Full Judgment Text
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PETITIONER:
B.K. INDUSTRIES AND ORS. ETC. ETC.
Vs.
RESPONDENT:
UNION OF INDIA AND OTHERS
DATE OF JUDGMENT13/04/1993
BENCH:
JEEVAN REDDY, B.P. (J)
BENCH:
JEEVAN REDDY, B.P. (J)
VENKATACHALA N. (J)
CITATION:
1993 AIR 2123 1993 SCR (3) 51
1993 SCC Supl. (3) 621 JT 1993 (2) 709
1993 SCALE (2)541
ACT:
Vegetable Oils Cess Act, 1983: Section 3. Levy and
collection of cess for period March. 1986 to March 31, 1987-
Validity of.
Statutory Interpretation:
Power of exemption--Cannot be utilised nor extended to
scrapping of the Act itself.
HEADNOTE:
Parliament enacted In 1983 the National Oilseeds and
Vegetable Oils Development Board Act, 1983 to provide for
the development, under the control of the Union, of the
Oilseeds Industry and the Vegetable Oils Industry and for
matters connected therewith. The Act contemplated the
establishment of a board called the National Oilseeds and
Vegetable Oils Development Board, and the Constitution of
Oilseeds and Vegetable Oils Development Fund for promoting
the purposes of the Act. The Vegetable Oils Cess Act, 1983,
was, simultaneously enacted to levy and collect by way of
cess, for the purpose of the National Oilseeds and Vegetable
Oils Development Board Act,1983, a duty of excise on
vegetable oils produced in any mill in India at such rate
not exceeding Rs. 5 per quintal on vegetable oil. This Cess
Act was, however, repealed by Section 12 of the Cotton,’
Copra and Vegetable Oils Cess (Abolition) Act, 1987.
Chapter 5 of the’ said Act carried the heading ’Collection
and Payment of Arrears of Duties and Excise’.
The petitioners who were manufacturers of vegetable oil,
which was subject to the cess/duty of excise under Section 3
of the Cess Act, in their writ petitions to this Court
questioned the validity of the levy and collection of cess
for the period commencing on, 1st March, 1986 and ending
with 31st March. 1987. It was contended that (1) In his
Budget Speech delivered on 28.2.1986 while presenting the
Budget
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1986-87, the Union Finance Minister had stated that as an
endeavour to reduce the number of cesses it had been decided
to dispense with the cession cotton, copra and vegetable
oils and that this statement was exemplified and implemented
by way of a communication from the Directorate of Vanaspati.
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It is not open to the Government to go back upon the said
decision and demand cess for the period subsequent to March
1, 1986, and (2) By virtue of Sub-section (4) of Section 3
of the Cess Act, Rule 8 of the Central Excise Rules is
attracted among other provisions of the Central Excise Act
and Rules. Reading the budget proposals of the Finance
Minister and the letter of the Directorate of Vanaspati
together it must be held that vegetable oils have been
exempted from the levy under Section 3 (1).
Dismissing the Writ Petitions, this Court,
HELD: 1 (a) The cess having been imposed by a
Parliamentary enactment could he rendered inoperative only,
by a parliamentary enactment. Such repealing enactment came
only in the year 1987 with effect from April 1, 1987. (58-C)
(b) The repealing Act expressly provided in Section 13 that
the cess due before the date of said repeal, but not
collected, shall be collected according to law", as if the
Cess Act is not repealed. This provision amounts to a
positive affirmation of the intention of the parliament to
keep the said imposition alive and effective till the date
of the repeal of the Cess Act. (58-1).)
(c) In the face of the aforesaid statutory provisions, no
rights can he founded-nor can the levy of the cess be said
to have been dispensed with by virtue of the alleged
decision referred to in the Finance Minister’s speech or on
account of the letter dated August 11., 1986. (58-E)
(d) The Finance Minister’s speech is not law. The
Parliament may or may not accept his proposal. Indeed, in
this case, it did not accept the said proposal immediately
but only a %ear later. It is only from the date of the
repeal that the said levy becomes inoperative. (58 F)
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2 (a) The cess imposed under section 3 (1) of the Cess Act.
is a duty of Excise as stated in Section 3 Itself.
Therefore, the Central Board of Excise and Customs was
perhaps competent to grant exemption even in the case of
said cess though no definite opinion on this question need
be expressed since it was not debated. Suffice It to say
that the Central Government cannot again be brought in under
sub-rule (2) of rule 8 in the place of the Central Board nor
can the Directorate of Vanaspati and Vegetable Oils be
equated to the Central Board of excise and customs. (58-H,
59-A)
(b) The words "so far as may bell occurring In section 3
(4) of the Cess Act cannot be stretched to that extent.
Above all It Is extremely doubtful whether the power of
exemption conferred by rule 8 can be carried to the extent
of nullifying the very Act itself. It would be difficult to
Wee that by virtue of the power of exemption, the very levy
created by Section 3 (1) can be dispensed with. Doing so
would amount to nullifying the Cess Act Itself. Nothing
remains thereafter to be done under the cess Act. Even the
language of Rule 8 does not warrant such extensive power;
Rule 8 contemplates merely exempting of certain excisable
goods from the whole or any part of the duty leviable on
such goods. (59-B)
3. The power of exemption cannot be utilised to dispense
with the very levy created under Section 3 of the Cess Act
or for that matter under Section 3 of the Central Excise
Act. (59-E)
Kesavananda Bharti Sripadagalvaru and others v.. State of
kerala and another A.I.R. 1973 S.C. 1461, (62-G) relied on.
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JUDGMENT:
ORIGINAL JURISDICTION: Writ Petition (c) No. 857/87 etc.
etc.
(Under Article 32 of the Constitution of India).
Altaf Ahmed, Addl. SolicitorGeneral, M.L. Verma, G.L.
Sanghi. K. Labiri, Sarva Miner, Narain, S. Bhattacharya,
Vivek Gambhir, S.K. Gambhir, Vijay-Hansaria, P. Pameswaran,
P.K.Jain, Rajiv Dutta, M.N. Shroff, Ms. A.Subhashini, Ms.
PratibhaJain, L.K. Gupta, M.A. Firoz, Naresh K. Sharma, A.K.
Goel, Ashok K. Mahajan, Ms.
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Sushma Suri and Kailash Vasdev for the appearing parties.
The judgment of the Court was delivered by
B.P. JEEVAN REDDY, J. The petitioners in this batch of writ
petitions question in the validity of the levy and
collection of cess under section 3 of the Vegetable Oils
Cess Act, 1983 for the period commencing 1st March, 1986 and
ending with 31st March, 1987.
Parliament enacted in the year 1983 the National Oilseeds
and Vegetable Oils Development Board Act, 1983 (being Act 29
of 1983) hereinafter referred to as the Board Act. The Act
was intended to provide for the development, under the
control of the Union, of the oilseeds Industry and the
Vegetable Oils Industry and for matters connected therewith.
The Act contemplated establishment and constitution of a
board called the National Oilseeds and Vegetable Oils
Development Board. The functions of the Board were
specified in section 9. In short the duty of the Board was
to promote the development, by such measures as it thought
fit, subject to the control of the Central Government, the
Oilseeds Industry and the Vegetable Oils Industry. Section
12 provided for constitution of Oilseeds and Vegetable Oils
Development Fund. The fund was to be applied for promoting
the purposes of the Act.
Simultaneously with the Board Act was enacted the Vegetable
Oils Cess Act, 1983 (being Act 30 of 1983), hereinafter
referred to as the Cess Act. The purpose of this Act is
stated in sub-section (1) of section 3. It is to levy and
collect "by way of cess, for the purposes of the National
Oilseeds and Vegetable Oils Development Board Act, 1983, a
duty of excise on vegetable Oils produced in any m- ill in
India at such rate not exceeding Rs.5 per quintal on
vegetable oil, as the Central Government may, from time to
time, specify by notification in the Official Gazette".
Sub-section (2) of Section 3 clarified that the duty of
excise levied under sub-section (1) section 3 shall be in
addition to the duty of excise leviable on vegetable oils
under the Central Excises and Salt Act, 1944 or any other
law for the time being in force. Sub-section (3) stated
that the duty of excise levied on section 3 (1) shall be
payable by the occupier of the mill in which the vegetable
oil is produced. Sub-section (.4) provided that the
provisions of the
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Central Excise Act and the Rules made thereunder including
those relating to refunds and exemptions from duty, "shall
so far as may be, apply in relation to the levy and
collection of the said duty of excise as they apply in
relation to the levy and collection of the duty of excise on
vegetable oils under that Act". Section 4 provided that the
proceeds ,of the duty of excise levied under section 3 (1)
shall first be credited to the Consolidated Fund of India.
Subject to appropriation made by law by the Parliament, the
Central Government could pay to the Board from time to time
such amounts from out of the said collections as it thought
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fit for being utilised for the purposes of the Board.
Section 7 amended certain provisions of the Produce Cess
Act, 1966.
It is thus clear that the cess, which is called a duty of
excise, levied under section 3 of the cess Act was intended
to serve the purposes of the Board Act. The said cess was
accordingly levied and collected on and from 1983. The Cess
Act was, however, repealed by section 12 of the Cotton,
Copra and Vegetable Oils Cess (Abolition) Act, 1987 (being
Act 4 of 1987), hereinafter referred to as the Repeal Act.
Chapter IV of the Repeal Act provides for the repeal inter
alia of the Vegetable Oil Cess Act, 1983. Section 12 is the
repealing section. Chapter V, containing only one section
namely section 13, is relevant for purposes. Chapter V
carries the heading "COLLECTION OF ARREARS OF DUTIES OF
EXCISE",. Section 13 reads as follows:
"13. Collection and payment of arrears of
duties of excise-Notwithstanding anything
contained in the amendments made to the
Produce Cess Act, 1966 (15 of 1966) or the
repeal of the Copra Cess Act, 1979 (4 of 1979)
or the Vegetable Oils Cess Act, 1983 (30 of
1983) , by this Act, any duty of excise,
levied under any of the said Acts immediately
before the commencement of this Act, but has
not been collected before such commencement,
shall be liable to be collected after such
commencement in accordance with the provisions
of the said Acts for being paid into the
Consolidated Fund of India as if this Act had
not been enacted,"
The Statement of Objects and Reasons appended to the Bill,.
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(which became the Repeal Act) stated inter alia that the
abolition of the said cess was with a view to reduce the
number of cesses and multiplicity of taxes.
The petitioners do not dispute the validity of the levy of
the said cess/duty of excise till the 28th February, 1986.
Their submission is confined, as stated hereinbefore, to the
period commencing on. March 1, 1986 and ending with March
31, 1987. As noticed here in before, the Cess Act was
repealed on and with effect from March 31, 1987 by section
12 of the Repeal Act. Section 13 of the Repeal Act
expressly provides notwithstanding the said repeal, the
duty of excise levied under the said Act immediately
before the commencement of the Repeal Act, but which has
not been collected before such commencement, shall be liable
to be collected even after the repeal, in accordance with
the Cess Act, as if the said Cess Act has not been repealed.
In the face of this provision, it would appear that the
petitioners’ dispute as to their liability to pay the said
cess for the period March 1, 1986 to March 31, 1987 is of
little avail. The petitioners, however, rely upon certain
circumstances/grounds in support of their contention which
we may now deal with.
The petitioners are manufacturers of vegetable oil, which
was subject to the cess/duty of excise under section 3 of
the Cess Act. They rely upon the following circumstances
and ground in supports of their plea:
(1) In his Budget Speech delivered on 28.2.1986, presenting
the Budget 1986-87, the Union Minister of Finance stated:
"the long term Fiscal Policy recognises that cesses levied
as excise duties contribute to the multiplicity of taxes.
As an endeavour to reduce the number of the cesses it has
been decided to dispense with the cess on cotton, copra and
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vegetable oils. The Ministry of Agriculture will take
appropriate action in the matter. The loss to the exchequer
on this account will be Rs.5.90 crores." The Budget
proposals also specify the loss of revenue on account of the
decision to dispense with the cess on vegetable oils among
others. This, Speech made on the floor of the Lok Sabha
speaks of a decision already taken by the Government and is
enforceable and effective from the said date.
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(2) In pursuance of the said decision of the Government of
India, the Directorate of Vanaspati, Vegetable Oils and Fats
addressed the letter dated August 11, 1986 to the
Commissioner (Tax Research) Department of Revenue,. New
Delhi asking him to issue instructions to all concerned
indicating that the cess on vegetable oils has been
dispensed with and as such the cess shall not be collected.
It was further directed that the cess collected, if any,
since April 1, 1986 shall be refunded. A copy of this
letter was sent to the President, Central Organisation for
Oil Industries and Trade, Bombay.
Counsel for the petitioners Shri M.L. Verma and G.L. Sanghi
urged the following contentions:
(a) The Budget Speech of the Finance Minister delivered on
the floor of the Lok Sabha constitutes a enforceable and
effective decision upon which the petitioners were entitled
to act. The said decision was exemplified and implemented
by way of a communication from the Directorate of Vanaspati,
Vegetable Oils and Fats referred to above. In view of the
said communication, the petitioners did not pass on the
burden of the said cess to their purchasers on and from
March 1, 1986. It is not open to the Government to go back
upon the said decision and demand cess for the period
subsequent to March 1, 1986.
(b) By virtue of sub-section (4) of section 3 of the Cess
Act, Rule 8 of the Central Excise Rules is attracted among
other provisions of the Central Excise Act and Rules.
Rule 8 empowers the Central Government to grant exemption on
any excisable goods from the whole or any part of duty
leviable on such goods. Sub rule (1) of Rule 8 empowers the
Central Government to grant exemption while Sub-rule (2) em-
powers the Central Board of Excise and Customs to grant
exemption. Inasmuch as section 3 (4) of the Cess Act
applies the provisions of the Central Excise Act and the
Rules subject to the rider "so far as may be", the
provisions in Rule 8 should be read with the necessary
modification. In other words, while sub-rule (1) of rule 8
must be read as empowering the Central Government to grant
exemption, sub-rule (2) must be read as conferring a similar
power upon the Central Government and/or the Directorate of
Vanaspati, Vegetable Oils and Fats. Unlike sub-rule (1),
sub-rule (2) does not require the order of exemption to be
published in the Official Gazette nor does it require that
such
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exemption should be through a notification. The budget
proposals of the Finance Minister and the letter of the
Directorate of the Vanaspati and Vegetable Oils aforesaid
are relatable to sub-rule (2) or Rule 8 of Central Excise
Rule read with sub-section (4) of section 3 of the Cess Act.
Reading them together it must be held that the Government
and the Directorate have exempted the vegetable oils from
the levy under section (1) of section 3.
We find it difficult to agree. It is not brought to our
notice that the budget proposals contained in the Finance
Minister’s speech were accepted by the Parliament. The cess
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having been imposed by a Parliamentary enactment could be
rendered inoperative only by a Parliamentary enactment.
Such repealing enactment came only in the year 1987 with
effect from April 1, 1987. Not only that. The repealing
Act expressly provided in section 13 that the cess due
before the date of said repeal. but not collected, shall be
collected according to law as if the Cess Act is not
repealed. This provision amounts to a positive affirmation
of the intention of the Parliament to keep the said imposi-
tion alive and effective till the date of the repeal of the
Cess Act. In the face of the said statutory provisions, no
rights can be founded-nor can the levy of the cess be said
to have been dispensed with by virtue of the alleged
decision referred to in the Finance Minister’s speech or on
account of the letter dated August 11, 1986. The Finance
Minister’s speech is not law. The Parliament may or may not
accept his proposal. Indeed, in this case, it did not
accept the said proposal immediately but only a year later.
It is only from the date of the repeal that the said levy
becomes inoperative.
Now coming to the argument based upon Rule 8 of the Central
Excise Rules read with section 3(4) of the Cess Act, we find
it totally unacceptable. No notification has been issued
under rule 8 (1) by the Central Government-much less was any
such notification published in the Gazette. No special
order has also been made by the Central Board of Excise and
Customs in this behalf under rule 8 (2). The cess imposed
under section 3 (1) of the Cess Act, it may be remembered,
is a duty or Excise as stated in section 3 itself.
Therefore, the Central Board of Excise and Customs was
perhaps competent to grant exemption even in the case of
said cess-though we do not wish to express any definite
opinion on this question since it was not debated at the
Bar. Suffice it to say that the Central Government cannot
again be brought
59
in under sub-rule (2) of rule 8 in the place of Central
Board nor can the Directorate of Vanaspati and Vegetable
Oils be equated to Central Board of Excise and Customs. The
words "so far as may be" occurring in section 3 (4) of the
Cess Act can not be stretched to that extent. Above all it
is extremely doubtful whether the power of exemption
conferred by rule 8 can be carried to the extent of
nullifying the very Act itself. It would be difficult to
agree that by virtue of the power of exemption, the very
levy created by section 3(1) can be dispensed with. Doing
so would amount to nullifying the Cess Act itself. Nothing
remains thereafter to be done under the Cess Act. Even the
language of rule 8 does not warrant such extensive power.
Rule 8 contemplates merely exempting of certain excisable
goods from the whole or any part of the duty leviable on
such goods. The principle of the decision of this Court in
Kesavananda Bharti Sripadagalvaru and others v. State of
Kerala and another A.I.R. 1973 S.C. 1461 applies here
perfectly. It was held therein that the power of amendment
conferred by Article 368 cannot extend to scrapping of the
Constitution or to altering the basic structure of the
constitution. Applying the principle of the decision, it
must he held that the power of exemption cannot be utilised
for, nor can it extend to, the scrapping of the very Act
itself. To repeat, the power of exemption cannot be
utilised to dispense with the very levy created under
section 3 of the Cess Act or for that matter under section 3
of the Central Excise Act.
Mr. Sanghi submitted that the Board contemplated under the
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Board Act never did actually start functioning and,
therefore, the levy of cess is impermissible. It is
difficult to agree with this contention either. As the
Preamble to the Cess Act indicates, the levy of the said
cess was not for the purpose of the Board but for the
purpose of the development of the Oilseeds Industry and
Vegetable Oils Industry. The Board was merely a medium in
that effort. It must be noticed that the cess was to be
credited to the Consolidated Fund of India, out of which
requisite sums of money to be utilised for the purpose of
the Board Act. In any event there is nothing to show that
the Board did not become operational except the bare
assertion to that effect. A vague allegation cannot merit
any credence.
In Writ Petition 963 of 1987 Mr. Sanghi raised an additional
contention that the goods concerned therein cannot be called
"Veg-
60
eatable Oil" within the meaning of section 3 (1) of the Cess
Act and, therefore, the levy of the cess thereon is
incompetent. We cannot, however, allow this contention to
be raised in a petition under Article 32 of the
Constitution. It is open to the petitioner to raise the
said contention before the appropriate authority at the
appropriate stage.
For the above reasons the writ petitions fail and are
dismissed but in the circumstances without costs.
N. V. K. Petitons dismissed.
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