INDIAN EXPRESS NEWSPAPERS (BOMBAY) PRIV.ATE LTD. & ORS. ETC. ETC. v. UNION OF INDIA & ORS. ETC. ETC .

287

INDIAN EXPRESS NEWSPAPERS (BOMBAY) PRIV.ATE LTD. & ORS. ETC. ETC. B v.

UNION OF INDIA & ORS. ETC. ETC . • December 6, 1984 c [0. CHINNAPPA REDDY, A.P. SEN AND E.S. VENKATARAMIAH, JJ .)

· Constitution of India 1950, Article 19(1)(a)-Freedom of speech and expres. ,ion-Whether includes Freedom of press-Restrictions other than those tn Article 19~2)-Whether reasonable-Interference in the name of Public Interest-Whether Justified. D Roll of PreSJ and Newspaperr-Duty of Court to held the balance even and to strike down any unconstitutional invasion of press.

fandamental rights under Article J9(J)(a) and (g)-Whether different from right conferred by First Amendment to American Constitution.

Article J3(3)(a)-Notification under section 25 Customs Act 1962-Contrary to fundamental rights-Whether to be struck down.

Article 14-Classijication a/ newspapers for levying customs duty-Whether discriminatory. Article 41-Duty of State to encourage education of mas1es through media ofpm•-Necesslty of. F

Entry 87 and 93, List 1. Seventh Schedule-Newspaper Industry-Levy of tax-Competency of Parliament to enact laws-Scrutiny by Courts When arises -Tax transgressing into the field of freedom of speech and expression and stifles that freedom-Whether unconstitutional.

Article 32-Validity of tax-Duty of Court-Not to be burdensome-New1.. G paper Industsy not to be sif,gled out-Custom Duty on newspaper-Whether tax on know/edge-People's right to know-Imposition of tax-Government to be more cautious.

Interpretation of statuteJ :

Co111tltutlon of India 1950, Article 19(/)(al-l•terpretation of-American H

288 SUPRBl.tll COURT REPORTS [1985] 2 S.C.11.. !...'.· A cases-Whether sole guide-Help In understaMlng the ba&ic principles offrtetfom of 1peech and expre11lon. • Statutes Taxing Newsprint-Tests for determining vires of-Different from other taxing statutes-Grounds of challenge . .

Customs Act/ 1962, Settion '25-Power to grant exemption-Whether B legislative power-Whether notlfi~ation a Subordinate plece. of legislation - Whether questi'onab/e on the Kround of unreasonableness-Power of Govr",.nment · di1cTetionary but not unrestricted. '

Customs Act, 1962, Section 25-Notification Substitution of by another-- Whether former notification would rerire if the latter is held inra/id. • Customs Tariff Act, 1975, Section 2 and Seco•d Schedule Heading 48.01/21 -Sub-heading 2-Newsprint-lmport duty and auxiliary levy at a flat rate-- Validity of.

Under the Indian) Tariff Act. 1934, there was a levy of customs duty on imPQrted.!lllper. Exemption, however, had been granted for import of white, grey or unglazed newsprint from the levy of any kind of cus\oms duty in excess of !.5% ad vaforem but subsequently a specific import duty of Rs. 50 per MT was levied on newsprint imports upto 1966. The Inquiry Committee on Small Newspapers examined the question of customs duty on newsprint and Sl!bmitted its report in 1965 recommending total exem~tion of newsp;int from Customs duty. Pnrsilant to the said recommendation, the Government abolished customs duty on newaprint altogeth<:r in the year 1966. In 1971, a rogutatoey duty of2·1/2% wa1 levied on newsprint imports. This 2-1/2% regulatory duty · was abolished and was converted into 5% auxiliary duty by the Finance Act of

1973. On the Customs Tariff Act 1975 coming into force, the Indian Tariff Act 1934 was repealed. Under aection 2 read with Heading No. 48.01/21 of the Fit11t Schedule to the 197S Act, a levy of basic customa duty of.40% ad valorem was imposed on newsprint. However, the 5% auxiliary duty ,levied from April I, 1973 continued to be in OP,eration which was also totally abolished in F July 1977. The total exemption from customs duty on newsprint continued till March J, 1981 when notification dated July 15, 1977 granting total exemp-. tion from customs duty superseded by the issue of a fresh notification under which publishers oi newspapers had to pay 10% ad va/orem customs duty on import~rnewsprint. By another notification issued at about the same time the auxiliai:y duty imposed by the Finance Act of 1981 above 5% ad 1•a/orem was exempted in the case of newsprint.· The result was that a total duty ·of 15% adv4lorem came to be imposed on newsprint for the year 1981·82, which led to the increase in the price of newspaper resulting in fall in circulation of news.. papers. In the first set of writ petitions this 15% levy was challenged. • During the pendency of thCse writ petitions while Customs Tariff Act, 1975 was amended levying 40% ad valorem plus Rs. 11)00 pet MT as customs duty on newsprint, the auxiliary duty payable on all goods s~bject to customs duty was increa•ed to 50% ad vaforem .. D~t by notification dated Februray 82.

iNOiAN llXPRE"!l v. UNION ' 289 1982 issued under section 25(2) of the Customs Act 1962 the notification dated March 1, 1981 was superseded and Rs. 550 per tonne was imposed as customs duty on newsprint and auxiliary duty was fixed at Rs. 275 per tonne. In all Rs. 825 per tonne of newspaper had to be paid as duty.

'Under the newsprint policy of the Government there were three sources of supply of newsprint--{i) high seas sales, (ii) sales from the buffer stock built up by the State Trading Corporation which includes imported newsprint, and. B (iiQ newsprint manufactured in I11dia. Imported newsprint is an important component of the total quantity of newsprint utilised by any newspapef · establishment . • The validity of the imposition of import duty on newsprint imported· from abroad under section 12 of the.Customs Act 1962 (Act 52of1962) read with section 2 and Heading 1'0. 48.01/21 Sub-beading No. (2) in the First Schedule to the Customs Tariff Act, 1975 (Act 51 of 1975) and the levy of auxiliary duty under the Finance Act, 1981 on newsprint as modified by not.itications issued under aection 25 of the Customs Act 1962 with effect from March 1, 1981 was challenged in the writ petitions.'

In the writ petitions it was contended :(I) that the imposition of the import duty has the direct effect of crippling the freedom of speech and expres• D sion guaranteed by the Constitution as it led to the increase in the price of news- papers and the inevitabJe consequence of reduction Qf their circulation ; (2) that with the growth of population and literacy 'in the country every news- paper is expected to register an automatic growth of at Jeast S% in its. c:i,rcuJa- tion every year but this growth is directly f.lmpeded by tl!e ~ncrease in the price of newspapers ; (3) that the method adopted by the Custom! Act, 1962 and the Cu11toms Tariff Act, l 97S in determining the rate of impOrt duty has e,g;posed the newspaper publishers to Executive interference; (4) that there w~ no need to impose customs duty on newsprint which had enjoyCd tQtaJ .exemptl9ri froll) its payment till March l, 1981, as the foreign exchange position was quite comfortable. Under the scheme in force, the State Trac\ing Corporation of India sells newsprint to small newspapers with a circulatiOn of less than 15,000 at a price which does not iCclude any jmport duty, to medium newspapers witbr F a circulation between 15,000 and 50,000 at a price which includes 5% ad valorent duty (now Rs. 275 per MT) and to big1newspapers having a circulation of over 50,000 at a price which includes the levy of 15% ad valorem duty (now Rs. 825 per MT). This classification of newspapers' into big, medium and small newspapers ii; irration,al as the purchases on high seasiare sometimes effected by a publillher owning many newspapers which may belong to different classes ; (5) that the enormous increase in the price of newsprint subsequent to March 1, G 1981 and the iatiationary economic conditions which led to higher cost of production have made it impossible fot the industry to bear the duty any • tonger. Since the capacity to bear the duty is an .essential element in determin- ing the reasonableness of the levy, the continuance of the levy i• violative of Article 19(1)(a) and Article 19(l)(g) of th• Constitution. The imposition of the levy on large ne,..papers by the Executiv<>'is done with a view to stiflina circula- tion of newspapers which are highly critical of the perfonnance of the admlnis- ff

, ' ___ ~

290 Sl/PIU!Mll COURT llEPOl!.TS [1985]' 2 s.c . 11.. trat!~n. .The classification of newspapers into small, medium and big for puriioses of levy of import duty iB violative of Article 14 of the Constitution ; and (6) that the power of' the Government to levy taxes of any kind on the ne\VSpaper establishment rings the death.knell of the freedom of press and would be .totally against the spirit of the Constitution.

The Union of India contested the writ petitions alleging (I) that the Govern- ment bad levied the duty in the public interest to augment the rcveoue of the o·ovcrnmcnt. When exemption is given from the customs duty, the Executive has to satisfy itself fhat there is some other corresponding pubJic interest justify- ing such exemption and that in the absence of any such public interest, there is no power to exempt but to carry out the mandate of Parliament which has fixed the rate of duty by the Customs Tariff Act, 1975 ; (2) that the classifica- • tion of'neWspapers for purposes of granting exemptiOn is done in the public c irtterest having regard to relevant considerations, and that the levy was not ma/a fide. Since every section of the society.has to bear its due share of the "economic burden of the state;·1evy of custdms duty on newsprint cannot be considered to be violative of Article 19(1) (a). The plea that the burden of taxation is e<ces- sive is an.irrelevant factor to the levy of import duty on newsprint ; (3) that the fact that the foreign exchange position was comfortable was no bar to the imposjtion of import cjuty ; and (4) since the duty imposed is an indirect tax which would be borne by the purcbaS<r of newspaper, the petitioner could not feel aggrieved by it. ·

Allowing theWrit Petitions,

2. :'There could not be any kind of restriction on the freedom of speech and expression other than those mentioned in Article 19 (2) and it is clear that thete could not be any interference with that freedom in the name of public interest. Even when clause (2) of Article 19 was <ubsequently substituted under the Constitution (First Amendment) Act, 1951 by a new clause which permitted the imposition of reasonable reStrictions on the freedom of speech and expresSion in the interests of sovereiloty and integrity of India, these urity of the State, friendly relations with foreign States, public order, decency- -or morality in relation to contempt of cout:t, defamation or incitement to an offence. Parliament did. not _choose to inclpde a clause enabliog the imposition of reasonable restrictions in the public in.terest. (3J2B-CJ • -~j

3. Fr~dom of press js thelleart of social and political intercourse. The press has now • .,.urned the role of the public educator making formal and non-for111al education possible in a large scale particularly in the developing world, wh~re television. and o\h\lr kinds of modern comlllQnication are 11ot fl '.

INDiAN EXPRESS v.· lJNlON ' ~91 still available for all sections of societ'y. The purp0se of the piess· is to 3.dvance the pubJic interest by pub!hhing facts and opiniOns withOut which. a demo- A cratic electorate cannot make responsible judgments. Newspapers being purveyors of news and views- having a bearing on public administi'ation very often carry material which Would not be palatable to governments and other authorities. With a view to thecking malpractices which inierfere with free flow of informatioO., democratic constitutions all over the world have made Provisions guaranteeing the fri!cdom of speech and expression laying 'down the limits of interference with it. [316B-D; HJ B It is the primary duty of all the national courts to uphold the said free-. · dom and invalidate all laws or administrative actions which interfere • with it, contrary to the constitu~ionaCmandate. [3l7A] . · Brij Bhushan & Ani-. v, The State of Delhi,' [1950} ·~;.C.R.' ·605, Bennett Coleman & Co. & OTs. v. Union of India & Ors·. [1973J 2 S.C.R. 757, Romesh Thappar v. The State of Madras; 1950 S.C.R. 594, Express Ne.wspapers (Privtite) c Ltd. &: Anr. v. Tile Union of India & Ors., [1959] S.C.R. 12 and Sakal Papers (P; Ltd. & Ors v. T7ze Unfon of India, (1962] 3 S.C.R. 842,fo//owed•. ·' - 1 Annals of Congress (1789-96) p. 141 ; D.R. Mankekar: The Press under ~Pressure (1973) p. 25 ; Article j9 ·of the Universal Declaration of Human Rights, [1948 : Article 19 of the International Covenant on Civil and Political Rights, 1966 ~·Article JO of the Europe~n Con11elztion on Human Rights: First Amend- D ment 'to the Constitution of the United States of America ; 'Article by Frank C. Newman and Karel Vasak on "Civil and political Rights' in the International Dimensions of Human Rights (Edited by Karel Vasak) Vo. l,pp.155·156; "Many VoiceS, One Worldn a publication of UNESCO containing the Final Report of - the International Commission for the Study of Communication Problems, Part V dealing with 'Communication Tomorrow' p. 265; Article entitled "Toward a G_eneral Theory of the First Amendment' by Thomas I. Emerson (The Yale Law E Journal, Vol. 72, 877 at p. 905: Second Press Commission Report (Vol.I. pp. 34.35). referred to. S. (i) Excluding sm1ll newspaper establishm1:nts · having circulation of less than about 10,000 ~opies a day, all other bigger ·newspaper establish~ meats have ·the characteristics of a large industry. The Governinent has to provide_ many services to them resulting in a big drain on the financial resources of the State as many of these services are heavily subsidized. F Naturally such big newspaper organisations have to contribute their due share to the public exchequer and have to bear the common fiscal burden like' au others. [324C ; EJ ·' (ii) While ex.amining the constitut"ionality of a law said tO be contra· veniag Article 19 (l) (a) Or the Constitutiori, the.decisions of ·the Supreme Court of the United States of America cannot be solely relied upon for guidance but _couid be taken into consideratiori fof understanding the basic G • .principles of freedom of speech and expressiyn and the need for that freedom in a democratic country.· [324F·G] (iii) The pattern of Article 19 (I) (a) and of Article.19(1)(g)ofth~: Indian Constitution is different from the pattern of the fitst AmCDdment to the American Constitution which is almost absolute in its terms. The rights guaranteed under Aniele 19 (I) (a) and Article 19 (I) (g) of the Constitution .ff

' arc to bC read alongwith clauses (2) and (6) of Article 19 which carve out areas A in respect or which valid legislation can be made. (324H ; 325AJ

p. 292

6. Newspaper industr)' has not been granted exemption from taxation in express terins. Entry 92 of List I of the Seventh· Schedule in the ·consti- tution empowers Parliament to make laws levying taxes on saJe or Purchase or newspapers and on advertisements . published therein. The power to levy customs duties on goods imported into the country is also entrusted to Parlia- B ment by Entry 83 in List I of the Seventh Schedu1e' to the ConStitution. [325B ; 326G] .. 7.- The First Amendment, to the Constitution of the United States of America is almost in absoJute terms and, therefore, r.o Jaw abridging the freedom of the press can be made by" the Congress. ·Yet the American Courts have recognised the power of the State to_ levy taxes on newspapers establish· ments.subjecttOjudicialreview.bycourts by the application of the due pro. c ccss of law principle. [328E-FJ

8. The police'Power•. taxation and eminent domain are all forms of social control which ai.-e essential for peace and good government. In India the power to levy tax on persons carrying on the business of publishing n:!wspapers has got to be rCcoitlised as it is inherent in the vefy Concept of government: But the exercise of 5UCh power should. however. be subject to scrutiny by courts. Entry 92 · of List I of the Seventh Schedule to the Constitution expressly suggests th~ e~iste~ce of such power. [328G ; 329C] .. ' 9. It is not necessary for the press to be subservient to the Government. As tong as 'this Court sits• newspapermen need not- have the fear of their freedom being curtailed hy unconstitutional mean5. It is not acceptable 'that merely beCause the Government has the power to levy taxes. the freedom of press would be totally lost. The Court is always there to hold the balance even. and to strike down any uncons~itutional invasion. of.that freedom. [338G ; 339Fl

10•. Newspaper industry enjoys two or the fundamental rights, namely, the freedom of speech and expression guaranteed under Article 19 (1) (a) _and the freedom to engage in any profession, occupation, trade, industry or busi- . F ness iuarantced under Article 19 (I) (g). While there can be no tax on the right to exercise freedom of ei:pression. , tax is Jeviable on profession, occu· pation. trade, business and industry. Hence tax is leviable · on newspaper industrY. But when such .tax transgresses into the field of freedom of ex· pression and stifles that freedom. it becomes unconstitutional. As long as it is within reasonable limits and does not impede freedom of expression it ' will not be contravening the limitations Or Article 19 (2). The delicatC . task G of determining when it crosses from the area or p[ofession, occupation,. trade. business or industry into th'e area of freedom of expression and_ inter· Ceres with that freedom is eiltrusted to tb-e Courts. [339G·H; 340A-B] • _ . 11. White ~levying a tax on newspaper industry it must. be kept in mind that it should not be an over-burden on newspapers which constitute the Fourth Estate or the· country. Nor should it singtC out newspaper industrY for harsh treatment. Imposition ofa tax Jike the customs-duty- on _ r.ewsprint is an e imposition·. on knOwtedgC 3.nd 'wou!d virtually amOUnt to'a burderl imposed on

, . INDIAN EXPRESS P. UNION 293 a man for being literate and for being conscious of his duty as a citizen to inform himse1f about the world around him. 'The public- interest in frredom of discussion (of which the freedom of the press is one aspect) stems from the requirement that members of a democratic society should be sufficiently informed that they m1y influence inteUigentJy the decisions which may affect 'themselves'. [34JH ; 342A·Bl

J2. FreeJom of expression has four broad social pfilposes to ~erve: (i) it helps an individual to attain sdf fulfitIDeat. (ii) it assist.io in the di~overy of truth, (iii) it strengthens_ the capacity of an individual in p:irticipating in dl!cisiori. making, and (iv) it provides a mechanism . by which it would be possible to • eStablish a reasonable balance between stabifity and social change. All members of society shou!d be able to form their own beJiefs and communicate them freely to others. In su!:n. the fundJ.mental principle is the people's fight to know. Freedom of speech and expression should, therefore~ receive a generous support from all those who believe in the participation or people in the administration. It is on account ·of this special interest' which Society has in c the freedom of speech and expression that the approach of the Government should be more cautious while levying taxe.S on matters concerning newspaper industry than while levying taxes on other matters. (342C~E]

13. In view of the intimate connection of newsprint with the freedom of the press. the tests for determining_ the vices of a statute taxing newsprint D have, therefore. to be different from the tests usua!Jy adopted for testing the vires of other taxing statutes .. In the case" of ordinary taxing statutes, the Jaws may bC questioned oaly if they are either openly confiscatory or a colourable device to confiscate. qn the other band, in the case of a tax on newsprint, it may· be sufficient to show a distnct and noticeable burdensomeness, clearly and directly attributable to the tax. [3420-H) E ' Constituent A.<semh/j./Jebates. Vol. IX pp. 1175-1180 dt. September 9,1949: Corpus Juris Secundum (VoJ. -16) p. 1132; American Jurisprudence 2d (Vol. 16) p. 662; Article on the First Amendment by Thomas I. Emerson (The Yale Law Journal, Vol. 72 at p. 941); Second Press Commission Report (Vol.J) p. 35; Essay No. 84 by Alexander Hamilton in 'The Federal!st,; Alice Lee Grosjean, Supervisor of Public Accounts for. the State of Louisiana y. American Press Company. 291 U.S. 233 : 80 L. ed. 660; Robert Murdock Jr. v. Commonwealth of Pennsylvania (City of Jeannette). 319. U.S. IOS: 87 Law. ed. 1292 and F Attorney General&: Anr. v. Antigua Times' Ltd.• [1975] 3 AJI ~· R. 81. referred • to

Bennett Coleman d: ·Co. &: Ors. v. Uni~n of India & Ors.• [1973] 2 S.C.R. 157 and Sakal Papers (P) Ltd. & Ou. v. The Union of· India, [1962) 3 S.C.R. 842, distinguished. G

Attorney General v. Times Newspapers, [1973] 3 All. E.R. S4, followed.

14, In the instant cases, assum;ng that the power to gr~nt exemption under. section 25 of the Customs Act, 1962 is a JegisJative power and a notification issued by the Government thereunder amounts to a piece of H subordinate legislatio~ even then the notification_'.is liable to be questioned on the ground that it is an unreasonable one. [345C-D]

p. 294

15. A piece of subordinate legislation does not carry the sfme degree of immunity which is enjoyed by a stattite passed by a competent legislature. Subordinate legislatiOn may be questioned on any of grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the ground ~hat it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sen:;e that it is manifestly arbitrar'y. , , (345H ; 346A-B] •

16. In India arbitrariness is not a separate ground since it will come · · within the embargo or Article 14 of the Constitution. In India any enquiry c into the vires of dele.gated legislation must be confined to the ground on which pl~nary legislation may be questioned to the ground that it is contrary to other statutory provisi6ns or .that it is so arbitrary that it could not be said to be iri conformity with the statute or that it offends Article 14 of the Constitution. Subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned. , (347E·G] D

17. A distinction must ·be made between delegation of a legislative function in the case of which the _question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary power. In thC latter case the question may be considered on aU grounds on which administrative action may be questioned, such as, non-application of mind, taking irrelevant matters into consideratioa, failure to take relevant· matters E blto consideration, etc. etc. On the facts and circumstances of a case, a subordinate legislation m3.y be struck. down as arbitr(!ry or contrary to statute if it fails to take into account very vital facts lYhiCb-' either expressly or by necessary implication are required to be taken into consideration by the statute or. Say, the Constitution. This can only be done on the ground that it does not conform to the statutory or constitutional requirements or that it offends F Article. 14 or Article 19 (1) (a) of the Constitution. It cannot. no doubt, be done merely on the ground that it is not reasonable or that it bas not taken into account relevant circumstances which the Court considers relevant. [348A-D]

18. In cases Where the power vested in the Government is ~ power which has got to be exercised in tLe public interest. as· it harpens to be here. the Court may require the Government to exercise that power in a reasonable way • in accordance with. the spirit of the Constitution.. The fact that a notification G issued under section 25 (I) of the Customs Act, 1962 is required to be laid before Parliament under section 159 thereof does not make any substantial difference as regards the jurisdiction of the court to pronounce on its validity. [3.48E-FJ

19. Section 25 of the Customs Act, 1962 under which the notifications are issued confers a power on the Central Government coupled with a duty to examine the whole is~uo in· the light of public interest. It provides that if the Central Government is satisfied that it is necessary in .the public interest so to lJ

INDIAN EXPRESS v. UNION 295 do it may exempt generally either absolutely or subj~ct to such conditions, A goods of any description, from the whole or any part of the customs duty levi- able thereon. The Central Government may if it is satisfied that in the pubHc interest so to do exempt from the payment of duty by a special order in each case under circum:;tances of an exceptional nature to be stated in such order any goods on which duty is lev!able. The power e11:ercisable under section 25 of the Customs Act, 1962 is no doubt discretionary but it is not unrestricted. l350C-EJ ·B

20. Any notification issued under a statute also being a 'law' as defined under Article 13(3)(•) of the Constitution is liable to be struck down if it is contrary of any of the fundamental rights guaranteed under Part III of the Constitution. [350H ; 35 lA]

.frticle entitled 1ludicial Control of Delegated Legislation : The Test of C Reasonableness' by Prof. Alan Wharam, 36 Modern La~ Review 61 l at pp. 622 23 ; H.W.R. Wade: Administrative Law (5th Edn.) pp. 747-748; Municipal Corporation of Delhi v. Bir/a Cotton, Spihning and Weaving Mills, Delhi & .Anr., [1968] 3 S.C.R. 251 ; Kruse v. Johnson, [1898] 2 Q.B.D. 91 ; Mixnom Properties Ltd. v. Chertsey U.D.C. {1964] I Q.11. 214; The Tu/sipur Sugar Co. Ltd. v. The Notified Area Committee, Tu/sipur, [1980] 2 S.C.R. 1111 ; Ramesh Chandra D Kachardas Porwal & Ors. v. State qf Maharashtra & Ors. etc., [1981] 2 S.C.R. 866; Bates v. Lmd Hai/sham of St. Marylebone & Ors. (1972] I W.L.R. 1373 and Associated -Provincial Picture Houses Ltd. v. Wednesbury Corporation, (1948] I K.B. 223, referred to.

Narinder Chand Hem Raj&: Ors. v. Lt. Governor, Administrator, Union Territory, Himachal Pradesh & Ors., [1972] 1 S.c.R. 940, distinguished. E

State of Madras v. V.G. Rao, [1952] S.C.R. 597 and Breen v. Amalga- mated Engineering Union, [1971] 2 Q.B. 175, relied upon.

21. If any duty is levied on newsprint by Government it necessarily • has to be passed on to the purchasers of new<:papers, unless the industry is able to absorb it. In order to pass on the duty to the consumer the price of F newspapers has to be increased. Such increase naturally affects the circulation of newspapers adversely. [352G]

22. The pattern of the law imposing customs-duties and the manner in which it is opereted, to a certain extent exposes the citizens who are liable to pay customs duties to the vagaries of executive discretion. While Parliament has imposed Juties by enacting the Customs Act, 1962 and the Customs Tariff Act, 1975, the Executive Government is given wide power by section 25 of the Customs Act, 1962 to grant exemption from the'1evy of Customs Duty, It is ordinc.rily assumed that while such power to granfexemptions is given to the Government it will consider all relevant asixcts governing.the-question whether exemption should be granted or not. In the instant case, in 1975 when the Customs Tariff Act, 1975 was enacted, 40% ad valorem was levied on news.. print even though it had been exempted from payment of such c:luty. Jf the exemption had not been continued, newspaper publishers had to pay 40% ad valortm customs duty on the coming into force of the Customs Tariff Act, H

296 SUPRl!Mll COUllT RBPORts [1985] 2 s.c.R.

1975. ·Tben agaia in 1~82 by the Finance Act, 19g2 an extra levy of Rs. 1000 per tonne was imposed in addition to the original 40% ad valorem duty even'. though under the exemption notification the basic duty had been fixed at 10% of the value of the imported newsprint. Neither any material justif}riog the said additional levy was produced by the Government nor was it made clear why this futile exercise 'of levying an additional duty of Rs. 1000 per tonne was done when under -the notification issued· unde~ section 25 of the B Customs Act, 1962 on March 1, 1981, which was in force then, customs duty on newsprint above 10% ad valorem had been exempted. While levying tax on an activity which is protected also by Article 19(1)(a) a greater degree of care should· be e:ichibJted. While it is indisputable that the newspaper industry should also bear its due share of the total burden of taxation alongwith the rest of the community when any tax: is specially imposed on newspaper industry. it should be capable of being justified as a reasonable levy ia court when its 0 validity is challenged. In the'..absence of sufficient material, the levy of 40% plus Rs. 1000 per tonne would become vulnerable to attack. [355E-H; 356A-C]

23 .. The reasons given by the Government to justify the total customs duty of 15% levied from March l, 1981 or total Rs. 825 per tonne as It is currently being levied appear to be inadequate. In the Finance Minister~s speech delivered on the floor Of the Lek 'Sabha in 1981, the first reason given for the 1evy of 15% duty was th3.t it was intended '·to promote a measure of restraint in the consumption of imported newsprint and thus help in conserving foreign exchange." This ground appears to be not tenable for two reasons. Nobody in Government had~ ever taken into consideration the effect of the import of newsprint on the foreign exchange reserve. before issuidg the notification levying 15% duty. Secondly, no nawspaper owner can i1nport newsprint directly. News- print import is Canalised through the State Trading Corporation. If excessive import of newsprint adversely affects foteign exchan-ge reserve,~ State Trad· ing Corporation may reduce the import of newsprint and allocate lesaer quantity of imported newsprint to newspaper establishmen~s. There is, however, no need to· impose import duty with a"view to curbing excessive import of news. print. It is clear that the Govem·mcnt had not considered vitaJ aspects before • withdrawing the total exemption which was beiug enjoyed by newspaper industry F. till March I, 1981 aad imposing 15% duty on.newsprint. (356D-H; 357A·B]

~4. A~tention was particularly drawn to the statement of the Finance Minister that one of the considerations which prevailed Upon the Government io levy the.cUstolns dUty was that'', t~e newspapers contained 'piftles'. A 'piffie' -!', means foolish -nonsense. It appears that one of the reasons for levying the duty Was that Ce~tain writings in newspapers appeared. to tlie Mihistcr as 'piffles'. Such action is not pi;rmissibk Lirider the Constitution. [361H ; 362Al G zs. Matters concern-ing the intellect and ethics do undergo fluctuations from era to era. The wotld of mind is a ·changing one. It is not static. The. streams of literature aD.d of taste ind judgment in that sphere arc not stagnant. They have a quality of freshness and vigour. They keep oa changing from time to time, fr?rri place to plilce and from community to community. [868A) lND!AN BicPiulss v. UNION

26. It is one thing to say that in view of considerations relevant to public finance which require every citizen to- contribte a reas6nable amouD.t A to public exchequer customs duty is leviabte even on newsprint used by news- paper industry and an entirely different thing to say that the leVy is imposed because the newspapers genera11y contain 'piffles·. While the former may be valid if the circulation of newspapers is not affected prejudicially, the latter is impermissible under the Constitution as the levy is being made on a consi- deration which is wholly outside the constitutional limitations. The Govern- ment c3.nnot arrogate to itself the power to prejudge the nature of cont_ents of newspapers even before they are printed. Imposition of a restriction of the above kind virtually amounts to conferring on the Government ·the power to precensor a newspaper. The above reason given by the Minister to levy the customs duty is wholly irrelevant. [363B-DJ

27 The argument on behalf of the Government that the effect of the c impugned levy i ~minimal cannot be accepted. [36SCJ

28. There are factors indicating that the present 1evy is heavy and is perhaps heavy enough to affect .circulation. There appears to be a good ground to direct the Central Government to reconsider the matter afresh. [366C ; DJ D Final Report of the International Commssion for the Study of CommuniM cation Problems, pp. JOO add 141 ; Encyclopaedia Britannica [1962] Vol. 16; p. 339; Second Press Commission Report (Vol. II) pp. 182-183; Bennett Coleman & Ca. and Ors. v. Union of India and Ors., [1973] 2 S.C.R. 757; Sakal Papers(P) Ltd. & Or.. v. The Union of India, [1962] 3 S.C.R. 842; William B. Cammarane v. United Stater of.America, 358 US 498 ; 3 Led 2d 462 ; Jeffery Sole Bigelow Commonwealth of Virgina, 421 US 809 : L ed 2d600 at 610 and Robert E. Hannegan v. Esquire, Inc. 327 U.S. 147 : 90 Led. 586, reffered to.

Hamdard Dawakhana (Wakf) Lal Kuan, Delhi & Anr. v. Union of India & Ors., [1960] 2 S.C.R. 671 ; Lews J. Velentine v. f.J. Chrestensen, 86 Law ed. !292 and in re Sea Customs Act, [1964] 3 S.C.R 787, distinguished.

F Romeah Thapper v. The State of Madras, [1950] S.C.R. 564 ; Hono- u.able Dr. Paul Borg Olivier & Anr. v. Houourable Dr. Anton Buttigieg, [1%7) A.C. 115 (P.C.) ; Thomas v. Collins, [1944] 323 U.S. 516 Martin v. City of Stru· , thers, (1943]319 U.S. 141, followed.

29. The classification of the newspapers into small, medium and big newspapers for purposes of levying customs duty is not violative of ·Article 14 G' of the Constitution. The object of exempting small newspapers from the paymont of cu.ioms duty· and levying 5% ad 'alorem (now Rs. 275 per MT) on medium newspapers while levyiny full customs duty on big news· papers is to assist the small and ·medium newspapers, in bringing down their cost of production. Such papers do not command · large advertisement 're~ venue. Their area.of circulation is limited and majority of them are in Indian languages catering to rural seclor. There is notbin1 sinister in the Q'

. '!

".') l- ~ " 1-:

298 SUPREMli COURT REPORTS (1985] 2 s.c.a. object nor can it. be said that the classification has no nexus with the object to be achieved. [366F-G] .. Benn£tt Coleman & Co. & Ors. v. Union of India & Ors., [1973] 2 S.C.R. 757, referred to.

30. Quashing of the impugned notification dated March I, 1981, which had repealed the notification dated July 15, 1977 under which total exemption B had been granted would not revive the notification dated July 15, 1977. Once an old rule has been substituted by a new rule, it ceases to exist and it does" not get revived w.\len the new rule is held invalid. Since the com- petence of the Central Government to repealer annul or supersede the notification dated July 15, T977 is not questioned, its revival on the im- pugned notifications being held to be void would not ari_se and, therefore, on tho quashing of the impugned notifications the petitioners would have .c to pay customs duty of 40% ad va/orem'from March l, !981 to February 28, ·1982 and 40% ad va/orem plus Rs. 1,000 per MT from March I, 1982 onwards. In addition to it they would also be liable to pay auxiliary duty of 30% ad valorem during the fiscal year 1982·83 and auxiliary duty of 50% ad va/orem during the fiscal year 1983·84. They would straightaway be liable to.pay the whole of customs duty and any other duty levied during the current fiscal year also. Such a resul_t cannot be a!lowed to ensUe. The challenge to the validity of the levy prescribeu by the Customs Tariffs Act, 1975 itself cannot be allowed to succeed. [370F-HJ

31. The Government has failed 10 discharge its statutory obligations While issuing the impugned notifications. The Government is directed to re- 'examine the wbo)e issue after taking into account au relevant considerations fOr_the period subsequent to March 1, 1981. The Government cannot be doprivod of the legitimate dut~ payable on imported newsprint. [37JD.EJ

32. Having regard to the peculiar features of these cases and ArticJe 32 of the Constitution which imposes an obligation on this Court to enforce the fundamental rights and Article 142 of the Constitution which enables this Court in the exercise of its jurisdiction· to make such order as is necessary for doin& complete justice in any cause or matter the followiiig order was made : [371F) I. The Government of India shall reconsider within six months the entire question of levy of import duty or auxiliary duty payable by the petitioners and others on newsprint used for printing newspapers, periodicals etc. with effect from March 1,1981. The petitioners and others who are engaged in newspapers business shall make available to the Government all information necessary to decide the question. [371G-HJ

2. If on such reconsid.:ration the Government decides that th!!re should be any ·modification in the levy of customs duty_ or auxiliary duty with effect from March 1,1981, it shall take necessary steps to implement its decision. 372A]

3. Until such redetermination of the liability of the petitioners and others is made, the Government shall recover only Rs. 550 per MT on ft. . imported newsprint towar_ds customs duty and auxiliary duty and shall n~t

INDIAN EXPRl's'S v. UNION 299 insist upon payment of duty in accordance with the impugned notificatioos. The concessions extended to medium aa:d small newspapers may, however, remain in force. [372C)

4. If, after such redetermination, it is foun4 that any of the petitioners is liable to pay any deficit amount by way of duty, such deficit amount shaH be paid by such petitioner within four months from the date on which a notice of demand is served on. such petitioner by the concerned authority. Any bank guarantee or security given by the petitioners shall be available for recovery of snch deficit amounts. [3720]

5. If, after such redetermination, it is found that any of the petitioneis is entitltd to any refund, such refund ·sha11 be made by the Government within .. four months from the date of such redetetmination.

6. A writ shall issue to the respon<lents. f372F] c B.N. Tiwari v. Union of India & Ors., [1965] 2 S.c.R: 421, T. Devadasan v. Union of India & Anr., [1964] 4 S.C.R, 680 and Firm A.TB. Mehtab Majid & Co. v. State of Madras & Anr. [1963] Supp. 2 S.C.R, 435 at 446. relied on. Mohd.. Shaukat Hussain Khan v. State of Andhra Pradesh, [1975) 1 S.C.R. 4~9, Shri Mulchand Odharji v. Rajkot Borough Municipality, A.I.R. 1970 S.C. D 685, Kote11Mr Vittal Karnath v. K. Rangappa Baliga & Co., (1969] 3 S.C.R. 40 and The case of State of Maharashtra etc. v. The Central Provinces Mangan~ Ore Co. Ltd., [1977] I S.C.R. 1002, distinguis)led.

ORIGINAL JURISDICTION : Writ Petition Nos. 2656-60. 2935·40, 2941-46, '2947-52, 3402, 3467, 3595, 3600-03, 3608, 3632, 3653, 3661, 3821, 3890-93, 4590-93, 4613-15, 5222, 5576, 5600-02, 5726-27, E 7410, 8459-62, 8825, 8944 of 1981, 1325 of 1982, 470·72 of 1984. T.C. Nos. 23of1983 and 23of1984. AND Writ Petitions Nos. 3114·17 of 1981 WITH F Wrii Petitions Nos. 3393.93 of 1981 WITH Writ Petitions No. 3853 of 1981 WITH Writ Petitions Nos. 6446·47 of 1181 G·

(Under Article 32 of the Constitution of India) A.K. Sen, A.B. Divan, F.S. Nariman, K.K. Venugopal, B.R. Agarwa/a, Miss Vijay Lakshmi Menon, A.K. Ganguli P.H. Parekh, C.S. Vaidyanathan, D.N. Mishra, Pravin Kumar, K.R. Nambiar, M.C. Dhingra, Miss $ieta Vaidya/ingam, P,C. Kapur, Pramod Dayal, CM ff

300 SUPREME COURT REP<JR'l'S (1985] 2 s.C.R. Nayar, S.S, Munjral, KK. Jain, S.K. Gupta, A.D. Sangar,. Iliinja11 A Mflkherjee, Sudip Sarkar, PX. Ganguli, Miss Indu Malhotra, PR. Seetharaman and V. Shekhar for the petitioners. "' K. Parasaran, Attorney General oflndia, Krishna1yer; P.A. Francis, A. Subba Rao, Da!veer Bhandari and R.N. Poddar for the respondents . .B F.S. Nariman, S. K. Dholakia, So/i J. Sorabjee, Anil B. Divan J.B. Dadachandji S. Sukumaran, D.N. Mishra, K.P. Dhanda- panf, R.C. Bhatia, P.C, Kapur, A.N. Haksar, O.C. Mathur, Miss Meera Mathur, Dr. Roxna Swamy, Aruti Jetley, P.H. Parekh, Miss ' Divya Bhalla and Pinaki Misra for the intervener.