TaxTMI 
TaxTMI 
1962 (2) TMI 2
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....intendent, Central Excise, Cuttack, (4) Collector, Central Excise, Calcutta, (5) Board of Directors, Madhunagar Powerloom Weavers' Co-operative Society Ltd., through its President (to be hereinafter referred to as the Society). 2. The petition is founded on the following allegations. The Company is incorporated under the Indian Companies Act, 1913, with its head office at Nayabazar, Cuttack. The second petitioner is the director of the Company, which runs a weaving mill at Nayabazar in Cuttack. There are 160 looms operating in the mill, and nearly 300 employees are employed in the factory, which produces, on the average, about 45 lakh yards of cloth (41/2 million yards). The paid-up capital of the Company is Rs. 1,10,000, divided into 7,100 shares of the value Rs. 100 each. It has 8 directors, including a representative of the Government of Orissa. The Company commenced production on October 1, 1955, and has been sustaining losses ever since it started functioning "due to adverse circumstances in the State of Orissa and due to the heavy taxation and duties." Ever since the Company started production, it has been paying excise duty - Rs. 2,16,670 for the year 1958-59, Rs. 1....
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....y the State the number of cotton powerlooms in his ownership and actually operated by him does not exceed four and did not exceed four at any time during the three years immediately preceding the date of his joining the society, and that he would have been exempt from excise duty even if he had not joined the co-operative society; and (d) that the exemption shall be available — (i) for a period ending on the 31st July, 1962 in respect of registered co-operative societies which have commenced production prior to the date of this notification; and (ii) for a period of three years from the date of commencement of production in respect of co-operative societies which have been registered but have not commenced production or which may be registered on or before the 31st March, 1961. (No. 74/59) Sd/- Illegible S.K. Bhattacharjee, Deputy Secretary to Govt. of India F. No. 74/59/F. No. 13/59-CXIII." "Government of India, Ministry of Finance (Department of Revenue) New Delhi. The 10th April, 1960. Notification Central Excise. G.S.R. In pursuance of sub-rule (1) of rule 8 of the Central Excise Rules, 1944 as in force in India and as app....
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....e Society, was higher by 12.5% in 1958 and 10% in 1959, with the result that the Company is at a disadvantage, as compared to the Society, in the competitive market of Orissa. Due to heavier taxation on fine cloth, the Company has abandoned the production of that quality and has restricted its production to coarse and medium cloth. The apprehension of the Company is that on account of the exemption granted to the Society, the Company's business will be very adversely affected. It is contended that Rule 8 of the Central Excise Rules, 1944, under the Act, vests the Government with unguided power wholly or partially to exempt any goods from the duty leviable under the Act, and is therefore, clearly discriminatory as against the petitioner. The Government notifications exempting the Society, or such other similar societies as may hereafter come into existence, have the effect of violating the petitioners' fundamental rights under Arts. 14 and 19(1) (f) and (g) of the Constitution. It is also contended that the power conferred upon the Government under the Rules, aforesaid, being unguided and uncontrolled, goes beyond the permissible limits of a valid delegation, and is, therefore, void....
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....the weaver, plus a margin of profit for him. The Society undertakes the sale of the piece-goods produced by the weaver without making any profit to itself except that it levies handling charges, which are paid by the buyer. If the Society makes any savings out of the handling charges thus realised, the weaver gets a share of the savings by way of dividend. Unlike the Company, the Society is not the owner of the looms. The Society is only a servant of the weaver-owners and renders them services, which they need, to help them to market their produce. The Society is, thus, only an organisation which assists all individual owners of looms in the production and sale of the products of their respective looms, for their exclusive benefit. It is, therefore, claimed that the exemption granted in respect of the goods produced in co-operative societies, of which the weavers are the owner members, each individual not possessing more than 4 looms, is in pursuance of the Notification No. 70/60, dated April 30, 1960, issued under Rule 8, under the provisions of the Act, and is based on a valid classification, and does not infringe the provisions of Articles 14 and 19(1)(f) & (g) of the Constituti....
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....as made rules. For the purposes of this case, it is only necessary to quote Rule 8, which is as follows : "Power to authorise exemption from duty in special cases : (1) The Central Government may from time to time, by notification in the Official Gazette, exempt subject to such conditions as may be specified in the notification any excisable goods from the whole or any part of the duty leviable on such goods. (2) The Central Board of Revenue may by special order in each case exempt from the payment of duty, under circumstances of an exceptional nature, any excisable goods." 7. In pursuance of the power conferred on the Central Government by sub-rule (1) of Rule 8 the notifications referred to above were issued by the Central Government. By virtue of Section 38 of the Act, all rules made and notifications issued by the Central Government, as aforesaid, are required to be published in the Official Gazette, and thereupon those rules and notifications "shall have effect as if enacted in this Act". Thus, it is manifest that the notifications and the rule impugned in this case have been incorporated into the Act itself, and have become part of the taxing sta....
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....ider necessary or desirable to adapt them to circumstances. It is a function of the State, in order to raise revenue for State purposes, to determine what kind of taxes shall be levied and in which manner. Its function, therefore, is to raise revenues for public purposes. The State naturally is interested in raising all revenue necessary for public purposes, without sacrificing the legitimate interests of persons and groups, who deserve special treatment at the hands of the State for reasons, which the State may determine, entitling them to be placed in a special class. The Directive Principles of the Constitution, contained in Part IV, lay down the policies and objectives to be achieved, for promoting the welfare of the people. In the context of the present controversy the following words of Article 48 are particularly apposite : "...........and in particular, the State shall endeavour to promote cottage industries on an individual or co-operative basis in rural areas." It has rightly been pointed out in the affidavit filed on behalf of the respondents 1-4 that the exemption granted by the impugned notifications is meant primarily for the protection of petty producers of cot....