Summary
The appellants/writ petitioners are private importers of edible oils. Under the Import Policy of 1978-79, the Govern- ment canalised the import of edible oils through the State Trading Corporation. Some of the private importers who had entered into firm commitments with foreign suppliers, and were now being denied permission to import the edible oils, filed writ petitions in various High Courts. These writ petitions were allowed and they were granted licences to import the edible oils, in order to honour their commit- ments.
From March 17, 1979 the import of edible oils was sub- jected to differential rates of customs duty at the hands of private importers and the State Trading Corporation, inas- much as c- oncessional rate of customs duty was levied on the imports by the State Trading Corporation under the order of exemp- tion issued under section 25(2) of the Customs Act, 1962.The order stated that in view of high international prices of vegetable oils and in order to keep the domestic prices at reasonable levels it was considered necessary to exempt the State Trading Corporation from part of the Customs duty.The appellants filed writ petitions in the High Court of Delhi complaining of the differential treatment accorded between the private importers and the State Trading Corpora- tion. Similar writ petitions were filed in this Court di- rectly. The High Court dismissed the writ petitions.Before this Court it was contended on behalf of the private importers that (i) there was no basis for the dif- ferential duty set out in the exemption orders and no real or substantial nexus between the 357differentiation made and the object of s. 25(2); (ii) there was no real or substantial distinction between the private importers and the State Trading Corporation having regard to the object of the statute, the nature of customs duty, the rationale of s. 25 and the professed object of the exemption orders under s. 25(2); (iii) the State Trading Corporation could not be equated with the Central Government; (iv) assuming that the State Trading Corporation could be equated with the Central Government or that it was acting on behalf of the Central Government, once the Government ventured into the commercial field it donned the robes of a trader, and it could not therefore claim any special attribute or prefer- ence for differentiation; (v) the differentiation proceeded on excessive classification, and that resulted in violation of the doctrine of equality enshrined in Art. 14 of the Constitution; (vi) the concession must relate to the goods and not to the personality of the importer; and (vii) the allegation that the international prices of edible oils were high was inconsistent with the reality of the situation.Dismissing the appeals. special leave petitions and the writ petitions, this Court.HELD: (1) The power conferred on the Central Government under s. 25(2) of the Act is to be exercised by it in its subjective satisfaction. The exercise of the power is con- trolled by the requirement in the sub-section that the exemption order must contain a statement stating the circum- stances of an exceptional nature under which the special exemption order has been considered necessary. The require- ment is intended by the statute to ensure that the satisfac- tion of the Central Government concerning the necessity of the order is not reached arbitrarily but flows from material relevant to the object for which the power has been con- ferred. [361E-G](2) The limitations on the jurisdiction of the Court in cases where the satisfaction has been entrusted to executive authority to judge the necessity for passing orders is well defined and has been long accepted. [365E-F](3) Contracts by private importers concluded before 2 December, 1978 were allowed to be worked out after that date without affecting the principle that as from December, 1978, the business of importing such oils belonged exclusively to the State Trading Corporation. This is the background in which the questions raised before the Court need to be considered. [364E]358 (4) It is the Central Government which has to be satis- fied, as the authority appointed by Parliament under s.25(2), that it is necessary in the public interest to make the special order of exemption. It has set out the reasons which prompted it to pass the orders. It is not for this Court to sit in judgment on the sufficiency of those rea- sons. [365D-E](5) The reasons set forth in the exemption notifications can constitute a reasonable basis for those notifications.International prices were fluctuating, and although they may have shown a perceptible fall there was the apprehension that because of the history of fluctuations there was a possibility of their rising in future. The need to protect the domestic market is always present, and therefore encour- agement had to be given to the imports effected by the State Trading Corporation by reducing the rate of customs duty levied on them. [364F-G](6) It is true that the State dons the robes of a trader when it enters the field of commercial activity, and ordi- narily it can claim no favoured treatment. But there may be clear and good reason for making a departure. Viewed in the background of the reasons for granting a monopoly to the State Trading Corporation, acting as an agent or nominee of the Central Government in importing the specified oils, it will be evident that policy considerations rendered it necessary to make consummation of that policy effective by imposing a concessional levy on the imports. No such conces- sion is called for in the case of private importers who, in any event, are merely working out contracts entered into by them with foreign sellers before 2 December, 1978. [365F-H]S.T.C.v. Commercial Tax Officer, Vishakapatnam, [1964] 4SCR 99; Heavy Engineering Mazdoor Union v. State of Bihar,[1969] 3 SCR 995; Andhra Pradesh State Road Transport Corpo- ration v. Income Tax Officer, [1964] 7 SCR 17; Vidarbha Housing Board v. Income Tax Officer City & Refund Circle, Nagpur, 92 ITR 430; L. 1. C.v. Escorts Ltd., [1986] 1 SCC 264, 344; State of J & K v.T.N. Khosa, [1974] 1 SCR 771,792;Mohammad Shujat Ali v. Union of India, [1975] 1 SCR 449, 470 and In Re The Special Courts Bill, 1978, [1979] 2 SCR 476, 561-2, referred to.See the full content of this document
Extract
M. Jhangir Bhatusha Etc. Etc. VS. Union Of India & Ors. Etc. Etc.
PETITIONER: M. JHANGIR BHATUSHA ETC. ETC.Vs.RESPONDENT: UNION OF INDIA & ORS. ETC. ETC.DATE OF JUDGMENT17/05/1989BENCH: PATHAK, R.S. (CJ)BENCH: PATHAK, R.S. (CJ)RANGNATHAN, S.MUKHARJI, SABYASACHI (J)NATRAJAN, S. (J)VENKATACHALLIAH, M.N. (J)CITATION: 1989 AIR 1713 1989 SCR (3) 356 1989 SCC Supl. (2) 201 JT 1989 (2) 465 1989 SCALE (1)1458CITATOR INFO : F 1989 SC2054 (19)RF 1991 SC1931 (1)ACT: Customs Act 1962: Section 25(2)--Edible Oil--Import of- Concessional rate of customs duty in favour of State Trading Corporation-Private importers complaining of differential treatment-Held necessary in public interest to make special order of exemption.JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1924-27 of 1980 etc. etc.From the Judgment and Order dated 14.11.1979 of the Delhi High Court in Civil Writ No. 1517 of 1979.359 Soli J. Sorabjee, S.K. Mehta, H.N. Salve, A.N. Banatwa- la, Rajiv Datta, R. Ravindran, K.K. Patel, Ujwal Rana, M.K.Dua, S.M. Sarin, Aman Vachher, E.M.S. Anam, P.G. Gokh...
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