1988 (5) TMI 41 - HC - Central Excise

Summary

Issues Involved:

1. Validity of Central Excise Notification No. 203/87.
2. Applicability of the principle of promissory estoppel.
3. Alleged discrimination under Article 14 of the Constitution of India.
4. Alleged unreasonable restriction on the right to trade under Article 19(1)(g) of the Constitution.
5. Violation of the principle of natural justice.

Issue-wise Detailed Analysis:

1. Validity of Central Excise Notification No. 203/87:

The petitioner challenged Notification No. 203/87, which withdrew the benefit of the MODVAT scheme for aerated waters. The court examined the legislative and constitutional framework governing such notifications and concluded that the government has the authority to amend or withdraw benefits under the MODVAT scheme as part of its fiscal policy. The court held that the notification was valid and within the government's powers.

2. Applicability of the Principle of Promissory Estoppel:

The petitioner argued that the Prime Minister's Budget Speech created a promissory estoppel, preventing the government from withdrawing the MODVAT benefits. The court noted that for promissory estoppel to apply, there must be a clear and unambiguous promise, and the other party must have altered their position to their detriment based on that promise. The court found no clear promise in the Budget Speech that the MODVAT scheme would remain unchanged. Furthermore, the court held that budgetary statements are subject to change and do not create enforceable rights. Therefore, the principle of promissory estoppel was not applicable in this case.

3. Alleged Discrimination under Article 14 of the Constitution of India:

The petitioner contended that the withdrawal of the MODVAT scheme for aerated waters, while retaining it for other food products, was discriminatory and violated Article 14. The court emphasized that Article 14 prohibits class legislation but allows reasonable classification. The petitioner failed to demonstrate that the classification between aerated waters and other food products was unreasonable. The court held that the government's action was based on rational grounds and did not violate Article 14.

4. Alleged Unreasonable Restriction on the Right to Trade under Article 19(1)(g) of the Constitution:

The petitioner claimed that the withdrawal of the MODVAT scheme imposed an unreasonable restriction on their right to trade. The court observed that the mere reduction in profits or increased tax liability does not constitute an unreasonable restriction on trade. The court found no evidence that the withdrawal of the MODVAT scheme resulted in an unreasonable restriction on the petitioner's business. Therefore, the challenge under Article 19(1)(g) was dismissed.

5. Violation of the Principle of Natural Justice:

The petitioner argued that the notification was issued without giving them an opportunity to be heard, violating the principle of natural justice. The court held that the principle of natural justice applies to administrative or judicial decisions affecting individuals, not to legislative actions or policy changes. The issuance of a notification under statutory powers does not require prior notice or hearing. Consequently, the court found no violation of the principle of natural justice.

Conclusion:

The court dismissed the petition, upholding the validity of Notification No. 203/87. It ruled that the principle of promissory estoppel was inapplicable, there was no discrimination under Article 14, no unreasonable restriction under Article 19(1)(g), and no violation of natural justice. All interim orders were vacated, and no costs were awarded.