State Of U.P. & Ors vs M/S. Mahindra & Mahindra Ltd

STATE OF U.P. & ORS. Appellant (s)

VERSUS

M/S. MAHINDRA & MAHINDRA LTD. Respondent(s)

O R D E R

1. Leave granted.

2. We have heard learned counsel appearing for the parties

in this appeal, which is filed challenging the legality of the

judgment and order passed by the Allahabad High Court in a

writ petition filed by the respondent, praying for issuance of a

writ of mandamus to read in the exemption notification, the

words "Tractor Engine specifying Cubic Capacity (CC) of the

Tractor Engine not exceeding 1800 CC. The Government of

India had issued notification on 16th April, 1985, making an

amendment in the notification of the Government of India in

respect of the table annexed to the notification, inserting by

way of substitution the words "Tractors of Draw-Bar Horse

Power not exceeding 25". Another notification was

subsequently issued by the Government of India on 17th July,

1985, substituting the words "Draw-Bar" with the words

"Power Take-off Horse". Be it stated here that all such

notifications relate to the payment of excise duty.

3. The Government of Uttar Pradesh, however, for the

purpose of levy of sales tax issued a notification on 12th

September, 1986, in which it was stated that under Section 4

of the Uttar Pradesh Sales Tax Act, 1948, Tractors with Power

Take-off Horse Power not exceeding 25 would stand exempted

from payment of tax under the Sales Tax Act, subject, however,

to the condition that the said tractors are exempted from

payment of Central Excise Duty.

4. A show cause notice was issued to the respondent from

the Office of the Assistant Commissioner (Assessment)-I Sales

Tax, Lucknow, stating therein that at the time of survey made,

and as per the literature made available it was found that the,

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horse power of the tractors of the respondent had been

disclosed as 30 Horse Power. In the aforesaid show cause

notice it was stated that in view of the facts mentioned in the

said notice, the respondent may submit a reply as to why the

return filed by the respondent would not be rejected and a

provisional assessment order for the period in question may

not be completed under Rule 41(5) of the Rules.

5. Pursuant to the aforesaid show cause notice issued, a

detailed reply was filed by the respondent. The Assessment

Officer considered the entire records and, thereafter, by his

order dated 21st March, 1992, passed an assessment order on

the basis of the contents of the notification dated 12th

September, 1986, denying exemption from payment of sales

tax to the tractors of the respondent.

6. After the aforesaid assessment order was passed, the

respondent filed a writ petition before the Allahabad High

Court with the following reliefs:

"1. A Writ of certiorari or any other suitable Writ, Order

of direction be issued to modify or amend, the

notification so as to bring in conformity with the Central

Government and conformity in respect of measuring

strength or engine by all manufacturer as contained in

Annexure-1 to this Writ Petition.

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2. A Writ of mandamus directing the Opposite Party

No.2 to clearly state in the said notification the basis of

exemption being cubic capacity of the Tractor Engine not

exceeding 1800 CC for exemption for Sales Tax in place

of 25 P.T.O.H.P., and directing the Opposite Party No.2 to

exempt the petitioners, tractor engine and specify the

C.C. (Cubic Capacity) of the Tractor engine not exceeding

1800 C.C. And bring it at Par with Circular No.89/87/CE

dated 01.03.1987 issued by Central Government to clear

the anomaly and ambiguity in both the circulars, which

creates discrimination among manufacturer of Fuel

Efficient engines and rest ones, and refrain the Opposite

Party No.2 to desist from recovering disputed Sales Tax of

Rs.2,34,00,965.400 from April' 91 to Feb. 92 created by

Annexure II dated 21.03.1991, and stay operation

thereof."

7. Interestingly, in the said writ petition there was no

challenge to the assessment order passed. Be that as it may,

the Division Bench of the Allahabad High Court proceeded to

hear the aforesaid writ petition and by a detailed order passed

held that since the Central Government has by notification

dated 28th February, 1987, replaced the word 25 PTOHP by the

word 1800 CC and thereby exempted the tractor having

capacity not exceeding 1800 from Excise Duty, the same

wordings, namely, Tractors with Power Take-off Horse Power

not exceeding 25 should also be read as Tractors not exceeding

1800 CC, which would stand exempted from levy of Sales Tax.

The aforesaid findings recorded by the High Court are under

challenge in this appeal.

Page 4 of 10 8. The first contention of the counsel appearing for the

appellant is that there is no power vested on the High Court to

issue such a direction to the Executive to re-frame the

subordinate legislation, and that therefore the High Court

exceeded its jurisdiction by issuing such directions in a field

where the High Court cannot and should not tread. In support

of the said contention, the counsel has relied upon the

decision of this Court in Supreme Court Employees' Welfare

Association v. Union of India and another (1989) 4 SCC 187,

Bal Ram Bali and another v. Union of India (2007) 6 SCC 805

and Municipal Committee, Patiala v. Model Town Residents

Association and others (2007) 8 SCC 669 as also the decision

in M/s. Narinder Chand Hem Raj and others v. Lt. Governor,

Administrator, Union Territory, Himachal Pradesh and others

(1971) 2 SCC 747. Wherein this Hon'ble court held as follows:

"The power to impose tax is undoubtedly a legislative

power. That power can be exercised by the legislature

directly or subject to certain conditions, the legislature

may delegate that power to some other authority. But the

exercise of that power whether by the legislature or by its

delegate is an exercise of a legislative power. The fact

that the power was delegated to the executive does not

convert that power into an executive or administrative

power. No court can issue a mandate to a legislature to

enact a particular law. Similarly no court can direct a

subordinate legislative body to enact or not to enact a law

which it may be competent to enact. [945 F-G] Article

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265 of the Constitution lays down that no tax can be

levied and collected except by authority of law. Hence the

levy of a tax can only be done by the authority of law and

not by any executive order. Unless the executive is

specifically empowered by law to give any exemption, it

cannot say that it will not enforce the law as against a

particular person. No Court can give a direction to a

Government to refrain from enforcing a provision of law".

9. In Supreme Court Employees' Welfare Association v.

Union of India and another (supra), in paragraph 51, this Court

stated as follows:

"51. There can be no doubt that no court can direct a

legislature to enact a particular law. Similarly, when an

executive authority exercises a legislative power by way

of subordinate legislation pursuant to the delegated

authority of a legislature, such executive authority

cannot be asked to enact a law which he has been

empowered to do under the delegated legislative

authority.

10. Within our Constitution, we have specifically demarcated

the ambit of power and the boundaries of the three organs of

the Society by laying down the principles of separation of

powers, which is being adhered to for carrying out democratic

functioning of the country. So far as the legislation is

concerned, the exclusive domain is with the legislature.

Subordinate legislations are framed by the executive by

exercising the delegated power conferred by the Statue, which

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is rule making power. The judiciary has been vested with the

power to interpret the aforesaid legislations and to give effect

to them since the parameters of the jurisdiction of both the

organs are earmarked. Therefore, it is always appropriate for

each of the organs to function within its domain. It is

inappropriate for the courts to issue a mandate to legislate an

Act and also to make a subordinate legislation in a particular

manner. In this particular case, the High Court has directed

the subordinate legislation to substitute wordings in a

particular manner, thereby assuming to itself the role of a

supervisory authority, which according to us, not a power

vested in the High Court. It is also by now settled law that so

far exemption clauses are concerned, there should be strict

interpretation of the same as has been held by this Court

repeatedly. Suffice will be to refer to very recent decisions of

this Court in Bhai Jaspal Singh and another v. Assistant

Commissioner of Commercial Taxes and others (2011) 1 SCC

39 and Commissioner of Central Excise, New Delhi v. Hari

Chand Shri Gopal and others (2011) 1 SCC 236. We would also

extract a passage from the decision of the Supreme Court in

Novopan India Ltd. Hyderabad Vs. Collector of Central

Excise and Customs, Hyderabad, reported at 1994 Supp (3) SCC

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at page 606, wherein this Court has held that:

"16. .........such a notification has to be interpreted in the

light of the words employed by it and not on any other

basis. This was so held in the context of the principle

that in a taxing statute, there is no room for any

intendment, that regard must be had to the clear

meaning of the words and that the matter should be

governed wholly by the language of the notification i.e. by

the plain terms of the exemption."

11. During the course of the arguments, it was also brought

to our notice that subsequent to the order of assessment, an

appeal was filed, which came to be dismissed, subsequent to

which a second appeal was filed before the Tribunal, which

allowed the appeal giving effect to the orders of the High

Court. Since, in our considered opinion, the High Court

exceeded its jurisdiction in passing the aforesaid orders and in

issuing the directions for inserting certain additional words

into notification of exemption issued by the Uttar Pradesh

Government, we set aside the impugned judgment and order

passed by the High Court and also the order passed by the

Tribunal. As the Tribunal had given effect to the order of the

High Court, the order of the Tribunal is hereby set aside. Even

otherwise Courts can always take notice of the subsequent

events and developments that had taken place subsequent to

the filing of the writ petition or filing of the special leave

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petition and it is also within the jurisdiction of this Court to

pass consequential orders to give effect to the remedies

available to the parties. Considering these facts and

circumstances from the aforesaid angle, we after setting aside

the order passed by the High Court and also by the Tribunal as

also by the First Appellate Court, remit back the matter to the

First Appellate Court to consider the matter de novo taking

into consideration the notification as existing and which was

issued on 12th September, 1986, and decided the matter

without making any addition/alternation thereto.

12. However, counsel appearing for the respondent has

submitted before us that it would be possible for the

respondent to prove and establish that the tractor

manufactured by the respondent is below 25 PTOHP. If certain

exemption is available on the factual aspect, such benefit must

be provided to an assessee but that is possible only when the

respondent is able to prove and establish with cogent and

reliable materials that he is entitled to the benefit of the

exemption notification. Therefore, we allow the parties to lead

additional evidence before the appellate authority, which shall

be allowed to be filed within four weeks from their date of

appearance and, thereafter, the appellate authority shall

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proceed to decide the matter de novo in the light of the

records available and also in the light of the exemption

notification.

13. This appeal stands allowed to the aforesaid extent as

indicated and leave the parties to bear their own costs. The

parties shall appear before the appellate authority on 2nd May,

2011, for obtaining further dates in the appeal. We also

request the appellate authority to take up the matter and

dispose of the same as expeditiously as possible, preferably

within a period of three months from the date of receipt of the

additional evidence, if produced by the parties.

...........................................

J.

(DR. MUKUNDAKAM SHARMA)

..............................................J.

(ANIL R. DAVE)

New Delhi;

April 20, 2011.

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