Explore the constitutional issues surrounding the Central Government’s Excise Duty collection from September 2016 to June 2017. Uncover the research and discussions on the implications, legal perspectives, and the appellant’s efforts to address the matter through writ proceedings.
Through this write-up, I aim to share with readers my views on the topic mentioned above and the research work I undertook in 2016-17. I was on the path to filing a writ regarding the matter, but unfortunately, I couldn’t proceed with it. This piece is intended solely for discussion and serves as an appeal. I hope readers will appreciate the insights provided.
STATEMENT OF FACTS
1. The Central Government (hereinafter termed as “CG”) with an intention to implement Goods & Services Tax (hereinafter termed as “GST”) has introduced The Constitution (One Hundred & Twenty-Second Amendment) Bill, 2014 (hereinafter termed as “Bill”) in the House of the People (hereinafter termed as “Lok Sabha”) on December 19, 2014 in terms of Article 368 of The Constitution of India. The bill was subsequently passed by the Lok Sabha on May 06, 2015.
2. The Bill was introduced in The Council of States (hereinafter termed as “Rajya Sabha”) in terms of Article 368 of The Constitution of India and was passed by the Rajya Sabha with amendments on August 03, 2016. Further the Lok Sabha on August 08, 2016 passed the Bill as amended by Rajya Sabha.
3. On September 08, 2016 the bill received the assent of The Hon’ble President of India after being ratified by more than half of Legislatures of The States and was enacted as The Constitution (One Hundred & First Amendment) Act, 2016.(hereinafter termed as “Amendment Act”)
4. On the path of implementation of GST the CG issued Notification No. 2216 dated September 10, 2016 for giving effect to Section 12 of The Amendment Act through which a new Article 279A was being inserted after Article 279 in the Constitution of India in relation to formation and working of GST Council. Further on September 15, 2016 The Hon’ble President of India vide Notification no. 2255 dated Sept. 15, 2016 has constituted GST Council
5. On September 16, 2016 the CG, vide its Notification No. 2278 dated Sept. 16, 2016 had brought in effect all the sections of The Amendment Act, thereby resulting in amendment to all the concerned Articles of Constitution of India.
6 The Appellant after reading and analyzing the effect of said amendment to the Constitution of India had formed a view that the CG had intentionally waived its Power to Levy Duty of Excise in terms of amendment to Entry No. 84 of List I (hereinafter termed as “Union List”) of Seventh Schedule of The Constitution of India. Further the appellant was also of view that The Service Tax levied under Chapter V of The Finance Act, 1994 would also become ultra-vires to the Constitution of India in terms of amendment to Article 248 of the Constitution read with Entry 97 of the Union List.
7 In order to bring the matter before the CG, the appellant on Sept. 18, 2016 has made a written submission to The Prime Minister of India, through Government Portal (pgportal.gov.in) vide grievance registration no. PMOPG/E/2016/0352773.
8 Further following communication were also made to authorities as mentioned below.
| Date | Mode | Authority | Remarks |
| 21/09/2016 | Letter | The Hon’ble Finance Minister | EC066404924IN |
| The Hon’ble Minister of Law & Justice | EC066404819IN | ||
| The Hon’ble Minister of State (Finance) | EC066404703IN | ||
| The Hon’ble Secretary (Revenue) | EC066404822IN | ||
| 22/09/2016 | The Hon’ble Finance Minister | For Immediate action on the issue the soft copy of above letter mailed with copy of speed post receipt. | |
| The Hon’ble Minister of Law & Justice | |||
| The Hon’ble Minister of State (Finance) | |||
| The Hon’ble Secretary (Revenue) | |||
| 25/09/2016 | Prime Minster Website | The Hon’ble Prime Minister of India | PMOPG/E/2016/0365200 |
| 13/10/2016 | The Hon’ble Finance Minister | A reminder mail was given to all the dignitaries. | |
| The Hon’ble Minister of Law & Justice | |||
| The Hon’ble Minister of State (Finance) | |||
| The Hon’ble Secretary (Revenue) | |||
| 24/11/2016 | Letter | The Ho’ble President of India | EC073022418IN |
| The Hon’ble Prime Minister of India | EC073022404IN | ||
| The Attorney General for India | EC073022421IN | ||
| 04/12/2016 | The Ho’ble President of India | A reminder mail was given to all the dignitaries. | |
| The Hon’ble Prime Minister of India | |||
| The Attorney General for India | |||
| The Hon’ble Finance Minister | |||
| The Hon’ble Minister of Law & Justice | |||
| The Hon’ble Minister of State (Finance) | |||
| The Hon’ble Secretary (Revenue) |
9 The appellant had tried all ways to obtain clarification from the CG. However, his efforts remain unfruitful. Thus, the appellant has filed an appeal under Article 226 before this Hon’ble High Court for issuing appropriate writ and provide such relief as the Hon’ble High Court may deem fit.
GROUNDS OF APPEAL
A. Submissions on Power of CG to Levy duty of excise under the constitution of india.
A.1 The Parliament vide Entry No. 84 of Union List of Seventh Schedule of the Constitution of India read with Article 246, was having the power to make laws in respect of duties of excise on goods manufactured or produced in India. The duty of Excise was thus levied by CG under the Central Excise Act, 1944.
A.2 Entry 84 of the Union List of Seventh Schedule of the Constitution of India was read as under (prior to Sept. 16, 2016)
“84. Duties of excise on tobacco and other goods manufactured or produced in India except—
(a) alcoholic liquors for human consumption;
(b) opium, Indian hemp and other narcotic drugs and narcotics,
but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry.”
A.3 The CG on September 16, 2016 amended the said Entry 84, through Section 17(a) of the Amendment Act. Thus, after the said amendment the Entry 84 of the Union List of the Seventh Schedule of Constitution of India is read as under –
“84. Duties of excise on the following goods manufactured or produced in India, namely: —
(a) petroleum crude;
(b) high speed diesel;
(c) motor spirit (commonly known as petrol);
(d) natural gas;
(e) aviation turbine fuel; and
(f) tobacco and tobacco products.” [ as amended]
A.4 The above amendment made by the CG had intentionally curtailed the law-making powers of Parliament of India with respect of duties of excise. In other words, the Parliament can make laws for levy of duty of Excise on certain specified products w.e.f. September 16, 2016.
A.5 Further the appellant would also like to bring to the kind attention of your honour that it is a well settled law of land that –
“Any law inconsistent with the Constitution of India shall become void to the extent it is inconsistent”
A.6 Thus the appellant requests your honour to declare the provisions of the Central Excise Act, 1944 ultra vires to the extent it is in consistent with Article 246 read with Entry 84 of Union List of the Seventh Schedule of the Constitution of India as amended by the Amendment Act.
B Submissions on power of cg to levy service tax under The Finance Act, 1994.
B.1 The Parliament of India by the authority provided under the residuary provision of Article 248 read with Entry No. 97 of List-I (Union List) of the Seventh Schedule of the Constitution of India enacted The Chapter V of The Finance Act, 1994 (hereinafter referred as “Service Tax Act”) which authorized Central Government to levy & collect Service Tax on Services.
B.2 For the purpose of reference, Article 248 of the COI is reproduced below –
“Article.248. Residuary powers of legislation. –
(1) Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List.
(2) Such power shall include the power of making any law imposing a tax not mentioned in either of those Lists.”
B.3 The said article was amended vide section 3 of the Amendment Act by the CG w.e.f. Sept. 16, 2016 vide aforementioned notification. The amended article shall be read as under –
“Article.248. Residuary powers of legislation. –
(1) Subject to article 246A, Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List.
(2) Such power shall include the power of making any law imposing a tax not mentioned in either of those Lists.”
B.4 The CG vide the said amendment by insertion of words “Subject to Article 246A” had put a limitation on the residuary powers provided to the Parliament by the said article. To understand the said limitation, it would be better to read and understand what Article 246A provides.
B.5 Article 246A was inserted vide section 2 of The Amendment Act w.e.f. Sept. 16, 2016 which provides the power to The Parliament & The Legislature of a State to making laws with respect to goods and services tax imposed by the Union or by such State. Further Article 366 of The COI was amended for providing definition of “Goods and Services Tax” under clause (12A), “Services” under clause (26A) & “State” under clause (26B) vide Section 14 of said Amendment Act which is effective from Sept. 16, 2016.
B.6 The aforementioned article and clauses are reproduced here for the purpose of reference –
“246A. (1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State.
(2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
Explanation. —The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article 279A, take effect from the date recommended by the Goods and Services Tax Council.’’
In article 366 of the Constitution,—
(i) after clause (12), the following clause shall be inserted, namely:—
‘(12A) “goods and services tax” means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption;’;
(ii) after clause (26), the following clauses shall be inserted, namely:—
‘(26A) “Services” means anything other than goods;
(26B) “State” with reference to articles 246A, 268, 269, 269A and article 279A includes a Union territory with Legislature;’
B.7 The said amendment to Article 248 puts a limitation on the residuary powers of the Parliament. The said limitation is that ‘the Parliament can enact any law under the Article 248 read with Entry No. 97 of Union List of the Seventh Schedule of the Constitution of India except a law relating to Goods & Service Tax.’ Thus, in view of above amendment Service Tax Act shall become void as the power under which it was enacted by the Parliament, has been expressly withdrawn by the CG.
C. Submissions transitional provision under section 19 of the amendment act.
C.1 Section 19 of the Amendment Act provides for transitional benefit to Governments and authorities. The same is reproduced here for reference –
“19. Notwithstanding anything in this Act, any provision of any law relating to tax on goods or services or on both in force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until expiration of one year from such commencement, whichever is earlier.”
C.2 Prior to elaborating the transitional provision, appellant would like to bring to the kind attention of your honour that –
“Who can levy & collect taxes & duties in India?”
- Central Government by the authority law of enacted by the Parliament.
- State Government by the authority law of enacted by the Legislature of such state.
- Panchayats (Article 243H) & Municipalities (Article 243X) by the authority, provided to them under a law enacted by the Legislature of State.
- Regional Council and District council created under the provisions of Sixth Schedule of the COI for Administration of Tribal Areas in the States of Assam, Meghalaya, Tripura and Mizoram, by the authority provided to them under the same schedule.
C.3 Further, the terms “Parliament” & “Legislature” appears many a times in the Constitution of India. The question arises that to whom they refer? Is there any definition of “Parliament” and “Legislature” provided in the Constitution of India?
C.4 Article 79 of the Constitution of India provides the answer to above question for the term “Parliament” which is read as under –
“There shall be a Parliament for the Union which shall consist of the President and two Houses to be known as respectively as the Council of States and the House of People.”
C.5 From the above reproduced Article 79 it can be clearly concluded that the President, along with Lok Sabha & Rajya Sabha is termed as the “Parliament”.
C.6 Similarly Article 168 of The Constitution of India provides the answer to the question raised for the term “Legislature”. The said article is reproduced below –
“(1) For every State there shall be a Legislature which shall consist of the Governor, and –
(a)In States of in the States of Andhra Pradesh, Bihar, Madhya Pradesh, Maharashtra, Karnataka, Tamil Nadu and Uttar Pradesh, two Houses;
(b) in other States, one House.
(2) Where there are two Houses of the Legislature of a State, one shall be known as the Legislative Council and the other as the Legislative Assembly, and where there is only one House, it shall be known as the Legislative Assembly”
C.7 From the above reproduced Article 168 it can be clearly concluded that the Governor of State, along with Legislative Assembly of State & Legislative Council of State (if any) are termed as the “Legislature”.
C.8 Now a question arises – Who can repeal or amend a law? The answer to this question is simple and logical too. Generally the authority that enacts a law can only amend or revoke it. Thus, in India –
- Law enacted by the Parliament can be revoked by the Parliament.
- Law enacted by the Legislature of a State can be revoked by such Legislature.
- Law enacted by authorities, such as Municipal Corporation, Panchayats, Regional Council & District Council can be revoked by such authorities.
C.9 The said transitional provision as provided under section 19 of the Amendment Act, can read and interpreted in following two ways –
(a) any provision of any law relating to tax on goods or services or on both in force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or repealed by a competent Legislature or until expiration of one year from such commencement, whichever is earlier.
(b) any provision of any law relating to tax on goods or services or on both in force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or repealed by a other competent authority or until expiration of one year from such commencement, whichever is earlier.
C.10 As discussed in Para C.9 (a) supra, the section provides the transitional benefits to any provision of any law relating to tax on goods or services or on both in force in any State unless amended or repealed by a competent Legislature.
“Competent Legislature” here refers to Legislature of State and not the Parliament. The Constitution framers have clearly differentiated between the term “Parliament” & “Legislature”.
C.11 In Draft Constitution of India, the Constitution framers has distinctly provided for “Constitution of Parliament” under Article 66 (Article 79 today) & “Constitution of Legislatures in States in Part I of the First Schedule” under Article 148 (Article 168 today).
C.12 Further, during the discussion in Constituent Assembly on January 03, 1949 on Article 66 of Draft Constitution of India, one member “Begum Aizaz Rasul” moved an amendment to said article 66 which is as under [relevant extracts of debates of Constituent Assembly]
“Begum Aizaz Rasul (United Provinces: Muslim) : Sir, I beg to move:
“That in article 66, for the words “There shall be a Parliament for the Union which’, the words ‘The Legislature of the Union shall be called the Indian National Congress and’ be substituted.”
The Article will then read:
“The Legislature of the Union shall be called the Indian National Congress and shall consist of a President and two Houses to be known respectively as the Council of States and the House of the People.”
Sir, my object in moving this amendment is that the word ‘Parliament’ may be substituted by a name which will convey to the people of India and to the world the name of the party that instituted the struggle for the freedom of the country. If the words ‘Indian National Congress’ are substituted for the word ‘Parliament’, the participation of the Congress in the national struggle will be permanently commemorated. This will also save the Congress from degenerating in course of time as all political parties are bound to do. It will liberate the Indian people from the glamour of the Congress and make it possible for them to exercise their vote democratically for otherwise the name of the Congress will unduly influence their emotions. This is more necessary because the Congress in the past was a movement rather than a party. It represented the Nation’s urge to freedom and attracted people to suffering and sacrifice. Today, with its transformation into a party, it may become a happy hunting ground for political adventurers and successful black-marketeers.
The word ‘Congress’ is not new. It is used for the American Parliament and if adopted for India will certainly convey to the world the ideals and principles for which the Indian National Congress stands for. I therefore think that it is in the fitness of things that in this Constitution of India, the words ‘National Congress’ should be substituted for the word ‘Parliament’. I hope that this suggestion of mine will receive the attention and sympathy it deserves. With these few words I move my amendment.
C.13 The amendment moved by Begum Aizaz Rasul, was negatived by the Constituent Assembly and Article 66 was passed without any amendments. This also makes it clear that the intention of Constitutional framers was to call central legislative body as “Parliament”.
C.14 Further, the appellant would also like to bring to the kind attention of your honour that to a great extent the Constitution of India is influenced by Government of India Act, 1935. The federal scheme, office of Governors, powers of federal judiciary, etc. was drawn from Government of India Act, 1935.
C.15 The concept of federal structure was adopted by the Constitutional framers from Government of India Act, 1935, which provided for establishment of Federal Legislature under section 18 and establishment of Provincial Legislature for every Province under section 60. However, the Constitutional framers instead of calling central legislative body as “Federal Legislature” or “Union Legislature” preferred calling central legislative body as “Parliament”, which shows its supremacy over all other legislative bodies in the country.
C.16 The above all discussion shows that the intention of Constitutional framers was to call central legislative body as “Parliament” and not “Legislature”.
C.17 Without prejudice to above submissions, the appellant would also like to submit that the term “Legislature” has been used to refer “Parliament” in just one article, i.e., Article 323B, which was done through an explanation in the article, which provides that for the purpose of the said article “Appropriate Legislature” shall means “Parliament”. The said article is reproduced here below –
“323B. Tribunals for other matters. – (1) The appropriate Legislature may, by law, provide for the adjudication or trial by tribunals of any disputes, complaints, or offences with respect to all or any of the matters specified in clause (2) with respect to which such Legislature has power to make laws.
(2) The matters referred to in clause (1) are the foll0-wing, namely: –
(a) levy, assessment, collection and enforcement of any tax;
(b) foreign exchange, import and export across customs frontiers;
(c) industrial and labour disputes;
(d) land reforms by way of acquisition by the State of any estate as defined in article 31A or of any rights therein or the extinguishment or modification of any such rights or by way of ceiling on agricultural land or in any other way;
(e) ceiling on urban property;
(f) elections to either House of Parliament or the House or either House of the Legislature of a State, but excluding the matters referred to in article 329 and article 329A;
(g) production, procurement, supply and distribution of foodstuffs, (including edible oilseeds and oils) and such other goods as the President may, by public notification, declare to be essential goods for the purpose of this article and control of prices of such goods;
(h) offences against laws with respect to any of the matters specified in sub-clauses (a) to (g) and fees in respect of any of those matters;
(i) any matter incidental to any of the matters specified in sub-clauses (a) to (h).
(3) A law made under clause (1) may-
(a) provide for the establishment of a hierarchy of tribunals;
(b) specify the jurisdiction, powers (including the power to punish for contempt) and authority which may be exercised by each of the said
tribunals;
(c) provide for the procedure (including provisions as to limitation and rules of evidence) to be followed by the said tribunals;
(d) exclude the jurisdiction of all courts, except the jurisdiction of the Supreme Court under article 136, with respect to all or any of the matters falling within the jurisdiction of the said tribunals;
(e) provide for the transfer to each such tribunal of any cases pending before any court or any other authority immediately before the establishment of such tribunal as would have been within the jurisdiction of such tribunal if the causes of action on which such suits or proceedings are based had arisen after such establishment;
(f) contain such supplemental, incidental and consequential provisions, (including provisions as to fees) as the appropriate Legislature may deem necessary for the effective functioning of, and
for the speedy disposal of cases by, and the enforcement of the orders of, such tribunals.
(4) The provisions of this article shall have effect notwithstanding anything in any other provision of this Constitution or in any other law for the time being in force.
Explanation.-In this article, “appropriate Legislature”, in relation to any matter, means Parliament or, as the case may be, a State Legislature competent to make laws with respect to such matter in accordance with the provisions of Part XI.’.
C.18 From all the above discussions it is clear that Parliament cannot be covered under the term “Competent Legislature” in the Section 19 of the Amendment Act for purpose of providing transitional benefits to laws enacted by Parliament.
C.19 Further, as discussed in Para C.9 (b) supra, the section provides the transitional benefits to any provision of any law relating to tax on goods or services or on both in force in any State unless amended or repealed by an other Competent Authority. Now here the question arises – To whom does Competent Authority refers?
C.20 The Constitution of India does not define the term “Authority”. The term has been defined in Black’s Law Dictionary as –
“The official right or permission to act, esp. to act legally on another’s behalf; esp., the power of one person to affect another’s legal relations by act done in accordance with the other’s manifestations of assent;”
C.21 Thus in view of above it can be understood that the term “Competent Authority” under the transitional provision, can never cover with in ambits the Parliament of India, because the Parliament is the supreme body in India and it delegates powers to States and other authorities. Further, Considering Parliament is covered by the term “Competent Authority” will be a derogatory to the integrity of the Parliament.
C.22 Thus as per my understanding the term “competent authority” of the transitional clause of the Amendment Act, only covers authorities, such as Municipal Corporation, Panchayats, Regional Council & District Council, who are levying and collecting the duties and taxes in their jurisdiction.
C.23 Thus from above all discussions it is clear that the transitory provision under section 19 of the Amendment Act does not provides any transitional benefits to laws enacted by the Parliament.
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