Allowing instalment as eco policy not justiceable

The Supreme Court has unequivocally laid down that in a matter of economic policy, the court shall not intervene unless the policy is itself violative of the fundamental rights

The immediate reason for writing this theoretical treatise is to assess the basis of determining the contour of the recent controversies about the recovery of the dues from the telecom companies where instalment was acceptable to the Department of Telecom. I am not writing on the merit of the decision on this particular case but only on how the Supreme Court has decided this issue about whether the economic policy is justiceable in previous judgments which constitute a precedent. If a court now ignores a precedent, is also another issue.

It has always been accepted in various judgments of the Supreme Court that economic policy is not justiceable. It is already a settled issue that the Court cannot intervene unless any fundamental right has been violated.

There are several judgments on the issue. In the cases of Black Diamond Beverages vs UoI reported in 1988 (36) ELT (Cal) and Sulochana Enterprises vs UoI 1991 (56) ELT 22 (Mad), it was held that the if the expressiveness of tax or policy was confiscatory, then only the policy is violative of Art 19 (1) (g) of the Constitution which was necessary to make an economic policy justiceable.

A clear decision came in the well-known case of Indian Express Newspapers v.UoI reported in AIR 1986SC 515 that a notification is legislative in nature and so intervention is not permissible. Here the Supreme Court interfered to strike down the excessive tax on newsprint because it concluded that the imposition of the high tax on it violates the fundamental right of freedom of speech under Art 19(1) g. On a mere ground of unreasonableness, the imposition of tax even by amendment of notification cannot be challenged, it said. Economic policy is not justiceable unless it violates fundamental rights.

There were many judgments after that. The Kasinka Trading vs. UoI – 1994(74) ELT 782(SC) and Shrijee, Sales Corporation vs. UoI – 1997(89) ELT 452 (SC) held that taxation policy cannot be pronounced upon by the courts unless there is a violation of the Constitution. Later a Bench of a Supreme Court with two judges in the case of Dai-Ichi Karkaria Ltd. vs. UoI – 2000(119) ELT 516(SC) decided that “the mere fact that a notification under Customs Act is required to be laid before Parliament” does not make it a legislative action. So this decision struck down the notification, which had reduced the extent of exemption to oil in the public interest. The Court held that the professed public interest was really not in the public interest. Thus the Court considered that public interest declared in the notification is justiceable. This decision is directly contrary to the conclusion arrived at in the Indian Express case, which has been given by three Judges. So this judgment in the Karkaria case has gone completely contrary to all other Supreme Court judgments. 

However many judgments such as the three following, UoI vs. Godhawani Brothers – 2000(141)ELT16(SC), UoI vs. Bharat Commerce & Industry-2002-TIOL-603-SC-CUS, and Bannari Amman Sugars Ltd. vs. Commercial Tax Officer-2005 (1) SCC 625 having been delivered after this Karkaria judgement, which are all against the Karkaria judgment, this judgment can be taken as not effective any more.

What’s an economic policy is the next question. In a telecom sector when the payability is established, asking for instalment, and the government agreeing to it, may be due to the need to save stressed telecom services, the weaker banking system and massive job loss, which together with many, amount to an implosion of the sector. This is the last thing India needs now. (Khullar, former chairman, TRAI Business Standard 3rd March 2020).
 

The conclusion is this: The Supreme Court in a plethora of judgments has unequivocally laid down that in the matter of economic policy, the Court shall not intervene unless the policy is itself violative to the fundamental rights as envisaged in the Constitution. Allowing instalments to clear dues can be a matter of economic policy to save the economy from implosion. So it is not the jurisdiction of the Court to intervene. Once the main principle is laid down by the Court itself in previous judgments, the precedent must be followed.

The writer is retired member of the Central Board of Excise & Customs

E-mail: smukher2000@yahoo.com