom of propagation of ideas and that freedom is secured by freedom of circulation. " Liberty of circulation is as essential to that freedom as the liberty of publication. Indeed without circulation the publication would be of li....
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....medium newspapers shows that there is bound to be an impact. No effort has been made on the part of the Government to show the precise nature of the impact. On the other hand, the case of the Government appears to be that such considerations are entirely irrelevant, though the outstanding fact remains that for several years, the Government itself thought that the newsprint deserved total exemption. On the material now available to us, while it is not possible to come to the conclusion that the effect of the levy is indeed so burdensome as to affect the freedom of the press, we are also not able to come to the conclusion that it will not be burdensome. This is a matter which touches the freedom of the press which is, as we said, the very soul of democracy. This is certainly not a question which should be decided on the mere question of burden of proof. There are factors indicating that the present levy is heavy and is perhaps heavy enough to affect circulation. On such a vital issue, we cannot merely say that the petitioners have not placed sufficient material to establish that the drop in circulation is directly linked to the increase of the levy when, on the side of the Government....
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.... of a subsequent notification on an earlier notification in whose place the subsequent notification was issued has been considered by this court in B. N. Tewari v. Union of India [1965] 2 SCR 421 ; AIR 1965 SC 1430. In that case, the facts were these: In 1952, a " carry forward " rule governing the Central Services was introduced whereby the unfilled reserved vacancies of a particular year would be carried forward for one year only. In 1955, the above rule was substituted by another providing that the unfilled reserved vacancies of a particular year would be carried forward for two years. In T. Devadasan v. Union of India [1964] 4 SCR 680 ; AIR 1964 SC 179, the 1955 rule was declared unconstitutional. One of the questions which arose for consideration in this case (Tewari's case [1965] 2 SCR 421; AIR 1965 SC 1430) was whether the 1952 rule had revived after the 1955 rule was struck down. This court held that it could not revive. The following are the observations of this court on the above question (p. 1432 of AIR 1965 SC): We shall first consider the question whether the carry forward rule of 1952 still exists. It is true that in Devadasan's case [1964] 4 SCR 680;....
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....dified or repealed effectively. The decision of this court in Shri Mulchand Odhavji v. Rajkot Borough MuniciPality, AIR 1970 SC 685, is also distinguishable. In that case the State Government had been empowered by section 3 of the Saurashtra Terminal Tax and Octroi Ordinance (47 of 1949) to impose octroi duty in towns and cities specified in Schedule I thereof and section 4 authorised the Government to make rules for the imposition and collection of octroi duty. These rules were to be in force until the city municipalities made their own rules. The rules framed by the municipality concerned were held to be inoperative. Then the question arose whether the rules of the Government continued to be in force. The court held (p. 687): The Government rules, however, were to cease to operate as the notification provided from the date the said municipality put into force their independent bye-laws. It is clear beyond doubt that the Government rules would cease to apply from the time the respondent-municipality brought into force its own bye-laws and rules under which it could validly impose, levy and recover the Octroi duty.' The said notification did not intend any hiatus when ....
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....on the totality of Circumstances and the context in which they are used. 107. In the cases before us, the competence of the Central Government to repeal or annul or supersede the notification dated July 15, 1977, is not questioned. Hence, its revival on the impugned notifications being held to be void would not arise. The present cases are governed by the rule laid down in Tiwari's case, AIR 1965 SC 1430. 108. Hence, if the notification dated July 15, 1977, cannot revive on the quashing of the impugned notifications, the result would be disastrous to the petitioners as they would have to pay customs duty of 40% ad valorem from March 1, 1981, to February 28, 1982, and 40% ad valorem plus Rs. 1,000 per MT from March 1, 1982 onwards. In addition to it, they would also be liable to pay auxiliary duty of 30% ad valorem during the fiscal year 1982-83 and auxiliary duty of 50% ad valorem during the fiscal year 1983-84. They would straightaway be liable to pay the whole of customs duty and any other duty levied during the current fiscal year also. Such a result cannot be allowed to ensue. 109. It is no doubt true that some of the petitioners have also questioned the validity o....