Sukumar Mukhopadhyay: Is economic policy justiceable?

This word “justiceable” is not available in an ordinary dictionary. It is only found in a Law Lexicon. That is because it is a purely legal concept. It is not the same thing as justifiable. Justiceable means that one cannot go to the Court against it. So it means it is beyond the Court’s jurisdiction.

Economic policies can be monetary, fiscal or others. The case laws are mostly on fiscal issues. Most people have gone to court against high or unjust tax impositions. The question that the Courts had to decide first before giving a decision on the merits of the case was whether the issue of excessiveness of tax could be agitated before the Court. Higher or lower tax is a matter of fiscal policy which is a part of the overall economic policy which the finance minister and Parliament had jurisdiction to deal with. If the Courts interfere in making tax policy by striking down a particular rate of tax because it is too high, then the task of  designing the tax policy would pass on from Parliament to the High Courts and the Supreme Court.

The challenge to the high rate of tax, therefore, is always presented before Courts not as a case of mere high and excessive tax but as one which has gone to harm and hinder the fundamental right as in Article 19(1)(g) which is “the right to practise any profession or to carry on any occupation, trade or business”. The case presented before the Court is usually that the excessive tax has ruined the business either by itself or in comparison to the competitors, and therefore it has affected adversely the right to trade and  business.

We may now examine some important cases decided by the  Supreme Court. [ Indian Express Newspapers v. U.O.I. - AIR 1986 SC 515 ]

In this case several newspapers approached the Supreme Court challenging the impost of heavy and exorbitant import duty, by withdrawing the existing exemption, on the ground that the action was against freedom of the Press as enshrined in Article 19(1)(a) of the Constitution which guarantees freedom of speech and expression. The Supreme Court held that there is “intimate connection of newsprint with freedom of the Press” because “newsprint constitutes the body if expression happens to be the soul”. In view of this the Supreme Court held that a levy on newsprint needs to be tested on stricter grounds.

   Thus we find from this judgment that the Supreme Court has settled the law in this way that in the case of ordinary fiscal levies, the challenge before the Court cannot be only on the ground that they are unreasonable and have not taken into account certain circumstances. They have to prove that the levies are openly or covertly confiscatory in nature (in which case the constitutional guarantee of right to trade and employment is attracted). In the case of newsprint, merely proving burdensomeness is enough to challenge the levy.

[ Hind Plastics v. C.C., Bombay - 1994 (71) E.L.T. 325 (S.C.) ]

The issue was whether double taxation of packing material was illegal. The Supreme Court said that it could be harsh but not illegal. “What should be taxed is a matter not to be decided by the Courts but by appropriate instrumentalities of functionaries,” held the Supreme Court.

[ Pankaj Jain Agencies v. U.O.I. - 1994 (72) E.L.T. 805 (S.C.) ]

In this case the issue was that by the amendment of a notification the impact of customs duty on certain machinery increased in the case of the petitioners .  The Supreme Court held in this case the following :

“A tax, in particular, in the nature of duties of customs is not per se violative of Article 19(1)(g). Mere excessiveness of tax is not by itself violative of Article 19(1)(g). This question cannot be divorced from the nature of the right to import."

[ Kasinka Trading v. U.O.I. - 1994 (74) E.L.T. 782 (S.C.)]

            In this case under the Customs Act an exemption notification has withdrawn in public interest.  The Supreme Court held that the State has power to supersede or revoke an exemption notification in public interest.  The doctrine of promissory estoppel does not get attracted  unless a malafide on the part of a government is established. "

[Shrijee Sales Corporation v. U.O.I. - 1997 (89) E.L.T. 452 (S.C.)]

 In this judgement the Supreme Court has summarised the then existing status of the theory of promissory estoppel [while deciding on the validity of its previous judgment in the Kasinka case - 1994 (74) E.L.T. 782 (S.C.)] and agreed with this judgement.  It decided the principle by using the following words:

“.... the principle of promissory estoppel is applicable against the Government but in case there is an supervening public equity, the Government would be allowed to change its stand "

     Analysing all the above judgments we find that it is well settled now that mere excessiveness of tax is not justiceable. One cannot go to the Court on the ground that the tax rate is very high and therefore the profit has got reduced or he is finding difficulty in cut-throat competition with the indigenous or foreign competitors. Had it been so, all the cases of notification issued increasing or decreasing the tax rates or all the cases of anti-dumping impositions would go before the Courts which would create an absurd situation and it would completely upset the distribution of powers between the executive, legislature and judiciary.

     So in order to make it justiceable, the petitioner has to prove that the burdensomeness or excessiveness has robbed him of his right to practice any profession or to carry on any occupation, trade or business. Here it is the right to trade or business which is relevant. That is to say, he has to prove that the excessive tax has been hit by Article 19(1)(g) of the Constitution. So far no case has succeeded before the High Courts and the Supreme Court on this count, though high levy on newsprint has been struck down on the mere ground of burdensomeness. The reason given by the Supreme Court is that in the case of a fiscal levy on newsprint, it is to be remembered that “newsprint constitutes the body if expression happens to be the soul”. In view of the intimate connection between newsprint and freedom of Press, which is enshrined in the freedom of speech under Article 19(1)(a), even if burdensomeness of tax is proved, the tax goes against Article 19(1)(g).

      Another important  conclusion is that a notification in taxation is a subordinate legislation and is also a legislative action because of which it cannot be justiceable in respect of the public interest in which it is declared to be issued.  The Court cannot judge whether the public interest has been exercised by Government justly or not. If the Government declares that the notification is in the public interest, it cannot be challenged in the Court. Only the Parliament can debate it when it is placed before it.