Union of India & Ors. Vs. M/s. G. S. Chatha Rice Mills & Anr.
Union of India & Ors. Vs. M/s. G.
S. Chatha Rice Mills & Anr.
[Civil Appeal No. 3249 of 2020 arising
out of S.L.P. (C) No. 3860 of 2020]
[Civil Appeal No. 3250 of 2020 arising
out of S.L.P. (C) No. 3861 of 2020]
[Civil Appeal No. 3250 of 2020 arising
out of S.L.P. (C) No. 3869 of 2020]
[Civil Appeal No. 3252 of 2020 arising
out of S.L.P. (C) No. 3867 of 2020]
[Civil Appeal No. 3253 of 2020 arising
out of S.L.P. (C) No. 3865 of 2020]
[Civil Appeal No. 3262 of 2020 arising
out of S.L.P. (C) No. 5029 of 2020]
[Civil Appeal No. 3265 of 2020 arising
out of S.L.P. (C) No. 7059 of 2020]
[Civil Appeal No. 3267 of 2020 arising
out of S.L.P. (C) No. 6451 of 2020]
[Civil Appeal No. 3269 of 2020 arising
out of S.L.P. (C) No. 7063 of 2020]
[Civil Appeal No. 3270 of 2020 arising
out of S.L.P. (C) No. 7064 of 2020]
[Civil Appeal No. 3271 of 2020 arising
out of S.L.P. (C) No. 7057 of 2020]
[Civil Appeal No. 3272 of 2020 arising
out of S.L.P. (C) No. 5920 of 2020]
[Civil Appeal No. 3273 of 2020 arising
out of S.L.P. (C) No. 7065 of 2020]
[Civil Appeal No. 3274 of 2020 arising
out of S.L.P. (C) No. 7066 of 2020]
[Civil Appeal No. 3275 of 2020 arising
out of S.L.P. (C) No. 7067 of 2020]
[Civil Appeal No. 3276 of 2020 arising
out of S.L.P. (C) No. 6189 of 2020]
[Civil Appeal No. 3277 of 2020 arising
out of S.L.P. (C) No. 7543 of 2020]
[Civil Appeal No. 3278 of 2020 arising
out of S.L.P. (C) No. 6683 of 2020]
[Civil Appeal No. 3279 of 2020 arising
out of S.L.P. (C) No. 7068 of 2020]
[Civil Appeal No. 3259 of 2020 arising
out of S.L.P. (C) No. 5036 of 2020]
[Civil Appeal No. 3264 of 2020 arising
out of S.L.P. (C) No. 5823 of 2020]
[Civil Appeal No. 3256 of 2020 arising
out of S.L.P. (C) No. 4960 of 2020]
[Civil Appeal No. 3254 of 2020 arising
out of S.L.P. (C) No. 4959 of 2020]
[Civil Appeal No. 3255 of 2020 arising
out of S.L.P. (C) No. 4961 of 2020]
[Civil Appeal No. 3260 of 2020 arising
out of S.L.P. (C) No. 5822 of 2020]
[Civil Appeal No. 3257 of 2020 arising
out of S.L.P. (C) No. 5033 of 2020]
[Civil Appeal No. 3258 of 2020 arising
out of S.L.P. (C) No. 5821 of 2020]
[Civil Appeal No. 3261 of 2020 arising
out of S.L.P. (C) No. 7058 of 2020]
[Civil Appeal No. 3263 of 2020 arising
out of S.L.P. (C) No. 5028 of 2020]
[Civil Appeal No. 3266 of 2020 arising
out of S.L.P. (C) No. 7061 of 2020]
[Civil Appeal No. 3268 of 2020 arising
out of S.L.P. (C) No. 7062 of 2020]
Dr Dhananjaya Y Chandrachud, J
This judgment has been divided into
sections to facilitate analysis. They are:
|
A |
The
aftermath of Pulwama |
|
B |
The
backdrop |
|
C |
Petitions
before the High Court |
|
D |
The
judgment of the High Court |
|
E |
Submissions
in the appeals |
|
F |
Determination
of the rate under Section 15 of the Customs Act 1962 |
|
G |
Precedent |
|
H |
Interpreting
'day' and 'date' |
|
I |
Notification
under Section 8A of the Customs Tariff Act |
|
J |
General
Clauses Act |
|
K |
Information
Technology Act, 2000 |
|
L |
Effect
of notifications issued in e-gazettes |
|
M |
Retrospectivity |
|
N |
Summation |
1 Leave granted.
A The aftermath of Pulwama
2 A terrorist attack took place at
Pulwama on 14 February 2019. On 16 February 2019, the Union Government issued a
notification under Section 8A of the Customs Tariff Act 1975. The notification
introduced a tariff entry by which all goods originating in or exported from
the Islamic Republic of Pakistan were subjected to an enhanced customs duty of
200%.
The precise time at which the
notification was uploaded on the e-Gazette was 20:46:58 hours. Customs
authorities at the land customs station at Attari sought to enforce the
enhanced rate of duty on importers who had already presented bills of entry for
home consumption before the enhanced rate was notified in the e-Gazette. Their
action led to a challenge before the High Court of Punjab and Haryana. The consignments
of import covered a diverse range of goods, ranging from dry dates to cement.
3 On 26 August 2019, a Division Bench
of the High Court of Punjab and Haryana allowed a batch of writ petitions under
Article 226 of the Constitution. The High Court held that since the importers,
who had imported goods from 7 PART A Pakistan, had presented their bills of
entry and completed the process of "selfassessment" before the
notification enhancing the rate of duty to 200 per cent was issued and uploaded,
the enhanced rate of duty was not attracted.
The High Court held that the importers
were liable to pay the duty applicable at the time when the bills of entry for
home consumption were filed under Section 46 of the Customs Act, 1962.1 The
Union of India was ordered to release the goods within seven days on the
payment of duty 'as declared and assessed' without applying the notification
enhancing the rate of duty on goods originating in Pakistan.
4 The Union of India is in appeal.
5 The judgment of the High Court is titled
as Rasrasna Food Private Limited versus Union of India. Chronologically, the
first petition listed before this Court by Special Leave under Article 136 of
the Constitution is in the case of G S Chatha Rice Mills. Since the issues of
law which have been raised are common to the batch of appeals, they have been
heard together.
B The backdrop
6 The First respondent is a partnership
firm based in Amritsar which is, inter alia, engaged in the import of cement.
It imported a consignment of fourteen hundred bags of cement from Pakistan
under an invoice dated 1 February 2019. A truck bearing registration number
TLV-189 (cargo) crossed the 'zero line' on Saturday, 16 February 2019 under
entry number 47195 with a Pakistan Custom's Cargo Manifest bearing the time of
4:31 pm. The goods arrived at the Land Customs Station Road Cargo, Attari Road,
Amritsar on the same day and IGM number 366870 was filed in respect of the
goods.
The truck unloaded its cargo at the
Central Warehousing Corporation, ICP, Attari. The arrival of the goods and the
filing of the IGM was before 18:00 hours on 16 February 2019. The First
respondent filed bill of entry number 2083178 dated 16 February 2019 seeking
clearance of the goods for home consumption. The bill of entry was self- assessed
at 18:08 hours under the provisions of Section 17(1) of the Customs Act 19622
under Customs Tariff Heading 2523910 by levying nil customs duty in terms of
notification 68/2012 dated 31 December 2012 (as amended by notification
50/2017- serial 129 dated 30 June 2017) and IGST at 28 percent rate (in terms
of notification 1/2017- schedule III serial No. 3).
The duty payable was assessed at Rs
73,342/-. Notification 50/2017-Cus (serial No. 129), prescribed a preferential
rate of duty on specified goods originating in the Islamic Republic of
Pakistan. On 16 February 2019, notification 5/2019 was issued by the Ministry
of Finance in the Department of Revenue, in exercise of powers conferred by
sub-section (1) of Section 8A of the Customs Tariff Act 1975.3 By this
notification, a new tariff entry was introduced in Chapter 98 of Section XXI in
the following terms:
|
(1) |
(2) |
(3) |
(4) |
(5) |
|
"9806
00 00 |
All
goods originating in or exported from the Islamic Republic of Pakistan |
- |
200 % |
-". |
The notification contains a reference
to the date (16 February 2019) and time (20:46:58) at which it was uploaded and
published in the e-Gazette of the Government of India. Based on the enhancement
in the rate of duty brought about by the notification, the customs authorities
refused to release the goods which were assessed earlier. The bill of entry was
recalled and reassessed on 20 February 2019 at 18:14 hours by levying customs
duty at 200 per cent and IGST at 28 per cent, enhancing the duty from Rs 73,342/-
to 8,10,952/-. 7 Aggrieved by the action of the customs authorities, the first
respondent filed a petition under Article 226 for setting aside (i) the
assessment of the bill of entry to a duty of 200%; (ii) Notification 5/2019
dated 16 February 2019; and for a direction to CWC to issue a detention memo
and the release of the goods.
C Petitions before the High Court
8 The batch of petitions before the
High Court involved cases of other similarly situated importers. The facts
pertaining to the writ petitions, as gleaned from the judgment of the High
Court, are summarized below:
(i) the goods were imported in the
ordinary course of trade from Pakistan;
(ii) the goods entered Indian territory
through the Attari border at Amritsar before 18:00 hours on 16 February 2019;
(iii) the importers had filed bills of
entry under Section 46 of the Customs Act, before the close of working hours,
seeking clearance of the goods for home consumption;
(iv) the value and description of the
goods were declared;
(v) the importers had self-assessed the
goods in terms of the prevailing notifications and had filed the bills of entry
in the EDI system;
(vi) the declarations were subject to
verification by the customs department which did not dispute them and generated
duty payment TR-6 challans;
(vii) since 16 February 2019 was a
Saturday, the customs' office was closed after 18:00 hours and was to open on
Monday,18 February 2019;
(viii) some of the importers paid the
duty online through TR-6 challans on 16 February 2019 while in the case of
others, the payment of duty was in progress;
(ix) Notification 5/2019 was issued at
20:46:58 hours on 16 February 2019 following the Pulwama terrorist attack as a
result of which the rate of duty on goods originating in Pakistan was enhanced
to 200 per cent irrespective of the fact that some of the products had hitherto
been exempt from customs duty; and
(x) the customs authorities refused to
release the goods on the basis of the bills of entry which were self-assessed
at the pre-existing rate and proceeded to recall them and re-assess the goods
to the enhanced rate of duty applicable under notification 5/2019. 9 Before the
High Court, the submission of the importers was that before notification 5/2019
was issued (at 20:46 hours on 16 February 2019 in order to discourage the
import of goods from Pakistan),
(i) they had placed orders;
(ii) the goods had entered into the
territory of India;
(iii) the goods were fully or partially
exempt from basic customs duties, but subject to IGST at the time of the filing
of the bills of entry;
(iv) the exporters from Pakistan
received payment of the consideration on the basis of which the goods had been
supplied; and
(v) the object of the notification was
to discourage imports from Pakistan and not to penalize Indian importers who
had placed orders and had imported goods into
India, bona fide relying on the policy
which was applicable before the notification was issued in the late hours of
the day. On the issues of law, it was urged that after the presentation of the
bills of entry for home consumption, self-assessment and duty payment challans
had been generated, it was not open to the customs authorities to levy the enhanced
rate of duty which came into force later, from 20:46 hours on 16 February 2019.
The application of notification 5/2019
would, it was urged, have retrospective effect since the bills of entry for
home consumption had been filed electronically on the customs' automated
platform before the issuance of the notification and they were self-assessed.
10 On the other hand, the contention of the Union government before the High
Court was that under Section 15 of the Customs Act, 1962 the relevant date for determining
the rate of duty is the date of the presentation of the bill of entry.
The submission was that the amended
rate of duty under notification 5/2019 came into force on 16 February 2019;
hence, the importers were liable to pay duty on the basis of the amended rate.
The submission was that the customs authorities were entitled to re-assess the
bills of entry under Section 17(4).
D The judgment of the High Court
11 The High Court, after analyzing the
provisions of Sections 8A and 11A of the Customs Tariff Act, 1975 and Sections
12, 15, 17, 46 and 47 of the Customs Act,1962 held that:
(i) The relevant date for the
determination of duty is the date of the presentation of the bill of entry,
which, in the facts of this case, corresponds to the date of the entry of the
vehicle carrying the goods into India;
(ii) The bills of entry were presented
on 16 February 2019 before the issuance of notification 5/2019;
(iii) The dual requirements of Section
15 namely, the filing of the bill of entry and the entry of the vehicle were
fulfilled before the publication of notification 5/2019;
(iv) The amended rate of duty was not
applicable;
(v) The absence of customs' clearance
under Section 47 had no bearing on the rate applicable;
(vi) Notification 5/2019 having been
released after working hours, it would apply from the next day as held in the
decision of this Court in Union of India vs. Param Industries Limited4; and
(vii) A notification under Section 8A
of the Customs Tariff Act, 1975 cannot apply retrospectively. PART E 12 The
Union of India is in appeal.
E Submissions in the appeals
13 Besides making oral submissions, Mr
K M Natraj, Additional Solicitor General of India has filed written
submissions. His submissions are prefaced with a delineation of the issue which
is raised in the appeals, which is: "...whether the amendment to the First
Schedule of the Customs Tariff Act, 1975 takes effect from the time at which it
is uploaded / notified in the gazette or from the first moment of the day /
date on which it was issued/ published in the gazette." The submissions of
the ASG are summarized below:
A (i) Under Section 15 of the Customs
Act, the date for the determination of the rate of duty and valuation of
imported goods, in the case of goods which are entered for home consumption
under Section 46, is the date on which the bill of entry in respect of the
goods is presented. The expression "on the date" comprehends the
entire period of 24 hours, in this case beginning at midnight on 16 February
2019;
(ii) Section 15 does not make any
reference to time and hence, irrespective of the point of time when a
notification has been uploaded or published in the e-Gazette, the rate of duty
leviable on imported goods cleared for home consumption is, by a legal fiction,
the rate prevalent on the date of the presentation of the bill of entry;
(iii) Section 15 should be interpreted
in light of the rule of literal construction, and the law has to be applied as
it is; and (iv) This case is not about the prospective or retrospective
application of the Notification at issue. Rather, it is the simple intent of
Parliament to consciously make the date on which the Notification is issued as
the date for determination of the rate of duty (as applicable), which this
court must uphold.
B (i) Independent of (A) above, a
notification under Section 8A(1) of the Customs Tariff Act has the effect of
amending the First schedule and is a legislative act which dates back to the
commencement of the day;
(ii) The schedule is a part of the Act,
and hence an amendment to it is an amendment to the Act;
(iii) Sub-section (2) of Section 8A of
the Customs Tariff Act applies the provisions of sub-sections (3) and (4) of
Section 7 to a notification which is issued under Section 8A(1);
(iv) A notification under Section 8A(1)
amending the first schedule has to be placed before each House of Parliament
and is subject to its approval and modification; and
(v) An amendment to the schedule, upon
the exercise of powers under Section 8A, constitutes an amendment of the Act
itself which passes through a process of receiving Parliamentary sanction and
is subject to its approval.
C (i) In view of (B) above, since the
schedule to the Customs Tariff Act is a part of the enactment, the provisions
of the General Clauses Act 18975 are attracted to an amendment effected under
section 8A(1);
(ii) Section 3(7) of the General
Clauses Act defines the expression 'Central Act' to mean an Act of Parliament
while Section 3(13) defines 'commencement' to mean the day on which an Act or
Regulation comes into force;
(iii) Under Section 5(3) of the General
Clauses Act, a Central Act or Regulation, unless the contrary is expressed,
comes into force immediately on the expiration of the day preceding its
commencement; and
(iv) 'Commencement' can only be from a
day which takes within its fold the entire period of 24 hours from midnight of
the day before the issuance of the notification.
D The twin requirements of Section 15
are fulfilled because
(i) The notification was issued and
uploaded in the Gazette on 16 February 2019; and
(ii) The bills of entry for home
consumption under Section 46 were presented on 16 February 2019. This is the
substratum of the plea that the rate of duty prescribed by notification 5/2019
is applicable.
14 Opposing the above submissions, Mr
PS Narasimha, learned Senior Counsel submitted that
A (i) The levy of customs duty under
Section 12 of the Customs Act is at the rates prescribed under the Customs
Tariff Act;
(ii) Under Section 15 of the Customs
Act, the rate of duty is the rate prevalent on the date of the presentation of
the bill of entry under section 46 of the Customs Act, where goods are cleared
for home consumption; and
(iii) The importers fulfilled the twin
requirements of the goods having entered on 16 February 2019 and the bill of
entry having been filed before 20:46 hours when notification 5/2019 was issued.
The bills of entry had to be assessed to customs duty at the rate which was in
existence prior to the publication of the notification.
B (i) Notification 5/2019 having been
published at 20:46:58 hours on 16 February 2019 it was never updated on the EDI
portal;
(ii) Notification 5/2019 would apply
only to bills of entry for home consumption presented after 20:46:58 hours on
16 February 2019 or upon amendment in the online EDI portal of ICEGATE;
(iii) A notification issued under the
provisions of Section 8A (1) of the Customs Tariff Act cannot have a
retrospective character; and (iv) Subordinate legislation is not retrospective
unless the statute under which it has been framed, expressly or by necessary
implication, imports retrospectivity. Subordinate legislation cannot always be
equated as an 'Act of legislature' for the interpretation of 'Central Act' as
defined by the General Clauses Act.
C (i) Digital India is a new vision and
idea into which India is evolving, and we are in a phase of governance in which
multiple commercial transactions take place every single day. Rule 5(1) of the
Information Technology (Electronic Service Delivery) Rules, 2011 mandates
maintenance of timestamps for any governmental electronic records;
(ii) In exercise of the powers
conferred by Section 157 read with Sections 46 and 47 of the Customs Act, the
Central Board of Indirect Taxes and Customs has passed the Bill of Entry
(Electronic Integrated Declaration and Paperless Processing) Regulations 20186;
(iii) Under Regulation 4(2), the bill
of entry is deemed to have been filed and self-assessment completed when, after
the entry of the electronic integrated declaration on the customs automated
system, a bill of entry is generated by the Indian Customs Electronic Data
Interchange System and the self-assessed copy of the bill of entry may be
electronically transmitted to the authorized person;
(iv) In terms of the provisions of
Section 15(1)(a), where goods are entered for home consumption under Section
46, the rate of duty is the rate in force on the date on which a bill of entry
in respect of such goods is presented under Section 46. The Regulations of 2018
have been made pursuant to Section 46 and contain a deeming fiction which
prescribes when the presentation of the bill of entry and self-assessment is
complete;
(v) Once the bills of entry were filed
and self-assessment was complete, the subsequent issuance of notification
5/2019 at 20:46:58 hours would have no application to the present batch of
cases; and
(vi) Bills of entry, once presented,
can be re-assessed under Section 17(4) only in instances when the assessment
has "not been done correctly" upon verification, examination or
testing of the goods by the proper officer. None of these circumstances are
applicable to the present case.
D The purpose of the notification being
to discourage the import of goods from Pakistan, it has prospective effect: the
object and purpose is not to penalize Indian importers who had completed their
imports, presented bills of entry for home consumption and had completed
self-assessment in terms of the provisions of the Customs Act and the
Regulations, prior to the issuance of the notification. The submissions which
were urged by Mr P S Narasimha have been supported by other learned counsel
appearing for the respondents including Mr Devashish Bharuka, Ms Anjana Gusain,
Mr Anant Agrawal, Ms Sishti Agarwal, Mr Parmatma Singh and Mr Saurabh Kapoor.
15 The rival submissions are considered
below.
F Determination of the rate under
Section 15 of the Customs Act 1962
16 Chapter V of the Customs Act
provides for the levy of and exemption from customs duties. Section 12(1),
which is the charging provision, provides for the levy of duties of customs on
goods imported into, or exported from India at the rates specified by the
Customs Tariff Act or, in any other law for the time being in force. Section
15(1) is extracted below: "15. Date for determination of rate of duty and
tariff valuation of imported goods.-
(1) The rate of duty and tariff
valuation, if any, applicable to any imported goods, shall be the rate and
valuation in force,- (a) in the case of goods entered for home consumption
under section 46, on the date on which a bill of entry in respect of such goods
is presented under that section; (b) in the case of goods cleared from a
warehouse under section 68, on the date on which a bill of entry for home
consumption in respect of such goods is presented under that section]; (c) in
the case of any other goods, on the date of payment of duty: Provided that if a
bill of entry has been presented before the date of entry inwards of the vessel
or the arrival of the aircraft or the vehicle by which the goods are imported,
the bill of entry shall be deemed to have been presented on the date of such
entry inwards or the arrival, as the case may be. The provisions of this
section shall not apply to baggage and goods imported by post."
(emphasis supplied)
17 Section 12 specifies that the rates
of duty on goods imported and exported are those which are provided in the
Customs Tariff Act or in any other law. Section 12 does not indicate when the
duties under those enactments will come into being or force. Section 15
specifies the date with reference to which the rate of duty and tariff
valuation of imported goods is determined. Clauses (a), (b) and (c) of
sub-section (1) of section 15 contain distinct provisions which apply to:
(i) goods entered for home consumption
under Section 46; (ii) goods cleared from a warehouse under Section 68; and
(iii) other goods. Where goods are entered for home consumption under Section
46, the rate of duty and tariff valuation is to be the rate and valuation
"in force" "on the date on which" a bill of entry in respect
of such goods is presented under that Section.
In relation to the rate of duty, the
effect of clause (a) of Section 15(1), is that the rate which is in force on
the date on which a bill of entry is presented under Section 46 (in the case of
goods entered for home consumption) is applicable to the imported goods. When
the duties come into force under the enactments imposing them is dependent on
and defined by the terms of the particular enactment.
18 Chapter IX of the Customs Act
contains provisions for warehousing. Section 68 which falls under that Chapter
stipulates that goods which have been warehoused may be cleared for home
consumption if: a) A bill of entry for home consumption has been presented; b)
Import duty, interest, fine and penalties, as applicable, have been paid; and
c) An order for clearance for home consumption has been made by the proper
officer. Provided that the order referred to in clause (c) may also be made
electronically through the customs automated system on the basis of risk
evaluation through appropriate selection criteria.
For goods which are cleared from a
warehouse under Section 68, clause (b) of Section 15 (1) provides that the rate
of duty and valuation are those "in force" "on the date" on
which a bill of entry for home consumption is presented under Section 68. In
the case of other goods, it is the date of the payment of duty which determines
the rate of duty under clause (c) of Section 15(1). The proviso to Section 15
(1) contemplates a situation where a bill of entry has been presented before
the date of the entry inwards of the vessel or the arrival of the aircraft or
vehicle through which the goods are imported.
Under the proviso to Section 46(3), a
bill of entry may be presented at any time not exceeding thirty days prior to
the expected arrival of the aircraft or vehicle by which the goods have been
shipped for importation into India. Dealing with such a situation, the proviso
to Section 15(1) states that if a bill of entry has been presented prior to the
date of the entry inwards of the vessel or the arrival of the aircraft or
vehicle by which the goods are imported, the bill of entry is deemed to have
been presented on the date of the entry inwards or the arrival of the goods.
Hence even where the bill of entry has
been presented before the date of the entry inwards or the arrival of the
aircraft or vehicle, the rate of duty is determined with reference to the date
of entry inwards or the arrival of the aircraft or vehicle. This is a
consequence of the deeming fiction under the proviso, as a result of which the
presentation of the bill of entry, when filed prior to the arrival of the
goods, is deemed to be on the date of the entry inwards or the arrival of the
aircraft or vehicle.
Hence, implicit in the provisions of
Section 15(1) are the dual or (as counsel before the court described them) the
twin requirements of (i) the presentation of the bill of entry; and (ii) the
entry inwards of the vessel or, as the case may be, the arrival of the aircraft
or vehicle.
19 Section 17 provides for the
assessment of duty. Section 46 provides for the entry of goods on importation.
Both the provisions of Section 17 and Section 46 have undergone legislative
changes by Act 8 of 2011 and by the Finance Act of 2018. By Act 8 of 2011,
Section 17 was substituted and Section 46 was amended to provide for the
presentation in the electronic form of a bill of entry for home consumption or
warehousing. Section 46 provides as follows:
"46. Entry of goods on importation.-(1)
The importer of any goods, other than goods intended for transit or
transhipment, shall make entry thereof by presenting [electronically] [on the
customs automated system] to the proper officer a bill of entry for home
consumption or warehousing in such form and manner as may be prescribed:
Provided that the [Principal Commissioner of Customs or Commissioner of
Customs] may, in cases where it is not feasible to make entry by presenting
electronically on the customs automated system, allow an entry to be presented
in any other manner:
Provided further that if the importer
makes and subscribes to a declaration before the proper officer, to the effect
that he is unable for want of full information to furnish all the particulars
of the goods required under this sub-section, the proper officer may, pending
the production of such information, permit him, previous to the entry thereof
(a) to examine the goods in the presence of an officer of customs, or (b) to
deposit the goods in a public warehouse appointed under section 57 without
warehousing the same.
(2) Save as otherwise permitted by the
proper officer, a bill of entry shall include all the goods mentioned in the
bill of lading or other receipt given by the carrier to the consignor.
(3) The importer shall present the bill
of entry under subsection (1) before the end of the next day following the day
(excluding holidays) on which the aircraft or vessel or vehicle carrying the
goods arrives at a customs station at which such goods are to be cleared for
home consumption or warehousing: Provided that a bill of entry may be presented
at any time not exceeding thirty days prior to the expected arrival of the
aircraft or vessel or vehicle by which the goods have been shipped for
importation into India: Provided further that where the bill of entry is not
presented within the time so specified and the proper officer is satisfied that
there was no sufficient cause for such delay, the importer shall pay such
charges for late presentation of the bill of entry as may be prescribed.
(4) The importer while presenting a
bill of entry shall make and subscribe to a declaration as to the truth of the
contents of such bill of entry and shall, in support of such declaration,
produce to the proper officer the invoice, if any, [and such other documents
relating to the imported goods as may be prescribed].
(4A) The importer who presents a bill
of entry shall ensure the following, namely:-
(a) the accuracy and completeness of
the information given therein; (b) the authenticity and validity of any
document supporting it; and (c) compliance with the restriction or prohibition,
if any, relating to the goods under this Act or under any other law for the
time being in force......."
(emphasis supplied)
Sub-section (1) of Section 46 requires
an importer of goods to make an entry by presenting a bill of entry for home
consumption or warehousing "electronically on the customs automated
system" to the proper officer "in such form and manner as may be
prescribed". The word 'electronically' was introduced by Act 8 of 2011
with effect from 8 April 2011.
The provision for the presentation of
the bill of entry on the customs automated system and in 'such form and manner
as prescribed' was introduced by the Finance Act of 2018. Under sub-section (3)
of Section 46, a bill of entry under sub-section (1) must be presented before
the end of the day following the day on which the aircraft, vessel or vehicle
carrying the goods arrives at a customs station at which the goods are to be
cleared for home consumption or warehousing (holidays being excluded).
The first proviso to subsection (3)
enables the presentation of a bill of entry before arrival, at a time not
exceeding thirty days prior to the expected arrival of the aircraft, vessel or
vehicle by which the goods have been shipped for importation. Under the second
proviso if the bill of entry is not presented within the specified time without
sufficient cause, the importer is required to pay the charges prescribed for
late presentation of the bill of entry. 20 Section 17 makes provisions for the
assessment of duty:
"Assessment of duty. 17.
Assessment of duty -
(1) An importer entering any imported
goods under section 46, or an exporter entering any export goods under section
50, shall, save as otherwise provided in section 85, self-assess the duty, if
any, leviable on such goods.
(2) The proper officer may verify [the
entries made under section 46 or section 50 and the self-assessment of goods
referred to in sub-section (1)] and for this purpose, examine or test any
imported goods or export goods or such part thereof as may be necessary.
Provided that the selection of cases for verification shall primarily be on the
basis of risk evaluation through appropriate selection criteria.
(3) For the purposes of verification
under sub-section (2), the proper officer may require the importer, exporter or
any other person to produce any document or information, whereby the duty
leviable on the imported goods or export goods, as the case may be, can be
ascertained and thereupon, the importer, exporter or such other person shall
produce such document or furnish such information.
(4) Where it is found on verification,
examination or testing of the goods or otherwise that the self-assessment is
not done correctly, the proper officer may, without prejudice to any other
action which may be taken under this Act, re-assess the duty leviable on such
goods....."
(5) Where any re-assessment done under
sub-section (4) is contrary to the self-assessment done by the importer or
exporter and in cases other than those where the importer or exporter, as the
case may be, confirms his acceptance of the said re-assessment in writing, the
proper officer shall pass a speaking order on the re-assessment, within fifteen
days from the date of re-assessment of the bill of entry or the shipping bill,
as the case may be.
Explanation.-For the removal of doubts,
it is hereby declared that in cases where an importer has entered any imported
goods under section 46 or an exporter has entered any export goods under
section 50 before the date on which the Finance Bill, 2011 receives the assent
of the President, such imported goods or export goods shall continue to be
governed by the provisions of section 17 as it stood immediately before the
date on which such assent is received."
(emphasis supplied)
Prior to its substitution by Amending
Act 8 of 2011, Section 17 contained requirements for (i) examination and
testing of goods; and (ii) assessment. Section 17, as it stood prior to
substitution, was in the following terms: "17. Assessment of Duty. -
(1) After an importer has entered any
imported goods under section 46 or an exporter has entered any export goods
under, section 50 the imported goods or the export goods, as the case may be,
or such part thereof as may be necessary may, without undue delay, be examined
and tested by the proper officer.
(2) After such examination and testing,
the duty, if any, leviable on such goods shall, save as otherwise provided in
section 85, be assessed.
(3) For the purpose of assessing duty
under sub-section (2), the proper officer may require the importer, exporter or
any other person to produce any contract, broker's note, policy of insurance,
catalogue or other document whereby the duty leviable on the imported goods or
export goods, as the case may be, can be ascertained, and to furnish any
information required for such ascertainment which it is in his power to produce
or furnish, and thereupon the importer, exporter or such other person shall
produce such document and furnish such information.
(4) Notwithstanding anything contained
in this section, imported goods or export goods may, prior to the examination
or testing thereof, be permitted by the proper officer to be assessed to duty
on the basis of the statements made in the enter relating thereto and the documents
produced and the information furnished under sub-section (3); but if it is
found subsequently on examination or testing of the goods or otherwise that any
statement in such entry or document or any information so furnished is not true
in respect of any matter relevant to the assessment, the goods may, without
prejudice to any other action which may be taken under this Act, be re-assessed
to duty.
(5) Where any assessment done under
sub-section (2) is contrary to the claim of the importer or exporter regarding
valuation of goods, classification, exemption or concessions of duty availed
consequent to any notification therefore under this Act, and in cases other
than those where the importer or exporter, as the case may be, confirms his
acceptance of the said assessment in writing, the proper officer shall pass a
speaking order within fifteen days from the date of assessment of the bill of
entry or the shipping bill, as the case may be."
The amendment of 2011 has made
significant legislative changes in the procedure and modalities for assessment
of duty under Section 17. Under subsection 1 of Section 17, the importer
entering imported goods under Section 46, has to 'self-assess' duty (except as
otherwise envisaged in the provisions of Section 85).
Under sub-section (2), the proper
officer may verify the entries made under Section 46 and the self-assessment
made under sub-section (1) and may examine or test the goods. The selection of
goods for verification has to be primarily on the basis of risk evaluation
through appropriate selection criteria. Under sub-section (4), where it is
found on verification, examination or testing of goods or otherwise that the
self-assessment has not been done properly the proper officer is entrusted with
a power of re-assessment. Sub-section (5) requires the passing of a speaking
order upon re-assessment.
21 Section 47 provides for the
clearance of goods for home consumption: "Clearance of goods for home
consumption.
(1) Where the proper officer is
satisfied that any goods entered for home consumption are not prohibited goods
and the importer has paid the import duty, if any, assessed thereon and any
charges payable under this Act in respect of the same, the proper officer may
make an order permitting clearance of the goods for home consumption:
Provided that such order may also be
made electronically through the customs automated system on the basis or risk
evaluation through appropriate selection criteria: Provided further that the
Central Government may, by notification in the Official Gazette, permit certain
class of importers to make deferred payment of said duty or any charges in such
manner as may be provided by rules.
(2) The importer shall pay the import
duty-- (a) on the date of presentation of the bill of entry in the case of self
assessment; or (b) within one day (excluding holidays) from the date on which
the bill of entry is returned to him by the proper officer for payment of duty
in the case of assessment, reassessment or provisional assessment; or (c) in the
case of deferred payment under the proviso to subsection (1), from such due
date as may be specified by rules made in this behalf, and if he fails to pay
the duty within the time so specified, he shall pay interest on the duty not
paid or short-paid till the date of its payment, at such rate, not less than
ten per cent. but not exceeding thirty-six per cent. per annum, as may be fixed
by the Central Government, by notification in the Official Gazette......"
(emphasis supplied)
Sub-section (2) of Section 47 requires
the importer to pay import duty "on the date of presentation of the bill
of entry in the case of self-assessment". Alternatively, where the bill of
entry is returned to the importer for the payment of duty in the case of
assessment, re-assessment or provisional assessment, the import duty has to be
paid within a day, after excluding holidays. The provisions contained in
Section 46 for the entry of goods on importation and those in Section 17 for
assessment form part of a composite scheme. Section 46 requires an importer of
goods to make an entry in the electronic form of a bill of entry for home
consumption or, as the case may be, for warehousing, on the customs automated
system.
An exception is contained in the
proviso to Section 46 (1) for cases where it is not feasible to make an entry
in the electronic form on the customs automated system. The bill of entry under
sub-section (1) has to be presented not later than the day following the
arrival of the goods though it can be presented before the arrival of goods, at
a time not exceeding thirty days prior to their expected arrival. In tandem
with the provisions of Section 46, Section 17 provides for the self-assessment
of duty by the importer. Section 46(1) stipulates that the bill of entry has to
be presented in the form and in the manner 'prescribed'.
The expression 'prescribed' is defined
in Section 2(32) to mean prescribed by regulations made under the Act. The Bill
of Entry (Electronic Integrated Declaration and Paperless Processing)
Regulations 2018 have been made in pursuance of the enabling power conferred by
Sections 46 and 47 and Section 157 which contains a general power to make
regulations. Section 157(2)(a) was amended by the Finance Act 2018 (Act 13 of
2018) to allow for the power to frame regulations on the form and manner of
delivering or presenting inter alia a bill of entry.
Regulation 2(c) of the 2018 Regulations
defines the expression bill of entry in the following terms: "(c)
"bill of entry" means electronic integrated declaration accepted and
a unique number generated and assigned to that particular bill of entry by the
Indian Customs Electronic Data Interchange System, and includes its electronic
records or print-outs" Regulation 2(d) defines the expression electronic
integrated declaration: "(d) "electronic integrated declaration"
means particulars relating to the imported goods that are entered in the Indian
Customs Electronic Data Interchange System" Under Regulation 2(e),
"ICEGATE" is the customs automated system of the Central Board of
Indirect Taxes and Customs.
Regulation 3 requires the authorized
person (defined in Regulation 2(b)7), which includes the importer, to enter the
electronic integrated declaration and supporting documents by affixing a
digital signature. Regulation 3 is as follows: "3. The authorised person
shall enter the electronic integrated declaration and the supporting documents
himself by affixing his digital signature and enter them on the Customs
Automated System and he may also get the electronic integrated declaration made
on the customs automated system along with the supporting documents by availing
the services at the service centre." Regulation 4 provides as follows
"4.
(1) The authorised person shall file
the bill of entry before the end of the next day following the day (excluding
holidays) on which the aircraft or vessel or vehicle carrying the goods arrives
at a customs station at which such goods are to be cleared for home consumption
or warehousing.
(2) The bill of entry shall be deemed
to have been filed and self-assessment completed when after entry of the
electronic integrated declaration on the customs automated system or by way of
data entry through the service centre, a bill of entry number is generated by
the Indian Customs Electronic Data Interchange System for the said declaration
and the self-assessed copy of the Bill of Entry may be electronically
transmitted to the authorised person or printed out at the service centre.
(3) Where the bill of entry is not
filed within the time specified in sub-regulation (1) and the proper officer of
Customs is satisfied that there was no sufficient cause for such delay, the
importer shall be liable to pay charges for late presentation of the bill of
entry at the rate of ......"
(emphasis supplied)
22 The Regulations of 2018 have made
provisions for submission of a declaration and generation of the bill of entry
in an electronic form on the automated platform provided by the Central Board
of Indirect Taxes and Customs. Sub-regulation (2) of Regulation 4 embodies a
legal fiction. Regulation 4(2) stipulates that the bill of entry is deemed to
have been filed and selfassessment completed when after the entry of the
electronic integrated declaration on the customs automated system (or by data
entry through a service centre) a bill of entry number is generated by the
Indian Customs Electronic Data Interchange ("EDI") System.
The self-assessed copy of the bill of
entry may be electronically transmitted to the authorized person under the
deeming fiction which is created by Regulation 4(2). Hence, the bill of entry
is deemed to be filed and the self-assessment completed when the requirements
of Regulation 4(2) are fulfilled namely by the (i) entry of the declaration on
the customs automated system; and (ii) generation of a bill of entry number by
the EDI system. Following this, the self-assessed copy of the bill of entry is
electronically transmitted to the authorized person.
23 In terms of the provisions of
Section 15(1)(a), in the case of goods which are entered for home consumption
under Section 46, the date of presentation of the bill of entry determines the
rate of duty and tariff valuation. Under Section 47(2)(a), the importer is
obliged to pay the import duty on the date of the presentation of the bill of
entry in the case of self-assessment. Regulation 4(2) of the Regulations of
2018 categorically stipulates when the presentation of the bill of entry is
complete.
Once the bill of entry is deemed to
have been presented in terms of Regulation 4(2) the rate and valuation in force
stand crystalized under Section 15(1)(a). Section 17(4) confers a power of
re-assessment on the proper officer where it is found on verification,
examination or testing of the goods or otherwise- that the self-assessment has
not been done correctly. In the present case the customs authorities sought to
exercise the power of re-assessment on the ground of the subsequent
notification enhancing the rate of duty.
The fact of the matter is that
self-assessment was carried out on the basis of the rate of duty which
prevailed at the time of the presentation of the bill of entry. This is not and
cannot be a matter of dispute. Notification 5/2019, which introduced a new
tariff entry - 980 60 000 - in the First schedule to the Customs Tariff Act
covering all goods originating in or exported from the Islamic Republic of
Pakistan, was not in force at the time when the self-assessment was carried
out.
24 Under Section 15(1)(a) the rate of
duty is the rate in force on the date of the presentation of a bill of entry
where the goods are entered for home consumption under Section 46. The
submission of the learned ASG is that the expression "on the date" is
adopted by the legislature in clauses (a) and (b) and in the proviso to Section
15(1). He urged that Section 15(1) has no reference to time but only to the
date of the presentation of the bill of entry and once a notification was
issued on 16 February 2019 enhancing the rate of duty, that is the duty 'in
force' on the date of presentation. Section 15(1)(a) uses two expressions (i)
the rate and valuation "in force"; and (ii) "on the date"
of the presentation of the bill of entry for home consumption under Section 46.
The provisions of Section 15(1)(a) have
to be read in conjunction with the provisions of Section 46 which are referred
to in the former provision. Section 46 has incorporated a regime which
encompasses the submission of the bill of entry for home consumption or
warehousing in an electronic format, on the customs automated system in the
manner which is prescribed. The Regulations of 2018 stipulate the manner in
which the bill of entry has to be presented.
The deeming fiction in Regulation 4(2)
specifies when presentation of the bill of entry and 'selfassessment' are
complete. The rate of duty stands crystallized under Section 15(1)(a) once the
deeming fiction under Regulation 4(2) comes into existence. The regulations
have to be read together with the statutory provisions contained in Section
15(1)(a) and Section 46, while determining the rate of duty.
G Precedent
25 At this stage it is necessary to
analyze the precedent on the subject. In Bharat Surfactants (Private) Limited
vs. Union of India8 ("Bharat Surfactants"), customs duty was imposed
on the import of edible oil by the petitioners at the rate of 150 per cent on
the basis that the import was made on the date of the inward entry, which was
31 July 1981. The vessel arrived and registered in the Port of Bombay on 11
July 1981 but since a berth was not available, the cargo could not be unloaded.
The vessel left Bombay and proceeded to Karachi and returned towards the end of
July 1981.
The rate of customs duty prevailing on
11 July 1981 was 12.5 per cent and the contention of the importer was that but
for the fact that the vessel was unable to secure a berth, it would have
delivered the cargo. Speaking for a Constitution Bench, Chief Justice R S
Pathak rejected the contention of the importer that the import of goods must be
deemed to have taken place on 11 July 1981 when the ship originally arrived in
Bombay port and registered itself.
The Constitution Bench held:
"14...The provisions of Section 15 are clear in themselves. The date on
which a Bill of Entry is presented under Section 46 is, in the case of goods
entered for home consumption, the date relevant for determining the rate of
duty and tariff valuation. Where the Bill of Entry is presented before the date
of Entry Inwards of the vessel, the Bill of Entry is deemed to have been
presented on the date of such Entry Inwards." The Constitution Bench held
that the date of entry inwards of the vessel in the Customs' register was
mentioned as 31 July 1981 and the rate of import duty and tariff valuation
would be that which was in force on that day.
The decision in Bharat Surfactants was
adverted to in the decision of this court in Priyanka Overseas Pvt. Ltd. vs.
Union of India9. Justice N M Kasliwal, speaking for the two judge Bench,
observed: "34...The rate of duty and tariff valuation on the imported
goods may be changed from time to time and as such the legislature has clearly
expressed its intention under Section 15 as to on what date the rate of duty
and tariff valuation is to be determined... Many contingencies may happen in
between the filing of bill of entry and actual removal of the goods from the
warehouse for which sometimes the importer of goods may himself be responsible,
in some cases the responsibility may lie on the customs authorities and there
may also be contingencies beyond the control of both the parties.
In any case the intention of the
legislature being clear, rate of duty is to be applied, as may be in force on
the date of actual removal of goods from the warehouse under Section 15(1)(b)
of the Customs Act." The above observations, referring to the date of the
actual removal of goods from the warehouse, were made in the context of the
provisions of Section 15(1)(b). In a subsequent decision in Dhiraj Lal H Vohra
vs. Union of India10, Justice K Ramaswamy speaking for a three judge Bench
observed:
"3. It is clear from a bare
reading of these relevant provisions that the due date to calculate the rate of
duty applicable to any imported goods shall be the rate and valuation in force,
in the case of the goods entered for home consumption under Section 46, is the
date on which the bill of entry in respect of such goods is presented under
that section and in the case of goods cleared from a warehouse under Section
68, the date on which the goods are actually removed from the warehouse. By
operation of the proviso if a bill of entry has been presented before the date
of entry inwards the bill of entry shall be deemed to have been presented
"on the date of such entry inwards" but would be subject to the
operation of Sections 46 and 31(1) of the Act."
In that case the ship had arrived at
the Port of Madras on 20 February 1989 and was ready to discharge her cargo.
Though the import manifest was delivered, the cargo could not be handled as a
result of a continuous strike. The bill of entry for clearance of goods for home
consumption was presented on 27 February 1989. The ship arrived into the port
and was berthed on 2 March 1989 on which date the entry inwards was granted.
From 1 March 1989, the rate of duty was increased. The court rejected the
contention that since the vessel had entered Indian territorial waters on 20
February 1989 when she was ready to discharge the cargo, the rate of duty must
be that which prevailed on that date:
"3...The contention, therefore
that the ship entered Indian territorial waters on February 20, 1989 and was
ready to discharge the cargo is not relevant for the purpose of Section 15(1)
read with Sections 46 and 31 of the Act. The prior entries regarding
presentation of the bill of entry for clearance of the goods on February 27,
1989 and their receipt in the appraising section on February 28, 1989 also are
irrelevant.
The relevant date to fix the rate of
customs duty, therefore, is March 2, 1989. The rate which prevailed as on that
date would be the duty to which the goods imported are liable to the impost and
the goods would be cleared on its payment in accordance with the rate of levy
of customs prevailing as on March 2, 1989." Another decision of a Bench
comprising three learned judges of this Court in D.C.M. vs. Union of India11
held as follows:
"7...A reading of Sections 15, 46
and 68 makes it clear that they provide an option to the importer either to
file a bill of entry for home consumption straight away (in which case he PART
H has to pay the duty determined with reference to that date) or to file a bill
of entry for warehousing. In the latter case, the goods are merely warehoused.
The import duty will be levied at the rate and on the basis of the valuation
determined in accordance with the provisions prevailing on the date of clearance
from the warehouse for which purpose the importer has to file a fresh bill of
entry for home consumption.
In other words, it is the date of
filing the bill of entry for home consumption which determines the rate of duty
in clauses (a) and (b) of Section 15. Inasmuch as the matter is left to the
option of the importer and also because a uniform principle is adopted by the
Act, as explained above, we see no room for any legitimate grievance of
discrimination. There is also no presumption that rate of duty always goes up.
It may also go down, in which case, the importer stands to gain."
26 The presentation of a bill of entry
for home consumption under Section 46 is hence the definitive event with
reference to which the customs' duty payable for import is determined. The duty
in force on the day when the bill of entry for home consumption is presented is
the duty which is applicable under Section 15(1)(a). It is in view of this
principle that the entry of the vessel into territorial waters, before the
presentation of the bill of entry, has been held not to fix the rate of duty
where the rate of duty has undergone a change.
H Interpreting 'day' and 'date'
27 The expressions "day" and
"date" have been construed in varying contexts in the precedents of
this Court. The underlying feature of the decisions is that the content of
those expressions is based on the context. In Raj Kumar Yadav vs. Samir Kumar
Mahaseth12, the limitation provided by Section 81 of the Representation of the
People Act 1951 expired on the 45th day from the date of the election.
Interpreting the provision, Chief Justice R.C. Lahoti while speaking for a
three judge Bench of this Court observed :
"6...The word "day" is
not defined in the Act. It shall have to be assigned its ordinary meaning as
understood in law. The word "day" as per English calendar begins at
midnight and covers a period of 24 hours thereafter, in the absence of there
being anything to the contrary in the context." Hence, in that case the
Election Petition could have been presented up to midnight falling between 27
and 28 August 2003. The Court observed that the limitation which was prescribed
by the statute could not be curtailed or taken away by the rules of the High
Court, governing its procedure.
28 In New India Assurance Co. Ltd. vs.
Ram Dayal13 ("Ram Dayal"), a two judge Bench of this Court noted that
the insurance policy in respect of the vehicle was up to 31 August 1984 and
could be renewed. Instead of renewing the policy, a fresh insurance policy was
taken from 28 September 1984, on which date the accident occurred.
This Court upheld the view of the
Punjab and Haryana High Court, which was supported by earlier decisions of the
Madras High Court, Punjab and Haryana High Court and the Allahabad High Court,
that the insurance cover commenced from the beginning of the day and concluded
that: "4... when a policy is taken on a particular date, its effectiveness
is from the commencement of the date and, therefore, the High Court, in our
opinion, was right in holding that the insurer was liable in terms of the Act
to meet the liability of the owner under the award."
29 On the other hand, in National
Insurance Company Limited vs. Geeta Devi14, the cover note was issued on 9 June
1989 at 4:40 pm while the accident took place at 11:30 am on the same day. A
two judge Bench of this Court distinguished the decision in Ram Dayal (supra)
and held that when the cover note mentioned the date of issue of the policy as
9 June 1989 and the time as 4:40 pm " it necessarily means that the effective
date of issue and time of issue is as mentioned on the cover note." Since
the cover note mentioned both the date and time, the Court held that the
principle that the insurance cover would date back to midnight of the preceding
day would not cover the factual situation.
30 In Ahmadsahab Abdul Mulla (2) Dead
by proposed Lrs. vs. Bibijan15, the issue before this Court was whether the
expression "date" in Article 54 of the Schedule to the Limitation Act
(which prescribes the period of limitation for a suit for specific performance)
is suggestive of a specific date in the calendar. The court observed:
"11. The inevitable conclusion is
that the expression "date fixed for the performance" is a
crystallised notion. This is clear from the fact that the second part "time
from which period begins to run" refers to a case where no such date is
fixed. To put it differently, when date is fixed it means that there is a
definite date fixed for doing a particular act. Even in the second part the
stress is on "when the plaintiff has notice that performance is
refused". Here again, there is a definite point of time, when the
plaintiff notices the refusal. In that sense both the parts refer to definite
dates. So, there is no question of finding out an intention from other circumstances."
31 The expression 'date' in Article 54
was held to be suggestive of a specified date in the calendar. In Pashupati
Nath Singh vs. Harihar Prasad Singh16, a three judge Bench construed the words
"on the date fixed for scrutiny" in Section 36(2)(a) of the
Representation of the People Act 1951. Interpreting those words, the Court held
that the qualification of a candidate must exist from the earliest moment of
the day of scrutiny:
"13. It seems to us that the
expression "on the date fixed for scrutiny" in Section 36(2)(a) means
"on the whole of the day on which the scrutiny of nomination has to take
place". In other words, the qualification must exist from the earliest
moment of the day of scrutiny. It will be noticed that on this date the Returning
Officer has to decide the objections and the objections have to be made by the
other candidates after examining the nomination papers and in the light of
Section 36(2) of the Act and other provisions. On the date of the scrutiny the
other candidates should be in a position to raise all possible objections
before the scrutiny of a particular nomination paper starts."
32 A Special Bench of the Madras High
Court in Re Court Fees17 dealt with the interesting issue of whether the law
disregards fractions of the day. A notification was published in the Fort St.
George Gazette on 5 May 1922 by which the table of fees leviable in respect of
the institution of suits under Appendix - II of the old rules on the Original
side was amended. Instead of a fixed fee of Rs 30, it was provided that Rs 150
was to be levied in all suits where the value of the subject matter did not
exceed Rs 10,000/- and in respect of suits of a higher value, Rs 20/- was to be
levied for every Rs 5,000/- or part thereof in excess of Rs 10,000/-. The notification
stated that "the amendments do come into force from the date of
publication in the Fort St. George Gazette".
The office hours of the High Court were
from 11am to 5pm. The notification reached the High Court at about 5pm, at the
close of the office hours. The issue before the Special Bench was whether the
rules imposing increased institution fees on suits on the Original side of the
High Court would apply the new scale to suits which had already been instituted
on that day. Chief Justice Schwabe, on behalf of the majority, held "that
the hour of the day at which the Gazette was actually published is a wholly
irrelevant consideration".
The Chief Justice noted that the use of
the expression 'from' may have one of two meanings namely on and after, that is
including the named date, or merely after, that is excluding the named date.
The Chief Justice took the view that it is necessary to look at the context and
the circumstances of each case to arrive at the true construction. Having said
this, the Chief Justice outlined the principles in the following extract on
page 688:
"(1) that, if the named date is
the beginning of a defined limited period, that, where there is a terminus ad
quem as well as a terminus a quo, then prima facie the first day is excluded;
(2) that, if the named date is the beginning of an indefinite period then prima
facie the first day is included. I say prima facie because in my view there
must be exceptions". In his view, the expression "from a named
date" meant "on and after that day". Hence the date on which the
notification was published in the official Gazette was held to apply to all
plaints which were filed on 5 May 1922. Justice Coutts Trotter, arrived at the
same conclusion as the Chief Justice, following a different path, which he set
out in the following observations, on page 691:
"What I conceive to emerge from
the decided cases is this: that as the law in general neglects fractions of a
day you must either exclude or include the whole of the day with which a given
statute or rule or regulation deals. And the exclusion or inclusion, I think,
is clearly provided in two other rules. If you are fixing the point of time at
which a certain state of things is to be called into existence, that state of
things comes into existence at midnight of the day preceding the day at which
or on which or from which or from and after which the new state of things
begins. In such cases the statue or rule is only concerned in fixing the
terminus a quo of a new state of law which is enacted to continue indefinitely,
in other words, until repealed by a new enactment of the legislature where, in
short, you have a terminus a quo but no terminus ad quem."
In his view, on page 693: "Where a
statute fixes only the terminus a quo of a state of things, which is envisaged
as to last indefinitely, the common law rule obtains that you ought to neglect
fractions of a day and the statute or regulation or order takes effect from the
first moment of the day on which it is enacted or passed, that is to say, from midnight
of the day preceding the day on which it is promulgated: where on the other
hand, a statute delimits a period marked both by a terminus a quo and a
terminus ad quem, the former is to be excluded and the latter to be included in
the reckoning."
The notification, in this view, fell in
the former class and was held to have come into force on the first second of
the 5 May, that is to say from midnight of 4 May. Hence all plaints which were
filed on 5 May were liable to the enhanced fee. The tightly reasoned and
eloquent dissenting opinion delivered by Justice Kumaraswami Sastri, on the
other hand, deserves close attention. The learned Judge noted that if the case
were to be decided on the principle that the law disregards fractions of a day,
it could mean any one of two things: either that a fraction of a day is to be
taken as a whole day or that it is to be excluded altogether from the
calculation. Consequently, "it does not help us to determine in any
particular case whether the part is to be left out or kept in".
Justice Kumaraswami Sastri observed
that there is no invariable rule that the use of the expression 'from' includes
the first day. Nor was there any basis in principle in the submission of the
Crown that the exclusion of the first day where the word "from" is
used is only to be in case where there are two termini. The learned Judge held
that rules of equity and good conscience are by the Civil Courts Act to govern
cases not governed by the Hindu and Mohammedan Laws. Voicing a powerful
dissent, Justice Kumaraswami Sastri observed, on page 704:
"I do not think that the
principles which govern, or the devices which are resorted to, by the Executive
for the purpose of raising money by taxation ought to have any weight with us
in determining whether the date of publication is to be included or excluded. I
do not think the High Court is part of the tax gathering machinery of the
Government or has any concern with the consequences to the Government of their
decision on the construction of the rule. The rule, I take it, was passed by
the Judges of the High Court in the exercise of the powers entrusted to them to
control the administration of justice and the fees were raised because in the
opinion of the Judges it was just and proper that litigants ought to pay more
for the benefits which they derive by resorting to the jurisdiction of the High
Court".
In the view of the learned Judge, the
notification having been received in the Registry of the High Court at 5pm at
the office closing hour, litigants who had filed plaints before either or they
or the office had knowledge of the publication "did what was perfectly
valid under the old rules and they presented the plaints with Rs 30 stamp
irrespective of the value of their claim".
Looking at it from the citizens'
perspective, the learned Judge observed, on page 704: "A person who files
a plaint which is properly stamped and which is in order at the time of
presentation is entitled to have his plaint admitted on presentation though as
a matter of convenience the office receives the plaints and admits them at the
end of the day or later on.
There seems to me to be very little
justice or equity in directing that persons who have done what was perfectly a
legal and valid act at the time should pay a Court-fee which is much higher
simply because a notification was received at the close of the day making the
higher fees chargeable from the date of the notification. It may well be that
if those persons had notice that instead of Rs. 30 they had to pay at least Rs
150 and a maximum that would range according to the value of their claim, they
might rather have compromised with the other side or might have had resort to
other proceedings like arbitration for settling their claims. I can find
nothing to justify charging people, who filed their plaints on that day without
knowledge of the notification which only reached the High Court at 5 p.m., with
the higher fees in respect of plaints filed during the course of the day".
33 Mr Natraj, on behalf of the Union,
submitted that Parliament has employed the phrase "on the date"
without making a reference to time. Hence, he submitted that irrespective of
the time of the publication or uploading of the notification under the Customs
Tariff Act in the e-Gazette, the legislature has by a legal fiction, enacted
that the rate of duty on imported goods will be the rate that is prevalent on
the date of the presentation of the bill of entry for home consumption. He
submitted that two different rates of duty cannot be applicable on the same
day. Hence, according to the submission, once a notification is issued under the
Customs Tariff Act, it will be a notification in force on that date and apply
with effect from the commencement of that date.
34 The decisions to which a reference
has been made earlier, have construed the expression "day" or, as the
case may be, "date" in varying contexts ranging from the law
governing elections, insurance and limitation. A general position in law has
not been laid down that is divorced from subject, context and statute. In
interpreting the statute, the court is guided by the terms of its provisions,
the purpose underlying their adoption and the scheme which emerges from
interrelated provisions and the nature of the provision. The court in the
present case is interpreting the terms of a fiscal levy.
The court here has to construe the
scheme and provisions of the Customs Act and their relationship with the
provisions of the Customs Tariff Act. The provision which falls for
construction is Section 15(1) of which both clauses (a) and (b) use the
expression "on the date". In clause (a), the rate of duty and
valuation is the rate and valuation in force on the date on which a bill of
entry is presented under Section 46 where goods are entered for home
consumption. Under Clause (b), where goods are cleared from a warehouse under
Section 68 it is the date on which a bill of entry for home consumption is
presented under that Section which is determinative of the rate and valuation.
35 Mr Natraj is textually right when he
emphasizes that Section 15 (1) contains a reference to date and not time. But
there are two responses to his line of approaching the issue. First, the
legislature does not always say everything on the subject. When it enacts a
law, every conceivable eventuality which may arise in the future may not be
present to the mind of the lawmaker. Legislative silences create spaces for
creativity.
Between interstices of legislative
spaces and silences, the law is shaped by the robust application of common
sense. Second, regulatory governance is evolving in India as new technology
replaces old and outmoded ways of functioning. The virtual world of electronic
filings was not on the horizon when Parliament enacted the Customs Act in 1962.
Yet the Parliament has responded to the rapid changes which have been brought
about by the adoption of technology in governance. In the provisions of Section
17 and Section 46, the impact of ICT-based governance has been recognized by
the legislature in providing for the presentation of bills of entry in the
electronic form on the customs automated EDI system.
Precision, transparency and seamless
administration are key features of a system which adopts technology in pursuit
of efficiency. As we will explore in greater detail later in this judgment,
technology has enabled both administrators and citizens to know precisely when
an electronic record is uploaded.
The considerations which Parliament had
in its view in providing for crucial amendments to the statutory scheme by
moving from manual to electronic forms of governance in the assessment of
duties must not be ignored. Tax administration must leave behind the culture of
an age in which the assessment of duty was wrought with delays, discretion,
doubt and sometimes, the dubious. The interpretation of the court must aid in
establishing a system which ensures certainty for citizens, ease of application
and efficiency of administration.
36 It is with these principles of
interpretation in mind that we must evaluate the submission which was urged by
Mr Nataraj, on behalf of the Union, that upon the issuance of a notification
enhancing the rate of duty under Section 8A of the Customs Tariff Act, the date
on which the notification was issued will govern the rate applicable to all
bills of entry, including those which were presented before the enhanced rate
was notified. The submission cannot be accepted for several reasons. For one
thing, it misses the significance of the expression "in force' which has
been employed in the prefatory part of Section 15(1).
A notification under Section 8A(1) of
the Customs Tariff Act, even though it has the effect of amending the First
Schedule, takes effect prospectively. Section 8A does not confer upon the
notification an operation anterior to its making. In the language of the law,
its operation is prospective. To accept the submission of the ASG would mean
that the notification under Section 8A would have effect prior to its making,
something which Parliament has not incorporated by language or intent. If, as
we hold, the notification operates for the future beginning with the point of
its adoption, it cannot operate to displace the rate of duty which is
applicable when a bill of entry is presented for home consumption under Section
46.
The submission of the Union cannot be
accepted in view of the provisions contained in Section 46 for the presentation
of a bill of entry for home consumption in an electronic form on the customs
automated system. While making that provision, specifically by means of an
amendment by Act 8 of 2011 and later by the Finance Act of 2018, Parliament
used the expression "in such form and manner as may be prescribed."
Regulation 4(2) of the Regulations of 2018 provides when the bill of entry
shall be deemed to have been filed and selfassessment completed.
The legal fiction which has been
embodied in Regulation 4(2) emanates from the enabling provisions of Section
46. The provisions of Sections 15(1)(a), 17, 46(1) and 47(2)(a) constitute one
composite scheme. As a result of the modalities prescribed for the electronic
presentation of the bill of entry and self-assessment after the entry of the
electronic declaration on the PART I customs automated system, a bill of entry
number is generated by the EDI system for the declaration.
Regulation 4(2) provides for a deeming
fiction in regard to the filing of the bill of entry and the completion of
self-assessment. In the context of these specific provisions, it would do
violence to the overall scheme of the statute to interpret the language of
Section 15(1)(a) in the manner in which it is sought to be interpreted by the
ASG.
The submission of the ASG, simply put,
is that because notification 5/2019 was issued on 16 February 2019, the court
must regardless of the time at which it was uploaded on the e-Gazette treat it
as being in existence with effect from midnight or 0000 hours on 16 February
2019. The consequence of this interpretation would be to do violence to the
language of Section 8A(1) of the Customs Tariff Act, and to disregard the
meaning, intent and purpose underlying the adoption of provisions in the
Customs Act in regard to the electronic filing of the bill of entry and the completion
of self-assessment.
I Notification under Section 8A of the
Customs Tariff Act
37 The second and alternative limb of
the submissions of the ASG postulates that a notification under Section 8A(1)
of the Customs Tariff Act is a legislative act. The rates of duty applicable to
different categories of goods imported into India are set out in the First
schedule to the Customs Tariff Act. A notification under Section 8A(1) amends
the First schedule. Hence, the submission is that the schedule being a part of
the Act, any amendment made to it by a notification is an amendment to the Act.
The ASG relies upon the decisions of
this Court in Video Electronics (P) Ltd vs. State of Punjab18 and TN
Electricity Board vs. Status Spinning Mills Limited19 in support of the
principle that subordinate legislation validly made in pursuance of a
legislative provision is to be read as if it is a part of the enactment. Hence,
for instance, an exemption granted under a notification made in pursuance of a
statutory provision must be construed as if it is contained in the legislation.
38 In order to consider the submission,
it is necessary at the outset to advert to the provisions of the Customs Tariff
Act. Under Section 8A, an emergency power is vested in the Central Government
to increase the import duties leviable on an article included in the First
schedule where it is satisfied that circumstances rendering it necessary to
take immediate action exist. Section 8A is in the following terms:
"8A- Emergency Power of Central
Government to increase import duties- Where in respect of any article included
in the First Schedule, the Central Government is satisfied that the import duty
leviable thereon under section 12 of the Customs Act, 1962 (52 of 1962) should
be increased and that circumstances exist which render it necessary to take
immediate action, it may, by notification in the Official Gazette, direct an
amendment of that Schedule to be made so as to provide for an increase in the
import duty leviable on such article to such extent as it thinks necessary:
Provided that the Central Government
shall not issue any notification under this subsection for substituting the
rate of import duty in respect of any article as specified by an earlier
notification issued under this sub-section by that Government before such
earlier notification has been approved with or without modifications under
sub-section (2). (2) The provisions of sub-sections (3) and (4) of section 7
shall apply to any notification issued under sub-section (1) as they apply in
relation to any notification increasing duty issued under sub-section (2) of
section 7."
(emphasis supplied)
While Section 8A is an emergency power,
Section 11A empowers the Central government in public interest to amend the
First schedule: "(1) Where the Central Government is satisfied that it is
necessary so to do in the public interest, it may, by notification in the
Official Gazette, amend the First Schedule:
Provided that such amendment shall not
alter or affect in any manner the rates specified in that Schedule in respect
of goods at which duties of customs shall be leviable on the goods under the
Customs Act, 1962 (52 of 1962)." Sub-section (2) of Section 8A specifies
that the provisions of sub-sections (3) and (4) of Section 7 shall apply to a notification
which has been issued under subsection (1) of Section 8A. Sub-sections (3) and
(4) of Section 7 are in the following terms:
"(3) Every notification under
sub-section (2), insofar as it relates to increase of such duty, shall be laid
before each House of Parliament if it is sitting as soon as may be after the
issue of the notification, and if it is not sitting within seven days of its
re-assembly, and the Central Government shall seek the approval of Parliament
to the notification by a resolution moved within a period of fifteen days
beginning with the day on which the notification is so laid before the House of
the People and if Parliament makes any modification in the notification or
directs that the notification should cease to have effect, the notification
shall thereafter have effect only in such modified form or be of no effect, as
the case may be, but without prejudice to the validity of anything previously
done thereunder.
(4) For the removal of doubts, it is
hereby declared that any notification issued under sub-section (2), including
any such notification approved or modified under sub-section (3), may be
rescinded by the Central Government at any time by notification in the Official
Gazette."
(emphasis supplied)
Under sub-section (3) of Section 7, the
Central government is required to seek the approval of Parliament to a
notification within a period of fifteen days of its being laid before the House
of the People. Where Parliament is in session, the notification has to be laid
before the House as soon as may be after it is issued and, if it is not, then
within seven days of the legislature re-assembling. The approval of parliament
has to be sought within the specified period.
The notification would cease to have
effect or take effect with modifications, if Parliament so directs. In the case
of a notification which has been issued under Section 11A, sub-section (2) does
not require the Central government to seek the approval of Parliament to the
notification by a resolution moved within a period of fifteen days from the
date on which the notification has been laid before the House of the People.
Sub-section (2) of Section 11A merely states that the notification shall either
cease to have effect or have effect in a modified form if it is so directed by
both the Houses of Parliament.
39 A notification which is issued in
terms of the provisions of Sub-section (1) of Section 8A is akin to the
exercise of a delegated legislative power. The Central government is empowered
to issue a notification enhancing the rate of duty where it is satisfied that
immediate action is necessary to increase the rate of customs duty on an
article specified in the First schedule.
The effect of the PART J notification
is to amend the First schedule to the Customs Tariff Act in respect of the
import duty leviable on an article under Section 12 of the Customs Act. In
issuing a notification under Sub-section (1) of Section 8A, the Central
government exercises power as a delegate of the legislature. The issue now to
be considered is whether the notification that was issued by the Central
government under Section 8A(1) at 20:46:58 hours on 16 February 2019 took
effect commencing from 0000 hours on that day. The ASG relied on the provisions
of the General Clauses Act in support of his submission that it did.
J General Clauses Act
40 Section 5(3) of the General Clauses
Act 1897 provides thus: "(3) Unless the contrary is expressed, a Central
Act or Regulation shall be construed as coming into operation immediately on
the expiration of the day preceding its commencement." The above provision
applies to a "Central Act" or "Regulation". Hence, the
above provision makes it abundantly clear that it is only a 'Central Act' or
'Regulation' which comes into operation immediately on the expiration of the
day preceding its commencement.
The expressions "Central Act"
and "Regulation" are defined by the statute. The expression
"Central Act" is defined in Section 3(7) in the following terms:
"(7) "Central Act" shall means an Act of Parliament, and shall
include- (a) an Act of the Dominion Legislature or of the Indian Legislature
passed before the commencement of the Constitution, and (b) an Act made before
such commencement by the Governor General in Council or the Governor General,
acting in a legislative capacity;"
The expression "Regulation"
is defined in Section 3(50) as follows: "(50) "Regulation" shall
mean a Regulation made by the President under article 240 of the Constitution
and shall include a Regulation made by the President under article 243 thereof
and a Regulation made by the Central Government under the Government of India
Act, 1870, or the Government of India Act, 1915, or the Government of India
Act, 1935;" The expression "commencement" is defined in Section
3(13) as follows: "(13) "Commencement" used with reference to an
Act or Regulation, shall mean the day on which the Act or Regulation comes into
force." The definition of the expression "commencement' is also
relatable to a "Central Act" or "Regulation".
41 A notification issued by the Central
government under sub-section (1) of Section 8A does not fulfill the description
of a Regulation under Section 3(50) of the General Clauses Act. The expression
is confined to specific species of Regulations. The definition does not extend
to all subordinate legislation or to notifications issued by a delegate of the
legislature acting in pursuance of a statutory authority.
42 The expression "Central
Act" is defined by using the expressions "shall mean" and
"shall include". The use of these expressions indicates that the
definition is exhaustive. Insofar as is relevant, the expression 'Central Act'
is defined to mean an Act of Parliament. A notification which has been issued
under Sub-section (1) of Section 8A of the Customs Tariff Act is not an Act of
Parliament. The notification has the effect of amending the First schedule. The
Central government as a delegate of the legislature has been entrusted with the
authority to issue such a notification. That does not make the notification an
Act of Parliament.
43 The above analysis is based on a
textual reading of the two definitions - those of a "Central Act" and
"Regulation". The precedent on the subject confirms the analysis.
This Court has held that the mere fact that a piece of delegated legislation
has been issued in exercise of a legislatively conferred power does not bring
the delegated legislation within the ambit of the phrase "Central
Act" as defined in Section 3(7) of the General Clauses Act.
44 In Kolhapur Canesugar Works Ltd. vs.
Union of India (UOI)20, Constitution Bench of this Court had to decide, inter
alia, if Rules 10 and 10-a of the Central Excise Rules could be considered a
'Central Act' as defined in Section 3(7) of the General Clauses Act. This
decision of the Court, albeit subsequently questioned for its interpretation of
'repeal' through omission [which does not have a bearing on the issue at hand],
was not assailed for its interpretation of "Central Act" within the
General Clauses Act. Speaking through Justice D.P. Mohapatra, this Court
answered the question of whether the aforesaid Rules constituted a 'Central
Act' in the negative, in the following terms:
"32. When the term Central Act or
Regulation or Rule is used in that Act reference has to be made to the
definition of that term in the statute. It is not possible nor permissible to
give a meaning to any of the terms different from the definition. It is
manifest that each term has a distinct and separate meaning attributed to it
for the purpose of the Act. Therefore, when the question to be considered is
whether a particular provision of the Act applies in a case then the clear and
unambiguous language of that provision has to be given its true meaning and
import.
The Full Bench has equated a 'rule'
with 'statute'. In our considered view this is impermissible in view of the
specific provisions in the Act. When the Legislature by clear and unambiguous
language has extended the provision of Section 6 to cases of repeal of a
'Central Act' or 'Regulation', it is not possible to apply the provision to a
case of repeal of a 'Rule'. The position will not be different even if the rule
has been framed by virtue of the power vested under an enactment; it remains a
'rule' and takes its colour from the definition of the term in the Act (General
Clauses Act)."
45 In Securities and Exchange Board of
India vs. Magnum Equity Services Ltd21, a two judge Bench of this Court
considered whether the General Clauses Act is applicable to the interpretation
of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992. The Court
observed that the Regulations were framed by SEBI in exercise of the powers
conferred on it by Section 30 of the SEBI Act, 1992. Section 31 requires the
rules and regulations to be laid before Parliament. Justice Vikramajit Sen
concluded as follows:
"12. The main contention raised by
the learned Senior Counsel for the appellant is based on the application of the
General Clauses Act, 1897 which under Section 13(2) states that plural includes
singular. However, before we consider Section 13, we shall have to determine
whether the General Clauses Act itself is applicable to the SEBI (Stockbrokers
and Sub-Brokers) Regulations, 1992. Section 3 of the General Clauses Act, 1897
states that the said Act is applicable to all Central Acts and Regulations made
after the commencement of this Act. Further, the term "Central Act"
has been defined under sub-section (7) as an Act of Parliament, which includes
(a) an Act of the Dominion Legislature or of the Indian Legislature passed
before the commencement of the Constitution, and (b) an Act made before such
commencement by the Governor General in Council or the Governor General, acting
in a legislative capacity.
The SEBI (Stockbrokers and Sub-Brokers)
Regulations, 1992 are issued by SEBI in exercise of the powers conferred on it
under Section 30 of the SEBI Act, 1992. Section 31 of the SEBI Act, reproduced
below for the facility of reference, provides that the Rules and Regulations
are to be laid before Parliament:
"31. Rules and regulations to be
laid before Parliament.- Every rule and every regulation made under this Act
shall be laid, as soon as may be after it is made, before each House of
Parliament, while it is in session, for a total period of thirty days which may
be comprised in one session or in two or more successive sessions, and if,
before the expiry of the session immediately following the session or the
successive sessions aforesaid, both Houses agree in making any modification in
the rule or regulation or both Houses agree that the rule or regulation should
not be made, the rule or regulation shall thereafter have effect only in such
modified form or be of no effect, as the case may be; so, however, that any
such modification or annulment shall be without prejudice to the validity of
anything previously done under that rule or regulation."
13. Thus in light of the provisions of
the SEBI Act, 1992 under which the said Regulations have been issued, the
latter do not tantamount to a Central Act as defined Under Sub-section (7) of
the definition clause of The General Clauses Act, 1897." The Regulations
framed under the SEBI Act were held not to fall within the definition of a
'Central Act' contained in Section 3(7) of the General Clauses Act.
46 Notification 05/2019 was issued by
the Central Government under the delegated authority to increase emergency
tariff duties under Section 8A of the Customs Tariff Act, 1975. The
notification has been issued in pursuance of a PART K statutory power. The
notification has the effect of enhancing the rate of duty prescribed in the
First Schedule to the Customs Tariff Act. That does not, transform the
notification which has been issued in pursuance of a statutory authority into a
'Central Act'.
K Information Technology Act, 2000
47 While enacting the Information
Technology Act 2000, Parliament envisioned a regime of electronic governance.
The legislation recognizes that information technology is a facilitative
instrument for creating an efficient framework for e-commerce. Providing the
backdrop for Parliamentary intervention, the Statement of Objects and Reasons
underlying the enactment of the legislation provides the rationale for the law:
"New communication systems and
digital technology have made dramatic changes in the way we live. A revolution
is occurring in the way people transact business. Businesses and consumers are
increasingly using computers to create, transmit and store information in the
electronic form instead of traditional paper documents. Information stored in electronic
form has many advantages. It is cheaper, easier to store, retrieve and speedier
to communicate. Although people are aware of these advantages, they are
reluctant to conduct business or conclude any transaction in the electronic
form due to lack of appropriate legal framework.
The two principal hurdles which stand
in the way of facilitating electronic commerce and electronic government are
the requirements as to writing and signature for legal recognition. At present
many legal provisions assume the existence of paper based records and documents
and records which should bear signatures. The law of evidence is traditionally
based upon paper based records and oral testimony. Since electronic commerce
eliminates the need for paper-based transactions, hence to facilitate
e-commerce, the need for legal changes have become an urgent necessity.
International trade through the medium of e-commerce is growing rapidly in the
past few years and many countries have switched over from traditional paper
based commerce to e-commerce."
48 Parliament recognized the need to
bring about suitable amendments to existing legislation to facilitate
e-commerce, more so in light of India being a signatory to the United Nations
Commission on International Trade Law's Model Law on Electronic Commerce in
1996. It therefore proposed to provide legal recognition of electronic records
and digital signatures. This would, as the Statement of Objects and Reasons
indicate, "enable the conclusion of contracts and the creation of rights
and obligations through the electronic medium". Parliament envisaged the
use and acceptance of electronic records and digital signatures in governmental
offices and agencies, to facilitate electronic governance and to "make the
citizens' interaction with the governmental offices hassle free".
Bearing the legislative number of Act
21 of 2000, the law came into force on 17 October 2000. The long title to the
legislation provides that it is: "An Act to provide legal recognition for
transactions carried out by means of electronic data interchange and other
means of electronic communication, commonly referred to as "electronic
commerce", which involve the use of alternatives to paper-based methods of
communication and storage of information, to facilitate electronic filing of
documents with the Government agencies and further to amend the Indian Penal
Code, the Indian Evidence Act, 1872 , the Banker's Book Evidence Act, 1891 and
the Reserve Bank of India Act, 1934 and for matters connected therewith or
incidental thereto." Section 2(t) defines the expression 'electronic
record':
"(t) -electronic record means
data, record or data generated, image or sound stored, received or sent in an
electronic form or micro film or computer generated micro fiche" Chapter
III is devoted specifically to electronic governance. Among its salient
provisions are those providing for: (i) Legal recognition of electronic records
(Section 4); (ii) Legal recognition of electronic signatures (Section 5); (iii)
Use of electronic records and electronic signatures in government and its
agencies (Section 6); (iv) Authorization by government to service providers to
set-up, maintain and upgrade computerized facilities (Section 6A); and (v)
Retention of electronic records (Section 7).
Sub-section 1 of Section 6 has a
bearing on the issues raised in this case:
"6. Use of electronic records and
electronic signatures in Government and its agencies- (1) Where any law
provides for - (a) the filing of any form, application or any other document
with any office, authority, body or agency owned or controlled by the
appropriate Government in a particular manner; (b) the issue or grant of any
licence, permit, sanction or approval by whatever name called in a particular
manner; (c) the receipt or payment of money in a particular manner, then,
notwithstanding anything contained in any other law for the time being in
force, such requirement shall be deemed to have been satisfied if such filing,
issue, grant, receipt or payment, as the case may be, is effected by means of
such electronic form as may be prescribed by the appropriate Government."
Section 6A contemplates that for the
"efficient delivery of services to the public through electronic
means", government may authorize a service provider to set up, maintain
and upgrade computerized facilities and perform other services. Section 7
provides legal support to the retention of records in the electronic form.
Where a law requires documents, information or records to be preserved, the
requirement is satisfied by preserving them in an electronic form, subject to
the fulfillment of conditions.
One of the conditions stipulated by
Section 7(1)(c) is that the details which facilitate the identification of the
origin, destination, date and time of dispatch or the receipt of the electronic
record are available in the electronic record. The date and time of receipt or
of the dispatch of an electronic record are crucial from this perspective to
the maintenance of an electronic record.
49 In exercise of its rule making
power, the Central Government formulated rules for electronic service delivery.
Under these rules, called the Information Technology (Electronic Service
Delivery) Rules 2011, governmental authorities must maintain time stamps of the
creation of electronic records. Rule 5(1) incorporates such a requirement in
the following terms: "5. Creation of repository of electronically signed
electronic records by Government Authorities.- (1) All authorities that issue
any license, permit, certificate, sanction or approval electronically, shall
create, archive and maintain a repository of electronically signed electronic
records of such licenses, permits, certificates, sanctions or approvals, as the
case may be, online with due timestamps of creation of these individual
electronic records."
The Rules provide a procedure for
making changes in the repository of electronically signed electronic records,
in Rule 6. Rule 6(2) indicates that the person authorized to make a change must
also electronically sign the change and the time stamps of the original
creation and modification of the electronic record. Rule 6(2) reads thus:
"6. Procedure for making changes
in a repository of electronically signed electronic records.- (2) Any change
effected to any record in a repository of electronically signed electronic
records and any addition or deletion of a record from such repository shall be
electronically signed by the person who is authorized to make such changes
along with the time stamps of original creation and modification times"
Digital signatures have contextual
information including the date and time built into them. Under the Digital
Signature (End entity) Rules 2015, provisions for time stamps for digital
signatures are built into the legal regime under Rule 4(4) and, in the context
of a long term valid digital signature, in Rule 4(7). Section 13 of the
Information Technology Act 2000 contains provisions for the time and place of
the dispatch and receipt of electronic records. It reads as follows:
"13. Time and place of dispatch
and receipt of electronic record.-
(1) Save as otherwise agreed to between
the originator and the addressee, the dispatch of an electronic record occurs
when it enters a computer resource outside the control of the originator.
(2) Save as otherwise agreed between
the originator and the addressee, the time of receipt of an electronic record
shall be determined as follows, namely:- (a) if the addressee has designated a
computer resource for the purpose of receiving electronic records,- (i) receipt
occurs at the time when the electronic record enters the designated computer
resource; or (ii) if the electronic record is sent to a computer resource of
the addressee that is not the designated computer resource, receipt occurs at
the time when the electronic record is retrieved by the addressee; (b) if the
addressee has not designated a computer resource along with specified timings,
if any, receipt occurs when the electronic record enters the computer resource
of the addressee....."
(emphasis supplied)
The dispatch of a record occurs when it
enters a computer resource outside the control of the originator. The time of
receipt of the electronic record is fixed by the provisions of sub-section 2 of
Section 13. When the addressee has designated a computer resource, receipt
occurs when the record enters the computer resource so designated. Otherwise,
where no computer resource is designated, the receipt of the record is when it
is retrieved by the addressee. These provisions have been incorporated in the
law to enable the dispatch and receipt of a record in the electronic form to be
defined with precision with reference to both- time and place.
50 In the above context, it is to be
noted that the rate of customs duty is determined on the date on which the bill
of entry for home consumption is presented (Section 15). The presentation of
the bill of entry has to be made electronically (Section 46 read with the 2018
Regulations). The presentation is required to be made on the customs automated
system. The provisions in the Customs Act for the electronic presentation of
the bill of entry for home consumption and for self-assessment have to be read
in the context of Section PART L 13 of the Information Technology Act which
recognizes "the dispatch of an electronic record" and "the time
of receipt of an electronic record".
The legal regime envisaging the
electronic presentation of records, such as the presentation of a bill of
entry, has been imparted precision as a result of the enabling framework of the
Information Technology Act under which these records are maintained. The
presentation of the bill of entry under Section 46 is made electronically and
is captured with time stamps in terms of the requirements of the Information
Technology Act read with Rule 5(1) of the Information Technology (Electronic
Service Delivery) Rules 2011.
L Effect of notifications issued in
e-gazettes
51 Section 8 of the Information
Technology Act, 2000 creates a legal basis for the publication of laws through
e-gazettes. It reads as follows: "Section 8 - Publication of rule,
regulation, etc., in Electronic Gazette- Where any law provides that any rule,
regulation, order, byelaw, notification or any other matter shall be published
in the Official Gazette, then, such requirement shall be deemed to have been
satisfied if such rule, regulation, order, bye-law, notification or any other
matter is published in the Official Gazette or Electronic Gazette: Provided
that where any rule, regulation, order, by-law, notification or any other
matter is published in the Official Gazette or Electronic Gazette, the date of
publication shall be deemed to be the date of the Gazette which was first
published in any form."
52 On 30 September 2015, the Ministry
of Urban Development issued an Office Memorandum numbered No.
O-17022/1/2015-PSP-l which discontinued the practice of physical printing and
replaced it with the electronic gazette. The notification, in relevant part,
reads as follows:
"In compliance with the provisions
of Section 8 of the Information Technology Act, 2000, it has been decided in
consultation with Department of Legal Affairs to switch over to exclusive
e-publishing of the Government of India Gazette Notification on its official
website with effect from 01.10.2015 and to do away with the physical printing
of Gazette Notification. The date of publishing shall be the date of
epublication on official website by way of electronic gazette in respect of
Gazette notification." (emphasis supplied)
53 Thus far, this Court has not had to
confront the question as to whether the shift from the analog to the digital
for Gazette notifications has any bearing for ascertaining when they come into
force. The judgments which dealt with the starting point for the enforceability
of notifications were all concerned with circumstances in which such
publication took place in the physical gazette. We are now required to
determine if the shift to electronic gazettes has brought about a change in
this position.
54 The High Courts have begun offering
guidance on this score. The Delhi High Court in M.D. Overseas Industries vs.
Union of India22, dealt with a situation where the Director General of Foreign
Trade issued two notifications dated 25 August 2017 restricting the importation
of gold, including gold coins. Gold coins could no longer be imported freely
and had to be imported in accordance with a public notice issued in that
behalf.
The petitioners urged that the
restrictive regime created by these notifications was inapplicable to them
because the notifications, they contended, came into force only on 28 August,
2017, when they were published in the official gazette. The gold coins imported
by the petitioners, however, were dispatched on 25 August, 2017. Since the
notifications came into force three days later, they contended that these were
inapplicable to them. The notifications were electronically notified in the
gazette.
55 The High Court upheld the
Petitioner's view that the notifications were inapplicable to the petitioners
after considering Section 8 of the Information Technology Act, 2000 along with
the Office Memorandum dated 30.9.2015. It held: "32. The endorsement on
the electronic copy of the Gazette, whereby the impugned Notification Nos. 24
and 25, dated 25th August, 2017, were notified, seen in juxtaposition with
Section 8 of the IT Act, and of the OM dated 30th September, 2015 supra, of the
Ministry of Urban Development, makes it clear that the impugned Notification
Nos. 24 and 25, dated 25th August, 2017 were, in fact, electronically published
in the Official Gazette only at or after 10:47 p.m. on 28th August, 2017.
33. It has been conclusively held, by
the Supreme Court, in a catena of decisions - including Harla v. State of
Rajasthan [1952 (1) SCR 110], B.K. Srinivasan v. State of Karnataka [AIR 1987
SC 1059] and U.O.I, v. Param Industries [(2016) 16 SCC 692] that, notifications
would come into force on their publication in the Official Gazette, i.e. in the
present case, with effect from the date and time when they were electronically
printed in the Gazette, which was at or after 10:47 p.m. on 28th August,
2017."
(emphasis supplied)
56 Thus, the High Court regarded the
time of publication as the relevant marker for determining the enforceability
of the notifications. The issue of determining the starting point for the
enforceability of a notification in the electronic gazette was considered by
the Andhra Pradesh High Court in Ruchi Soya Industries vs. Union of India.23
The petitioner entered into a contract with its foreign supplier on 18 January
2008 for the import of 9,500 Metric Tons of crude oil. The first consignment of
4000 metric tons was shipped by the supplier on 6 February 2018 from Dubai.
The petitioner filed two bills of entry
for 2000 metric tons of crude oil on 1 March 2018. They were assessed that day
and levied with 30% customs duty and 10% social welfare surcharge. On the same
date, a notification raised the basic customs duty from 30 to 44%. The
petitioner filed four bills of entry for the remaining 2000 tons on 2 March 2018
and argued that the revised rate was not applicable to it because the
notification was published in the electronic gazette only on 6 March 2018.
The High Court agreed with the
petitioner and held that the revised notification would come into force only after
it was digitally signed by the competent official and uploaded and published in
the official gazette. The relevant excerpt from page 41 of the High Court's
judgment is quoted below: "....The notification was ...published
electronically on 6.3.2018. In view of the decision taken by the Government of
India in terms of Section 8 of the...Information Technology Act, to avoid
physical printing of Gazette notification to publish the same exclusively by
electronic mode, so as to attribute knowledge to the public at large. The
notification was signed by Rakesh Sukul on 6.3.2018 at 19:15:13 + 05'30'. When
notification needs to be signed digitally and only when the notification was
uploaded and published in the Official Gazette, the same is made available for public."
57 The Madras High Court dealt with a
similar situation in Ruchi Soya Industries vs. Union of India24 and held that
the decision of the A.P. High Court noted above was applicable to the case
before it. As a result, it allowed the writ petition on the same terms and
directed the Respondent to refund the enhanced duty collected from the
petitioner, along with IGST. 58 With the change in the manner of publishing
gazette notifications from analog to digital, the precise time when the gazette
is published in the electronic mode assumes significance.
Notification 5/2019, which is akin to
the exercise of delegated legislative power, under the emergency power to
notify and revise tariff duty under Section 8A of the Customs Tariff Act, 1975,
cannot operate retrospectively, unless authorized by statute. In the era of the
electronic publication of gazette notifications and electronic filing of bills
of entry, the revised rate of import duty under the Notification 5/2019 applies
to bills of entry presented for home consumption after the notification was
uploaded in the e-Gazette at 20:46:58 hours on 16 February 2019.
59 The impugned High Court judgement
has relied on the decision of the Karnataka High Court in Param Industries Ltd.
vs. Union of India25, which was confirmed by the decision of this Court in
Union of India vs. Param Industries Limited26 ["Param Industries"] In
that case, the respondents were in the business of importing and exporting
edible oil. The respondents imported RBD Palmolein which was cleared after
payment of import duty of 85 per cent of its value. The import duty was paid
pursuant to a notification which was in existence as on that date. A major
quantity of the goods had been removed from the warehouse after the payment of
duty.
The importer was, however, informed
that by a notification dated 3 August 2001 (incidentally this was also the date
the bill of entry was filed and goods were cleared) the tariff value had been
raised to USD 372 per metric tonne and that the importer was liable to pay the
difference in the tariff which was paid on the basis of the earlier
notification. The respondent contested the demand on the ground that the
notification raising the import duty had not come into effect on 3 August 2001.
The Division Bench of the High Court
held that the notification was not published on 3 August 2001 and must have
been Gazetted only after the following weekend namely on 6 August 2001 or
thereafter; the Gazette issued containing notification was offered for sale
only starting from 6 August 2001; and that the mere publication of the
notification on the website and the issuance of a letter to the Assistant
Controller, Government of India (Press) was not sufficient for the notification
to be operational and enforceable on 3 August 2001.
This Court in appeal observed that
according to the High Court two conditions were mandatory for the notification
to be brought into force (i) Due publication in the official Gazette; and (ii)
Offering the notification for sale on the date of its issue by the Directorate
of Publicity and Public Relations of the Board, New Delhi. This Court noted
that, in their case, the second condition was not satisfied as the notification
was offered for sale only on 6 August 2001 as it was published in the late
evening hours of 3 August 2001 and the next two days were holidays.
60 The decision of this Court in Param
Industries was on the interpretation of Section 14(2) of the Customs Act.
However, prima facie, this decision appears to be contrary to the principles
previously elucidated by this Court in the context of the Customs Act.
In a two judge Bench decision of this
Court in Pankaj Jain Agencies vs. Union of India,27 ["Pankaj Jain"]
the Court considered the determination of the date when a notification dealing
with an exemption would come into force. The mode of publication for such
notifications is prescribed separately under Section 25 of the Customs Act. The
Court held: "17. In the present case indisputably the mode of publication prescribed
by Section 25(1) was complied with. The notification was published in the
Official Gazette on the 13-2- 1986. As to the effect of the publication in the
Official Gazette, this Court held [Srinivasan case[(1987) 1 SCC 658, 672 : AIR
1987 SC 1059, 1067] AIR at p. 1067 : SCC pp. 672-73, para 15]:
"Where the parent statute is
silent, but the subordinate legislation itself prescribes the manner of
publication, such a mode of publication may be sufficient, if reasonable. If
the subordinate legislation does not prescribe the mode of publication or if the
subordinate legislation prescribes a plainly unreasonable mode of publication,
it will take effect only when it is published through the customarily
recognized official channel, namely, the Official Gazette or some other
reasonable mode of publication."
18. We, therefore, see no substance in
the contention that notwithstanding the publication in the Official Gazette
there was yet a failure to make the law known and that, therefore, the
notification did not acquire the elements of operativeness and enforceability."
(emphasis supplied)
The principles recognized in Pankaj
Jain were re-iterated and affirmed by a three judge Bench of this Court in
Union of India vs. Ganesh Das Bhojraj28 which dealt with the enforceability of
a notification under Section 25, prior to its Amendment by Act 21 of 1998 which
inserted Section 25(4) and the requirement of 'offering for sale'. The Court
separately noted that the newly introduced requirement of 'offering of sale'
had prospective application.
However, in the factual scenario
concerning a notification governed by the pre-amended act, it upheld the
principle that any additional requirement of publication can only be introduced
by statute and the Court is bound by the applicable statutory scheme for
determining enforceability. It noted: "11. In our view, as noted above, in
Pankaj Jain Agencies case [(1994) 5 SCC 198] the Court directly dealt with a
similar contention and after relying upon the decision in the case of Mayer
Hans George [AIR 1965 SC 722 : (1965) 1 Cri LJ 641 : (1965) 1 SCR 123] rejected
the same. That decision is followed in I.T.C. Ltd. [(1996) 5 SCC 538] and other
matters. Hence, it is difficult to agree that the decision in Pankaj Jain
Agencies case [(1994) 5 SCC 198] was not helpful in deciding the question dealt
with by the Court.
Section 25 of the Customs Act empowers
the Central Government to exempt either absolutely or subject to such
conditions, from the whole or any part of the duty of customs leviable thereon
by a notification in the Official Gazette. The said notification can be
modified or cancelled. The method and mode provided for grant of exemption or
withdrawal of exemption is issuance of notification in the Official Gazette.
For bringing the notification into operation, the only requirement of the
section is its publication in the Official Gazette and no further publication
is contemplated.
Additional requirement is that under
Section 159 such notification is required to be laid before each House of
Parliament for a period of thirty days as prescribed therein. Hence, in our
view Mayer Hans George [AIR 1965 SC 722 : (1965) 1 Cri LJ 641 : (1965) 1 SCR
123] which is followed in Pankaj Jain Agencies case [(1994) 5 SCC 198]
represents the correct exposition of law and the notification under Section 25 of
the Customs Act would come into operation as soon as it is published in the
Gazette of India i.e. the date of publication of the Gazette. Apart from the
prescribed requirement under Section 25, the usual mode of bringing into
operation such notification followed since years in this country is its
publication in the Official Gazette and there is no reason to depart from the
same by laying down additional requirement."
(emphasis supplied)
61 Param Industries, in as much as it
imposed an additional requirement of 'offering for sale', outside of the
prescribed statutory scheme under S.14(2) of the Customs Act, 1962, appears to
be contrary to pre-existing principles. Having said this, we do not wish to
rule on the validity of Param Industries or its consequent impact on decisions
that have relied on it. In the present judgment it is not necessary to take
recourse to the line of reasoning in Param Industries.
The situation at hand, operates on a
landscape which is significantly altered by the regulatory regime in the
electronic age where, both - uploading of notifications in the e-gazette and
filing of bills of entry- are in the electronic form. As we have previously
noted, Notification 5/2019 was uploaded in the e-gazette at a specific time and
date and cannot apply to bills of entry which were presented on the customs
automated EDI system prior to it, attracting the legal fiction set out in
Regulation 4(2) of the 2018 Regulations. Therefore, Param Industries does not
have any bearing on the case at hand.
M Retrospectivity
62 Section 8A of the Customs Tariff Act
confers an emergency power upon the Central government to increase import
duties "in respect of any article included in the first schedule". By
the notification dated 16 February 2019, the Union Ministry of Finance in the
Department of Revenue introduced a distinct tariff item - 980 60 000 -
encompassing "all goods originating in or exported from the Islamic
Republic of Pakistan" for which a rate of duty of 200 per cent has been
prescribed.
The exercise of the power under Section
8A is contingent on the satisfaction of the Central government that (i) the
duty on any article in the first schedule should be increased; and (ii) that
circumstances exist which render it necessary to take immediate action. The Central
government in the exercise of this power may by a notification in the official
gazette direct an amendment of the schedule to be made "so as to provide
for an increase in the import duty leviable on such article to such extent as
it thinks necessary".
Section 8A does not contain language
indicative of a legislative intent to authorize the Central government to
relate back the exercise of the power to a period prior to its exercise. The
exercise of the power under Section 8A (2) is governed by the prescriptions
contained in sub-sections (3) and (4) of Section 7. The conferment of the power
has not been made retrospective either expressly or by necessary implication.
63 Section 8A enables the Central
government to increase the rate of duty on an article in the first schedule in
emergent situations. The notification dated 16 February 2019 adds a new entry
altogether. Such an exercise may well be regarded as relatable to the
provisions of Section 11A. Section 11A confers a power on the Central
Government to amend the First schedule in public interest. Section 8A on the
other hand contemplates an increase in duty on an article contained in the
First schedule.
Notification 5/2019 introduces a new
tariff entry to provide for a duty of 200% on all articles originating in or
exported from Pakistan. However, this aspect of the matter need not be explored
further for the reason that neither before the High Court, nor before this
Court, was the challenge to the vires of the notification pressed during the
course of the submissions. The legal position which needs emphasis is that the
entrustment of the power to issue a notification enhancing the rate of duty
under Section 8A is not accompanied by a statutory entrustment of authority to
the Central government to exercise it with retrospective effect. An enhancement
of the rate of duty pursuant to the exercise of power under Section 8A can only
be prospective.
64 Parliament and the state
legislatures are entrusted with the power to enact legislation under Articles
245 and 246 of the Constitution. Parliament and the state legislatures possess
the plenary power to enact legislation, with prospective and retrospective
effect, subject to due observance of constitutional requirements. A
notification issued by the government pursuant to the conferment of statutory
power is distinct from an act of the legislature. Administrative notifications,
even when they are issued in pursuance of an enabling statutory framework, are
subject to the statute.
Delegated legislation does not lose its
character even when it has the same force and effect as if it is contained in
the statute. This is a settled position of law. In a decision which was
rendered in 1961 by a Constitution Bench of this Court in Chief Inspector of
Mines vs. Lala Karam Chand Thapar29, the principle of law was formulated in the
following terms:
"20. The true position appears to
be that the rules and regulations do not lose their character as rules and
regulations, even though they are to be of the same effect as if contained in the
Act. They continue to be rules subordinate to the Act, and though for certain
purposes, including the purpose of construction, they are to be treated as if
contained in the Act, their true nature as subordinate rule is not
lost...." In
K I Shepard vs. Union of India30, a two
judge Bench of this Court held that the power to frame a scheme under Section
45 of the Banking Regulation Act 1949 was not legislative in character but an
administrative function. This Court observed: "9...But is the scheme-making
process legislative? Power has been conferred on the RBI in certain situations
to take steps for applying to the Central Government for an order of moratorium
and during the period of moratorium to propose either reconstruction or
amalgamation of the banking company.
A scheme for the purposes contemplated
has to be framed by RBI and placed before the Central Government for sanction.
Power has been vested in the Central Government in terms of what is ordinarily
known as a Henry VIII clause for making orders for removal of difficulties.
Section 45(11) requires that copies of the schemes as also such orders made by
the Central Government are to be placed before both Houses of Parliament. We do
not think this requirement makes the exercise in regard to schemes a
legislative process."
The above decision was distinguished in
New Bank of India Employees' Union vs. Union of India31 ["New Bank of
India"] where the court held that a scheme framed under Section 9 of the
Banking Companies (Acquisition and Transfer of Undertakings) Act 1980 stands on
a distinct footing of being a legislative and not an administrative function.
The court held that the question was not of much relevance in view of its
conclusions on the main issues presented for decision.
Yet, it considered the question and
laid emphasis on the authority entrusted to Parliament to consider, within 30
days, to agree/modify/arrive at any decision with regards to the scheme, only
thereafter was the scheme was to have effect. These requirements, qualitatively
distinguished from a requirement of mere 'laying' under Section 45 of the
Banking Regulation Act 1949, were pivotal in the court's view that a scheme
under the 1980 Act has a legislative character.
Mr Natraj sought to emphasize a similar
argument, by placing reliance on the provisions of sub-sections (3) and (4) of
Section 7 which are made applicable by reason of sub-section (2) of section 8A.
However, in the absence of a sine qua non for parliamentary sanction before the
notification is enforceable, the decision of New Bank of India provides little
anchor. For the purpose of the present decision the point which needs emphasis
is that in empowering the Central Government to exercise power under Section 8A
of the Customs Tariff Act, Parliament has not either expressly or by necessary
implication indicated that a notification once issued will have force and
effect anterior in time.
The provisions of sub-sections (3) and
(4) of Section 7 of the Customs Tariff Act bring to bear legislative oversight
and supervision over the power which is entrusted to the Central Government
under Section 8A. That however does not lead to the inference that a
notification under Section 8A has retrospective effect. Plainly, a notification
enhancing the rate of duty under Section 8A has prospective effect. A rule
framed by the delegate of the legislature does not have retrospective effect
unless the statutory provision under which it is framed allows retrospectivity
either by the use of specific words to that effect or by necessary implication.
In Hukum Chand vs. Union of India32, a three judge Bench of this Court held
that:
"8...The extent and amplitude of
the rule-making power would depend upon and be governed by the language of the
section. If a particular rule were not to fall within the ambit and purview of
the section, the Central Government in such an event would have no power to
make that rule. Likewise, if there was nothing in the language of Section 40 to
empower the Central Government either expressly or by necessary implication, to
make a rule retroactively, the Central Government would be acting in excess of
its power if it gave retrospective effect to any rule.
The underlying principle is that unlike
Sovereign Legislature which has power to enact laws with retrospective
operation, authority vested with the power of making subordinate legislation
has to act within the limits of its power and cannot transgress the same. The
initial difference between subordinate legislation and the statute laws lies in
the fact that a subordinate law-making body is bound by the terms of its
delegated or derived authority and that Court of law, as a general rule, will
not give effect to the rules, thus made, unless satisfied that all the
conditions precedent to the validity of the rules have been fulfilled."
(emphasis supplied)
65 The distinction between the plenary
power which is entrusted to Parliament and the state legislatures to enact
legislation with both prospective and retrospective effect, and the power
entrusted to a delegate of the legislature to frame subordinate legislation has
been maintained in a consistent line of precedent of this Court. In Regional Transport
Officer, Chittoor vs. Associated Transport Madras (P)33, Justice V.R. Krishna
Iyer speaking for a two judge Bench of this Court with his characteristic
eloquence observed:
"4. The legislature has no doubt a
plenary power in the matter of enactment of statutes and can itself make
retrospective laws subject, of course, to the constitutional limitations. But
it is trite law that a delegate cannot exercise the same power unless there is
special conferment thereof to be spelled out from the express words of the
delegation or by compelling implication. In the present case the power under
Section 4(1) does not indicate either alternative......"
The Court held that the fact that the
rules had been framed in pursuance of a resolution passed by the legislature or
that they have to be placed on the table of the legislative body would not lead
to an inference that the legislature had authorized the framing of subordinate
legislation with retrospective effect:
"4...The mere fact that the rules
framed had to be placed on the table of the legislature was not enough, in the
absence of a wider power in the section, to enable the State Government to make
retrospective rules. The whole purpose of laying on the table of the
legislature the rules framed by the State Government is different and the
effect of any one of the three alternative modes of so placing the rules has
been explained by this Court in Hukam Chand v. Union of India [(1972) 2 SCC
601, 606 : (1973) 1 SCR 896, 902]."
This precisely is the principle which
applies in construing whether the power which is conferred by Section 8A of the
Customs Tariff Act is retrospective. The provisions of sub-sections (3) and (4)
of Section 7, which are made applicable by sub-section (2) of Section 8A, are
to ensure Parliamentary oversight. But that does not enable the Central
Government to exercise the power under section 8A with retrospective effect.
In Federation of Indian Minerals
Industries vs. Union of India34, a three judge Bench of this Court formulated
the principles on the subject. Justice Madan B Lokur observed that the power to
frame subordinate legislation is not retrospective unless it is authorized
expressly or by necessary implication by the parent statute. The Court
observed:
"26...The relevant principles are:
(i) The Central Government or the State
Government (or any other authority) cannot make a subordinate legislation
having retrospective effect unless the parent statute, expressly or by
necessary implication, authorises it to do so. [Hukam Chand v. Union of India
[Hukam Chand v. Union of India, (1972) 2 SCC 601] and Mahabir Vegetable Oils
(P) Ltd. v. State of Haryana [Mahabir Vegetable Oils (P) Ltd. v. State of
Haryana, (2006) 3 SCC 620] ].
(ii) Delegated legislation is
ordinarily prospective in nature and a right or a liability created for the
first time cannot be given retrospective effect. (Panchi Devi v. State of
Rajasthan [Panchi Devi v. State of Rajasthan, (2009) 2 SCC 589: (2009) 1 SCC
(L&S) 408] )
(iii) As regards a subordinate
legislation concerning a fiscal statute, it would not be proper to hold that in
the absence of an express provision a delegated authority can impose a tax or a
fee. There is no scope or any room for intendment in respect of a compulsory
exaction from a citizen. [Ahmedabad Urban Dev. Authority v. Sharadkumar
Jayantikumar Pasawalla [Ahmedabad Urban Dev. Authority v. Sharadkumar
Jayantikumar Pasawalla, (1992) 3 SCC 285] and State of Rajasthan v. Basant
Agrotech (India) Ltd. [State of Rajasthan v. Basant Agrotech (India) Ltd.,
(2013) 15 SCC 1]" PART N The judgment of Justice Dipak Misra (as he then
was) speaking for a two judge Bench decision in State of Rajasthan vs. Basant
Agrotech (India) Ltd35 adopts the same position.
N Summation
66 The imposition of a tax encompasses
three stages. The locus classicus on the subject is embodied in the dictum of
Lord Dunedin in Whitney vs. Commissioners of Inland Revenue36 which has been
consistently applied in the decisions of this court. There is, first, the
declaration of liability which determines "what persons in respect of what
property are liable".
The second is the stage of assessment.
Liability, it is well settled, does not depend on assessment since exhypothesi,
that has already been fixed. Assessment particularizes the exact sum which a
person is liable to pay. Third (and the last) are the methods of recovery if a
person who is taxed does not voluntarily pay. (See in this context the
decisions of the Federal Court in Chatturam v. CIT, Bihar37 and of this Court
in A V Fernandez vs. State of Kerala38 and Deputy CTO vs. Sha Sukraj
Peerajee39.
67 In the present case the twin
conditions of Section 15 stood determined prior to the issuance of Notification
5/2019 on 16 February 2019 at 20:46:58 hours. The rate of duty was determined
by the presentation of the bills of entry for home consumption in the
electronic form under Section 46. Self-assessment was on the basis of rate of
duty which was in force on the date and at the time of presentation of the
bills of entry for home consumption.
This could not have been altered in the
purported exercise of the power of re-assessment under Section 17 or at the
time of the clearance of the goods for home consumption under Section 47. The
rate of duty which was applicable was crystallized at the time and on the date
of the presentation of the bills of entry in terms of the provisions of Section
15 read with Regulation 4(2) of the Regulations of 2018. The power of
reassessment under Section 17(4) could not have been exercised since this is
not a case where there was an incorrect self-assessment of duty. The duty was
correctly assessed at the time of self-assessment in terms of the duty which
was in force on that date and at the time. The subsequent publication of the
notification bearing 5/2019 did not furnish a valid basis for re-assessment.
68 For the above reasons, we have come
to the conclusion that there is no merit in the appeals. The appeals shall
stand dismissed. There shall be no order as to costs. 69 Pending
application(s), if any, stands disposed of.
.................................J. [Dr
Dhananjaya Y Chandrachud]
.................................J.
[Indu Malhotra]
New Delhi;
September 23, 2020.
Union of India and Ors. Vs. M/s. G. S.
Chatha Rice Mills and Anr.
[Civil Appeal No. of 2020 @ S.L.P.
(Civil) No. 3860 of 2020]
K.M. Joseph, J.
1. Does a notification under Section 8A
of the Customs Tariff Act, 1975 increasing the import duty published late in
the evening of 16th Feb 2019, date back to the midnight of the previous day?
Does a day include its fractions? While I agree with my esteemed and learned
brother in his erudite judgment that the appeals be dismissed, having regard to
the questions involved, I have written the following separate opinion:
2. Following the terror attack at
Pulwama on 14.02.2019, the Government of India published a Notification on
16.02.2019 (hereinafter referred to as 'the Notification') purporting to be in
exercise of powers under Section 8A(1) of the Customs Tariff Act, 1975
(hereinafter referred to as 'the Tariff Act', for short). By the same, the
First Schedule to the Tariff Act, 1975 came to be amended in the following
manner: "In the First Schedule to the Customs Tariff Act, in Section XXI,
in Chapter 98, after tariff item 9805 90 00 and the entries relating thereto,
the following tariff item and entries shall be inserted, namely:-
|
(1) |
(2) |
(3) |
(4) |
(5 ) |
|
9806 00
00 |
"All
goods originatin g in or exported from the Islamic Republic of Pakistan. |
- |
200% |
-"
. |
3. It came to be published in the
Gazette at 20:46:58 hrs. on 16.2.2019.
4. On the same day, i.e., on
16.02.2019, the respondents in the Appeals, who were the Writ Petitioners
before the High Court, filed Bills of Entry under the Customs Act, 1962 in
respect of goods imported from Pakistan. In fact, there was an agreement between
India and Pakistan, both being SAARC Countries, under which, duty was to be
levied on the imports from Pakistan at concessional rates, in those cases where
imports were exigible to any duty at all.
The goods which were subject matter of
import, had also arrived in the Customs Station and as noticed, during the
course of the working hours on 16.02.2019 and well before the time of the
Notification hereinbefore adverted to, the Bills of Entry came to be presented.
The duty came to be selfassessed by the respondents. It is, thereafter, that
taking inspiration from the hefty increase in duty effected under the
Notification the Writ Petitioners came to be faced with reassessment
proceedings.
It is accordingly that they approached
the High Court and filed Writ Petitions wherein the prayer may be noticed in
Writ Petition No. 18460 of 2019 as follows:
"a) Writ in the nature of
certiorari/mandamus or any other appropriate writ for quashing of the
assessment order passed in the bill of entry no. 2083178 dated 16.02.2019
(Annexure-P5) being illegal arbitrary, against the principles of natural
justice and in violation to the provisions of article 14 & 19 of the
Constitution of India and against the provisions of Section 128 & 129 of
the Customs Act, 1962;
b) Writ in the nature of
certiorari/mandamus quashing the notification no. 05/2019-cus dated 16.02.2019
(Annexure-P7) being prospective and in contravention to the Notification no.
50/2017-cus. dated 30.06.2017 granting benefit of customs duty over and above
NIL% as well as section 4 & 11 of the Customs Tariff act, 1975,
c) Writ in the nature of certiorari/
mandamus directing the Respondent No.3 to issue detention memo in terms of
Regulation 6(1)(1) of the Customs Act, 1962 and further directing the
Respondent No. 4 to release the goods without demanding any ground rent. d)
Writ in the nature of certiorari/ mandamus restraining the respondent no.4 for
conducting auction of the goods.
5. It is these Writ Petitions which
have been allowed by the High Court.
6. The High Court has found that in the
Scheme of the Customs Act read with the Tariff Act, the rate of duty is to be
determined with reference to two definite indicia, viz., the date of
presentation of the Bills of Entry and the movement of goods across the border
and availability of the same within the Customs Station. Present these two
aspects, the law enables the importer to demand that payment of the duty be
with reference to the date of presentation of the Bills of Entry.
The High Court did not consider the
challenge to the Notification on the basis of the stand taken by the
respondents and confined its reasoning to the aforesaid aspect which I have
indicated. The Court took the view that the Notification which came to be
published late in the evening on 16.02.2019 could not alter the destiny of the
Writ Petitioners cases as regards the rate of duty.
7. We have heard Shri K.M. Nataraj,
learned Additional Solicitor General, appearing on behalf of the appellants,
Shri P.S. Narsimha, learned Senior Counsel, appearing on behalf of the Writ
Petitioners.
CONTENTIONS OF THE APPELLANTS
8. Shri K.M. Nataraj, learned
Additional Solicitor General would contend that the Notification issued under
Section 8A of the Tariff Act following the extraordinary circumstances
surrounding the Pulwama terror attack, the rate of duty came to be increased by
Notification dated 16.02.2019. The Notification would have effect in respect of
all the Bills of Entry which came to be filed/presented on that day. To
buttress his submissions, he also sought to draw support from Section 5(3) of
the General Clauses Act, 1897. He would point out that the Notification would,
therefore, have effect from the expiry of the previous day.
That is, it is his contention that
though it is issued late in the evening on 16.02.2019, since the previous day,
viz., 15.02.2019 expired at midnight, the Notification must be treated as born
and alive from the first tick of time past the midnight of 15.02.2019. He also
drew our attention to the Scheme of the Customs Act, 1962 otherwise. With the
assistance of Sections 12, 15, 46 and 47, he sought to contend that the High
Court fell into error in not recognizing that the preferring of the Bills of
the Entry by the respondents, could not detract from the applicability of the
increased rate of duty under the Notification.
9. The principal argument of the Union
of India is that these cases must be decided based on the provision of Section
15 of the Customs Act. Expatiating the argument of the Union of India Shri K.M.
Nataraj, learned counsel for the Union of Indiaappellant would contend that there
is no challenge to the validity of Section 15 of the Customs Act.
The said provision must be taken as it
is and applied. The result would then be inevitable that the notification in
question which no doubt was published late in the evening on 16.02.2019, fixed
the increased rate of duty on all goods imported from Pakistan and it was
undoubtedly to have effect from that day onwards. In other words, since Section
15 of the Act contemplates that the rate of duty to be the rate in force during
the day, and as the Notification was published on 16.02.2019, the day
16.02.2019 was not to be excluded.
It was, in other words, to have
operation throughout the day, 16.02.2019. It is contended that there cannot be
two rates of duty which are at loggerheads with each other on a single day. The
time of the day at which the notification was actually published, would pale
into insignificance in answering the question as to whether the said
notification which is of the kind involved in this case was to hold sway during
the course of the whole day. He urges us to notice that Section 15 of the
Customs Act does not allude to the time of the day but only refers to the day.
He would further contend that by virtue
of the notification, the rate in force within the meaning of Section 15 from
the mid night of 15.02.2019 was the rate fixed under the notification in
respect of the goods governed by the same. Any other interpretation would
involve rewriting of Section 15 and the amendment of the provision which is
plainly impermissible. He also no doubt points that the authorities have
rightfully embarked upon reassessment under the Act upon noticing that the
goods were assessed with duty at a rate which was not in force, namely, the
rates which stood supplanted by the notification issued under Section 8A on
16.02.2019.
In this regard he drew inspiration from
the provisions of Section 17(4) of the Act. In particular, he pointed out that
the expression "otherwise" is capable of encompassing the situation
existing in the facts of these cases. He would also point out that the Court
may notice that an order has not been passed under Section 47 of the Act
permitting clearance of the goods for home consumption. As soon as the factum
of the notification having bearing came to light, proceedings for re-assessment
were resorted to and no case was made out for the High Court to interfere with
the action of the authorities in purporting to apply the correct rate of duty
within the meaning of Section 15 of the Act.
10. Per contra, Shri P.S. Narsimha,
learned Senior Counsel for the respondent-Writ Petitioners, countered the
appellants submissions by pointing out as follows: Under Section 12 of the
Customs Act, imports attract customs duty as is fixed under the Tariff Act.
Section 15 of the Customs Act, however, determines the date with reference to
which the rate of duty as provided in the Tariff Act is to apply. Still further
and crucially, this exercise is to be accomplished with reference to the date
of presentation of the Bills of Entry as provided in Section 46 of the Customs
Act.
He would, in fact, submit that under
the Customs Act, a perusal of Sections 15 and 16, would show that there are
four different situations contemplated. Under Section 15, which deals with rate
of duty payable on imports, in a case where the Bills of Entry is presented for
home consumption under Section 46, the rate of duty is to apply with reference
to be date of presentation of the Bills of Entry. In the case where the goods
are cleared for being warehoused under Section 68, again the duty is to be paid
at the rate with reference to the presentation of the Bills of Entry for home
consumption under Section 68. The two other circumstances pertain to exports.
In the case of goods entered for export
from India, the rate of duty is fixed with reference to the date on which the
proper officer makes an order permitting clearance and loading of goods for
exportation under Section 51. In any other case, which is the fourth Category,
the duty is fixed with reference to the date of payment of duty. He would draw
our attention to the Electronic Filing of Bills of Entry Regulations, 2018. In
particular, he would draw our attention to Regulation 4 of the said
Regulations.
He would point out that Regulation 4,
of the said Regulations, makes it clear that once the Bills of Entry is filed
electronically and the event takes place, which under law determines the point
of time with reference to which the rate of duty is to be imposed, the position
is unalterable. He would submit that neither is the rate of duty dependent on
the date of payment of duty nor is it based on Entry Inward. An order is
contemplated under Section 47 of the Customs Act for clearing the goods, which
contemplates payment of duty as a condition precedent for such an order.
This is irrelevant. He would submit
that in the present-day world of international trade, innumerable transactions
take place at different points of time during the course of the day. The Law
Giver has not contemplated the reopening of a transaction, which in the eye of
law, is a closed chapter. He would point out that the court must bear in mind that
it is dealing with a law which visits a person with a tax.
The point of time is transparent and
declared through the Scheme of the Customs Act read with the Tariff Act. It
would be wholly impermissible to inflict imports which have been visited with
the duty in accordance with the law, with the rates of duty, which was not
prevalent at the relevant time. The Notification could have only prospective
operation. In fact, Shri Kapoor, the learned Counsel, who appeared in the High
Court for the Writ Petitioners, pointed out that after the Notification was
issued late in the evening, the system did not accept further electronic
declaration of Bills of Entry as it was contemplated that such Bills of Entry
would attract the higher duty.
11. Mr. P.S. Narsimha, learned Senior
Counsel, points out that Customs Act contemplates self-assessment. He drew our
attention to Section 17 in this regard. It is the further case of the writ
petitioners that based on the self-assessment, the system generated details
which approved of the self-assessment. After the matter stood concluded in
terms of the Act, the transaction could not be revisited on the strength of the
Notification issued under Section 8A, runs the argument. It is pointed out that
the Notification, issued under Section 8A, may be akin to delegated
legislation.
Even proceeding on the basis that it is
delegated legislation, it can have only prospective operation. Section 8A of
the Tariff Act, under which the Notification was issued, did not empower the
author of the Notification to issue the Notification with retrospective effect.
In answer to a query by the Court as to what would have been the effect of the
notification which was issued at 10.00a.m. at 16.02.2019, instead of 20:46:58
hrs., at which time, it was in fact issued and if the Bill of Entry is
presented after 10.00 a.m., Mr. P.S. Narsimha pointed out that it would be the
Notification which was issued on 10.00 a.m., which would be the Notification in
force, and therefore, the increased duty may have been payable.
Mr. P.S. Narsimha has also, no doubt, a
contention that the Notification issued under Section 8A is illegal for the
reason that what is contemplated under Section 8A is the increase of the rate
of duty in respect of items which are already included in the first schedule of
the Tariff Act whereas a perusal of the Notification would show that a new
entry has been made and the rate of duty has been provided therein, viz., the
rate of duty of all goods emanating from Islamic Republic of Pakistan was
increased to 200 per cent. But this line of argument was not pursued.
12. Both sides referred us exhaustively
to case law.
ANALYSIS
13. The Customs Act is a consolidating
Act. It is intended, inter alia, to deal with the menace of smuggling. It
contains various sanctions. It also provides for the levy of Customs duty on
import and export. It is a law which provides revenue to the State. It is also
an important tool in the hands of the nation to arrange its economic affairs to
make it best suited to the welfare of the people otherwise. Indisputably, the
charging Section is Section 12. The taxable event is import into or export of
goods from India. Ordinarily, the Tariff Act provides the rates at which duty
is imposed on imports and exports.
There is no dispute that India and
Pakistan being S.A.A.R.C. Countries they were parties to an agreement under
which the trade between the countries was subjected only to duty on
concessional rates. It is while so, following the unfortunate incident of
Pulwama that the Government of India in exercise of its powers under Section 8A
of the Tariff Act decided to increase the rate of import duty on all goods in
the manner done. The Notification was issued on 16.02.2019. It was published at
about 20:46:58 hrs. In the meantime, during the course of the day, the writ
petitioners before us who imported goods had filed Bills of Entry
electronically.
The goods were present in the Customs
Station. To be more correct, the Bills were presented and self-assessment was
undertaken. It is thereafter that late in the evening as a bolt from the blue,
as it were, the notification came to be issued under Section 8A of the Tariff
Act. The questions which arise for the consideration of this Court is
articulated as follows:
1. What is the nature of the Notification?
Is it a species of subordinate legislation?
2. If it is subordinate legislation,
when did it commence? What is the scheme of the Customs Act as regards the rate
of duty on imports and the power of assessment? Was the Notification in force
on 16.02.2019 so that it would cover all the transactions countenanced by the
Bills of Entry which were duly presented during the office hours on 16.02.2019?
What constitutes a day under Section 15 of the Customs Act?
3. Whether the Notification is covered
by Section 5(3) of the General Clauses Act?
4. Whether the appellants were
justified in resorting to re-assessment in these cases?
THE TARIFF ACT AND WHETHER THE
NOTIFICATION IS A FORM OF DELEGATED LEGISLATION
14. It is apposite that the working of
the Tariff Act is unravelled. The rates of duty under the Customs Act are to be
provided as per the entries in the First and Second Schedule. Section 2 of the
Tariff Act, reads as follows:
"2. Duties specified in the
Schedules to be levied. - The rates at which duties of customs shall be levied
under the Customs Act, 1962 (52 of 1962), are specified in the First and Second
Schedules."
15. In other words, the rate of duty
must be one which is provided by Parliament. It may require an amendment to the
Tariff Act to increase or decrease the rate of duty under Section 2. Section
11A contemplates power with the Central Government to amend the First Schedule.
It cannot be, in the region of doubt, that the exercise of power under Section
11A would amount to exercise of delegated legislation. Section 11A(2)
stipulates the procedure to be adopted after the Notification is issued. It has
to be placed before each House of Parliament and the further procedures are as
provided therein, which includes the power to modify the Notification.
The proviso, however, makes it clear
that the exercise of power under Section 11A, to amend the First Schedule, will
not involve or amount to an increase in the rates which are specified in the
First Schedule in regard to duties of customs leviable under the Customs Act.
In other words, barring the rate of customs duty, the contents of the First
Schedule can be amended by the Central Government under Section 11A.
Resultantly, Section 11A does not confer upon the Central Government, the power
to increase the rate of duty under the Customs Act.
The rate of duty, in other words,
ordinarily falls within the province of Parliament, and it is Parliament alone,
which can increase or decrease the rate of duty. However, an exception has been
carved out under Section 8A to change the rate of duty under the Schedule to
the Tariff Act. It is an emergency power vested with the Central Government.
The emergency power vested with the Central Government is to change the import
duty and the change is limited to an increase in the rate of import duty.
The condition requisite is, no doubt,
that circumstances exist which render it necessary to take immediate action for
providing for an increase in the import duty. Section 8A, in fact, does not
contemplate the power to amend the First Schedule. The power under Section 8A
is confined to any article which is already included in the First Schedule.
Undoubtedly, it is the same Authority, viz., the Central Government, which
stands clothed with the power to amend the First Schedule under Section 11A.
The words "circumstances"
exists which render it necessary to take immediate action in Section 8A makes
it clear that the power to increase the rate of import duty is ordinarily a
power to be exercised by the Parliament by a process of amending the First
Schedule to the Tariff Act. It is only in emergent circumstances where the
delegate of the Legislature, viz. the Central Government, considers it
necessary to take immediate action that is the process of amending the Act or
rather the Schedule to the Act by the Parliament, would take time, the same is
sought to be obviated by taking action under Section 8A. Undoubtedly, the
provisions of Sections 7(3) and 7(4) will apply in making of the Notification.
16. On a perusal of the provisions, as
noted, it is clear that a Notification issued under Section 8A, increasing the
import duty, is a species of delegated legislation. It must be remembered that
Article 265 of the Constitution of India declares that no tax shall be levied
except by the authority of Law. An increase in the rate of duty cannot
obviously be affected by an Executive Order.
That is not to say that when the
Executive is empowered to increase the rate of duty by way of delegated
legislation, it would not fulfill the requirement of Article 265 and there can
be no hesitation in holding that it is law within the meaning of Article 13 of
the Constitution of India and it is a species of delegated legislation. [See in
this regard AIR 1961 SC 21 para 11]
THE SCHEME OF THE CUSTOMS ACT QUA RATE
OF DUTY ON IMPORTS AND ASSESSMENT TO DUTY
17. Section 12 is the charging Section.
It reads as follows:
"12. Dutiable goods.- (1) Except
as otherwise provided in this Act, or any other law for the time being in force,
duties of customs shall be levied at such rates as may be specified under the
Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in
force, on goods imported into, or exported from, India. (2) The provisions of
sub-section (1) shall apply in respect of all goods belonging to Government as
they apply in respect of goods not belonging to Government."
18. Section 15 deals with the date
relevant to fix the rate of duty. It reads as follows: "15. Date for
determination of rate of duty and tariff valuation of imported goods.-
(1) The rate of duty and tariff
valuation, if any, applicable to any imported goods, shall be the rate and
valuation in force,-
(a) in the case of goods entered for
home consumption under section 46, on the date on which a bill of entry in
respect of such goods is presented under that section;
(b) in the case of goods cleared from a
warehouse under section 68, on the date on which a bill of entry for home
consumption in respect of such goods is presented under that section;
(c) in the case of any other goods, on
the date of payment of duty: Provided that if a bill of entry has been
presented before the date of entry inwards of the vessel or the arrival of the
aircraft or the vehicle by which the goods are imported, the bill of entry
shall be deemed to have been presented on the date of such entry inwards or the
arrival, as the case may be.
(2) The provisions of this section
shall not apply to baggage and goods imported by post."
19. In the matter of imports, the rate
of duty, which is the sole area of controversy, is to be determined on the
basis of the rate of duty which is in force on the day of the presentation of
the Bill of Entry. It will be further noticed that an importer may, when the
goods are physically present within the Customs Station in question, file the
Bill of Entry for home consumption. Section 46(1) also contemplates the
presentation of the Bill of Entry for the goods being warehoused. This
ordinarily would occur when the importer may have difficulty in paying the duty
on the goods.
He may also warehouse the goods when he
has not yet found a buyer for his goods or there are any other obstacles in
clearing the goods. Cases of goods imported for the purpose of being taken out
of the country by way of transshipment or goods intended for transit, are not
covered by Section 46 (1). The Bill of Entry under sub-Section (1) is to be
presented before the expiry of the day following the day (excluding holidays)
on which the aircraft, vessel or vehicle carrying the goods arrives at a
Customs Station, at which the goods are to be cleared, either for home
consumption or warehousing [See Section 46(3)].
The Second Proviso to Section 46(3)
provides that if the Bill of Entry is not presented within the time specified
and there are no sufficient reasons for such delay, the importer is to pay
charges for late presentation. The importer is also to make a declaration
regarding the truth of the contents of the Bill of Entry, and in support of the
same, he is to produce the invoice and other documents, as may be prescribed.
[See Section 46 (4)]
20. The next procedure contemplated
under the Customs Act in regard to an importer entering any imported goods
under Section 46 for home consumption is for the importer to carry out
self-assessment except in a situation covered by Section 85 [See Section
17(1)]. The proper Officer is to verify the entries in the Bill of Entry
entered under Section 46, inter alia, and the self-assessment of the goods
carried out by the importer.
He is clothed with the power to examine
or test any imported goods, inter alia, for the purpose of such verification.
The importer is to furnish any document for verification, as may be necessary
towards the carrying out of the verification [See Section 17(3)]. It is thereafter
that Section 17(4) empowers the Officer who carries out the verification to
re-assess the duty leviable on such goods.
The perusal of Section 17(4) would
reveal that such re-assessment can be done, when, on verification, examination
or testing of the goods, the officer finds that the self-assessment is not done
correctly. Section 17(4) also employs the expression "otherwise"
after the words "verification, examination or testing of the goods".
It is argued by the learned Additional
Solicitor General that the word "otherwise" is attracted in the facts
of this case as it is found that the issuance of the Notification on 16.02.2019
albeit in the late evening determined the rate of duty in respect of all Bills
of Entry which may have been presented during the course of the day and
re-assessment was legally permissible as it fell within the wide embrace of the
word "otherwise".
This question will be answered after
examining, considering and answering the question as to when the Notification
commenced. It may also be noticed that Section 18(1)(a), which provides that
notwithstanding anything contained in the Act but without prejudice to Section
46, that the Officer may carry out provisional assessment. Under Section
18(1)(a) such provisional assessment is permitted when the importer, inter
alia, is unable to make the self-assessment under Section 17(1), and what is
more, makes a request in writing to the proper Officer for provisional
assessment.
21. There are three other circumstances
enumerated in clause (b), (c) and (d) of Section 18(1) which entitle the
Officer to pass an Order of provisional assessment. In such a case, it is open
to the Officer to carry out the final assessment. So also, it is open to the
Officer to carry out re-assessment.
22. What is the time at which the
importer who presents a Bill of Entry under Section 46 for home consumption is
to effect payment of the import duty, when he carries out self-assessment? This
question is answered in Section 47(2)(a) which provides that the importer is to
pay the import duty on the very day of presentation of the Bill of Entry when
the importer carries out self-assessment as is contemplated under Section 17(1)
of the Act.
23. Section 47(1) contemplates that
where the Officer is satisfied about the goods entered for home consumption,
being not prohibited goods, and the importer has paid the import duty, if any,
assessed thereon, and other charges, under the Act, he is to pass an Order
permitting clearing of goods for home consumption. It is again to be noted that
under Section 47(2)(b), the importer is to pay the duty within one day from the
date on which the Bill of Entry is returned to him when there is assessment,
re-assessment or provisional assessment. Section 47(1)(c) also contemplates
permitting the importer to make deferred payment which is permitted under the
Second Proviso to Section 47(1).
24. What is the effect of non-payment
of the duty within the time specified in Section 47(2)? The answer to this also
is contained in Section 47(2) itself as the law mandates that the importer
shall pay interest on the duty not paid or short paid till the date of its
payment at the rate as provided therein. It is to be noticed that Section 47 is
related to goods entered for home consumption. No doubt without payment, an
order for clearance of goods would not be passed.
25. Section 28 of the Customs Act
provides for recovery of duties not levied, not paid, short levied, short paid
or erroneously refunded. Similar provisions are contained in the Central Excise
Act as well. It is also noteworthy that Section 2(25) defines the word
"imported goods" as meaning the goods brought into India from the
place outside India but it does not include the goods which have been cleared
for home consumption.
26. A perusal of Section 15(1)(a) makes
it clear that as far as goods entered for home consumption under Section 46,
the rate of duty is to be the rate of duty in force on the date on which the
Bill of Entry in respect of such goods is presented under Section 46. It is not
the date on which the goods are ordered to be cleared under Section 47. In
fact, the Scheme of the Act, in regard to goods entered for home consumption,
is that the importer is to present the Bill of Entry, as contemplated under
Section 46, he is to make self- assessment under Section 17(1), he is to make
the payment of the duty on the day on which he presents the Bill of Entry under
Section 47(2)(a).
Should he fail to make the payment on
the same day in the case of self- assessment, he becomes liable to pay interest
as provided till the date of payment. What is crucial is, however, that only
that date is relevant on which he presents the Bill of Entry for home
consumption in the form and in the manner, which is prescribed. The word
"prescribed" has been defined in Section 2(32) to mean prescribed by
Regulations made under the Act. Regulations have been made in regard to
presentation of Bill of Entry. Section 46(1) would reveal that the word
"electronically" came to be inserted by Act 8 of 2011 w.e.f. 08.04.2011.
Immediately following the words "electronically, the words "at the
customs automated system", have been inserted by the Finance Act, 2018
w.e.f. 01.04.2018.
The words "in such form and
manner, as may be prescribed" came to substitute the words "in the
prescribed form", by the Finance Act, 2018. No doubt, the First Proviso to
Section 46(1) empowers the Principal Commissioner of Customs or the
Commissioner of Customs to allow the Bill of Entry to be presented in any other
manner, where it is not feasible to make the entry electronically.
27. The Regulations holding the field
providing for the form and manner in which the Bill of Entry is to be presented
for home consumption under Section 46(1) of the Customs Act are called the Bill
of Entry (Electronic Integrated Declaration and paperless Processing)
Regulations, 2018 (hereinafter referred to as 'the 2018 Regulations", for
short). Regulation 4(2), which is the relevant Regulation, reads as follows:
"4(2) The bill of entry shall be
deemed to have been filed and self-assessment completed when after entry of the
electronic integrated declaration on the customs automated system or by way of
data entry through the service centre, a bill of entry number is generated by
the Indian Customs Electronic Data Interchange System for the said declaration
and the selfassessed copy of the Bill of Entry may be electronically
transmitted to the authorised person or printed out at the service
centre."
28. A perusal of the aforesaid
Regulation makes it clear that there is not only a deemed presentation of the
Bill of Entry which the law calls into existence, as provided therein but also
completion of selfassessment. This deemed presentation and completed
self-assessment takes place when the bill of entry number is generated. Once
there is a deemed presentation of the Bill of Entry, then, under Section
15(1)(a), the rate of duty, which is in force on such deemed date of
presentation, would be the rate which is applicable.
This is, no doubt, subject to the
further requirement that the goods are physically present in the Customs
Station. This is for the reason that under the First Proviso to Section 46(3),
an importer can present a Bill of Entry in anticipation of the arrival of the
goods provided that the presentation of such Bill of Entry is limited to a
period not exceeding thirty days prior to the expected arrival.
However, in case, where the Bill of
Entry is presented under the First Proviso to Section 46(3), the rate of duty
will be determined with reference to the act of presentation of the Bill of
Entry, but such presentation of the Bill of Entry is by a deeming fiction made
only from the date of the entry inwards or of the arrival, as the case may be of
the goods.
29. In the facts of these cases, there
is no dispute that the imported goods were very much in the Customs Station and
the Bills of Entry were presented under Section 46(1) on 16.2.2019. It is clear
that the rate of duty, for the purpose of the cases before the Court, is to be
determined with reference to the presentation of the Bills of Entry. The law
does not take into consideration even the time of payment of the duty which is
self-assessed by the importer.
This is noted for the reason that the
importer, who presents a Bill of Entry under Section 46 and who carries out
self-assessment, is duty-bound to pay such duty on the very same date. The
consequence of failure is only the liability to pay interest under Section 47
besides disabling him from clearing the goods. It does not postpone the point
of time at which the rate of duty is to be determined.
30. Having dwelt upon the Scheme of the
Act in regard to goods which are imported into India and which have been
entered under a Bill of India for home consumption, the time is now ripe for
ascertaining the impact of the Notification which came to be issued late in the
evening on 16.02.2019. The nature of the Notification, which is admittedly
issued under Section 8A of the Tariff Act, has been explained earlier. It is a
species of delegated legislation.
As far as law made by Parliament or the
State Legislatures, which are sovereign bodies in their own right, subject, no
doubt, to their position, under the Constitution, as expounded by this Court,
the law comes into force immediately after the assent is given by the President
or the Governor, respectively. A law made by Parliament has effect without any
further act on the part of the Executive. This is, no doubt, subject to the
intention expressed otherwise in the law so made as to any other date from
which it is to have operation. It may also be a case of a conditional
legislation where the law is to be brought into force by the Executive.
31. No doubt, there is a distinction
between conditional legislation and delegated legislation (See in this regard,
judgment of this court in I.T.C. Bhadrachalam Paperboards and another v. Mandal
Revenue Officer and other s40, where the earlier case law has been exhaustively
dealt with).
32. A Notification, which is made by
the Executive, must indeed be made known. Ordinarily this is made known by
being published in the Gazette. In this regard, it is profitable to refer to
what this Court laid down in the decision reported in B.K. Srinivasan v. State
of Karnatak a41:
"15. ... It is, therefore,
necessary that subordinate legislation, in order to take effect, must be
published or promulgated in some suitable manner, whether such publication or
promulgation is prescribed by the parent statute or not. It will then take effect
from the date of such publication or promulgation. Where the parent statute
prescribes the mode of publication or promulgation that mode must be followed.
Where the parent statute is silent, but
the subordinate legislation itself prescribes the manner of publication, such a
mode of publication may be sufficient, if reasonable. If the subordinate
legislation does not prescribe the mode of publication or if the subordinate
legislation prescribes a plainly unreasonable mode of publication, it will take
effect only when it is published through the customarily recognised official
channel, namely, the Official Gazette or some other reasonable mode of
publication. There may be subordinate legislation which is concerned with a few
individuals or is confined to small local areas. In such cases publication or
promulgation by other means may be sufficient [Narayana Reddy v. State of A.P.,
(1969) 1 Andh WR 77]."
33. This view came to be endorsed in a
case under the Customs Act, which is reported in M/s. Pankaj Jain Agencies v.
Union of India and others 42. Therefore, it is only with the publication
effected at 20:46:58 hrs. on 16.02.2019, the Notification issued under Section
8A, increasing the rate of import duty, came into force.
34. While on publication required in law,
to make a Notification effective, the decision of this Court, rendered under
the Central Excise Act in Collector of Central Excise v. New Tobacco Company
and others 43, is noticed.
The question, which was considered, was
whether a Notification under the Central Excise Act became effective from the
date on which it was printed in the Government Gazette or from the date it was
made available to the public. This Court, elaborately referred to the judgment
of the Madras High Court in Asia Tobacco Company Limited v. Union of India and
other s44. Therein, the High Court, inter alia, held as follows:
"8. ...... "The mere printing
of the official Gazette containing the relevant notification and without making
the same available for circulation and putting it on sale to the public will
not amount to the notification within the meaning of r.
8(1) of the Rules.
........................... It would be a mockery of the rule to state that it
would suffice the purpose of the notification if the notification is merely printed
in the Official Gazette, without making the same available for circulation to
the public or putting it on sale to the public ...... Neither the date of the
notification nor the date of printing, nor the date of Gazette counts for
notification within the meaning of the rule, but only the date when the public
gets notified in the sense, the concerned Gazette is made available to the
public.
The date of release of the publication
is the decisive date to make the notification effective. Printing of the official
Gazette and stacking them without releasing to the public would not amount to
notification at all ......"
35. Thereafter, this Court went on to
hold as follows: "11. We hold that a Central Excise Notification can be
said to have been published, except when it is provided otherwise, when it is
so issued as to make it known to the public. It would be a proper publication
if it is published in such a manner that persons can, if they are so
interested, acquaint themselves with its contents. If publication is through a
Gazette then mere printing of it in the Gazette would not be enough. Unless the
Gazette containing the notification is made available to the public, the
notification cannot be said to have been duly published."
36. It may be noticed that a Bench of
three learned Judges came to, however, overrule the Judgment in New Tobacco
Company (supra) in the decision reported in Union of India and others v. Ganesh
Das Bhojra j45. Therein a Notification was issued under Section 25 of the
Customs Act on 04.02.1987, amending an earlier Notification of the year 1976 by
which exemption had been granted and limiting the exemption to the duty in
excess of 25 per cent.
The Bill of Entry was filed on
05.02.1987. This Court took the view that under Section 25 of the Customs Act,
since the Notification dated 04.02.1987 has been published in the Gazette, it
had come into force and constituted the rates prevalent on 05.02.1987, when the
respondent had filed the Bill of Entry. In fact, the Court noticed the
subsequent development in Section 25 of the Customs Act by which sub-Sections
(4) and (5) were added to Section 25, which reads as follows:
"25. Power to grant exemption from
duty.-
xxx xxx xxx xxx
(4) Every notification issued under
subsection (1) or sub-section (2A) shall, -
(a) unless otherwise provided, come
into force on the date of its issue by the Central Government for publication
in the Official Gazette;
(b) also be published and offered for
sale on the date of its issue by the Directorate of Publicity and Public
Relations of the Board, New Delhi.
(5) Notwithstanding anything contained
in sub-section (4), where a notification comes into force on a date later than
the date of its issue, the same shall be published and offered for sale by the
said Directorate of Publicity and Public Relations on a date on or before the
date on which the said notification comes into force."
The view in New Tobacco Company (supra)
was held to be not good law.
37. It is to be noticed that it is in
regard to a Notification issued under Section 25 of the Customs Act that the
principles contained in sub-Section (4) and (5) will have effect from the date
on which these provisions were brought into force. As far a Notification issued
under Section 8A, with which this Court is concerned, it is the principle which
has been laid down in Ganesh Das Bhojraj(supra), which will apply.
38. In other words, as far as the
Notification issued under Section 8A of the Tariff Act is concerned, the
Notification would come into force on the date on which it is published in the
Gazette. The question, however, which arises in this case is, as far as this
Court is concerned, res integra, viz., whether having regard to the time at
which it was published, whether Notification would come into force on
16.02.2019, by including the whole of the day or will it operate from the time
of its publication, or whether the Notification is to be enforced only after
excluding 16.02.2019.
39. The question would pointedly arise
whether it was to have effect for the whole of the day, viz., 16.02.2019, which
means, since the day 16.02.2019 was born, immediately after the midnight on
15.02.2019, does a day mean the first moment after the midnight? If that were
the effect, what would be its impact on the Bills of Entry which were
electronically presented under Section 46(1) of the Customs Act read with Rule
4(2) of the 2018 Regulations, which have already been referred to above. It is
here that it becomes necessary to notice the provisions of Section 9 of the
General Clauses Act, 1897.
SECTION 9 OF THE GENERAL CLAUSES ACT,
1897
40. Section 9 of The General Clauses
Act, 1897, reads as follows: "9 Commencement and termination of time.
(1) In any Central Act or Regulation
made after the commencement of this Act, it shall be sufficient, for the
purpose of excluding the first in a series of days or any other period of time,
to use the word from, and, for the purpose of including the last in a series of
days or any other period of time, to use the word to.
(2) This section applies also to all
Central Acts made after the third day of January, 1868, and to all Regulations
made on or after the fourteenth day of January, 1887."
41. In this case, there is no dispute
that Notification under Section 8A was published in the Gazette. It was
published at 20:46:58 hrs. on 16.02.2019. It is to be noticed that we are not
dealing with a case, where a period of time, limited by two different termini,
is present. A Statute may fix a terminus aquo. The Statute may be made to last
without indicating when the period is to end, which is the terminus ad quem.
42. Section 9 of the General Clauses
Act enunciates the principle, that for, excluding the first in a series of days
or any other period of time, it suffices to use the word "from". It
also provides, likewise, for the devise of using the word "to", for
the purpose of including the last in the series of days or other period of
time. It is clear from Section 9 that it contemplates a period, or a series of
days which is marked by both terminus aquo and terminus ad quem. Section 9 is
expressly intended to apply to a Central Act or Regulation.
43. In this case, we are concerned with
the Notification issued under the Statute, and which is a piece of delegated
legislation, under which, the rate of import duty has been increased. The
increase in the rate of duty is not for any period. In other words, it is not a
case where the terminus ad quem or a period of time, is fixed for the operation
of the increased import duty of goods imported from Pakistan. In other words,
the increased rate of import duty under the Notification is to last
indefinitely. The word "indefinite" is intended to mean that it is to
bear life till it is increased, reduced or completely done away with, in
exercise of powers available under the Customs Act or the Customs Tariff Act
(See in this regard Section 25 of the Customs Act and Section 2 of the Tariff
Act).
A DAY; A PERIOD OF TIME; FRACTION OF
TIME
44. It now becomes necessary to refer
to principles enunciated by Courts in diverse situations under different
branches of law.
45. I would begin by referring to an
off-quoted Judgment rendered by the Master of the Rolls, Sir William Grant in
the decision reported in Lester v. Garlan d46. In the said case, there was a
bequest of residual interest in favour of 'A' if she gave security not to marry
'B', inter alia, within six calendar months, after the death of the Testator.
There was a proviso to go over if 'A' refused to give such security. The
Testator died on the 12th of January. Security was given by 'A' on the 12th of
July.
The Testator died on 12th of January
between 8 and 9 in the evening. Security was given by 'A' about 9 in the
evening on 12th of July. The question, which was considered was whether the
date of the death of the Testator was to be included within the six months,
within which, 'A' had to give the security, or to be excluded. If the day of
the death of the Testator was included, the security given by 'A' would be
beyond the period of six months and she would stand divested of the bequest,
whereas, if the date of the death of the Testator was excluded, then, 'A' would
be entitled to the bequest as the security given by her would be within the
period of six months. It would be profitable to notice the relevant part of the
discussion by the learned Judge:
"It is not necessary to lay down
any general rule upon this subject: but upon technical reasoning I rather
think, it would be more easy to maintain, that the day of an act done, or an
event happening, ought in all cases to be excluded, than that it should in all
cases be included. Our law rejects fractions of a day more generally than the
civil law does. (See the note, 14 Ves. 554, where it is admitted in bankrupty.)
The effect is to render the day a sort of indivisible point; so that any act,
done in the compass of it, is no more referrible to any one, than to any other,
portion of it; but the act and the day are co-extensive; and therefore the act
cannot properly be said to be passed, until the day is passed.
This reasoning was adopted by Lord
Rosslyn and Lord Thurlow in the case before mentioned of Mercer v. Ogilvie. The
ground, on which the judgment of the Court of Session was affirmed by the House
of Lords, is correctly stated in the fourth volume of the Dictionary of the
Decisions of the Court of Session. In the present case the technical rule
forbids us to consider the hour of the testator's death at the time of his
death; for that would be making a fraction of a day. The day of the death must
therefore be the time of the death; and that time must be past, before the six
months can begin to run.
The rule, contended for on behalf of
the Plaintiffs, has the effect of throwing back the event into a day, upon
which it did not happen; considering the testator as dead upon the 11th,
instead of the 12th, of January ; for it is said, the whole of the 12th is to
be computed as one of the days subsequent to his death. There seems to be no
alternative but either to take, the actual instant, or the entire day, as the
time of his death; and not to begin the computation from the preceding day. But
it is not necessary to lay down any general rule. Whichever way it should be
laid down, cases would occur, the reason of which would require exceptions to
be made.
Here the reason of the thing requires
the exclusion of the day from the period of six months, given to Mrs . Pointe r
to deliberate upon the choice she would make; and upon the whole my opinion is,
that she has entered into the security before the expiration of the six months;
in sufficient time therefore to fulfil the condition, on which her children
were to take."
(Emphasis supplied)
46. In Re. Railways Sleepers Supply
Co.47, an Extraordinary General Meeting of the company passed a Special
Resolution on 25.02.1885, for the reduction of the capital of the company. On
11.03.1885, the Resolution passed on the 25.02.1885, was confirmed. On a petition
filed, seeking sanction of the Court for the proposed reduction of capital, the
question arose whether there was compliance with Section 51 of the Companies
Act, 1862. The said provision, inter alia, required confirmation of the
Resolution at a subsequent General Body Meeting which was held at an interval
of not less that fourteen days and not more than one month from the date of the
meeting at which the Resolution was first passed.
47. Chitty J., in his opinion, referred
to Lester v. Garland (supra) and held, inter alia, as follows:
"... Lord Mansfield in his
well-known judgment in Pugh v. Duke of Leeds says, "Date does not mean the
hour or the minute, but the day of delivery, and in law there is no fraction of
a day." The day of the death of the testator, which is equivalent here to
the day of the first meeting, was not reckoned by Sir William Grant in his
well-known decision in Lester v. Garland, where a bond had to be given within
six months after the testator's decease.
The 51st section states that the
subsequent or second meeting is to be held "at an interval of not less
than fourteen days or more than a month." The word "at" means
after the interval, or at some time after the interval, prescribed by the other
part of the section. The word "at" refers grammatically rather to a
point of time than a period. ......"
"... The interval "of not
less than fourteen days" was allowed to give reasonable time for
deliberation, and to prevent undue haste or surprise, and to afford to the
shareholders who might be present at the first meeting, and also to those who
might not think fit or might not be able to attend it, time for reflection and
consideration, and to make arrangements to enable them to attend the
second...."
".... An interval of not less than
fourteen days" is equivalent to saying that fourteen days must intervene
or elapse between the two dates...."
"... That means fourteen clear
days; and as Littledale , J., said in Reg. v. Justices of Shropshire, I do not
see any distinction between "fourteen days" and "at least
fourteen days." I must come therefore to the conclusion that the
resolution is bad. Probably no question has more exercised the minds of Judges
in former times than the question as to the proper mode of computing time. Lord
Mansfield's judgment in Pugh v. Duke of Leeds and Lord Wensleydale's judgment
in the case of Chambers v. Smith, to which I have already referred, are
excellent illustrations of what I have said. ...."
48. In 1895, a case, viz., In Re. Nort
h48 arose under the Bankruptcy Act, 1890. The question was whether an act of
bankruptcy had been committed by reason of the fact that on an action taken by
an execution creditor, and after the seizure of goods of the debtor and
subsequent private sale, as permitted by the Court, the Sheriff had held the
goods for a period of twenty-one days. Lord Esher M.R., after referring to
Lester v. Garland (supra), holds as follows:
" ...., after a learned
examination of the whole subject, laid down what I conceive to be the wholesome
view that no general rule exists. ...."
"... The statute which we have to
construe for the purpose of deciding how the period of time mentioned in it is
to be computed is a Bankruptcy Act, and enacts a new act of bankruptcy, the
commission of which is to be determined by a computation of time. ...."
"... If we construe s. 1 of the
Act of 1890 according to the ordinary English meaning of the words, it enacts
that certain consequences are to happen if the sheriff holds for twenty-one
days goods seized by him under an execution: an act of bankruptcy is committed
if he holds them for that time. The ordinary meaning of the words is that he
must hold them for twenty-one days; but we are told that under a technical rule
of construction the section is satisfied if he holds them for twenty days and a
part of a day. Which is right? ..."
"... Here the result may be to
make a man a bankrupt, which is not a benefit to him, nor necessarily to the
whole of his creditors. The bankruptcy law is a law of public social policy,
and affects in a very detrimental manner the status of those who are brought
under its operation; in old times, indeed, to make a man a bankrupt was to make
him a criminal; ..."
"... Bankruptcy is the creature of
statute, and under a long series of bankruptcy statutes the same practice as to
computing time has been followed, though for different purposes or results; the
practice is a perfectly well-known one, the rule in bankruptcy being to exclude
the first day or part of a day, and to begin the computation of time on the
first whole day. ..."
"... Again, there is the rule of
construction that if a statute, which so affects a man's status as to be in
effect a penal enactment, is capable of two constructions, that one should be
adopted which is most favourable to the person affected. Applying this rule,
the mode of calculating the twenty-one days ought to be in favour of the debtor
doing something which would prevent his becoming a bankrupt at all, and we
ought to construe this section as meaning that the first day, or part of a day,
is to be excluded from the computation, which should begin on the day after the
date of the seizure. ..."
(Emphasis supplied)
49. A.L. Smith L.J. agreed with Lord
Esher M.R. and held, inter alia, as follows:
"... But it has been shewn from
subsequent cases that there is no such universal rule, and that in the
reckoning of time each case must depend on its own circumstances and
subject-matter, and for this I need only refer to the judgment of Sir William
Grant in Lester v. Garland , to that of Kelly C.B. in Isaacs v. Royal Insurance
Co., and of Chitty J. in In re Railway Sleepers Supply Co. To say, therefore,
that a rule of law compels us to say that to hold goods for twenty days and a
fraction of a day is the same as to hold them for twenty-one days is to say
that which is not a fact. ..."
50. Rigby L.J. also concurred with Lord
Esher M.R. and, in his judgment, held as follows, inter alia:
"... It was contended before us,
and it seems at one time to have been thought to be law, that where a fact or
event was mentioned from which a given period of time was to be reckoned, the
Court was bound to reckon the portion of the day on which the act was done as
though it were a whole day, and to reckon it as the first day of the period.
That doctrine underwent a thorough examination in Lester v. Garland, at the
hands of Sir W. Grant, who considered the cases in which the first day had been
included or excluded, and came to the conclusion (which I think was inevitable)
that there was no general rule on the subject. ..."
"... His classification of the
cases shews that where the calculation is in favour of a person, the
construction should be adopted which is more favourable to him. In the case of
a sheriff, for instance, it is more in his favour to include the day on which
the act is done than to exclude it, and on that ground it is included; but
where, to take another example, something has to be done which is necessary to
complete a title, the first day is excluded, otherwise there would be a cutting
down of the time allowed for doing the act.
In my opinion, although Sir W. Grant
did not put the proposition in so many words, his judgment leads us to the
conclusion that the question of whether the day on which the act is done is to
be included or excluded must depend on whether it is to the benefit or
disadvantage of the person primarily interested. But whether or no the
proposition is to be put so high, we have here a statute which does not say
twentyone days from taking possession; and it is only to cases where a terminus
is mentioned that any such general rule was ever held to apply. The present is
an a fortiori case; no terminus is mentioned, and the only question is whether
the sheriff held for twenty-one days. ..."
(Emphasis supplied)
51. On 05.05.1922, by a Notification in
the Fort St. George Gazette Extraordinary, published on a Friday, the Table of
Fees under Appendix-II, the old Rules on the Original Side of the Madras High
Court, was amended and instead of a fixed fee of Rs.30/- levied under Serial
No.1, it was provided that Rs.150/- was to be levied in all the suits where the
value of the subject matter does not exceed Rs.10,000/-, inter alia. The
Notification further recited that the amendments were to come into force from
the date of publication in the Fort St. George Gazette. The Gazette
Extraordinary reached the High Court at about 05.00 p.m. on 05.05.1922.
A Special Bench was constituted to
resolve the controversy as to whether the amended Scale of Fees was to apply
from the 5th day of May or after excluding the 5th May. The three learned
Judges, In Re: Court Fees 49 proceeded to author three separate Judgments. The
majority view is contained in the judgments of the Chief Justice and Justice
V.M. Coutts Trotter. In their Judgments, they took the view that the amended
Scale of Fees, though as already noted, represented an increase from an earlier
Scale of Fees, was to apply even in regard to the suits which came to be
instituted before the time of the Notification on 05.05.1922. In the Judgment
of the learned Chief Justice, the following discussion is noted:
"2. ... I approach this matter
conscious of the salutary rule that, in all statutes imposing taxation, any
real ambiguity must be decided in favour of the subject and against the Grown.
I consider that the hour of the day at which the Gazette was actually published
is a wholly irrelevant consideration, because on neither view does it make any
difference. If the Gazette had been published early in the morning, according
to the view of Kumaraswami Sastri, J., the tax will come into operation only
the next day.
If it had been published late in the
night, according to the view of Coutts-Trotter, J., the tax would still be
operative from the time the office opened for the receipt of plaints on that
day. I agree that we have nothing to do with the English Common Law except in
so far as it may afford some guide as to the proper meaning to be attached to
words in the English language. ... .
3. ... Applying the general rules
stated above to this case, the named date must be included unless there is some
valid reason why it should not be, and I can find none. It is true that it may
have the effect of making persons pay more than they understood they had to pay
when they filed their suits;
but this seems to me a ground for
criticising the method of imposing this tax rather than a ground for
interpreting the notice in any particular way; and I think that this argument
is more than counterbalanced by the fact that this was a sudden imposition of a
tax which in many cases could be avoided if notice was given of it in time for
suits to be filed between the time of the publication and of its actually
coming into operation. ..."
(Emphasis supplied)
52. In the Judgment of V.M. Coutts
Trotter J., the learned Judge observes as follows:
"6. ... What I conceive to emerge
from the decided cases is this: that as the law in general neglects fractions
of a day you must either exclude or include the whole of the day with which a
given statute or rule or regulation deals. And the exclusion or inclusion, I
think, is clearly provided in two other rules. If you are fixing the point of
time at which a certain state of things is to be called into existence, that
state of things comes into existence at midnight of the day preceding the day
at which or on which or from which or from and after which the new state of
things begins.
In such cases the statute or rule is
only concerned in fixing the terminus o quo of a new state of law which is
enacted to continue indefinitely, in other words, until repealed by a new
enactment of the legislature where, in short, you have a terminus a quo but no
terminus ad quem. ....................................
...... Where a statute fixes only the
terminus a quo of a state of things which is envisaged as to last indefinitely,
the common law rule obtains that you ought to neglect fractions of a day and
the statute or regulation or order takes effect from the first moment of the
day on which it is enacted or passed, that is to say, from midnight of the day
preceding the day on which it is promulgated: where, on the other hand, a
statute delimits a period marked both by a terminus a quo and a terminus ad
quem, the former is to be excluded and the latter to be included in the
reckoning.
This notification clearly falls within
the former class and must be taken to have come into force on the first second
of the 5th May, that is to say, from midnight of the 4th May. It follows that
the plaints filed on the 5th May are liable to the enhanced fees laid down by
the Regulation.
7. A very large part of the argument
addressed to us on behalf of those who filed plaints on the 5th May was based
on what was called a hardship suffered by them if our decision should be
favourable to the Crown. Increased taxation is always in a sense a hardship to
the subject but I cannot see any special hardship imposed upon these particular
litigants. If the suits which they filed are not in their opinion worth the
expenditure entailed by the increased rate of institution fees, they would
doubtless be permitted to ? withdraw them-a suit evaluated at that rate by the
person who institutes it, is not likely to be based on a very solid cause of
action. ...."
(Emphasis supplied)
53. However, C.V. Kumaraswami Sastri,
J., dissented. The learned Judge also referred to Lester v. Garland (supra) and
In Re. North (supra) and held as follows: "21. Applying the law as laid
down in the previous cases to the facts of the present case, we have to see
whether the 5th of May, 1922, is to be included or excluded. I might, in this
connection, state that I do not think that the principles which govern, or the
devices which are resorted to, by the Executive for the purpose of raising
money by taxation ought to have any weight with us in determining whether the
date of publication is to be included or excluded.
I do not think the High Court is part
of the tax gathering machinery of the Government or has any concern with the
consequences to the Government of their decision on the construction of the rule.
The rule, I take it, was passed by the Judges of the High Court in the exercise
of the powers entrusted to them to control the administration of justice and
the fees were raised because in the opinion of the Judges it was just and
proper that litigants ought to pay more for the benefits which they derive by
resorting to the jurisdiction of the High Court.
The notification expressly states that
it is to have effect from the date of publication, the object of the
publication being that the public ought to have notice that the fees were being
raised so that they might know exactly what they were in for when they resorted
to the High Court for justice. The notification, as I have already said, was
(as appears from a note of the Deputy Registrar) received in the High Court at
5 p.m., the office closing at 5 p.m. It seems to me that the litigants who
filed plaints before they or even the office had knowledge of the publication
of the rule did what was perfectly valid under the old rules and they presented
the plaints with Rs. 30 stamp irrespective of the value of their claim.
A person who files a plaint which is properly
stamped and which is in order at the time of presentation is entitled to have
his plaint admitted on presentation though as a matter of convenience the
office receives the plaints and admits them at the end of the day or later on.
There seems to me to be very little justice or equity in directing that persons
who have done what was perfectly a legal and valid act at the time should pay a
Court-fee which is much higher simply because a notification was received at
the close of the day making the higher fees chargeable from the date of the
notification.
It may well be that if those persons
had notice that instead of Rs. 30 they had to pay at least Ra. 150 and a
maximum that would range according to the value of their claim, they might
rather have compromised with the other side or might have had resort to other
proceedings like arbitration for settling their claims. I can find nothing to
justify charging people, who filed their plaints on that day without knowledge
of the notification which only reached the High Court at 5 p.m., with the
higher fees in respect of plaints filed during the course of the day.
22. Having regard to all the facts and
circumstances of the present case, I think that, if the law is that there is no
hard and fast rule in deciding whether the word "from" is inclusive
or exclusive of the date of notification and that each case must depend upon
its own circumstances subject-matter, justice and equity demand that the date
of the notification ought to be excluded. I would, therefore direct that all
the plaints received on the 5th of May, 1922, be stamped with Rs. 30."
(Emphasis supplied)
THE POSITION UNDER THE LAW RELATING TO
PREVENTIVE DETENTION
54. A Division Bench of High Court of
Delhi had occasion to consider the question again of time of operation in the
following circumstances in the decision reported in Jasbir Singh vs. Union of
Indi a50. The contentions urged by the detenu included the contention that the
detention orders stood vitiated as in contravention of Section 3(3) of the COFEPOSA
Act, the grounds of detention was served on the 6th day of the day of Order of
detention being served. Section 3(3), inter alia, provides for communication to
a person of the grounds of detention as soon as may be after detention but
ordinarily not later than five days and in an exceptional case and for reasons
to be recorded in writing not later than 15 days from the date of detention.
The Division Bench, which included
Chief Justice M. Jagannadha Rao (as His Lordship then was), took note of judgment
of the Madras High Court reported in In Re: Court Fees 51 under the Court Fee
Act and took the view that the word "from" is similar to the word
"after", and therefore, the date on which the detention order was
served, has to be excluded. In this regard, the Court took the view that the
legislature has given clear 5 days to the Government to complete many other
formalities before serving the grounds of detention. This is besides being
guided by the use of words 'as soon as may be'.
THE CASES UNDER CONTRACTS OF INSURANCE
55. In the decision reported in New
India Assurance Company Limited vs. Ram Dayal and Others 52, the vehicle was
insured earlier upto 31st August, 1984. Instead of obtaining renewal, a fresh
insurance was taken from 28th September, 1984. The accident took place on the
very same day, namely, 28th September, 1984. The insurer repudiated its
liability as the policy was taken after the accident. The High Court took the
view that the policy of insurance became operative from the commencement of the
date of insurance, namely, the previous midnight. This Court agreed with the
view of the High Court that once a policy is taken on a particular day, its
effectiveness is from the commencement of the day. It found the insurer liable.
It is necessary only to notice paragraphs 5, 6 and 7:
"5. As pointed out in Stroud's
judicial Dictionary 'Date' means day, so that where a cover not providing for
temporary insurance of a motor car expires 15 days after date of commencement,
it runs for the full 15 days after the day on which it was to commence."
6. Similarly it has been stated in
Stroud that "a bill of exchange, or note, is of the date expressed on its
face, not the time when it is actually issued."
56. The view taken by this Court in
regard to the issue of the liability of insurer with reference to the time at
which the policy of insurance is taken, may be noticed from the recent judgment
which adverted to, not only Ram Dayal (supra) but the Judgment rendered by
three-Judge Bench, reported in Oriental Insurance Company Limited v. Porselvi
and Anothe r53 and another judgment reported in Oriental Insurance Company
Limited v. Sunita Rathi and Other s54.
The recent judgment is reported in
National Insurance Company Limited vs. Geeta Devi and Others 55, I may refer to
paragraphs 3 and 4 which adverts to the decisions of this Court distinguishing
Ram Dayal (supra). Finally, this Court took the view, there is a cover note
mentioning the time as 04:40 p.m. and it was issued after the accident and
therefore, the insurer was not liable:
"3. The question again came up for
consideration in National Insurance Co. Ltd. v. Jikubhai Nathuji Dabhi; (1997)
1 SCC 66. Reliance was placed on the abovementioned judgments. However, a
three-Judge Bench of this Court noted that the Tribunal had recorded, as a
fact, that the policy had come into force at 4:00 P.M. whereas the accident had
taken place at 11:40 a.m. This Court held that in view of the special contract
and in view of the fact that the accident had occurred earlier, the insurance
coverage would not enable the claimant to seek recovery from the Insurance
Company.
4. The question again arose in Oriental
Insurance Co. Ltd. v. Sunita Rathi; (1998) 1 SCC 365, was relied upon. This
court distinguished Ram Dayal case; (1990) 2 SCC 680, was relied upon. This
Court distinguished effective date and time of the policy was after the
accident, the Insurance Company would not be liable."
57. After having made a reference to
some of the decisions covering different branches of law, the question to be
resolved comes into focus. It is clear that the situation which is presented
before us, is not covered by the principle which is embedded in Section 9 of
General Clauses Act, 1897.
In other words, having regard to the
terms of the Notification, which is a form of delegated legislation, by which
the Central Government has increased the rate of import duties of goods
imported from Pakistan, though the notification is gazetted on 16.02.2018 at
20:46:58 hrs., there is no period for which it is to last as already noticed,
and in that sense, it can be argued that there would be no occasion for
exclusion of the date on which it was issued.
WHETHER SECTION 5(3) OF THE GENERAL
CLAUSES ACT APPLIES TO THE NOTIFICATION?
58. Section 5 (3) reads as follows:
"5(3) Unless the contrary is expressed, a Central Act or Regulation shall
be construed as coming into operation immediately on the expiration of the day
preceding its commencement."
59. The argument of learned Additional
Solicitor General is that in terms of Section 5 (3), the notification issued
under the Customs Tariff Act will have effect from the expiry of the previous
day. That is to say, it will operate from the first tick of time past the mid
night of 15.2.2019. In order to appreciate this argument, we must consider
definition of the word 'Central Act' and 'Regulation' in the General Clauses
Act.
Section 3 (7) defines Central Act. It
reads as follows: "(7) "Central Act" shall means an Act of
Parliament and shall include- (a) an Act of the Dominion legislature or of the
Indian Legislature passed before the commencement of the Constitution, and (b)
an Act made before such commencement by the Governor General in Council or the
Governor General, acting in a legislative capacity;"
60. Section 3 (50) defines 'Regulation'.
It reads as follows: "3(50) "Regulation" shall mean a Regulation
made by the President under article 240 of the Constitution and shall include a
Regulation made by the President under article 243 thereof and a Regulation
made by the Central Government under the Government of India Act, 1870, or the
Government of India Act, 1915, or the Government of India Act, 1935" 61.
It is quite clear that the notification which is issued is one which is issued
under Section 8A of the Tariff Act.
The notification is not one which is
made by Central Legislature, namely, the Parliament. It therefore is not a
Central Law as defined in the Act. We have also noticed the definition of the
word 'Regulation'. The notification is not a regulation as defined in General Clauses
Act. There is no merit in the contention of the Union of India that by virtue
of Section of 5(3) of the General Clauses Act, the notification must be treated
as effective from the point of time immediately after mid night on 15/16
February, 2019.
THREE POSSBILE VIEWS
62. There are three possible answers to
the questions as to what is to be the meaning of the word 'day', in the context
of the provisions of Section 15 the Customs Act and the Notification. 1.The
first way to look at "the day", would be to take it as a fraction of
day, viz., 16.02.2019, having its beginning at 20:46:58 hrs. and ending with
the midnight on 16.02.2019. 2.The second way to look at it is, it would operate
only after the midnight of 16.02.2019, and would impact Bills of Entries
presented on 17.02.2019 onwards. In other words, it would be an interpretation
which would exclude 16th February, 2019. 3.The third day to look at it would be
as follows - "16.02.2019, would mean the day commencing immediately after
the midnight on 15.02.2019, and therefore, it would be the whole of the 24
hours commencing at midnight of 15.02.2019 and would include the period of time
during the day during which the respondents had presented the bill of
entry".
63. The question is certainly not free
from difficulty. The solution must, however, be found. On one hand, we are
dealing with a Notification by which the appellant has purported to increase
the rate of duty to a hefty quantum of 200 per cent, following the incident
which took place at Pulwama.
Would it be a fair and reasonable to
include the whole, the day 16.02.2019, having regard to the effect on the
importer of the goods who would have struck the bargain on the basis of rate of
duty being what it was prior to the Notification? Could it not be said that
based on the contracts for import, the importer would have entered into
contracts for sale of goods in India where the price would be fixed with
reference to the position obtaining as on the date of contract for import.
64. On the other hand, what we are
called upon to decide, is the question of time at which the delegated
legislation will take effect. It is true that there is no equity about tax. The
fact that there is a sudden increase in the rate of tax, may not render it
vulnerable on the score that it violates Fundamental Rights. [See in this
regard, the Judgment of this Court in Pankaj Jain vs. UOI (supra)].
65. If analogy is to be drawn from the
majority view of Madras High Court in the matter relating to Court Fees
(supra), it can, indeed, be urged that the impact of the increased duty of
import cannot by itself decide the question as to the point of time at which
the delegated legislation must operate from.
66. Yet another aspect which could not
be over-looked is while it is true that in Section 15 of the Customs Act, what
is referred to is the rate of duty enforced on the date, the law itself
entitles importer to have the goods cleared upon payment of the duty which is
accepted as correct in the self-assessment proceedings, following the due
presentation of the bill of entry under Section 46 read with Rule 4(2) of the
2018 Regulations. In conjunction with the mandate of charging section contained
in Section 12 and Section 15 of the Customs Act which fixes the date according
to the rate of duty as the date of presentation of the bill of entries, could
it certainly not be said that the law would abhor the reopening of transactions
which have culminated in proceedings which are otherwise impeccably correct and
regular.
By way of re-assessment can matters
concluded in the eye of law be revisited on the basis of a notification which
comes much later in the day? There is yet another aspect which must also be
borne in mind. The question before us, arises on the basis of notification
which is, indeed, a form of delegated legislation which is issued under Section
8A of the Tariff Act. Section 8A of the Tariff Act empowers the Central
Government to increase the rate of import duty but the power to issue a
notification under Section 8A, is not conferred to increase the rate of import
duty with retrospective effect.
67. We may at once notice the counter
argument. By ensuring full play for the notification for the whole of the day
on which it was issued, the provisions of Section 15 of the Customs Act in the
view of Additional Solicitor General, are duly honoured. It is his argument
that any other view would involve rewriting of Section 15, as Section 15
contemplates the rate of duty to be the rate of duty for the day.
There cannot be two rates of duty at a
given point of time. If the rate of duty, on a proper interpretation of the
Notification would hold the field at all points of time during the whole of
16.02.2019 at which the respondents may have presented the Bills of Entry in
tune with the prevailing rates of duty which would have been applicable
otherwise, it would not detract from the power of authority to reassess on the
strength of an instrument like the Notification.
What would logically and inexorably
follow, in other words, is that the rate of duty applicable during the whole of
the day on 16.02.2019 was only the increased rate of duty. This was, therefore,
the correct rate of duty at which the importers were to pay the duty. There is
no illegality involved in resorting to power enabling reassessment and recovery
of the correct duty from the respondents. In other words, there is no
retrospectivity involved, runs the argument.
68. There can be no doubt that the
principle which appears to have evolved over a period of time is that
generally, the law frowns upon determining a day with reference to its
fractions. Undoubtedly, in the case of Central Act or a Regulation, the
principle is statutorily incorporated in Section 5(3), that unless a contrary
intention appears, it begins its journey in the Statute Book from the first
point of time past the stroke of the previous midnight. Section 5(3) does not
apply to the notification which is a form of delegated legislation, as found
hereinbefore.
69. If the contention of the Union of
India is accepted, though the notification is issued late in the evening, the
'day' referred in Section 15 of the Customs Act would commence from the first
moment past the midnight of 15.02.2019. The diametrically opposite option would
be to exclude the whole of the day on which the notification was issued and the
third option is that the day would consist of the hours remaining of the day
16.02.2019 after the time at which the Notification was issued. In other words,
under the third option, the time of operation of the notification was 20:46:58
hrs. and continued till midnight of 16.02.2019. It would indeed constitute a
fraction or part of an ordinary day consisting of twenty-four hours.
70. If the argument of Mr. P.S.
Narsimha, learned Senior Counsel, is accepted, then, it would have operation
from the time at which the Notification is issued. This is because in answer to
a query as to what would be the position if the Notification had been issued at
10.00 a.m. on 16.02.2019 and the Bills of Entry were presented after 10.00
a.m., his response was, the importers would have to pay the higher rate of duty
under the Notification. Therefore, his argument appears to be that a
Notification must come into operation with reference to the point of time of
the day when the Notification was issued.
71. The principle that fractions of the
day are eschewed from consideration, is not a universal principle which knows
no exceptions.
72. Section 48 of the Transfer of Property
Act, 1882, reads as follows: "48. Priority of rights created by
transfer.-Where a person purports to create by transfer at different times
rights in or over the same immoveable property, and such rights cannot all
exist or be exercised to their full extent together, each later created right
shall, in the absence of a special contract or reservation binding the earlier
transferees, be subject to the rights previously created."
73. In an enquiry, as to the priority
of title, the fractions of the day, undoubtedly, will assume relevance. In
fact, the exact time at which a document is registered, will determine the
question of priority, and consequently, of title itself, to the property
concerned and it is open to parties to adduce evidence in this regard.
74. Section 47 of the Registration Act,
1908, reads as follows:
"47. Time from which registered
document operates.-A registered document shall operate from the time which it
would have commenced to operate if no registration thereof had been required or
made, and not from the time of its registration." Here again, the time of
the day may become decisive. The recent decisions of this Court in regard to
insurance contracts appear to accept the significance of the time of the day.
(See para 56 of this judgment).
75. Section 5(1) of General Clauses
Act, 1897 reads as follows:- "5. Coming into operation of enactments.- (1)
Where any Central Act is not expressed to come into operation on a particular
day, then it shall come into operation on the day on which it receives the
assent,- (a) in the case of a Central Act made before the commencement of the
Constitution, of the Governor-General, and (b) in the case of an Act of
Parliament, of the President." It must be noticed that law which is made
by the legislature is to be treated differently from delegated legislation.
A law if made by Parliament including a
change in the rate of duty in the Customs-Tariff Act would involve a process
which is attended by a certain level of publicity. In this regard, the words of
Bailhache, J. in Johnson v. Sargant & Son s 5 6; 1917 1 K.B. 101, come to
mind:- "While I agree that the rule is that a statute takes effect on the
earliest moment of the day on which it is passed or on which it is declared to
come into operation, there is about statutes a publicity even before they come
into operation which is absent in the case of many Orders such as that with
which we are now dealing ; indeed, if certain Orders are to be effective at
all, it is essential that they should not be known until they are actually
published."
There is a process and time involved in
Parliament which is unlike what happens in the case of a delegated legislation
of the sort in particular, projected in these cases, namely, a notification
issued by the executive under Section 8A. It is on this basis that the law made
by the legislature is taken as known to the public and mere assent of the
President would suffice and the need to make any delegated legislation known by
publication before it becomes effective is insisted upon.
Publication in the case of delegated
legislation is based on a rationale. On this rationale even the principle
embedded in Section 5 in regard to the law made by the legislature cannot be
applied to a notification issued under Section 8A of the Tariff Act.
76. The view taken by Justice
Kumaraswami Sastri, in Re: Court Fees (supra), in the context of the increase
in the Court Fee, effected under a Notification, which came to the High Court
only at about 05.00 p.m., which was around the time when Court closed down, was
to exclude the operation of the increased Court Fee qua the suits which were
filed during the course of the day.
77. At the time, when the Madras High
Court considered the question, it may be noticed that the Constitution of India
was not in force. The matter has not been approached on an analysis as to the
nature of subordinate legislation and the point of time when a subordinate
legislation comes into force. The concept of State action, satisfying the
requirement of it being fair, as is the mandate of Article 14, could not have
been possibly considered by the learned Judges of the Madras High Court.
Under the Customs Act read with the
Tariff Act, as noticed, the Scheme provides for an importer, wishing to enter
goods for home consumption, to file Bills of Entry, do self-assessment and pay
the duty on the same day. If all goes well, which means that the selfassessment
is in accordance with the existing law, and the rate of tax is calculated with
reference to the rate of duty as stipulated and the amount of duty is paid, and
if there is any other amount to be paid, the same is also paid, Section 47 of
the Act would oblige the Officer, unless, of course, the goods are prohibited
goods, to issue an Order permitting clearing the goods.
Though, there is no Order for clearing
the goods in these cases under Section 47, the said Order is the culmination of
the steps to be undergone by an importer for clearing the goods. Once the
self-assessment is correct and the other conditions in Section 47 do not militate
against the importer, the goods can be physically cleared, and having regard to
the definition of the "imported goods", they cease to be imported
goods.
78. In the context of the Customs Act,
and having regard to the Scheme, which, in the case of import duty, consists of
filing of Bill of Entry for home consumption, self-assessment and payment of
duty on the basis of the same and the rate being clearly fixed with reference
to the particular point of time when the Bill of Entry is presented and there is
a deemed presentation and even a deemed assessment, which is otherwise in
order, and bearing in mind the principle that Section 8A does not provide power
for increase of rate of duty with retrospective effect, the Notification must
be treated as having coming into force not before its publication which is at
20:46:58 hrs. on 16.02.2019.
This would necessarily mean that the
Notification cannot be used to alter the rate of duty on the basis of which, in
fact, there was presentation of Bill of Entry several hours ago, the
self-assessment was done and what is more, the self-assessment was completed
under Regulation 4(2) of the 2018 Regulations. There cannot be reassessment.
The interpretation based on time of publication is in harmony with a view that
accords respect for vested rights.
TWO INCONSISTENT RATES AT THE SAME
POINT OF TIME
79. There is no merit in the submission
of the appellants in this regard. Once it is found that the notification upon
publication would take effect from the time of its publication then in regard
to the bills of entries which stand presented within the meaning of Section 46
of the Customs Act read with 4(2) of the 2018 Regulations, earlier to such
publication, the rate of duty in regard to the same would be only the rate of
duty which prevailed at the time of the deemed presentation under Regulation
4(2) of the 2018 Regulations.
EFFECT OF THE WORD
"OTHERWISE" IN SECTION 17(4) OF THE CUSTOMS ACT, 1962
80. The expression
"otherwise" in Section 17(4), will not come to the rescue of the appellants,
in the facts of the instant case. While the word "otherwise" may be
capable of taking care of situations which are not covered by the preceding
expressions, viz., verification, examination, attesting of the goods, it cannot
mean that it will empower the Officer to alter the rate of duty which is
prevalent at the time of the self-assessment following the due presentation of
the Bill of Entry. If it is otherwise, it will be open to the Department to
reopen cases of concluded assessments by virtue of the deemed completion of
assessment under Regulation 4(2) without any legal justification.
That would be plainly impermissible
being illegal. This is not a case where the assessment is assailed on any other
ground except by insisting on a rate of duty which is in applicable.
WHETHER THE CASE LAW RELIED UPON BY THE
APPELLANTS MILITATE AGAINST THE AFORESAID VIEW
81. The question which arose before the
Constitution Bench of this court in M/s. Bharat Surfactnts (P) Ltd. v. Union of
Indi a57 may not assist the appellants. The case involved a challenge to
Section 15(1)(a) of the customs Act. This court repelled the challenge. More
importantly, that was a case where the vessel in which the goods were carried
belonging to the petitioners arrived on 11th July 1981. Berth was not
available. By reason of the same it could not discharge its cargo at Bombay.
This court took the view that what is
relevant is the date on which the Bill of Entry is presented. Therefore, it
cannot be treated as authority for the proposition canvassed by the appellants.
The decision of this Court in Priyanka Overseas (P) Ltd. v. Union of Indi a58 also
will not assist the appellant in persuading this Court to answer the question
in favour of the appellant.
No doubt, the court has reiterated the
principle in Section 15 of the Customs Act and the question actually fell for
decision under Section 15 (1)(b) of the Act as it stood prior to its amendment.
Section 15 (1)(b) as it stood then contemplated the rate of duty applicable in
the case of goods cleared from a warehouse under Section 68 to be rate on the
date on which the goods were actually removed from the warehouse. Quite apart
from the fact that the said provision has been amended, we are in this case
concerned with Section 15(1)(a) and what is more important, the actual question
is the impact of the notification issued under Section 8A and what is the
significance of the word "the date".
In the decision of this Court in Dhiraj
Lal H. Vohra v. Union of Indi a59, the ship arrived at the port on 2.3.1989 and
inward entry was also given on the same day. The contention taken by the
appellant that the ship had entered the Indian territorial waters on 20.2.1989
and was ready to discharge the cargo was found irrelevant for purposes of
Section 15(1) read with Sections 46 and 31 of the Customs Act. This decision
also does not assist the Court in deciding the question which squarely falls
for decision.
The decision of this Court in
D.C.M.Ltd. and Another V. Union of Indi a60 involved a challenge to the
validity of Section 15(1)(b) of the Customs Act. Following the filing of
"Bill of Entry for warehousing" on 24.2.1982, the imported goods were
warehoused. The goods were cleared from the warehouse on 3.3.1982 and
15.4.1982. On the basis of Section 15(1)(b) taking note of the dates of
clearance from the warehouse, the duty was levied. The Court noted that Section
12, the charging section was subject to Section 15 among other sections.
An option was given to the importer to
either file a Bill of entry for home consumption straight away in which case he
has to pay the duty based on the filing of the bill of entry. In the case of
bill of entry for warehousing, the date of clearance of the goods determined
the rate under section 15(1)(b) as it stood. It does not have any effect qua
the facts of the case before this Court except that what determines the date of
the rate will be found from Section 15 of the Customs Act.
82. Coming to the decision of this
Court in Raj Kumar Yadav v. Samir Kumar Mahaseth 61, the facts of the case was
that an election petition was presented on 27.8.2003 after the designated judge
had retired to his chamber at 4.15 p.m.. The last date of limitation was
27.8.2003. The court inter alia held as follows:
"6. The limitation provided by
Section 81 of the Act expires on the 45th day from the date of election. The
word "day" is not defined in the Act. It shall have to be assigned
its ordinary meaning as understood in law. The word "day" as per
English calendar begins at midnight and covers a period of 24 hours thereafter,
in the absence of there being anything to the contrary in the context. (See
Ramkisan Onkarmal Agrawal v. State of Maharashtra [AIR 1994 Bom 87 : 1994 Mah
LJ 369] , AIR at p. 94, Municipal Council of Cuddalore v. S. Subrahmania Aiyar
[16 MLJ 101 : ILR (1906) 29 Mad 326] and P. Ramanatha Aiyar, The Law Lexicon,
pp. 470, 471.) Thus, the election petition could have been presented up to the
midnight falling between 27-8-2003 and 28-8-2003."
This Court also found that the High
Court should not have allowed the period of limitation to be abridged by the
rules. This is besides also finding that the rules were not properly
appreciated. It is to be noted that question involved was the period of
limitation to file the election petition. The last day was therefore understood
in the manner done. The decision of this Court in Ahmadsahab Abdul Mulla(2) (Dead)
By Proposed LRs. vs. Bibijan and other s62 dealt with the effect of the use of
the expression 'date' in Article 54 of the schedule to the Limitation Act,
1963. This Court inter alia held as follows:
"9. According to Advanced Law
Lexicon by P. Ramanatha Aiyar, 3rd Edn., 2005, the word "date" means
as follows: "Date.-(As a noun) The point of time at which a transaction or
event takes place; time given or specified; time in some way ascertained and
fixed; in a deed, that part of the deed or writing which expresses the day of
the month and year in which it was made, (2 Bl. Commn. 304; Tomlin). In Bement
& Dougherty v. Trenton Locomotive, etc., Co. [32 NJ Law 513] (NJ Law at p.
515) it is said:
'The primary signification of the word
date, is not time in the abstract, nor time taken absolutely but, as its
derivation plainly indicates, time given or specified time in some way
ascertained and fixed; this is the sense in which the word is commonly used.
When we speak of the date of a deed, we do not mean the time when it was
actually executed but the time of its execution, as given or stated in the deed
itself.'
'Where a deed bears no date, or an
impossible date, and in the deed reference is made to the "date", that
word must be construed "delivery"; but if the deed bears a sensible
date, the word "date", occurring in the deed, means the day of the
date, and not that of the delivery' (Elph. 123, citing Styles v. Wardle [(1825)
4 B & C 908 : 107 ER 1297] ; ...). 'Date', though sometimes used as the
shortened form of 'day of the date', is not its synonym; but means the
particular time on which an instrument is given, executed, or delivered (Howard
case [2 Salkeld 625: 91 ER 528: 1 Ld Raym 480: 91 ER 1219] ; Armitt v. Breame
[(1704) 2 Ld Raym 1076: 92 ER 213] and Pewtress v. Annan [(1841) 9 Dowl 828] ,
Dowl at pp. 834-35). ...
'The word "date" is much more
commonly descriptive of a day than of any smaller division of time' (per
Stormonth Darling, L.O., Simpson v. Marshall [37 Sc LR 316] Date means day, so
that where a cover note providing for temporary insurance of a motor car
expires '15 days after date of commencement' it runs for the full 15 days after
the day on which it was to commence (Cartwright v. MacCormack [(1963) 1 WLR 18
: (1963) 1 All ER 11 (CA)] )."
XXX XXX XXX XXX
11. The inevitable conclusion is that
the expression "date fixed for the performance" is a crystallised
notion. This is clear from the fact that the second part "time from which
period begins to run" refers to a case where no such date is fixed. To put
it differently, when date is fixed it means that there is a definite date fixed
for doing a particular act. Even in the second part the stress is on "when
the plaintiff has notice that performance is refused". Here again, there
is a definite point of time, when the plaintiff notices the refusal. In that
sense both the parts refer to definite dates. So, there is no question of
finding out an intention from other circumstances.
12. Whether the date was fixed or not
the plaintiff had notice that performance is refused and the date thereof are
to be established with reference to materials and evidence to be brought on
record. The expression "date" used in Article 54 of the Schedule to
the Act definitely is suggestive of a specified date in the calendar. We answer
the reference accordingly. The matter shall now be placed before the Division
Bench for deciding the issue on merits." The decision may not assist the
appellants in the nature of the question which falls for decision in the
appeals before this Court.
83. The decision of this Court reported
in Pashupati Nath Singh vs. Harihar Prasad Singh ;63 relied upon by the
appellant arose under the Representation of People Act, 1951. The petitioner
therein was a candidate for the election to the Bihar Legislative Assembly. He
filed his nomination paper on 16.1.1967. His nomination paper was rejected.
Petitioner challenged the election of the returned candidate, on the ground of
illegal rejection of his nomination paper. Section 36 of the Act provides for
scrutiny of nomination paper.
The objection taken which resulted in
the nomination of the petitioner being rejected was that he had not made and
subscribed the requisite oath or affirmation in the form which is prescribed.
Section 36 uses the words 'the date fixed for scrutiny' It is interpreting the
said words in Section 36 (2) (a) that the Court held as follows:
"13. It seems to us that the
expression "on the date fixed for scrutiny" in Section 36(2)(a) means
"on the whole of the day on which the scrutiny of nomination has to take
place".
In other words, the qualification must
exist from the earliest moment of the day of scrutiny. It will be noticed that
on this date the Returning Officer has to decide the objections and the
objections have to be made by the other candidates after examining the
nomination papers and in the light of Section 36(2) of the Act and other
provisions. On the date of the scrutiny the other candidates should be in a
position to raise all possible objections before the scrutiny of a particular
nomination paper starts.
In a particular case, an objection may
be taken to the form of the oath; the form of the oath may have been modified
or the oath may not have been sworn before the person authorised in this behalf
by the Election Commission. It is not necessary under Article 173 that the
person authorised by the Election Commission should be the Returning Officer.
14. In Paynter v. James [(1866-67) LR 2 CP 348] , Bovil, C.J., quoted, with
approval, the passage from the judgment of Tindal, C.J., in Regy v. Humphery
[10 Ad & E 335] , in which the following occurs:
"... we hold it therefore to be
unnecessary to refer to instances of the legal meaning of the word 'upon'
which, in different cases, may undoubtedly either mean before the act done to
which it relates, or simultaneously with the act done, or after the act done,
according as reason and good sense require the interpretation, with reference
to the context and the subject-matter of the enactment." 15. Bovill, C.J.,
observed that "that is a very clear statement of the various meaning of
the word 'on' or 'upon'."
16. In this connection it must also be
borne in mind that law disregards, as far as possible, fractions of the day. It
would lead to great confusion if it were held that a candidate would be
entitled to qualify for being chosen to fill a seat till the very end of the
date fixed for scrutiny of nominations. If the learned Counsel for the
petitioner is right, the candidate could ask the Returning Officer to wait till
11.55p.m. on the date fixed for the scrutiny to enable him to take the
oath." Clearly the context and the purpose of the statute guided the court
in holding that the law disregards fractions and it must be noted that even
then in the said case it was laid down that the fractions of the day are to be
disregarded as far as possible.
84. The decision of this Court on
Vikram Singh alias Vicky and Another v. Union of India and Others 64 is relied
upon to contend that the presumption runs that the legislature is well aware of
the circumstances and the effect of the words that have been employed by it. In
other words, the contention appears to be that since the word 'the date' is
used in Section 15, it must be given full effect.
As far as the judgment of this Court in
The Government of Andhra Pradesh and Anotheer v. Hindustan Machine Tools Ltd.
65 is concerned, and the purpose for which it is relied upon, the decision
appears to be inapposite in the facts. The contention taken is that it is
competent for the legislature to make law retrospectively and as the rate of
duty is to be determined as the rate in force on the day Section 15 is
determinative.
It is one thing to say that the
legislature may have the power to make a law with retrospective effect subject
to limitations imposed by the Constitution and quite another to contend that
delegated legislation would carry retrospective effect irrespective of power to
make such a law conferred by the parent enactment on the delegate. More importantly
the scheme of the Customs Act and the Tariff Act and the Regulation 4(2) of the
2018 Regulations rule out the tenability of applying the notification in the
manner sought by the appellants.
85. Reliance placed on the judgments
Video Electronics Pvt. Ltds and Another vs. State of Punjab and Another ;66,
Tamil Nadu Electricity Board and Another v. Status Spinning Mills Limited and
Another ;67 of this Court, taking the view that the Schedule to an act is a
part of the act and therefore an amendment to the Schedule by virtue of such a
notification is an amendment to the Act itself and therefore, the notification
issued under Section 8A of the Tariff Act partakes the character of
legislation, is clearly untenable, if it is intended to convey that the notification
issued under Section 8A of the Tariff Act is made by the legislature itself.
By its very nature, delegated
legislation is legislative in character but if it is to be a Central Act within
the meaning of Section 5 of General Clauses Act, it must be made by the
legislature. Delegated legislation which is called administrative legislation
in England, is exercise of legislative power by the executive.
It is to be further noticed the fact
that the notification issued under Section 8A is in the exercise of its
legislative power or that it may have to be read in the same manner as if it is
a part of the Act, will not detract the Court from ascertaining as to who is
the author of the exercise of the legislative power, namely, whether it is an
exercise of power by the legislature or by its delegate. Upon answer to the
question, namely, that the author of the legislative effort is the executive,
the question would necessarily arise as to whether there is publication. In the
scheme of the Customs Act, the Tariff Act and the 2018 Regulations, the time at
which the notification under Section 8A is published would indeed have
relevance as already found.
86. In this view of the matter, the
Appeals are found to be without merit and the same will stand dismissed.
.................................J. [K.
M. JOSEPH]
NEW DELHI:
DATED; SEPTEMBER 23, 2020
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