The Division Bench of the Supreme Court, in a recent judgment expressed a view that the proposals made by the Finance Minister during his budget speech do not have the status of enactments and the Parliament and the Government is not bound to such proposals. The Court was considering an appeal against the Order of the Bombay High Court in which the High Court refused to interfere with the issue on ground that the power of Judicial Review cannot used beyond the law enacted by the Parliament.
The appellant imported eight consignments of goods falling under Tariff Sub-Heading 2208.10 of the Customs Tariff, namely, “Compound alcoholic preparations of a kind used for the manufacture of beverages” during the financial years 1993-94 and 1994-95.The customs authorities assessed the goods imported provisionally and subjected them to a prescribed rate of duty of Rs.300/- per liter or 400% whichever is higher specified in respect of Sub-Heading 2208.10 of the Customs Tariff for 1993-94 and 1994-95. The appellants maintained that they have deposited the amount of duty provisionally assessed on the assessable value declared in the eight bills of entry. According to the appellant, he cleared the goods for home consumption during financial years 1993-94 and 1994-95.Between the years 1994 and 2001 the appellant addressed several communications, inter alia, to the Central Board of Excise and Customs and to the Tariff Research Unit (TRU) of the Union Ministry of Finance. The grievance of the appellant is that the rate which has been prescribed for goods falling under Tariff Sub-Heading 2208.10 is higher than that was authorized in the Budget Proposals duringfinancial years 1993-94 and 1994-95. The appellant sought for relevant information under the Right to Information Act from the concerned authorities. However, the request was not granted.
Being dissatisfied with the attitude of the authorities, the appellants filed a Writ Petition before the Bombay High Court. Through the petition, one of the main relief prayed by the appellant was that the Court should issue a writ of Mandamus directing the first and second respondents herein to issue a notification u/s.25(1) of the Customs Act, 1962 in order to exempt goods falling under Tariff Sub-Heading 2208.10 so as to give effect to the Budget proposal announced by the Finance Minister in Parliament for financial years 1993-94 and 1994-95.
In this regard, appellants contended that that the budget proposals for 1993-94 stipulated, inter alia, a reduction in effective rate of import duty on items which had then attracted a rate of duty higher than 85%, to 85% advalorem, except on dried grapes, almonds, alcoholic beverages, ball and roller bearings and passenger baggage; the Budget proposals for 1994-95 similarly contemplated a reduction in effective rates of customs duty on items which until then attracted a duty higher than 65%, to 65% except, on alcoholic beverages. ‘CAP of a kind used in the manufacture of beverages’ falling under sub-heading 2208.10 of the Act are not covered by the said exceptions ‘dried grapes, almonds, alcoholic beverages, ball and roller bearings and passenger baggage’ asmentioned in the Budget proposal appearing at Sl.No.B 1. Hence the import duty on ‘CAP of a kind used in the manufacture of beverages’falling under sub-heading 2208.10 should have been read as “85%”for the financial year 1993-1994 in keeping with the Budget Proposal at Sl.No.B1 duly passed by the Parliament for the financial year 1993-94 so also for the financial year 1994-95, it should have been “65%”.
It was further argued on behalf of the appellant that all the notifications contained in the Explanatory Memorandum 1993-94 and 1994-95 were to give effect to the Budget Proposals duly passed and legislated by the Parliament and rectify the erroneous tariff rates prescribed by the TRU department in the Customs Tariff Act, Finance Bill and Finance Act for 1993-94 and 1994-95; Budget proposals announced by the FM in the Parliament are duly passed and/or approved by the Parliament, no person, executive, bureaucrat or any authority or Court of Law has the authority and/or power to alter or amend the same. If the executives are allowed to prescribe any tariff rates contrary to the Budget Proposals duly authorized by the Parliament, then the Budget Proposals duly passed by the Parliament will have no meaning and will be rendered nugatory and thus opening the flood gates for ‘corrupt practice’.
The Department, on the other hand, contended that the speech of the Finance Minister while presenting the Budgetary Proposals only highlights the more important proposals of the Budget; Budgetary changes are, in fact, enacted by the Parliament as contained in the Finance Bill or ratified by Parliament or implemented through notifications. The legal force for charging a particular rate of customs duty on import of goods, is derived from the First Schedule of the Customs Tariff Act, 1975 read with notifications issued u/s.25(1) of the Act. If any changes in the rates were intended by Parliament it would have been reflected in the respective Finance Bills. According to them, there was no error or discrepancy between the budget proposals announced by the Finance Minister and the Finance Bill.
The Writ petition filed by the appellant was dismissed by the High Court by finding that once a particular Tariff Heading is prescribed, that constitutes the authoritative expression of the legislative will of Parliament and the High Court cannot exercise its power of judicial review and go beyond the law enacted by the Parliament and it is not permissible for the Court to undertake a scrutiny of whether there was an error on thepart of the Parliament in legislating a particular rate of duty.Further, the High Court observed that there is no discriminatory conduct which would compel the interference of the court. The appellant, unsatisfied with the order, has preferred a revision before the High Court which ended up in dismissal as no error apparent on record has been made out. Therefore, the appellant presented the matter before the Supreme Court on appeal by raising various questions. One of the main issue was that whether the budget proposals, as alleged by the appellant, are duly passed and approved by the Parliament and whether the tariff rates fixed by the TRU are contrary to the legislative mandate?
Addressing the above issue, the division bench has expressed that “We are unable to agree with the argument advanced by the appellant for the reason that he is unable to make note of the difference between a proposal moved before the Parliament and a statutory provision enacted by the Parliament, because the process of Taxation involves various considerations and criteria.Every legislation is done with the object of public good as said by Jeremy Bentham. Taxation is an unilateral decision of the Parliamentand it is the exercise of the sovereign power. The financial proposals put forth by the Finance Minister reflects the governmental view for raising revenue to meet the expenditure for the financial year and it is the financial policy of the Central Government.”
The division bench comprising of Justice Madan B Lokur and Justice N V Ramana opined that, “Finance Minster’s speech only highlights the more important proposals of the budget. Those are not the enactments by the Parliament. The law as enacted is what is contained in the Finance Act. After it is legislated upon by the Parliament and a rate of duty that is prescribed in relation to a particular Tariff Head that constitutes the authoritative expression of the legislative will of Parliament”.
The Court further pointed out that “now in the present facts of the case, as per the finance bill, the legislative will of the Parliament is that for the commodities falling under Tariff Head 2208.10, the tariff is Rs.300/- per litre or 400% whichever is higher. Even assuming that the amount of tax is excessive, in the matters of taxation laws, the Court permits greater latitude to the discretion of the legislature and it is not amenable to judicial review.” On this basis, the contention of the Court was rejected”.
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