1978 (12) TMI 50 - HC - Central Excise

Excess Production Scheme - Fixation of date for enforcement - Limitations of judicial review - Classification of goods - Courts jurisdiction - Fiscal statute - Canons of interpretation - Powers of legislature - Judicial review - Scope - Taxation - Delay - Suppression of facts - Judicial competence

Issues Involved:
1. Incentive Scheme and its applicability.
2. Classification and alleged discrimination under the scheme.
3. Judicial review and the limits of judicial intervention.
4. Delay in filing the petition.
5. Suppression of facts.
6. Right to concession or exemption.

Detailed Analysis:

1. Incentive Scheme and its Applicability:
The scheme announced on 16th June 1976 by the Central Government under Rule 8 of the Central Excise Rules, 1944, provided a rebate of 25% of excise duty on excess clearances above a base limit. The base period and clearance were determined based on when the specified goods were first cleared from a factory. The scheme initially excluded the polyester fibre industry but was extended to it on 9th September 1976. Manufacturers had to declare their intent to benefit from the scheme, which was in effect from 1st July 1976 to 31st March 1979.

2. Classification and Alleged Discrimination under the Scheme:
The main contention was that the scheme was discriminatory, favoring certain manufacturers like Calico over others like IOC. The classification was based on the period when the goods were first cleared, creating three categories. IOC argued that this classification was arbitrary and violated Articles 14, 19, and 31 of the Constitution. However, the court held that the classification was rational and related to the scheme's objective to boost production. The court emphasized that the legislature has wide discretion in economic and tax matters, and the classification was not found to be "hostile discrimination."

3. Judicial Review and the Limits of Judicial Intervention:
The court highlighted the principle of judicial self-restraint, especially in economic and fiscal matters. It cited precedents emphasizing the legislature's broad discretion in making classifications for taxation and economic regulation. The court stated that it is not within its purview to judge the economic wisdom of the scheme, which is a policy decision best left to the executive and legislative branches. The court reiterated that unless a classification is palpably arbitrary, it should be upheld.

4. Delay in Filing the Petition:
The petition was filed on 27th June 1978, while the scheme was extended to IOC on 9th September 1976. The court noted that IOC had been making representations to the government, which were turned down by 17th May 1978. Despite this, the court held that the delay in filing the petition was not satisfactorily explained and emphasized that relief under Article 226 is discretionary. The court concluded that it would not be proper to declare the scheme void given the elapsed time and the limited period remaining for the scheme.

5. Suppression of Facts:
The court found that IOC had not disclosed its role in requesting the scheme's extension to the polyester fibre industry and its benefit of Rs. 34.4 lakhs under the scheme. The court stressed that under Article 226, the petitioner must act with utmost good faith and disclose all material facts. The court held that IOC's failure to do so disentitled it to the relief sought.

6. Right to Concession or Exemption:
The court ruled that a concession or exemption is a matter of grace, not a right. It referenced the Supreme Court's stance that the government has wide discretion in granting exemptions or concessions and that such decisions cannot be struck down merely because they do not benefit all parties equally. The court concluded that the scheme aimed to encourage higher production and was within the government's discretion to implement.

Conclusion:
The court dismissed the petition, emphasizing judicial restraint in economic matters, the rationality of the classification under the scheme, the discretionary nature of relief under Article 226, and the lack of full disclosure by IOC. The court made no order as to costs.

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