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2026 (1) TMI 1183
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....1, W.M.P.(MD) Nos.2198, 2199, 18182, 4501, 4502 and 4503 of 2022 Honourable Mr Justice S. M. Subramaniam And Honourable Mr.Justice Mohammed Shaffiq In W.P.Nos.6840, 6300, 6427 of 2022, 22392, 25356, 25353 25358, 26557, 26561, 26568, 26571, 26574, 34389, 34391 of 2023 and In W.P.(MD)Nos.5564, 5565, 5566 of 2022 For Petitioner : Mr.B.Satish Sundar In WP.Nos. 24859, 24864 of 2021, 2472 of 2022, 5561 of 2023 and W.P.(MD) Nos.21206, 21211 of 2021, 2497 of 2022 For Petitioner : Mr.Hari Radhakrishnan In W.P.(MD) No.24076 of 2022 For Petitioner : Ms. H. Mary Sowmi Rexi for M/s.Isaac Chambers In W.P.No.6840 of 2022 For Respondents : Mr.AR.L.Sundaresan, Additional Solicitor General of India, Assisted by Mr.A.R.Sakthivel, Senior Panel Counsel In W.P.Nos. 6300 of 2022, 26568, 26571, 26574, 26557, 26561 of 2023 For Respondents : Mr.AR.L.Sundaresan, Additional Solicitor General of India, Assisted by Mr.R.Rajesh Vivekananthan Deputy Solicitor General of India In W.P.No.6427 of 2022 For Respondents : Mr.AR.L.Sundaresan, Additional Solicitor General of India, Assisted by Mr.S.Diwakar, Senior Panel Counsel In W.P. Nos.22392, 25353, 25356, 23538 of 2023 Fo....
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....& Steel Products 2 WP No. 25353 of 2023 Writ of Certiorari to quash notification as arbitrary and contrary to Section 14(2) of Customs Act Notification No. 57/2015-2020 dated 14.02.2023 Areca Nut/Betel Nut 3 WP No. 25356 of 2023 Writ of Certiorari to quash notification as arbitrary and contrary to Section 14(2) of Customs Act Notification No. 109/(RE-2013)/2009-2014 dated 06.02.2015 Cardamoms Chapter 09 ITC (HS) 2012 Schedule - 1 4 WP No. 25358 of 2023 Writ of Certiorari to quash notification as arbitrary and contrary to Section 14(2) of Customs Act Notification No. 42/2015-2020 dated 06.12.2017 Black Pepper 5 WP No. 22392 of 2023 Writ of Certiorari to quash notification as arbitrary and contrary to Section 14(2) of Customs Act Notification No. 05/2023 dated 08.05.2023 Apples 6 WP No. 26568 of 2023 Writ of Certiorari to quash notification as arbitrary and contrary to Sec.14(2) of Customs act Notification No. 42/2015-2020 dated 06.12.2017 Black Pepper 7 WP No. 26571 of 2023 Writ of Certiorari to quash notification as arbitrary and contrary to Sec.14(2) of Customs act Notification No. 57/2015-2020 ....
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.... 14.02.2023 Areca nut/Betel Nut 17 WP No. 6300 of 2022 Writ of Certiorari to quash notification as arbitrary and contrary to Section 14(2) of Customs Act Notification No. 21/2015-2020 dated 25.07.2018 Black Pepper 18 WP No. 6427 of 2022 Writ of Certiorari to quash notification as arbitrary and contrary to Section 14(2) of Customs Act Notification No. 2/2015-2020 dated 26.04.2021 Electronic Mosquito Bat - MIP Rs. 121 per racquet 19 WP(MD) No. 2497 of 2022 Writ of Certiorari to quash multiple DGFT notifications Notifications Nos.42/2015-2020 dated 06.12.2017, 50/2015-2020 dated 05.02.2018, 53/2015-2020 dated 21.03.2018 and 21/2015-2020 dated 25.07.2018 Black Pepper Garbled/Ungarbled 20 WP(MD) No. 5564 of 2022 Writ of Mandamus forbearing the Respondent from adjudicating the SCN, in view of the order of the Kerala High Court in WP(C).1119/2 022 dated 13.01.2022 Show cause notice in F.No.DRI/CZU/TTN/VIII/48/07/INT-01/2021 dated 26.11.2021 Black Pepper 21 WP(MD) No. 5565 of 2022 Writ of Mandamus forbearing Customs/DRI from adjudicating SCN, based on Kerala High Court order Show Cause Notice No. DRI/CZU/TTN/VIII/48....
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.... than seven years have lapsed since its issuance. 2.1. Since the grounds of challenge are common in all these Writ Petitions, we propose to pass a common order. We shall, for the purpose of disposing of this batch of writ, deal with the facts obtaining in W.P.No.2472 of 2022 taking it as lead matter. 3. Brief Facts and notifications: a) Petitioner in W.P.No.2472 of 2022 was engaged in the business of import and trading of spices and other agricultural products. Petitioner imported Black Pepper garbled/ungarbled through Port of Tuticorin. b) 1st respondent, i.e., Director General of Foreign Trade, vide Notification No.36/2015-2020 dated 17.01.2017, notified "Indian Trade Classification" (Harmonised System) of import items, 2017 [ITC (HS) 2017], {hereinafter referred to as "ITC (HS) 2017"}. c) By virtue of ITC (HS) 2017, "Schedule-1-Import Policy", (hereinafter referred to as "Import Policy"), was formulated in relation to import of schedule mentioned items. The import of the items mentioned in the Schedule to the Import Policy shall be subject to conditions, if any, contained in relation to such item in the Import Policy. d) "Black Pepper, g....
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....alue of the imported Black Pepper on the premise that its value should be equal or above the MIP fixed by the 1st respondent vide impugned notifications. Petitioner is stated to have paid the duty and levies as per the value arrived at by the 2nd respondent. Petitioner was permitted clearance of the goods on payment of customs duty on such enhanced value. k) While so, Directorate of Revenue Intelligence, Chennai Zonal Unit/2nd respondent initiated an enquiry into imports made by the petitioner as it appeared that petitioner had imported Black Pepper with value lesser than Rs. 500/- per Kg, in violation of the MIP condition contained in Notification No.53/2015-2020 dated 21.03.2018. 2nd respondent issued the impugned show cause notice dated 26.11.2021 alleging overvaluation to get over prohibition imposed on the basis of MIP vide impugned notifications. 4. Against this background, petitioners had filed the present batch of Writ Petitions challenging the impugned notification. 5. Case of the petitioner's: a) Power under Section 3 of FTDR Act, is conferred on Central Government to issue Orders, Impugned notifications issued by 1st respondent, i.e., Director....
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.... prices, thereby flooding Indian market with imported products. Fixation of MIP is a policy decision of Government in public interest. b) That impugned notification is issued by Government of India and 1st respondent had only performed the ministerial act of publication of the notifications. c) That requirement of laying contained in subsection (3) to Section 19 of the FTDR Act is directory and not mandatory. Moreso, inasmuch as no negative consequences are provided for non-compliance of sub-section (3) to Section 19 of the FTDR Act. d) That similar challenge to impugned notification, relating to fixation of MIP in relation to import of Black Pepper has been rejected by the Kerala High Court and validity of the impugned notification upheld. 7. Discussion: 7.1. On considering rival submissions, this Court is of the view that the challenge to the impugned notifications must fail for the following reasons: 7.2. Power under Section 3 of FTDR Act, is conferred on Central Government to issue Orders. Impugned notifications issued by 1st respondent, i.e., Director General of Foreign Trade - Contrary to and in excess of Section 3 of FTDR Act: a) ....
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....venient transaction of business and allocation of same amongst Ministers. Under the Government of India (Transaction of Business) Rules, 1961, the Government business is divided amongst Ministers and specific functions are allocated to different Ministries. The Director General of Foreign Trade is an ex officio Additional Secretary in the Government of India and is appointed by the Central Government under sub-section (1) to Section 6 of the FTDR Act to advise the Central Government in formulation and carrying out the Foreign Trade Policy. Wherefore, even the website of the Ministry of Commerce and Industry, Department of Commerce, states that DGFT is an agent of the Central Government and attached office to it. Further, clause (2) of Article 77 provides that validity of an order or instrument made or executed in the name of the President, authenticated in the manner specified in the Rules made by the President, shall not be called in question on the ground that it is not an order or an instrument made or executed by the President. Therefore, the contention of issuance of the impugned notification sans authority, cannot be sustained." b) The impugned notification also reco....
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....conferred in the Central Government in terms of sub-section (2) of Section 3 of the FTDR Act. The powers of the Central Government by an order imposing restriction on imports under sub-section (2) to Section 3 are, therefore, not entirely curtailed by Section 9-A of the FTDR Act. " (emphasis applied) 8.3. Validity of Order/notification - to be decided - By looking to substance not form: 8.3.1.This apart, we would think the above contention is devoid of merit for it is trite that while examining the validity or otherwise of a subordinate legislation, Courts would look to the substance and not the form. The effect of the impugned notifications was to impose restriction on import of specified commodities by fixing MIP. Importantly, Section 3 of FTDR Act expressly provides that the Central Government may make provision for prohibiting, restricting or otherwise regulating import or export of goods or services. Impugned notification even if assumed to prohibit Black Pepper with a Minimum Import Price of less than Rs. 500, power to impose/issue such prohibitory condition/restriction is traceable to subsection (2) to Section 3. 8.3.2. While exercising challenge to legisla....
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....ct as also for the purpose of registration under Section 12(2) of the Act, and the fee levied is both regulatory and registration fee leviable under Sections 11(2)(k) and 12(2) of the Act." (emphasis supplied) (c) Pine Chemicals Ltd. v. Assessing Authority, reported in (1992) 2 SCC 683: "9. ...It is well settled that if power to do an act or pass an order can be traced to an enabling statutory provision, then even if that provision is not specifically referred to, the act or order shall be deemed to have been done or made under the enabling provision. Thus the government orders satisfy all the requirements of the provisions of Section 5 of the local Act." (d) Small Industries Development Bank of India v. SIBCO Investment (P) Ltd., reported in (2022) 3 SCC 56: ''20. On the omission to advert to the statutory provisions on the basis of which RBI acted, we can seek guidance from the ratio in Peerless General Finance and Investment Co. Ltd. v. RBI [Peerless General Finance and Investment Co. Ltd. v. RBI, (1992) 2 SCC 343] [hereinafter "Peerless General Finance (1)"] wherein this Court, speaking through N.M. Kasliwal, J., held that : (SCC p....
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....e is truly in the nature of Regulation or otherwise, ought to be determined not by looking at the nomenclature for nomenclature is not conclusive, as to the status of a legislative instrument. Relevant portion of the judgment reads as under: ''22. ... Focusing narrowly on the nomenclature and the absence of an explicit provision for regulation-making within the RTI Act would undermine the broader purpose and intent of the same. The nomenclature used to describe these Regulations should not detract from their necessity and their role in facilitating the Commission's functioning. A purposive interpretation of Section 12(4) of the RTI Act reveals that the powers of "superintendence, direction and management" are intended to be comprehensive, enabling the CIC to adopt measures, including the framing of Regulations, that ensure transparency, accountability, and efficient handling of its responsibilities.'' (emphasis supplied) (g) In State of Karnataka Vs. Drive-In Enterprises [(2001) 4 SCC 60], it was held while examining challenge to the validity of Entertainment Tax, Courts would have to adjudge the validity by looking to the legislative instru....
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....nimum Import Price, thus traceable to sub-section (2) to Section 3 of FTDR Act. We thus find challenge on the ground that nomenclature is not in conformity with sub-section (2) to section 3 of FTDR Act is devoid of merit. 8.4. Impugned Notification - Contrary to style of legislative instruments in the form of Order: The next contention that has been urged by the petitioner is that Orders have a particular structure, which inter alia would include Short Title, Commencement, Definition and Provisions governing Procedure. However, the impugned notification cannot be treated as an Order since it is not in compliance with the above structure. We are afraid this contention only needs to be noticed to be rejected. Assuming the petitioners are correct that Orders normally have a particular style, however, departure thereof may not have any bearing on the validity. In this regard, it may be useful to rely on the decision of the Supreme Court in the case of Dy. CST v. Aysha Hosiery Factory (P) Ltd. [1992 Supp (2) SCC 178], wherein, while dealing with levy of Additional Sales Tax by way of a separate Act in addition to the General Sales Tax Act, which existed then, challenge on the prem....
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....mchand v. Union of India, AIR 1972 SC 2427, (1972) 2 SCC 601 : Kerala State Electricity Board v. Indian Aluminium Co., AIR 1976 SC 1031. (14th Edition of Principles of Statutory Interpretation by Justice G.P.Singh)) Laying clauses may be expressed in different forms depending upon the degree of control which the Legislature wants to keep in its hands. Broadly, these clauses are of three varieties (The Quarry Owners Association v. The State of Bihar, AIR 2000 SC 2870, (2000) 8 SCC 655) providing (1) laying which requires no further procedure (Section 3(6), Essential Commodities Act, 1955; 'Every order made shall be laid before both Houses of Parliament.) (2) laying allied with an affirmative procedure (Section 28(2), Mines and Minerals (Regulation and Development) Act, 1957; 'No rules made - shall come into force until they have been approved, whether with or without modification, by each House of Parliament'.), and (3) laying allied with negative procedure. (Section 3(2), All India Services Act, 1951). When a Parliamentary enactment confers power to make rules in respect of certain matters, it may provide that the rules so made be laid before Parliament. (The Quarry Own....
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.... to become operative until a resolution of both Houses of Parliament had been obtained. This form was used in Section 10(4) of the Road Traffic Act, 1930 [cf. Road Traffic Act, 1960, Section 19(3)] .... The affirmative resolution procedure necessitates a debate in every case. This means that one object of delegation of legislation (viz. saving the time of Parliament) is to some extent defeated. The procedure therefore is sparingly used and is more or less reserved to cases where the order almost amounts to an Act, by effecting changes which approximate to true legislation (e.g. where the order is the meat of the matter, the enabling Act merely outlining the general purpose) or where the order replaces local Acts or provisional orders and, most important of all, where the spending, etc. of public money is affected. Sometimes where speedy or secret action is required (e.g. the imposition of import duties), the order is laid with immediate operation but has to be confirmed within a certain period [cf. Import Duties Act, 1958, Section 13(4)]. This process of acting first and getting approval after has also been adopted in the Emergency Powers Act, 1920 under which a state of e....
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....failure to comply with laying by itself may not prove fatal to validity of impugned notification. (c) Our view stands fortified by the following judgments of the Supreme Court, wherein, similar if not identical provisions were considered. i) In State Bank of India and others Vs. O.P. Swarnakar and others [(2003) 2 SCC 721], while considering Section 19 of the Banking Companies (Acquisition ad Transfer of Undertaking) Act, 1970, which provided for similar laying clause, held the above was directory while rejecting the argument that noncompliance with which requirement of laying would prove fatal. The relevant provision considered by the Apex Court is extracted hereunder: (4) Every regulation shall, as soon as may be after it is made under this Act by the Board of Directors of a corresponding new bank, be forwarded to the Central Government and that Government shall cause a copy of the same to be laid before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive....
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....ies and Exchange Act"). It will therefore be essential to reproduce Section 31 of the said Act as the entire argument is placed on the requirement of the said section. Section 31 reads as under: "31. Rules and regulations to be laid before Parliament.-Every rule and every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation." 15. This apart the issue relating to the laying down of rules/regulations on the table of the Houses for the period provided under ....
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.... the Order to be void for non-compliance, the laying clause must be understood to be directory. Relevant portion of the said judgment reads as under: "32. From the foregoing discussion, it inevitably follows that the Legislature never intended that non-compliance with the requirement of laying as envisaged by sub-section (6) of Section 3 of the Act should render the order void. Consequently non-laying of the aforesaid notification fixing the maximum selling prices of various categories of iron and steel including the commodity in question before both Houses of Parliament cannot result in nullification of the notification." 9. From the above discussion, it is evident that the laying clause in subsection (3) to section 19 of the FTDR Act is directory and not mandatory. The contention of the petitioners that non-compliance with the laying clause would prove fatal to its validity is thus, liable to be rejected. 10. Before parting, it may be relevant to note that Parliament in its wisdom has provided for laying clause which enabled it to exercise greater control. One such provision is Section 16 of the Water (Prevention and Control of Pollution) Cess Act, 1977, which prov....
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.... was in fact sought for." (emphasis supplied) 12. The above view expressed by the Hon'ble Supreme Court in Union of India Vs. National Hydroelectric Power Corporation was however, distinguished by the Hon'ble Supreme Court in Veneet Agarwal's case referred to supra, by finding that the Hon'ble Supreme Court in National Hydroelectric Power Corporation's case, did not notice the difference between "approval" and "permission", and the expression used was not "prior approval". Referring to the judgment of Prohibition and Excise Supdt., A.P. And others Vs. Toddy Tappers Coop. Society, Marredpally and others, (2003) 12 SCC 738 Supreme Court further held that the observations made in National Hydroelectric Power Corporation's case have to be held to be confined to the facts of the matter obtaining therein. The relevant portion is extracted hereunder: "32. The said observations, thus, must be held to be confined to the fact of the matter obtaining therein. In that case it was found as of fact that the rule had never been placed before the legislature and, thus, there was even no substantial compliance with the law. The Bench, however, did not consider....