TaxTMI 
TaxTMI 
1962 (8) TMI 2
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....ad valorem by including in the price, charges for freight, packing and distribution. 2. The petitioner, the British India Corporation Ltd., is a Public Limited company which was formed to take over other companies and to amalgamate them. Among the companies which the petitioner took over were Cooper Allen and Company Ltd., and the North West Tannery Company Ltd., both at Kanpur. These two companies manufacture shoes and other leather goods and operate as a single unit manufacturing the well-known brand of "FLEX" shoes. As a result of the financial proposals of the Central Government for the financial year 1954-55, a Bill (No. 9 of 1954) was introduced in Parliament on February 27, 1954. Under Clause 8 of the Bill footwear were prop....
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....s of 1954 a sum of Rs. 9,47,630 as Excise Duty. The petitioner produces in the two units above-named, footwear for sale to the public and for supplies to the Government for the use of the Army and the Police. The petitioner contends that though the Excise Duty paid by it was capable of being passed on to the consumer, it could not include it in the price at which shoes were sold to the public because of heavy competition by those free from such duty, though it did include the Excise Duty in the price of the footwear supplied to Government. Thus Rs. 2 lacs odd were passed on to Govt. but Rs. 7 lacs odd were borne by the Company itself. The petitioner contended before the Collector of Central Excise, Allahabad, that the calculation of the dut....
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....the method of production. Similarly, the need for more than 2 H.P. arises if a larger number of mechanical units have to be worked and there is no essential difference between a large manufacturer and a small manufacturer by reason of the employment of more power or less. It is, therefore, contended that the imposition of Excise Duty on bigger manufacturers creates a discrimination in the trade which is neither just nor discernible and amounts to a violation of Article 14 of the Constitution. The levy of the Excise Duty in such circumstances is said to be both illegal and unconstitutional. 5. As a corollary to this it is contended that the petitioner, which was already carrying on its business at a loss in view of the competition, ....
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....irect tax capable of being passed on to the consumer as part of the price yet the mere passing on of the duty is not its essential characteristic. Even if borne by producer or manufacturer it does not cease to be a duty of excise. The nature of such a duty was explained in the very first case of the Federal Court and subsequently in others of the Federal Court, the Privy Council and this Court, but this ground continues to be taken and we are surprised that it was raised again. 9. The contention that the duty could not be collected before the passing of the Finance Act, 1954, has been the subject of an elaborate discussion in the recently decided case of this Court, Chhotabhai Jethabhai Patel and Co. v. Union of India, AIR 1962 SC ....
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..... The tax being illegal the levy amounts to a confiscation of the property of the petitioner. It will thus be seen that the imposition of the duty is first challenged under Article 14 as a discrimination, next it is challenged under Article 19 as a deprivation of the right to acquire, hold and dispose of property or to carry on a business or trade and lastly the collection of duty is characterised as a confiscation of property without the authority of law under Article 13. 12. The argument suffers from a fundamental fallacy in that it assumes that there can be no classification of manufacturers on the basis of the number of workers or the employment of power above a particular horse-power. Manufacturers who employ 50 or more worker....