Jagannath and Others v. Union of India

Judgment

ORIGINAL JURISDICTION: Writ Petition No. 84 of 1958. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. G. G. Mathur, for the petitioners. G. K. Daphtary, Solicitor-General of India, B. Sen, R. H. Dhebar and T. M. Sen, for the respondent~ 1961. April 20. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This is a petition filed underGajend1agadka1 J. Art. 32 of the Constitution challenging the validity of the excise tariff imposed by cl. (6) in entry 4(1) in the First Schedule to the Central Excises and Salt Act, 1944 (I of 1944). Petitioners Nos. 1 to 17 are tobacco cultivators and they carry on the trade and business of growing tobacco and of selling it in Kaimganj Tahsil in the District of Farrukhabad in Uttar Pradesh.

Petitioners 18 to 30 are partners or proprietors or agents of firms which are private bonded werehouse licencees and they carry on trade and business of pur- ' chasing tobacco from the cultivators and of selling the same to dealers or to other private warehouse licencees. By their petition the petitioners have asked for a writ, direction or order in the nature of mandamus to be issued to the respondent, the Union of India, restraining it from levyir.g excise duty on hooka and chewing tobacco under the impugned item and any other writ, direction or order which may be found suitable to [1962] protect the fundamental rights of the petitioners .to carry on their trade and business of dealing in hooka jugt1nnatli and chewing tobacco. The atlack against _the validity union uf_I,,di.i of the impugned tariff item is based substantially on two grounds. It is urged that the rates imposed by Gaj,ndrngadka'

J. the impugned item are excessive and they virtually destroy the petitioners' trade and it is argued that the impugned item is based on unconstitutional discrimination. Mr. Mathur, for the petitioners, fairly conceded that he would noL be able to substantiate the first ground of challenge, and indeed it is obvious that a challenge to tax law qn t1'e mere' ground that the tariff imposed by the tax law is heavy cannot be entertained. That leaves the question of discrimination alone to be considered iry. the present petition. For the purpose of th!s petition'. we will assume that if discrimination in' respect of commodities taxed is proved it ultimately amount,s to a discrimination against the persons taxed and t!illrefore Art. 14 can be invoked in such a case. Mr. Mathur contends that that is the effect of tji.e decision of this Court in K unmathat Thathunni Moopil Nair, etc., v. The.State of Kerala (1 ) and as we have just observed wo will assume that such a challenge can be made against the validity of a taxing statute with provisions such as we have before us and deal with the petitioff on that basis.

The tariff entry in dispute as it now obtains under the taxing statute is entry 4 in the First Sch~dule. lt deals with tobacco. Under this entry "tobacco" means any form of tobacco, whether cured or uncured a11d whether manufactured or not, and includes the leaf, stalks and stems of the tobacco plant, but does not include any part of a tobacco p~ant while still attached to the earth. Clause I in entry 4 deals with unmanufactured tobacco, and prescribes tariff per kilogram in respect of the several items specified in it. Item (1) under this clause deals with five categories of tobacco which are flue cured and are used iu the manufacture of cigarettes as indicated in the said five sub.clauses. hem (2) deals with tubi;cco which .is fluo cured and used for the nrnnufacturti of smoking (1) [1961) 3 S.C.R. 77. mixtures for pipes and cigarettes. Item (3) provides '96' for flue cured tobacco which is not otherwise specified;

Jagannath and item (4) is concerned with tobacco other than flue cured am! used for the manufacture of (a) cigarettes Union of Endia or (b) smoking mixtures for pipes and cigarettes. The , , -- tariff varies from Rs. 16•15 nP. per kilogram to 1'"J'ndragadkar J. Rs. 1·65 nP. per kilogram. That takes us to item (5). This item deals with tobacco other than flue cured and not actually used for the manufacture of (a) cigarettes or (b) smoking mixtures for pipes and cigarettes or ( c) biris. The fourth clause under this item is tobacco cur<'d in whole leaf form and packed or tied in bundles, hanks or bunches or in the form of twists or coils. For tobacco falling under the four clauses under item (5) the tariff is Rs. l·lOnP. per kilogram. Clause (6) in this item with which we are concerned in the present petition deals with tobacco other than flue cured and not otherwise specified. :P'or this residuary clause the tariff prescribed is Rs. 2·20 nP. per kilogram.

This tariff is double the tariff prescribed for the classes in the preceding item. Mr. Mathur's grievance is that the tobacco with which the petitioners deal cannot be dist.inguished on any rational basis from the tobacco covered by it<>m (5), cl. ( 4), and so the imposition 'of a double tariff on the tobacco in which the petitioners deal is invalid inasmuch as it is based on unconstitutional discrimination. The argument proceeds on the assumption that the tariff is prescribed by reference to the use to which tobacco is put and it is urged that tho tobacco with which the petitioners are concerned is not aetually used either for cigarettes or smoking mixtures or biris and the fact that it is broken and not whole leaf does not afford any rational basis for classification.

In dealing with this argument it would be relevant very briefly to refer to the report of the Tobacco Expert Committee whose recommendations have furnished the main basis for the present revised tariff in respect of tobacco. In substance this rnport shows that the present tariff cannot be said to have been prescribed either wholly or even primarily by reference actually to the use of tobacco. Tobacco, as the 16 80PREME COURT R~PORTS [1962] 1 96 1 Committee's report points out, is a. rich man's solace a.nd a poor man's comfort. Since it is used by all )AganY1ath I classes of peop e in various forms it is necessary to u.;.,. of India frame th<:> ta.riff in such a way that tlw incidence of tax shall fa.11 equitably on all classes of people using Gojud••gadka. J. it. The report then points out that the Intention Ta.riff based on the principle of intention was found to he ineffecti\'e because the assessec's declaration of intended 11-ie left large room for evasion of tax.

That is why th<' l ntention Tariff was substituted by a. fiat ra.to of duty. By experience it was found that even this method was not very effective or equitable and then was adopted the capability ta.riff. Cnder this test the criterion of assessment was to be whether or not a. particular specimen of tobacco was capable of use in biri manufacturing. If so capable it was assessable on a. higher rate, if not so capable then at a lower rate. The report has examined the advantages of the capability tariff and has quoted the opinion of the Taxation Enquiry Committee which ma.de its rnport in 1953. Tlw report considered the volume of e\'idence adduced before it and took into account a.II the suggestions ma.de.

"In view of the practical difficulties brought before us", says tho report, "we consider that, within tlw present tariff, the only workable and satisfactory method of classifying tobacco will be to prt·scribe standard~ readily ident ilia.hie either visually or by other 'imple tests and manipulations with a view to d<:>termine empirically what is capable and what is incapable of use in biris. The position is complicated bp,cause tl1e same tobacco is used for different purposes in different. parts of the country according to the prevalent consumption habits of different typea of tobacco"; and the Committee realised that any system of classific11.tiou on a uniform basis for the whole of the Indian I.Jn ion is bound to involve greater imposts on consumer' of those areas w l.J.ore the prevalent custom is to con,umc a variety for chewing, snuff, hooka., cigar purposes while the same varieties are used in other a.re<>s for biris.

The conclus;on of the Committee, therefore, was that the only criterion which is sa.fe to adopt is the one relating to the physical form of tobacco as affecting its suitability for biri making. '96' The Committee realised that it was very difficult to Jagannath classify specified varieties as solely chewing tobacco because many of these varieties are also used for mak- Union of India ing snuff and for hooka purposes. Normally, however, most chewing varieties are in whole leaf form and are Ga;endragadkar J. cured by addition of moisture. Tobacco cured in whole leaf form cannot be converted into flakes as readily as tobac11.o cured by dry curing methods, and in the opinion of'the Committee, although it is possible to prepare flakes out of tobacco cured in whole leaf form the process of conversion into flakes causes much higher proportions to crumble into dust, rawa and other unsaleable forms.

The Committee was conscious that the whole leaf varieties after suitable manipulation can be utilised for biri manufacturing purposes but it thought that this could be done only after converting them into graded flakes, and even thereafter only by admixture with other tobacco on a small localised scale. In regard to the broken leaf grades which the Committee recommended should be liable to assessment at the higher rate relief was recommended by permitting any owner to convert his broken leaf tobacco into fine rawa or dust in which form it will become physically unusable for biris. According to the Committee, after such manipulation of physical form, the resultant, if it fulfils the specifications for rawa and dust, may be allowed assessment at the lower rate.

We have referred to these observations made by the Committee in its report because they clearly and emphatically bring out the distinction between "tobacco other than flue cured and not otherwise sp!lcified" which is the subject-matter of the residuary clause and "tobacco other than flue cured and not actually used for the manufacture of cigarettes or smoking mixtures for pipefl. or cigarettes or biris" covered by cl. (5). By the test of physical form the two articles are different. By the test of capability of user they are different and in a sense according to the Committee's recommendations they partake of the character of different commodities. In this connection it may be SUPRE:\iE COURT REPORTS [1962] pointed out tha.t though the ta.riff impost on the toha.cco falling under 1l1e impugned cl.

(6) is much }aga111talls higher, biris in the manufacture of which no process Union 01 fnd•n ha8 been conducted with the aid of ma.chines operated with or without the a.id of power a.re not subject t-0 G•J•"d••c"dk•• J. any ta.riff, whereas cigars, chewing, cigarettes and biris in the manufacture of which any process ha.s been conducted with the aid of machines operated wit.h or without the aid of power arc subject to ta.riff. The problem which the Committee ha'd to face was to classify tobacco other than flue cured which would be used for the manufacture of biris, and with that object cl. (5) and cl. (6) have been devised. Therefore, in our opinion, the distinction between tobacco falling under cl. (5) a.nd cl. (6), according to the report of tho Committee, is so clear and unambiguous and its relation to the object intended by the imposition of ta.riff is so clearly reasonable that the attack against its validity on the ground of unconstitutional discrimination cannot be upheld.

There is one more point to which Mr. :\fathur referred and which may be incidentally considered. Mr. Mathur contended that Nicotia.na. Rustica with which tho petitioners deal is used exclusively for hooka and chewing in Utta.r Pradesh. The petition avers that the variety of Nicotiana Hustica which is used in biris is not grown in l' ttar Pra.desh and that all the toba.oco which is grown in Kaimganj is Xicotiana. Rustica. which is either pit cured or ground cured. It is used exclusively for hooka and chewing and is unfit for use in biris and cigarettes and is never so used. The argument, therefore, is that this tobacco cannot be legitimately taxed under tho impugned clause. Apa.rt from the fact that the question as to w hcther the particular tobacco in which tho petitioners deal falls under tho impugned clause or not cannot be legitimately raised in a petition under Art. 32, the answer to tho plea. is furnished by the count~r-a.ffidavit and the report of the Committee.

In the counter-affidavit the allegations made in regard to the exclusive user of :\ icotiana Rustics are generally denied, and what is more the report of the Committee specifically point.a out that though Rustica varieties of tobacco are gene- '96' rally not known to be used for biris, when they are Jagan•ath cured in broken leaf grades they cau be used with admixture with biri tobacco like Pandharpuri tobacco Union of llldia for imparting strength to biri mixtures, and so according to the Committee no generalisation in this matter Ga;endrngadkar J. is possible and it cannot be asserted that. all forms of this variety are incapable of use in biris. Besides, it would be quite possible for dealers in the said varieties of tobacco to send them to other parts of the country where they are used for the purpose of manufacturing biris. Therefore, the grievance made by the petitioners that the tobacco in which they deal can never be used for biris i8 obviously nut well founded.

In the result the petition fails and is di,,missed with costs. Petition dismissed. JYOTI PERSHAD THE ADMINISTRATOR FOR THE UNION TERH.ITORY OF DELHI (AND CONNECTED PETITIONS) (B. P. SINHA, 0 .• J., s. K. DAS, A. K. SARKAR, N. H.AJAGOPALA AYYANGAR and J. R. MUDHOLKAR, JJ.) Slu1n Areas-J.mprovement and clearance of-Validity of enactment-Co,.stit,.tionality-Rent Control-Operation of Rent Control Act in areas governed by Slmn Areas Act-Delhi 6- Ajmer Rent Control Act, I952 (38 of I952)-Slum Areas (Improvement and Clearance) Act, Ig56 (96 of Ig56), s. r9-Constitutian of lndid, Arts. I4, r9(r)(j). The petitioner after a prolonged litigation and having fu]. filled all the conditions of the Delhi Rent Control Act, obtained decrees of ejectment against the tenants, April 2I.