2010 (1) TMI 1279 - HC - Indian Laws

Summary

Issues Involved:
1. Legality and constitutional validity of the impugned Notifications.
2. Whether the impugned Notifications violate international treaties, specifically GATT and SCM Agreement.
3. Whether the impugned Notifications are discriminatory and violate Articles 14, 19(1)(g), and 253 of the Constitution of India.
4. Whether the impugned Notifications are arbitrary and unreasonable.
5. Whether the State of Maharashtra has the competence to issue the impugned Notifications.

Detailed Analysis:

1. Legality and Constitutional Validity of the Impugned Notifications:
The petitioner challenged the legality and constitutional validity of several Notifications issued by the State of Maharashtra, arguing that they created hostile discrimination between locally produced wines and imported wines. The petitioner claimed these Notifications violated the Union of India's trade agreements and principles of GATT, 1947, particularly "National Treatment" and "Agreement On Subsidies And Countervailing Measures." The petitioner argued that these Notifications were ultra vires, unconstitutional, arbitrary, unreasonable, and unjust, violating Articles 253, 14, and 19(1)(g) of the Constitution.

2. Violation of International Treaties:
The petitioner contended that the impugned Notifications violated GATT, 1947, and SCM Agreement principles. The court examined whether the international treaties have the force of law in India. It cited the Supreme Court's judgment in Maganbhai Patel's case, stating that international treaties do not automatically become law unless Parliament enacts legislation under Article 253 of the Constitution. Since Parliament had not enacted any law to implement GATT, the court held that the stipulations in the treaties do not have a binding effect on Indian nationals.

3. Discrimination and Violation of Constitutional Articles:
The petitioner argued that the Notifications discriminated against imported wines by imposing additional fees and higher taxes, while locally produced wines were exempted or subjected to lower rates. The court noted that a taxing statute is subject to Article 14 of the Constitution and requires valid classification. The court held that the classification between imported and domestic wines was reasonable and founded on an intelligible differentia, with a rational relation to the object sought to be achieved by the statute. The court referred to judgments like East India Tobacco Co. and Avinder Singh, affirming that the State has wide discretion in taxation matters and that such discretion should not be interfered with unless there is clear evidence of hostile discrimination.

4. Arbitrary and Unreasonable Nature of the Notifications:
The petitioner claimed that the Notifications were arbitrary and unreasonable. The court examined whether the Notifications conformed to the statute under which they were made and whether they were contrary to any other statute. The court found that the Notifications were consistent with the legislative intent and objectives of the Bombay Prohibition Act, 1949, and did not suffer from arbitrariness or unreasonableness. The court also rejected the argument that the Notifications violated Article 51 of the Constitution, which is non-enforceable and only advisory in nature.

5. Competence of the State of Maharashtra:
The court examined the legislative competence of the State of Maharashtra to issue the impugned Notifications. It held that the State had the legislative competence under Entry 8 of List II of the Seventh Schedule (pertaining to intoxicating liquors) and Entry 51 (pertaining to excise duty). The court rejected the argument that the Notifications were subordinate legislation and, therefore, subject to international treaties. It reiterated that in the absence of an enabling law by Parliament under Article 253, the Notifications could not be struck down on the ground of being contrary to international treaties.

Conclusion:
The court dismissed the petition, holding that the impugned Notifications were valid, non-discriminatory, and within the legislative competence of the State of Maharashtra. The court emphasized the wide discretion granted to the State in taxation matters and the non-binding nature of international treaties without enabling legislation by Parliament. The petitioner's arguments on the violation of international treaties, constitutional articles, and arbitrariness were rejected.