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TMI Blog1983 (3) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... lting scrap. By Notification No. 35/82-Customs F. No. BLD (Customs) 82, dated 28th February, 1982, the exemption was withdrawn with respect to the melting scrap of stainless steel. The effect of withdrawal of exemption was that the petitioners in these seven cases became liable to pay duty. at the rate of 40 per cent ad valorem on the melting scrap of stainless steel. The petitioners impugn the notification dated 28th February, 1982, by which the exemption granted in 1977 was withdrawn. It has to be noticed here that the notification of 15th July, 1977, was not a time-bound notification because it did not specify any time-limit during which the exemption granted by it would be available to the importers. 2. The other set of six writ petitions (C.W.P. Nos. 1295 of 1980 1289 of 1980, 1232 of 1980, 1233 of 1980, 1234 of 1980 and 1235 of 1980) raises the question of the validity of the time-bound notification. The exemption from Customs duty was granted for a fixed time and before the expiry of the time it was withdrawn. 3. The arguments addressed to us on both these, sets -were the same It is not disputed that if the challenge to the withdrawal of time-bound notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also not be liable for payment of any auxiliary duty thereon. 7. The petitioners say that relying on these exemption" notifications they entered into contracts for the purchase of aluminium ingots from abroad so that they may be able to in port without payment of duty the item required by them within the period from 18th April, 1980 to 30th September, 1980. 8. By a notification dated 29th August, 1980, issued in exercise of its powers under sub-section (1) of Section 25 of the Customs Act, 1962 (the Act), the Central Government rescinded the exemption notification as follows : "GOVERNMENT OF INDIA Ministry of Finance Department of Revenue New Delhi, the 29th August, 1980 NOTIFICATION Customs G.S.R.-In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby rescinds the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No. 79-Customs, dated the 18th April, 1980. Sd/- (K. CHANDRAMOULI) Under Secretary to the Government of India." 9. By another notification dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re would be clear indication of the likely trends in the supply of power and production of aluminium in the country and of the behaviour of Monsoon on which so much depends. Suddenly it found that the international prices of aluminium were falling steeply. Consequently, import prices became lower than the ex-factory prices of the indigenous metal. In the last week of July, 1980, the affidavit of the Government affirms, the Ministry of Steel and Mines requested for immediate withdrawal of exemption notification. After examining the matter thoroughly the Government issued the notification dated 29th August, 1980, withdrawing the exemption notification in public interest. It is pleaded that the withdrawal of the exemption notification was done in public interest. Section 25 of the Act reads as under: "Power to grant exemption from duty. - (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance), as may be specified in the notification goods of any specified description from the whole or an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action but is only available by way of defence, but there are now signs that even this bastion is about to crumble : see Re : Wyvern Developments (1974) I WLR 1097 ; Crabb v. Arun-D.C. (1975) 3. All ER 865. 16. The doctrine has been applied in a large number of cases in India and England. The solutions are varied but the principle on which these are reached is not in doubt : "The Court must look at all the circumstances in each case to decide in what way the equity can be satisfied" [Plimmer v. Wellington Corporation - (l984) 9 App Cas 699 (714)]. Denning, J., himself discovered this doctrine enunciated by Lord Cairns in Hughes v. Metropolitan Rly. Co. (1877) 2 App Cas 439. The Courts were hungry for this additional Jurisdiction, and adopted it rapidly. It was a plant of early and rapid growth. This was all in the course of the advancement of justice. The doctrine burst out in sudden blaze in 1946 when Denning, J., sitting in the Court of King's Bench delivered the judgment in Central London Property Trust Ltd. v. High Trees House Ltd., (1947) KB 130. Lord Denning brought it into being. We in India have nourished it. 17. M.P. Sugar Mills - AIR 1979 S.C. 621 is the hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te law). The specific purpose of the relationship between the individuals and the community regulated by tax is the imposition on individuals and corporations of a contribution to cover public expenditure. The taxing power : Predominance of the legislature 20. The limits to the right of the public authority to impose taxes are set by the power that is qualified to do so under the constitutional law. In a democratic system this power is with the legislature, not the executive or the judiciary. Taxation is a prerogative of the legislature. The historical origins of this principle are identical with those of political liberty and representative government - the rights of citizens to take cognizance, either personally or through their representatives, of the need for the public contributions, to agree to it freely, to follow its use and to determine its proportion, basis, collection and duration - in the words of the Declaration of the Rights of Man and the Citizen Proclaimed in the first days of French Revolution, August, 1789. Other precedents may be found in the English Bill of Rights of 1689 and the rule "no taxation without consent" laid down in the Declaration of Independ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either absolutely or subject to such conditions as may be specified in the notification, or by a special order in each case under circumstances of an exceptional nature. 23. At the same time Section 159 of the Act says that these exemption notifications issued under Section 25 shall be laid before Parliament as soon as may be after their issue and the Parliament may amend or reject them. This shows that the ultimate law-making power is retained by the legislature in its hands. It does not surrender it to the executive, this makes it perfectly clear that Parliament has in no way abdicated the authority, but is keeping strict vigilance and control over its delegate (D.S. Garewal v. State of Punjab, AIR 1958 S.C. 512). That the legislature keeps control over the delegate is an indicia that it is a legislative power. 24. Exemption notifications, therefore, have been issued under a general grant of authority by the representatives who are elected by the people to make the laws. The legislature is not always in session. It has been found both convenient and necessary for Parliament to delegate the actual exercise of certain law-making powers to the executive. No one doubts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Publication is a sure index of their legislative character. 29. This is so far as Section 25(1) is concerned. Whether sub-section (2) which provides for the making of a special order of exemption "under circumstances of an exceptional nature to be stated in the order" is a legislative order, it is not necessary for us to decide. Because no special orders under sub-section (2) are in question in any of these cases. These are all cases of general orders under Section 25(1). Perhaps a special order under subsection (2) is an "executive" order. The test suggested is that the meaning of "legislative" and "executive" may be determined by reference to the nature of the action. By this test, a power to make rules of general application is a legislative power and the rule is a legislative rule. A power to give orders on specific "cases" is, by the same test, an executive power and the order is an executive order. Similarly, a power to take specific action is an executive power and the action is an executive action. What is "general" and what is "specific" may be difficult to distinguish (Griffith and Street - Principles of Administrative Law, 5th ed., pp. 48-49). By this test a speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no promissory estoppel against the exercise of legislative power. The legislature can never be precluded from exercising its legislative function by resort to the doctrine of promissory estoppel : vide State of Kerala v. Gwalior. Rayon Silk Mfg. Co. Ltd.-(1974) I SCR 671". Again : "There can be no promissory estoppel against the legislature in the exercise of its legislative function". Public interest and estoppel 32. Article 265 of the Constitution lays down that no tax can be levied or collected except by the authority of law. Hence the levy of a tax can only be done by the authority of law and not by an executive order. "No taxation without representation". Representative Government owes its origin to financial necessities. Medieval kings summoned the people to parliaments because they needed money. And public finance is still the chief business of legislatures. Taxation is their prerogative. Even in the hands of the executive the power retains its true character of a legislative power. Now if the Central Government in public interest decides to grant exemption at one moment and decides to withdraw it at another the Court cannot compel it to continue the exemption bey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Court would compel the performance of the obligation arising out of the representation of the municipality. Representation, it was held, amounted to a contract. The object of promissory estoppel is to enforce contractual obligations. But taxation is not contract. It is an expression of unilateral will of the legislature. Tax is an exaction by the State in the exercise of its sovereign powers. There are no promises. There are no contractual obligations. If there are any promises they are subject to the overriding public interest. There is plain repugnance between contract and taxation. Taxation is the very antithesis of contract. 37. Indo-Afghan Agencies, (1968) 2 SCR 366 was followed in Ulhasnagar. In Indo-Afghan Agencies an executive scheme of incentives was in question. The court held that merely on their whim the Government cannot go back upon the promises made by it and embodied in the scheme. The Government cannot act arbitrarily on some "undefined and undisclosed ground". Indo-Afghan and M.P. Sugar Mills, (1979) 44 STC 42 S.C. ; AIR 1979 S.C. 621 which follows Indo-Afghan were cases of executive action, where the executive, to use the words of Shah, J., in Indo-Af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereign or executive power. The court quoted with approval the following observation : "It is now well-settled by a catena of decisions that there can be no question of estoppel against the Government in the exercise of its legislative, sovereign or executive powers." Excise Commissioner, U.P. v. Ram Kumar, AIR 1976 S.C. 2237 (2241). 41. It is here that Jit Ram differs from M.P. Sugar Mills. AIR 1979 S.C. 621. We are not, as at present advised, prepared to commit ourselves to the view that the doctrine can never be applied against the executive in all the circumstances in all cases, whether involving public interest or not. But on the authorities it is incontestable that against the Government in the exercise of its legislative power estoppel cannot be invoked. In M..P. Sugar Mills it was recognised that where the Government owes a duty to the public to act differently, promissory estoppel cannot be invoked to prevent the Government from doing so. The Government cannot be prevented from acting in the discharge of its duty under the law (AIR 1979 S.C. 621 at 646). 42. One thing is clear from the authorities. There is not a single case which has gone to the length of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m foreign competition. 45. The legislature is in effect saying to the importer, "we give you exemption in public interest. But if public interest demands otherwise we will withdraw the exemption". This is implied in the promise. This, to our minds, is the true construction of the statutory notification promulgated under Section 25 of the Act. 46. It was pressed upon us that we should do equity to the petitioners who, it was said, in reliance on the representation made in the notification dated 18th April, 1980, altered their position and acted to their detriment. In our opinion this argument has no merit. The truth is that the doctrine of promissory estoppel has no place in tax law. Promissory estoppel is "a child of equity" and "a juristic device for preventing injustice" : M.P. Sugar Mills, AIR 1979 S.C. 621 (635). But we are told that "in the law of taxation justice has no place at all" : David M. Walker-Oxford Companion to Law (1980), page 1308. Nor equity. "There is no equity about a tax" : per Rowlatt, J., in Cape Bramdy Syndicate v. Inland Revenue Commissioner, (1921) 1 K.B. 64 at page 71. The power to levy taxes is but one manifestation of the sove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the export and import policy of any democratic state is bound to be flexible. The needs of the country, the position of foreign exchange, the need to protect national industries and all other relevant considerations have to be examined by the Central Government from time to time and rules in regard to export and import suitably adjusted. It would therefore, be idle to suggest that there should be unfettered and unrestricted freedom of export and import". Bhatnagars and Co. v. Union of India, AIR 1957 S.C. 478. The import and export trade thus involves foreign exchange. It involves our relations with foreign powers. It involves raising tariff walls on the ground of reciprocity and protectionism. The petitioners have not placed any material to persuade us to hold that the restrictions imposed by the Government are unreasonable. On the facts of these cases we are unable to hold that their right under article 19(l)(g) has been infringed. 50. The mere ground that the incidence of taxation is heavy or it will diminish the profits of a party are not interferences with his right to carry on business. That the profits would be diminished or greatly reduced cannot be a ground for ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at alone will not entitle us to strike down the rescinding notification. This does not, in our opinion, afford a ground for judicial review. 55. A public authority exists primarily to regulate social and economic life. So the executive itself issued the exemption notification again on 9th September, 1980, as a sort of corrective action. In the international arena the Government is concerned more with the happenings of the future than with the promises of the past. The crux of the problem is that if the international trade calls for greater freedom and enterprise, it will be against the public interest to curb and confine that freedom by applying the doctrine of estoppel. The imposition, exemption, reimposition and re-exemption of levies are like launching life-boats to save a sinking ship in international market when faced with foreign competition. "Like the ocean, these markets are never at rest", a British banker has said, "and like the weather never entirely predictable". The rises and falls, the ups and downs, in the international trade are difficult to comprehend at once. Because the changes are so sudden in this cosmopolitan and competitive world. To reconcile the nume ..... X X X X Extracts X X X X X X X X Extracts X X X X
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