Ruchi Soya Industries Ltd. vs Union of India

Sanjib Banerjee, J.—The petitioners claim that a notification that had not become effective on the relevant date has been arbitrarily cited by the Customs authorities to demand duty at a much higher rate than payable by the petitioning assessee for the import of crude degummed soyabean oil of edible grade.

The matter involves a total of 12,000 MT of the said variety of oil. The petitioners claim that five bills of entry were filed on behalf of the petitioning assessee seeking clearance of the said goods for home consumption on September 14 and 15, 2015. According to the petitioners, the vessel carrying the oil arrived at the port of Haldia on September 14, 2015, but inward entry was granted to the relevant vessel under Section 31 of the Customs Act, 1962 at 0530 hours on September 17, 2015. The petitioners accept that in terms of the proviso to Section 15(1) of the said Act, the date for determination of the duty and tariff valuation of the imported goods was to be reckoned as September 17, 2015 as the date of entry inwards of the vessel would be the effective date if the bill of entry in respect of the imported goods were to be presented prior to the date of entry inwards of the vessel. The petitioners claim that as at the date of entry inwards of the vessel, on September 17, 2015, the rate of duty payable was 7.5 per cent in respect of the value of the goods in terms of a notification published in the Gazette of India on March 17, 2012.

On September 17, 2015, Notification No. 46/2015-Customs was issued by the Ministry of Finance (Department of Revenue) that sought to alter the duty payable in respect of the said goods from 7.5 per cent to 12.5 per cent of the value thereof. The authority to revise the duty is not questioned. The petitioners assert that the notification did not become effective till such time that it was published in the Official Gazette and till such time that the Official Gazette as containing the relevant notification was published and offered for sale by the Directorate of Publicity and Public Relations of the Central Board of Excise and Customs.

The petitioners rely on the replies furnished to them following the queries raised by them under the Right to Information Act, 2005. On October 12, 2015 the Government of India Department of Publication in Delhi informed the petitioners, following a query under the said Act of 2005, that "the copy of Gazette of India containing Notification No. 46/2015-Cus., dated 17-9-2015 was received on 21-9-2015 at 3.30 PM at Kitab Mahal, Sale Counter of this Department from Govt. of India Press, Mayapuri, Ring Road, New Delhi and put on sale to the general public on 21-9-2015." Another query addressed to the Government of India Press by the petitioners was answered on October 30, 2015 to the effect that the relevant notification was published in the Gazette on September 17, 2015, but the "Printed Gazette was despatched from the Govt. of India Press, Mayapuri, New Delhi for sale on 21-9-2015." At paragraph 14 of the petition, the petitioners have averred that a representative of the petitioners had gone around 12 noon on September 18, 2015 to Kitab Mahal at Kasturba Gandhi Marg, New Delhi to purchase a copy of the Gazette containing the said notification, but he was informed that the sale counter had not received the same. It has further been stated in the petition that the copy of the Gazette containing the notification was not available even at 5 pm on September 18, 2015 and the petitioners� representative was informed by the sale counter that it would be available only on September 21, 2015 since the intervening days were a Saturday and a Sunday. The petitioners claim to have sent an e-mail on September 18, 2015 to the Department of Publication narrating the above.

The petitioners maintain that since the said notification of September 17, 2015 could not be said to have become effective prior to September 21, 2015 when a copy of the Official Gazette containing the said notification was offered for sale, the petitioning assessee is not liable to pay the enhanced duty as per the said notification as the assessee continued to be governed by the previous rate that was prevalent on September 17, 2015 which is the date to be reckoned for determination of duty and tariff valuation under Section 15 of the said Act of 1962.

The petitioners emphasise on Section 25(1) of the Act to suggest that the wording thereof precludes any notification issued thereunder becoming effective prior to its publication in the Official Gazette. The petitioners say that the operative words in sub-section (1) of Section 25 of the said Act are : "... the Central Government ... may ... by notification in the Official Gazette, exempt ..." The petitioners contend that since the provision mandates that what the Central Government may do thereunder is only by notification in the Official Gazette, it is not possible for any notification under Section 25(1) of the said Act to be regarded as effective prior to the publication thereof in the Official Gazette. The petitioners next refer to key sub-section (4) of Section 25 of the said Act. According to the petitioners, two conditions are required to be complied with for a notification under Section 25(1) of the said Act coming into force and becoming effective : the publication of such notification in the Official Gazette; and such publication of the notification in the Official Gazette being offered for sale. The petitioners assert that it is only upon both the statutory conditions being met that the relevant notification under Section 25(1) of the Act would take effect; or else, it would not come into force.

The petitioners also seek to demonstrate that the requirement of the twin conditions to be met under Section 25(4) of the Act for a notification under Section 25(1) to be effective may also be gauged from Section 25(5) of the Act and the words "before the date on which the said notification comes into force" appearing at the end of such sub-section. The petitioners submit that it is impermissible to read clause (a) of sub-section (4) of Section 25 of the Act in isolation of clause (b) thereof. The petitioners maintain that compliance under both clauses must be demonstrably complete for a notification under Section 25(1) of the Act to come into force.

In support of the submission that when a statute requires a certain thing to be done in a certain manner it must be done in such manner or not at all, the petitioners refer to the famous judgment reported at AIR 1936 PC 253 (2) (Nazir Ahmad v. King-Emperor) and the more recent judgments reported at (1969) 1 SCR 499 (Narbada Prasad v. Chhaganlal) and (2003) 2 SCC 111 (Bhavnagar University v. Palitana Sugar Mill Private Limited). The petitioners also invoke the accepted legal principle that if a provision in a fiscal statute is capable of two possible interpretations, the one in favour of the assessee should be accepted.

The petitioners suggest that Section 25(4) of the said Act has been interpreted by the Supreme Court in a recent judgment reported at 2015 (321) E.L.T. 192 (Union of India v. Param Industries Limited) in an appeal arising out of a judgment of the High Court of Karnataka reported at 2002 (150) E.L.T. 3 (Param Industries Limited v. Union of India). Since the relevant Supreme Court order cited is spread over seven paragraphs, it is necessary to first appreciate the context in which the Karnataka judgment was passed.

The challenge before the High Court of Karnataka pertained to a demand for duty at an enhanced rate pursuant to a notification under Section 14(2) of the Act which was alleged to have come into effect on August 3, 2001. The challenge was on the ground that the notification was published in the Official Gazette only on August 6, 2001 and, as such, it could not be made effective prior to its publication in the Official Gazette. The Customs authorities claimed that the notification published on August 3, 2001 itself. Though the adjudication in the matter did not pertain to a notification under Section 25 of the Act, the High Court referred to Section 25 of the Act by way of analogy to determine the time when a notification under Section 14(2) of the Act came into effect. The following passage from paragraph 12 of the report is of relevance :

"12. ... It is also to be seen that the Parliament has added sub-sections (4) and (5) to Section 25 of the Customs Act by Act No. 25 of 1998 w.e.f. 1-6-1998, prescribing that unless otherwise provided, every notification issued under Section 25(1) shall come into force on the date of its issue by the Central Government for publication in Official Gazette with the further stipulation that such notification shall 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. This clearly shows the intention of the Legislature that a notification is to be effective from the date when it is issued by the Central Government for publication in the Official Gazette. The same analogy will apply to the instant case. As per the intention of the Legislature and the order of the Supreme Court a notification can be said to be made on the same day only if it is published and offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi. Failure to do so could not make a notification effective from the date of its issue for publication. This provision added w.e.f. 1-6-1998 also shows that the date of publication in the Official Gazette and the date of its issue for publication in the Official Gazette can be different. In the present case the said notification was published in the Official Gazette on 6-8-2001 and not before 6-8-2001 and was offered for sale not before 6-8-2001...."

In taking up the special leave petition and consequent civil appeal, the Supreme Court noticed that the goods had already been cleared prior to the publication of the notification on August 3, 2001 as the notification was published just short of midnight on that day. The court raised an issue whether the publication of a notification on the same day after the goods had been cleared could result in enhanced duty under the notification being payable for the goods that were cleared with appropriate duty at the time of their clearance. However, it was perceived that the issue was unnecessary in the context. The Supreme Court read the judgment of Karnataka as follows at paragraph 3 of the report without reference to Section 14(2) of the said Act :

"3. What we find is that the High Court has stated that for bringing the notification into force and make it effective, two conditions are mandatory, viz., (1) Notification should be duly published in the official gazette, (2) it should be offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi. In the present case, admittedly, second condition was not satisfied inasmuch as it was offered for sale only on 6-8-2001, as it was published on 3-8-2001 in late evening hours and 4/5-8-2001 were holidays."

The reason for agreeing with the view taken by the High Court was on the strength of the dictum in a judgment reported at (1952) SCR 110 (Harla v. State of Rajasthan) as evident from paragraph 4 of the report. The Customs authorities submit that the Supreme Court order in Param Industries Limited should not be regarded as good law since the two judge Bench did not take into account a three-judge Bench judgment reported at 2000 (116) E.L.T. 431 (Union of India v. Ganesh Das Bhojraj) where the dictum in Harla was explained and held to be inapplicable to a situation as in Section 25(1) of the said Act.

In Ganesh Das Bhojraj, the Supreme Court considered a matter governed by Section 25(1) of the said Act as it operated prior to sub-sections (4) and (5) being incorporated into Section 25 by an amendment of 1998. Prior to the 1998 amendment, Section 25(1) of the said Act was similar, in its material terms, to Section 14(2) of the said Act as it then stood. The essence of the Supreme Court opinion is found in the following passage at paragraph 12 of the report :

"12. ... 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 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 the notification in the Official Gazette. For being (sic, bringing) notification into operation, the only requirement of the section is its publication in the Official Gazette and no further publication is contemplated...."

In referring to Harla, the Supreme Court observed, at paragraph 17 of the report, that in such judgment the court dealt with a provision of a statute that "was never published in the Gazette and, therefore, the Court held that in the absence of some specific law or custom to the contrary, a mere resolution of a Council of Ministers in the Jaipur State without further publication or promulgation would not be sufficient to make a law operative."

It is now necessary to see Section 25 of the said Act to assess whether, in view of sub-section (4) thereof, sub-section (1) thereof stands qualified and whether the view taken in Param Industries Limited in respect of Section 14(2) of the Act would govern Section 25(1) of the Act as qualified by sub-section (4) thereof. Only sub-sections (1), (4) and (5) of Section 25 of the Act are relevant for the present purpose. The other sub-sections have no bearing on the legal issue that has arisen herein.

"25. Power to grant exemption from duty.

- (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon.

(2) ...

(2A) ...

(3) �

(4) Every notification issued under sub-section (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.

(6) �.

(7) �.

(8) �"

Prior to sub-section (4) being incorporated in Section 25 of the Act, a notification issued under Section 25(1) of the Act could be said to come into operation and be effective only upon its publication in the Official Gazette. The dictum in Ganesh Das Bhojraj must also be remembered that it is such publication in the Official Gazette that would make a notification effective, without any further act or deed. However, the situation is completely altered after the introduction of sub-section (4) into the provision. Sub-section (4) stipulates when a notification under sub-section (1) would come into force and must be seen to qualify the more general words used in sub-section (1). In the absence of sub-section (4), sub-section (1) would imply that a notification under such provision would come into force upon its publication in the Official Gazette. Such provision has also been interpreted thus in Ganesh Das Bhojraj.

However, sub-section (4) contains two statutory commands : under clause (a) that a notification under Section 25(1) of the Act would "come into force on the date of its issue by the Central Government for publication in the Official Gazette" and, clause (b) that the notification should "also be published and offered for sale on the date of its issue" by a specified body. Since the opening limb of sub-section (4) uses the word "shall" in its mandatory sense, it is beyond question that the mandate under both clauses have to be fulfilled. However, the coming into force of a notification is complete under clause (a) itself. The further command under clause (b) cannot, ordinarily, govern when the notification comes into force. Thus, in the context of a notification under Section 25(1) of the said Act, the statutory commands under the two several clauses of sub-section (4) are distinct and clause (b) may be seen to be somewhat dependant on clause (a), but clause (a) takes no colour from clause (b). The statutory requirement under Section 25(4)(a) of the said Act, as is material for the present purpose, may be seen to be thus : a notification under sub-section (1) shall come into force on the date of its issue by the Central Government for publication in the Official Gazette. The wording of clause (a) is quite different from the usual wording of any ordinary provision that makes anything effective upon its publication in the Official Gazette. Section 25(4)(a) is lucid in it stipulating when a relevant notification would come into force. A relevant notification would come into force not upon its publication in the Official Gazette, but on the date of its issue for publication in the Official Gazette. That would imply that if such a notification is issued on a particular day and it is asked to be published in the Official Gazette, notwithstanding its later publication in the Official Gazette, it would come into force on the date of its issue for publication in the Official Gazette.

The propriety of such provision has not been called into question. It is also not the submission on behalf of the petitioners that the provision should be read down and interpreted to imply something other than it apparently conveys in its plain and literal construction. It is not even the petitioners� suggestion that Section 25(4)(a) of the Act is at variance with Section 25(1) thereof. It is the cardinal rule of statutory interpretation that the plain meaning of the words ought to be accepted and given effect to unless it leads to an absurdity or it defeats the purpose of the provision or falls foul of any like mischief rule.

That does not mean that a notification may be issued for its publication in the Official Gazette, without it being actually published in the Official Gazette and yet the notification be regarded as having come into force. That would be an irrational construction of the provision. But if a notification is issued on a particular date and is required immediately thereupon to be published in the Official Gazette, upon the publication being made in the Official Gazette within a reasonable time (or even at the earliest available opportunity) the notification would be deemed to have come into force on the date of its issue for publication in the Official Gazette. It is possible, therefore, that a notification be issued for publication towards the close of a day and the publication in the Official Gazette takes place the following day, but the notification would have come into effect on the day that it was issued for publication in the Official Gazette, irrespective of the actual publication in the Official Gazette being a day later.

It must be recorded here that the petitioners accept that notwithstanding a notification under Section 25(1) of the Act coming into effect later in a day, the duty payable will be governed by such notification even if the bill of entry pertaining to the consignment and entry inwards of the vessel were deposited or issued earlier in the day. However, it is not a major concession made by the petitioners since Section 5 of the General Clauses Act, 1897 recognises the general legal principle that a Central Act or regulation "shall be construed as coming into operation immediately on the expiration of the day preceding its commencement."

Sub-section (5) of Section 25 of the Act has been cited by the petitioners to suggest that a notification under Section 25(1) of the Act can never come into effect prior to its publication in the Official Gazette. Such argument is unacceptable in view of the clear words of clause (a) of sub-section (4) as to when a relevant notification would come into force. If the exigencies of a situation so demand, a notification may be issued just short of midnight of a particular day for it to become immediately effective as long as the notification is issued for publication in the Official Gazette and it is actually published in the Official Gazette within reasonable time or even on the next available working day. Further, there is a distinction between a notification being brought into effect contemporaneously and a notification proposed to be given effect to on a future date. Though the wording of Section 25(5) of the Act does not expressly require the prior publication of the notification in the Official Gazette for such notification to come into effect, it may be unreasonable to interpret the provision to imply that the notification will come into force prior to its publication in the Official Gazette; as a notification prescribed to come into force on a future date may inherently not have the disadvantage of any time constraint as to its publication in the Official Gazette.

Clause (b) of sub-section (4) of Section 25 of the Act is in furtherance of the "made known" concept. The failure to comply with such statutory command in clause (b) may not tell upon the efficacy of a notification that has been issued for publication in the Official Gazette and has been published in the Official Gazette. However, if a breach of a relevant notification results in any criminal liability, that would not fasten till clause (b) is complied with; the civil liability under the notification will not be affected by the non-compliance of the mandate in clause (b).

Indeed, in Ganesh Das Bhojraj, the concurring opinion made a distinction between the operation of the rule as recognised in the substantive judgment to matters involving civil liability and criminal liability and restricted the operation of such rule only to civil liability.

The Karnataka judgment in Param Industries Limited imported the provision of Section 25(4) of the Act into Section 14(2) thereof when there may not have been any warrant to do so since the interpretation of Section 14(2) would be governed by the dictum in Ganesh Das Bhojraj on the pari materia wording of Section 25(1) of the Act. The Supreme Court judgment in Param Industries Limited did not have any occasion to deal with Section 25 of the Act. Even though the dictum in the Supreme Court judgment may be seen to be applicable in a situation covered by Section 14(2) of the Act, it cannot govern Section 25 thereof in view of the special feature of sub-section (4) that qualifies the more general provision of sub-section (1) of Section 25 of the Act.

Clause (b) of Section 25(4) of the Act does not admit of a construction that the notification as published in the Official Gazette must be offered for sale. If copies of the notification which has been published in the Official Gazette or has been required to be published in the Official Gazette at the first available opportunity, are put on sale, the statutory command is complied with. At any rate, the civil liability that arises upon a notification coming into force upon it being issued for publication in the Official Gazette cannot be diluted by the failure to adhere to the mandate in clause (b).

The most cardinal rule in interpreting a statutory provision is that the language of the statute should be read as it is. If the language of Section 25(4) of the Act is not distorted and the intention thereof gathered from the language used therein, the plain meaning of the words used do not admit of a construction that unless a notification is published in the Official Gazette and unless such notification or the Official Gazette containing the same is put on sale, the notification is not deemed to come into force. The construction of the provision as the petitioners suggest would require the addition or substitution of words not found in the provision or the rejection of certain words as meaningless. It is elementary that if a provision in a statute can be read without adding words thereto or subtracting words therefrom, that would be the ideal construction, unless it throws up an absurd result. The literal construction in this case does not result in any absurdity.

The fallacy in the petitioners� argument is that it is founded on the responses received following the queries raised under the Act of 2005. The queries and the responses received are on the mistaken premise that it is the notification as published in the Official Gazette that must be put on sale. The wording of the relevant sub-section does not warrant such a construction. Both clauses of such sub-section would be complied with if a notification were to be issued for publication in the Official Gazette and such notification were to be simultaneously put up on the website and otherwise offered for sale, though the timing of the issuance of the notification may have resulted in the publication in the Official Gazette to be made a day later. As long as the publication of a relevant notification is made in the Official Gazette, whether within reasonable time or at the first available opportunity of such notification being issued for publication therein, the notification comes into effect immediately upon its issuance for publication in the Official Gazette notwithstanding the publication in the Official Gazette being later.

The Union has disclosed in an affidavit that the notification was published in the Official Gazette on September 17, 2015. There is no creditable denial to such assertion. It is not the petitioners� case that the relevant Official Gazette is ante-dated. The Union has also claimed in the affidavit that though the Official Gazette containing the notification may not have been offered for sale on September 17, 2015, but copies of the notification were put on sale, nonetheless. The Union says that it has no cash memo to show since no one purchased the notification on September 17, 2015. There is no reason to disbelieve the Union, nor has anything been shown by the petitioners to detract therefrom.

There is no dispute that the notification was issued on the date it is said to have been. There is no dispute that the notification was issued for publication in the Official Gazette on the same day. There is even no dispute that the Official Gazette containing the said notification was published on the same day. All that the petitioners have been able to demonstrate is that the Official Gazette containing the said notification may not have been put up for sale prior to September 21, 2015. But that is of no consequence. The notification came into force on the date of its issue for publication in the Official Gazette and such date, indisputably, was September 17, 2015. Even if a strict view of the matter is taken and the publication in the Official Gazette is seen to be a precondition to the coming into force of the said notification, that was also completed on September 17, 2015. If the Union�s assertion of copies of the notification being put up for sale on September 17, 2015 is disbelieved, at the highest, it would amount to non-compliance of clause (b) which would have no effect on when the notification came into force.

For the reasons aforesaid, the petition is dismissed with the observation that the liability of the petitioning assessee to pay the duty as per the notification of September 17, 2015 is unimpeachable. It is the higher rate of duty under the notification that the petitioning assessee is liable to pay.

There will be no order as to costs.

Urgent certified website copies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities.

Later :

The petitioners seek a stay of the operation of the judgment and order, which is declined.