State of U.P. &
Ors. Vs M/S. Mahindra & Mahindra Ltd.
O R D E R
1.
Leave
granted.
2.
We
have heard learned counsel appearing for the parties in this appeal, which is filed
challenging the legality of the judgment and order passed by the Allahabad High
Court in a writ petition filed by the respondent, praying for issuance of a writ
of mandamus to read in the exemption notification, the words "Tractor Engine
specifying Cubic Capacity (CC) of the Tractor Engine not exceeding 1800 CC. The
Government of India had issued notification on 16th April, 1985, making an amendment
in the notification of the Government of India in respect of the table annexed to
the notification, inserting by way of substitution the words "Tractors of Draw-Bar
Horse Power not exceeding 25". Another notification was subsequently issued
by the Government of India on 17th July, 1985, substituting the words "Draw-Bar"
with the words "Power Take-off Horse". Be it stated here that all such
notifications relate to the payment of excise duty.
3.
The
Government of Uttar Pradesh, however, for the purpose of levy of sales tax
issued a notification on 12th September, 1986, in which it was stated that
under Section 4 of the Uttar Pradesh Sales Tax Act, 1948, Tractors with Power Take-off
Horse Power not exceeding 25 would stand exempted from payment of tax under the
Sales Tax Act, subject, however, to the condition that the said tractors are exempted
from payment of Central Excise Duty.
4.
A
show cause notice was issued to the respondent from the Office of the Assistant
Commissioner (Assessment)-I Sales Tax, Lucknow, stating therein that at the
time of survey made, and as per the literature made available it was found that
the, Page 2 of 10horse power of the tractors of the respondent had been disclosed
as 30 Horse Power. In the aforesaid show cause notice it was stated that in
view of the facts mentioned in the said notice, the respondent may submit a
reply as to why the return filed by the respondent would not be rejected and a provisional
assessment order for the period in question may not be completed under Rule
41(5) of the Rules.
5.
Pursuant
to the aforesaid show cause notice issued, a detailed reply was filed by the respondent.
The Assessment Officer considered the entire records and, thereafter, by his order
dated 21st March, 1992, passed an assessment order on the basis of the contents
of the notification dated 12th September, 1986, denying exemption from payment of
sales tax to the tractors of the respondent.
6.
6.
After the aforesaid assessment order was passed, the respondent filed a writ petition
before the Allahabad High Court with the following reliefs: "
i.
A
Writ of certiorari or any other suitable Writ, Order of direction be issued to modify
or amend, the notification so as to bring in conformity with the Central Government
and conformity in respect of measuring strength or engine by all manufacturer as
contained in Annexure-1 to this Writ Petition. Page 3 of 10
ii.
A
Writ of mandamus directing the Opposite Party No.2 to clearly state in the said
notification the basis of exemption being cubic capacity of the Tractor Engine
not exceeding 1800 CC for exemption for Sales Tax in place of 25 P.T.O.H.P.,
and directing the Opposite Party No.2 to exempt the petitioners, tractor engine
and specify the C.C. (Cubic Capacity) of the Tractor engine not exceeding 1800
C.C. And bring it at Par with Circular No.89/87/CE dated 01.03.1987 issued by
Central Government to clear the anomaly and ambiguity in both the circulars, which
creates discrimination among manufacturer of Fuel Efficient engines and rest
ones, and refrain the Opposite Party No.2 to desist from recovering disputed
Sales Tax of Rs.2,34,00,965.400 from April' 91 to Feb. 92 created by Annexure II
dated 21.03.1991, and stay operation thereof."
7.
Interestingly,
in the said writ petition there was no challenge to the assessment order
passed. Be that as it may, the Division Bench of the Allahabad High Court proceeded
to hear the aforesaid writ petition and by a detailed order passed held that since
the Central Government has by notification dated 28th February, 1987, replaced
the word 25 PTOHP by the word 1800 CC and thereby exempted the tractor having capacity
not exceeding 1800 from Excise Duty, the same wordings, namely, Tractors with Power
Take-off Horse Power not exceeding 25 should also be read as Tractors not
exceeding 1800 CC, which would stand exempted from levy of Sales Tax. The aforesaid
findings recorded by the High Court are under challenge in this appeal. Page 4
of 10
8.
The
first contention of the counsel appearing for the appellant is that there is no
power vested on the High Court to issue such a direction to the Executive to re-frame
the subordinate legislation, and that therefore the High Court exceeded its jurisdiction
by issuing such directions in a field where the High Court cannot and should
not tread. In support of the said contention, the counsel has relied upon the decision
of this Court in Supreme Court Employees' Welfare Association v. Union of India
and another (1989) 4 SCC 187, Bal Ram Bali and another v. Union of India (2007)
6 SCC 805 and Municipal Committee, Patiala v. Model Town Residents Association
and others (2007) 8 SCC 669 as also the decision in M/s. Narinder Chand Hem Raj
and others v. Lt. Governor, Administrator, Union Territory, Himachal Pradesh and
others (1971) 2 SCC 747. Wherein this Hon'ble court held as follows:
"The power to impose
tax is undoubtedly a legislative power. That power can be exercised by the legislature
directly or subject to certain conditions, the legislature may delegate that
power to some other authority. But the exercise of that power whether by the
legislature or by its delegate is an exercise of a legislative power. The fact that
the power was delegated to the executive does not convert that power into an executive
or administrative power. No court can issue a mandate to a legislature to enact
a particular law. Similarly no court can direct a subordinate legislative body
to enact or not to enact a law which it may be competent to enact. [945 F-G] Article
Page 5 of 10 265 of the Constitution lays down that no tax can be levied and
collected except by authority of law. Hence the levy of a tax can only be done
by the authority of law and not by any executive order. Unless the executive is
specifically empowered by law to give any exemption, it cannot say that it will
not enforce the law as against a particular person. No Court can give a direction
to a Government to refrain from enforcing a provision of law".
9.
In
Supreme Court Employees' Welfare Association v. Union of India and another
(supra), in paragraph 51, this Court stated as follows: "51. There can be no
doubt that no court can direct a legislature to enact a particular law. Similarly,
when an executive authority exercises a legislative power by way of subordinate
legislation pursuant to the delegated authority of a legislature, such executive
authority cannot be asked to enact a law which he has been empowered to do under
the delegated legislative authority.
10.
Within
our Constitution, we have specifically demarcated the ambit of power and the
boundaries of the three organs of the Society by laying down the principles of separation
of powers, which is being adhered to for carrying out democratic functioning of
the country. So far as the legislation is concerned, the exclusive domain is with
the legislature. Subordinate legislations are framed by the executive by exercising
the delegated power conferred by the Statue, which Page 6 of 10is rule making
power. The judiciary has been vested with the power to interpret the aforesaid
legislations and to give effect to them since the parameters of the jurisdiction
of both the organs are earmarked.
Therefore, it is always
appropriate for each of the organs to function within its domain. It is inappropriate
for the courts to issue a mandate to legislate an Act and also to make a
subordinate legislation in a particular manner. In this particular case, the High
Court has directed the subordinate legislation to substitute wordings in a particular
manner, thereby assuming to itself the role of a supervisory authority, which according
to us, not a power vested in the High Court. It is also by now settled law that
so far exemption clauses are concerned, there should be strict interpretation of
the same as has been held by this Court repeatedly. Suffice will be to refer to
very recent decisions of this Court in Bhai Jaspal Singh and another v. Assistant
Commissioner of Commercial Taxes and others and Commissioner of Central Excise,
New Delhi v. Hari Chand Shri Gopal and others
We would also extract
a passage from the decision of the Supreme Court in Novopan India Ltd. Hyderabad
Vs. Collector of Central Excise and Customs, Hyderabad, reported at 1994 Supp
(3) SCC Page 7 of 10at page 606, wherein this Court has held that: "16.
.........such a notification has to be interpreted in the light of the words employed
by it and not on any other basis. This was so held in the context of the principle
that in a taxing statute, there is no room for any intendment, that regard must
be had to the clear meaning of the words and that the matter should be governed
wholly by the language of the notification i.e. by the plain terms of the
exemption."
11.
During
the course of the arguments, it was also brought to our notice that subsequent to
the order of assessment, an appeal was filed, which came to be dismissed, subsequent
to which a second appeal was filed before the Tribunal, which allowed the appeal
giving effect to the orders of the High Court. Since, in our considered opinion,
the High Court exceeded its jurisdiction in passing the aforesaid orders and in
issuing the directions for inserting certain additional words into notification
of exemption issued by the Uttar Pradesh Government, we set aside the impugned judgment
and order passed by the High Court and also the order passed by the Tribunal.
As the Tribunal had
given effect to the order of the High Court, the order of the Tribunal is
hereby set aside. Even otherwise Courts can always take notice of the subsequent
events and developments that had taken place subsequent to the filing of the writ
petition or filing of the special leave Page 8 of 10petition and it is also within
the jurisdiction of this Court to pass consequential orders to give effect to the
remedies available to the parties. Considering these facts and circumstances
from the aforesaid angle, we after setting aside the order passed by the High
Court and also by the Tribunal as also by the First Appellate Court, remit back
the matter to the First Appellate Court to consider the matter de novo taking into
consideration the notification as existing and which was issued on 12th September,
1986, and decided the matter without making any addition/alternation thereto.
12.
However,
counsel appearing for the respondent has submitted before us that it would be possible
for the respondent to prove and establish that the tractor manufactured by the
respondent is below 25 PTOHP. If certain exemption is available on the factual
aspect, such benefit must be provided to an assessee but that is possible only
when the respondent is able to prove and establish with cogent and reliable materials
that he is entitled to the benefit of the exemption notification. Therefore, we
allow the parties to lead additional evidence before the appellate authority,
which shall be allowed to be filed within four weeks from their date of appearance
and, thereafter, the appellate authority shall Page 9 of 10proceed to decide the
matter de novo in the light of the records available and also in the light of the
exemption notification.
13.
This
appeal stands allowed to the aforesaid extent as indicated and leave the parties
to bear their own costs. The parties shall appear before the appellate
authority on 2nd May, 2011, for obtaining further dates in the appeal. We also request
the appellate authority to take up the matter and dispose of the same as expeditiously
as possible, preferably within a period of three months from the date of
receipt of the additional evidence, if produced by the parties.
...........................................J.
(DR. MUKUNDAKAM SHARMA)
...........................................J.
(ANIL R. DAVE)
New
Delhi;
April
20, 2011.
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