Notification under Section 8A of the Customs Tariff Act 1975 - introduced a tariff entry by which all goods originating in or exported from the Islamic Republic of Pakistan were subjected to an enhanced customs duty of 200%. - Whether is prospective or retrospective and tax is reassessable ?
The High Court held that since the importers, who had imported goods from 7 PART A Pakistan, had presented their bills of entry and completed the process of “selfassessment” before the notification enhancing the rate of duty to 200 per cent was issued and uploaded, the enhanced rate of duty was not attracted. The High Court held that the importers were liable to pay the duty applicable at the time when the bills of entry for home consumption were filed under Section 46 of the 8 PART B Customs Act, 1962.1 The Union of India was ordered to release the goods within seven days on the payment of duty ‘as declared and assessed’ without applying the notification enhancing the rate of duty on goods originating in Pakistan.
Apex court held thatThe rate of duty which was applicable was crystallized at the time and on the date of the presentation of the bills of entry in terms of the provisions of Section 15 read with Regulation 4(2) of the Regulations of 2018. The power of reassessment under Section 17(4) could not have been exercised since this is not a case where there was an incorrect self-assessment of duty. The duty was correctly assessed at the time of self-assessment in terms of the duty which was in force on that date and at the time. The subsequent publication of the notification bearing 5/2019 did not furnish a valid basis for re-assessment. 68 For the above reasons, we have come to the conclusion that there is no merit in the appeals. The appeals shall stand dismissed.
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No 3249 of 2020
(Arising out of SLP(C) No 3860 of 2020
Union of India & Ors. …Appellants
Versus
M/S G S Chatha Rice Mills & Anr. …Respondents
W I T H
Civil Appeal No 3250 of 2020
(Arising out of SLP (C) No.3861 of 2020)
W I T H
Civil Appeal No 3250 of 2020
(Arising out of SLP (C) No.3869 of 2020)
W I T H
Civil Appeal No 3252 of 2020
(Arising out of SLP (C) No.3867 of 2020)
W I T H
Civil Appeal No 3253 of 2020
(Arising out of SLP (C) No.3865 of 2020)
1
W I T H
Civil Appeal No 3262 of 2020
(Arising out of SLP (C) No.5029 of 2020)
W I T H
Civil Appeal No 3265 of 2020
(Arising out of SLP (C) No.7059 of 2020)
W I T H
Civil Appeal No 3267 of 2020
(Arising out of SLP (C) No.6451 of 2020)
W I T H
Civil Appeal No 3269 of 2020
(Arising out of SLP (C) No.7063 of 2020)
W I T H
Civil Appeal No 3270 of 2020
(Arising out of SLP (C) No.7064 of 2020)
W I T H
Civil Appeal No 3271 of 2020
(Arising out of SLP (C) No. 7057 of 2020)
W I T H
Civil Appeal No 3272 of 2020
(Arising out of SLP (C) No.5920 of 2020)
2
W I T H
Civil Appeal No 3273 of 2020
(Arising out of SLP (C) No.7065 of 2020)
W I T H
Civil Appeal No 3274 of 2020
(Arising out of SLP (C) No.7066 of 2020)
W I T H
Civil Appeal No 3275 of 2020
(Arising out of SLP (C) No.7067 of 2020)
W I T H
Civil Appeal No 3276 of 2020
(Arising out of SLP (C) No.6189 of 2020)
W I T H
Civil Appeal No 3277 of 2020
(Arising out of SLP (C) No.7543 of 2020)
W I T H
Civil Appeal No 3278 of 2020
(Arising out of SLP (C) No.6683 of 2020)
W I T H
3
Civil Appeal No 3279 of 2020
(Arising out of SLP (C) No.7068 of 2020)
W I T H
Civil Appeal No 3259 of 2020
(Arising out of SLP (C) No.5036 of 2020)
W I T H
Civil Appeal No 3264 of 2020
(Arising out of SLP (C) No.5823 of 2020)
W I T H
Civil Appeal No 3256 of 2020
(Arising out of SLP (C) No.4960 of 2020)
W I T H
Civil Appeal No 3254 of 2020
(Arising out of SLP (C) N0.4959 of 2020)
W I T H
Civil Appeal No 3255 of 2020
(Arising out of SLP (C) No. 4961 of 2020)
W I T H
Civil Appeal No 3260 of 2020
(Arising out of SLP (C) No.5822 of 2020)
4
W I T H
Civil Appeal No 3257 of 2020
(Arising out of SLP (C) No.5033 of 2020)
W I T H
Civil Appeal No 3258 of 2020
(Arising out of SLP (C) No. 5821 of 2020)
W I T H
Civil Appeal No 3261 of 2020
(Arising out of SLP (C)No. 7058 of 2020)
W I T H
Civil Appeal No 3263 of 2020
(Arising out of SLP (C) No. 5028 of 2020)
W I T H
Civil Appeal No 3266 of 2020
(Arising out of SLP (C) No.7061 of 2020)
AND
W I T H
Civil Appeal No 3268 of 2020
(Arising out of SLP(C) No.7062 of 2020)
5
J U D G M E N T
Dr Dhananjaya Y Chandrachud, J
This judgment has been divided into sections to facilitate analysis. They are:
A The aftermath of Pulwama
B The backdrop
C Petitions before the High Court
D The judgment of the High Court
E Submissions in the appeals
F Determination of the rate under Section 15 of the Customs Act 1962
G Precedent
H Interpreting ‘day’ and ‘date’
I Notification under Section 8A of the Customs Tariff Act
J General Clauses Act
K Information Technology Act, 2000
L Effect of notifications issued in e-gazettes
M Retrospectivity
N Summation
6
PART A
1 Leave granted.
A The aftermath of Pulwama
2 A terrorist attack took place at Pulwama on 14 February 2019. On 16
February 2019, the Union Government issued a notification under Section 8A of
the Customs Tariff Act 1975. The notification introduced a tariff entry by which all
goods originating in or exported from the Islamic Republic of Pakistan were
subjected to an enhanced customs duty of 200%. The precise time at which the
notification was uploaded on the e-Gazette was 20:46:58 hours. Customs
authorities at the land customs station at Attari sought to enforce the enhanced
rate of duty on importers who had already presented bills of entry for home
consumption before the enhanced rate was notified in the e-Gazette. Their action
led to a challenge before the High Court of Punjab and Haryana. The
consignments of import covered a diverse range of goods, ranging from dry dates
to cement.
3 On 26 August 2019, a Division Bench of the High Court of Punjab and
Haryana allowed a batch of writ petitions under Article 226 of the Constitution.
The High Court held that since the importers, who had imported goods from
7
PART A
Pakistan, had presented their bills of entry and completed the process of “selfassessment” before the notification enhancing the rate of duty to 200 per cent
was issued and uploaded, the enhanced rate of duty was not attracted. The High
Court held that the importers were liable to pay the duty applicable at the time
when the bills of entry for home consumption were filed under Section 46 of the
8
PART B
Customs Act, 1962.1
The Union of India was ordered to release the goods within
seven days on the payment of duty ‘as declared and assessed’ without applying
the notification enhancing the rate of duty on goods originating in Pakistan.
4 The Union of India is in appeal.
5 The judgment of the High Court is titled as Rasrasna Food Private Limited
versus Union of India. Chronologically, the first petition listed before this Court by
Special Leave under Article 136 of the Constitution is in the case of G S Chatha
Rice Mills. Since the issues of law which have been raised are common to the
batch of appeals, they have been heard together.
B The backdrop
6 The First respondent is a partnership firm based in Amritsar which is, inter
alia, engaged in the import of cement. It imported a consignment of fourteen
hundred bags of cement from Pakistan under an invoice dated 1 February 2019.
A truck bearing registration number TLV-189 (cargo) crossed the ‘zero line’ on
Saturday, 16 February 2019 under entry number 47195 with a Pakistan Custom’s
Cargo Manifest bearing the time of 4:31 pm. The goods arrived at the Land
Customs Station Road Cargo, Attari Road, Amritsar on the same day and IGM
number 366870 was filed in respect of the goods. The truck unloaded its cargo at
the Central Warehousing Corporation, ICP, Attari. The arrival of the goods and
the filing of the IGM was before 18:00 hours on 16 February 2019. The First
respondent filed bill of entry number 2083178 dated 16 February 2019 seeking
clearance of the goods for home consumption. The bill of entry was self1 “the Customs Act”
9
PART B
assessed at 18:08 hours under the provisions of Section 17(1) of the Customs
Act 19622
under Customs Tariff Heading 2523910 by levying nil customs duty in
terms of notification 68/2012 dated 31 December 2012 (as amended by
notification 50/2017- serial 129 dated 30 June 2017) and IGST at 28 percent rate
(in terms of notification 1/2017- schedule III serial No. 3). The duty payable was
assessed at Rs 73,342/-. Notification 50/2017-Cus (serial No. 129), prescribed a
preferential rate of duty on specified goods originating in the Islamic Republic of
Pakistan.
On 16 February 2019, notification 5/2019 was issued by the Ministry of Finance
in the Department of Revenue, in exercise of powers conferred by sub-section (1)
of Section 8A of the Customs Tariff Act 1975.3
By this notification, a new tariff
entry was introduced in Chapter 98 of Section XXI in the following terms:
(1) (2) (3) (4) (5)
“9806 00 00 All goods originating in or exported
from the Islamic Republic of
Pakistan
- 200 % -”.
The notification contains a reference to the date (16 February 2019) and time
(20:46:58) at which it was uploaded and published in the e-Gazette of the
Government of India. Based on the enhancement in the rate of duty brought
about by the notification, the customs authorities refused to release the goods
which were assessed earlier. The bill of entry was recalled and reassessed on 20
2 “the Customs Act”
3 “the Customs Tariff Act”
10
PART C
February 2019 at 18:14 hours by levying customs duty at 200 per cent and IGST
at 28 per cent, enhancing the duty from Rs 73,342/- to 8,10,952/-.
7 Aggrieved by the action of the customs authorities, the first respondent
filed a petition under Article 226 for setting aside (i) the assessment of the bill of
entry to a duty of 200%; (ii) Notification 5/2019 dated 16 February 2019; and for a
direction to CWC to issue a detention memo and the release of the goods.
C Petitions before the High Court
8 The batch of petitions before the High Court involved cases of other
similarly situated importers. The facts pertaining to the writ petitions, as gleaned
from the judgment of the High Court, are summarized below:
(i) the goods were imported in the ordinary course of trade from Pakistan;
(ii) the goods entered Indian territory through the Attari border at Amritsar
before 18:00 hours on 16 February 2019;
(iii) the importers had filed bills of entry under Section 46 of the Customs
Act, before the close of working hours, seeking clearance of the goods
for home consumption;
(iv) the value and description of the goods were declared;
(v) the importers had self-assessed the goods in terms of the prevailing
notifications and had filed the bills of entry in the EDI system;
(vi) the declarations were subject to verification by the customs department
which did not dispute them and generated duty payment TR-6 challans;
(vii) since 16 February 2019 was a Saturday, the customs’ office was closed
after 18:00 hours and was to open on Monday,18 February 2019;
(viii) some of the importers paid the duty online through TR-6 challans on 16
February 2019 while in the case of others, the payment of duty was in
progress;
11
PART C
(ix) Notification 5/2019 was issued at 20:46:58 hours on 16 February 2019
following the Pulwama terrorist attack as a result of which the rate of
duty on goods originating in Pakistan was enhanced to 200 per cent
irrespective of the fact that some of the products had hitherto been
exempt from customs duty; and
(x) the customs authorities refused to release the goods on the basis of the
bills of entry which were self-assessed at the pre-existing rate and
proceeded to recall them and re-assess the goods to the enhanced rate
of duty applicable under notification 5/2019.
9 Before the High Court, the submission of the importers was that before
notification 5/2019 was issued (at 20:46 hours on 16 February 2019 in order to
discourage the import of goods from Pakistan), (i) they had placed orders; (ii) the
goods had entered into the territory of India; (iii) the goods were fully or partially
exempt from basic customs duties, but subject to IGST at the time of the filing of
the bills of entry; (iv) the exporters from Pakistan received payment of the
consideration on the basis of which the goods had been supplied; and (v) the
object of the notification was to discourage imports from Pakistan and not to
penalize Indian importers who had placed orders and had imported goods into
12
PART D
India, bona fide relying on the policy which was applicable before the notification
was issued in the late hours of the day. On the issues of law, it was urged that
after the presentation of the bills of entry for home consumption, self-assessment
and duty payment challans had been generated, it was not open to the customs
authorities to levy the enhanced rate of duty which came into force later, from
20:46 hours on 16 February 2019. The application of notification 5/2019 would, it
was urged, have retrospective effect since the bills of entry for home
consumption had been filed electronically on the customs’ automated platform
before the issuance of the notification and they were self-assessed.
10 On the other hand, the contention of the Union government before the
High Court was that under Section 15 of the Customs Act, 1962 the relevant date
for determining the rate of duty is the date of the presentation of the bill of entry.
The submission was that the amended rate of duty under notification 5/2019
came into force on 16 February 2019; hence, the importers were liable to pay
duty on the basis of the amended rate. The submission was that the customs
authorities were entitled to re-assess the bills of entry under Section 17(4).
D The judgment of the High Court
11 The High Court, after analyzing the provisions of Sections 8A and 11A of
the Customs Tariff Act, 1975 and Sections 12, 15, 17, 46 and 47 of the Customs
Act,1962 held that:
13
PART D
(i) The relevant date for the determination of duty is the date of the
presentation of the bill of entry, which, in the facts of this case, corresponds
to the date of the entry of the vehicle carrying the goods into India;
(ii) The bills of entry were presented on 16 February 2019 before the issuance
of notification 5/2019;
(iii) The dual requirements of Section 15 namely, the filing of the bill of entry
and the entry of the vehicle were fulfilled before the publication of
notification 5/2019;
(iv) The amended rate of duty was not applicable;
(v) The absence of customs’ clearance under Section 47 had no bearing on
the rate applicable;
(vi) Notification 5/2019 having been released after working hours, it would
apply from the next day as held in the decision of this Court in Union of
India vs. Param Industries Limited4
; and
(vii) A notification under Section 8A of the Customs Tariff Act, 1975 cannot
apply retrospectively.
4 (2016) 16 SCC 692
14
PART E
12 The Union of India is in appeal.
E Submissions in the appeals
13 Besides making oral submissions, Mr K M Natraj, Additional Solicitor
General of India has filed written submissions. His submissions are prefaced with
a delineation of the issue which is raised in the appeals, which is:
“…whether the amendment to the First Schedule of the
Customs Tariff Act, 1975 takes effect from the time at which it
is uploaded / notified in the gazette or from the first moment
of the day / date on which it was issued/ published in the
gazette.”
The submissions of the ASG are summarized below:
A (i) Under Section 15 of the Customs Act, the date for the determination of the
rate of duty and valuation of imported goods, in the case of goods which
are entered for home consumption under Section 46, is the date on which
the bill of entry in respect of the goods is presented. The expression “on
the date” comprehends the entire period of 24 hours, in this case
beginning at midnight on 16 February 2019;
(ii) Section 15 does not make any reference to time and hence, irrespective of
the point of time when a notification has been uploaded or published in the
e-Gazette, the rate of duty leviable on imported goods cleared for home
consumption is, by a legal fiction, the rate prevalent on the date of the
presentation of the bill of entry;
15
PART E
(iii) Section 15 should be interpreted in light of the rule of literal construction,
and the law has to be applied as it is; and
(iv) This case is not about the prospective or retrospective application of the
Notification at issue. Rather, it is the simple intent of Parliament to
consciously make the date on which the Notification is issued as the date
for determination of the rate of duty (as applicable), which this court must
uphold.
B (i) Independent of (A) above, a notification under Section 8A(1) of the
Customs Tariff Act has the effect of amending the First schedule and is a
legislative act which dates back to the commencement of the day;
(ii) The schedule is a part of the Act, and hence an amendment to it is an
amendment to the Act;
(iii) Sub-section (2) of Section 8A of the Customs Tariff Act applies the
provisions of sub-sections (3) and (4) of Section 7 to a notification which is
issued under Section 8A(1);
(iv) A notification under Section 8A(1) amending the first schedule has to be
placed before each House of Parliament and is subject to its approval and
modification; and
(v) An amendment to the schedule, upon the exercise of powers under
Section 8A, constitutes an amendment of the Act itself which passes
through a process of receiving Parliamentary sanction and is subject to its
approval.
16
PART E
C (i) In view of (B) above, since the schedule to the Customs Tariff Act is a part
of the enactment, the provisions of the General Clauses Act 18975
are
attracted to an amendment effected under section 8A(1);
(ii) Section 3(7) of the General Clauses Act defines the expression ‘Central
Act’ to mean an Act of Parliament while Section 3(13) defines
‘commencement’ to mean the day on which an Act or Regulation comes
into force;
(iii) Under Section 5(3) of the General Clauses Act, a Central Act or
Regulation, unless the contrary is expressed, comes into force immediately
on the expiration of the day preceding its commencement; and
(iv) ‘Commencement’ can only be from a day which takes within its fold the
entire period of 24 hours from midnight of the day before the issuance of
the notification.
D The twin requirements of Section 15 are fulfilled because
(i) The notification was issued and uploaded in the Gazette on 16 February
2019; and
(ii) The bills of entry for home consumption under Section 46 were presented
on 16 February 2019.
This is the substratum of the plea that the rate of duty prescribed by notification
5/2019 is applicable.
14 Opposing the above submissions, Mr PS Narasimha, learned Senior
Counsel submitted that
5 “the General Clauses Act”
17
PART E
A (i) The levy of customs duty under Section 12 of the Customs Act is at the
rates prescribed under the Customs Tariff Act;
(ii) Under Section 15 of the Customs Act, the rate of duty is the rate prevalent
on the date of the presentation of the bill of entry under section 46 of the
Customs Act, where goods are cleared for home consumption; and
(iii) The importers fulfilled the twin requirements of the goods having entered
on 16 February 2019 and the bill of entry having been filed before 20:46
hours when notification 5/2019 was issued. The bills of entry had to be
assessed to customs duty at the rate which was in existence prior to the
publication of the notification.
B (i) Notification 5/2019 having been published at 20:46:58 hours on 16
February 2019 it was never updated on the EDI portal;
(ii) Notification 5/2019 would apply only to bills of entry for home consumption
presented after 20:46:58 hours on 16 February 2019 or upon amendment
in the online EDI portal of ICEGATE;
(iii) A notification issued under the provisions of Section 8A (1) of the Customs
Tariff Act cannot have a retrospective character; and
(iv) Subordinate legislation is not retrospective unless the statute under which
it has been framed, expressly or by necessary implication, imports
retrospectivity. Subordinate legislation cannot always be equated as an
‘Act of legislature’ for the interpretation of ‘Central Act’ as defined by the
General Clauses Act.
18
PART E
C (i) Digital India is a new vision and idea into which India is evolving, and we
are in a phase of governance in which multiple commercial transactions
take place every single day. Rule 5(1) of the Information Technology
(Electronic Service Delivery) Rules, 2011 mandates maintenance of
timestamps for any governmental electronic records;
(ii) In exercise of the powers conferred by Section 157 read with Sections 46
and 47 of the Customs Act, the Central Board of Indirect Taxes and
Customs has passed the Bill of Entry (Electronic Integrated Declaration
and Paperless Processing) Regulations 20186
;
(iii) Under Regulation 4(2), the bill of entry is deemed to have been filed and
self-assessment completed when, after the entry of the electronic
integrated declaration on the customs automated system, a bill of entry is
generated by the Indian Customs Electronic Data Interchange System and
the self-assessed copy of the bill of entry may be electronically transmitted
to the authorized person;
(iv) In terms of the provisions of Section 15(1)(a), where goods are entered for
home consumption under Section 46, the rate of duty is the rate in force on
the date on which a bill of entry in respect of such goods is presented
under Section 46. The Regulations of 2018 have been made pursuant to
Section 46 and contain a deeming fiction which prescribes when the
presentation of the bill of entry and self-assessment is complete;
6 “the Regulations 2018”
19
PART E
(v) Once the bills of entry were filed and self-assessment was complete, the
subsequent issuance of notification 5/2019 at 20:46:58 hours would have
no application to the present batch of cases; and
(vi) Bills of entry, once presented, can be re-assessed under Section 17(4) only
in instances when the assessment has “not been done correctly” upon
verification, examination or testing of the goods by the proper officer. None
of these circumstances are applicable to the present case.
D The purpose of the notification being to discourage the import of goods
from Pakistan, it has prospective effect: the object and purpose is not to penalize
Indian importers who had completed their imports, presented bills of entry for
home consumption and had completed self-assessment in terms of the
provisions of the Customs Act and the Regulations, prior to the issuance of the
notification.
The submissions which were urged by Mr P S Narasimha have been supported
by other learned counsel appearing for the respondents including Mr Devashish
Bharuka, Ms Anjana Gusain, Mr Anant Agrawal, Ms Sishti Agarwal, Mr Parmatma
Singh and Mr Saurabh Kapoor.
15 The rival submissions are considered below.
20
PART F
F Determination of the rate under Section 15 of the Customs Act 1962
16 Chapter V of the Customs Act provides for the levy of and exemption from
customs duties. Section 12(1), which is the charging provision, provides for the
levy of duties of customs on goods imported into, or exported from India at the
rates specified by the Customs Tariff Act or, in any other law for the time being in
force. Section 15(1) is extracted below:
“15. Date for determination of rate of duty and tariff valuation
of imported goods.— (1) The rate of duty and tariff
valuation, if any, applicable to any imported goods, shall
be the rate and valuation in force,—
(a) in the case of goods entered for home consumption
under section 46, on the date on which a bill of entry in
respect of such goods is presented under that section;
(b) in the case of goods cleared from a warehouse under
section 68, on the date on which a bill of entry for home
consumption in respect of such goods is presented under that
section];
(c) in the case of any other goods, on the date of payment of
duty:
Provided that if a bill of entry has been presented before the
date of entry inwards of the vessel or the arrival of the aircraft
or the vehicle by which the goods are imported, the bill of
entry shall be deemed to have been presented on the date of
such entry inwards or the arrival, as the case may be.
The provisions of this section shall not apply to baggage and
goods imported by post.”
(emphasis supplied)
21
PART F
17 Section 12 specifies that the rates of duty on goods imported and exported
are those which are provided in the Customs Tariff Act or in any other law.
Section 12 does not indicate when the duties under those enactments will come
into being or force. Section 15 specifies the date with reference to which the rate
of duty and tariff valuation of imported goods is determined. Clauses (a), (b) and
(c) of sub-section (1) of section 15 contain distinct provisions which apply to:
(i) goods entered for home consumption under Section 46;
(ii) goods cleared from a warehouse under Section 68; and
(iii) other goods.
Where goods are entered for home consumption under Section 46, the rate of
duty and tariff valuation is to be the rate and valuation “in force” “on the date on
which” a bill of entry in respect of such goods is presented under that Section. In
relation to the rate of duty, the effect of clause (a) of Section 15(1), is that the rate
which is in force on the date on which a bill of entry is presented under Section
46 (in the case of goods entered for home consumption) is applicable to the
imported goods. When the duties come into force under the enactments imposing
them is dependent on and defined by the terms of the particular enactment.
18 Chapter IX of the Customs Act contains provisions for warehousing.
Section 68 which falls under that Chapter stipulates that goods which have been
warehoused may be cleared for home consumption if:
a) A bill of entry for home consumption has been presented;
b) Import duty, interest, fine and penalties, as applicable, have been paid; and
22
PART F
c) An order for clearance for home consumption has been made by the
proper officer.
Provided that the order referred to in clause (c) may also be made electronically
through the customs automated system on the basis of risk evaluation through
appropriate selection criteria.
For goods which are cleared from a warehouse under Section 68, clause (b) of
Section 15 (1) provides that the rate of duty and valuation are those “in force” “on
the date” on which a bill of entry for home consumption is presented under
Section 68. In the case of other goods, it is the date of the payment of duty which
determines the rate of duty under clause (c) of Section 15(1).
The proviso to Section 15 (1) contemplates a situation where a bill of entry has
been presented before the date of the entry inwards of the vessel or the arrival of
the aircraft or vehicle through which the goods are imported. Under the proviso to
Section 46(3), a bill of entry may be presented at any time not exceeding thirty
days prior to the expected arrival of the aircraft or vehicle by which the goods
have been shipped for importation into India. Dealing with such a situation, the
proviso to Section 15(1) states that if a bill of entry has been presented prior to
the date of the entry inwards of the vessel or the arrival of the aircraft or vehicle
by which the goods are imported, the bill of entry is deemed to have been
presented on the date of the entry inwards or the arrival of the goods. Hence
even where the bill of entry has been presented before the date of the entry
inwards or the arrival of the aircraft or vehicle, the rate of duty is determined with
reference to the date of entry inwards or the arrival of the aircraft or vehicle. This
23
PART F
is a consequence of the deeming fiction under the proviso, as a result of which
the presentation of the bill of entry, when filed prior to the arrival of the goods, is
deemed to be on the date of the entry inwards or the arrival of the aircraft or
vehicle. Hence, implicit in the provisions of Section 15(1) are the dual or (as
counsel before the court described them) the twin requirements of (i) the
presentation of the bill of entry; and (ii) the entry inwards of the vessel or, as the
case may be, the arrival of the aircraft or vehicle.
19 Section 17 provides for the assessment of duty. Section 46 provides for the
entry of goods on importation. Both the provisions of Section 17 and Section 46
have undergone legislative changes by Act 8 of 2011 and by the Finance Act of
2018. By Act 8 of 2011, Section 17 was substituted and Section 46 was amended
to provide for the presentation in the electronic form of a bill of entry for home
consumption or warehousing. Section 46 provides as follows:
“46. Entry of goods on importation.—(1) The importer of
any goods, other than goods intended for transit or
transhipment, shall make entry thereof by presenting
[electronically] [on the customs automated system] to
the proper officer a bill of entry for home consumption or
warehousing in such form and manner as may be
prescribed: Provided that the [Principal Commissioner of
Customs or Commissioner of Customs] may, in cases
where it is not feasible to make entry by presenting
electronically on the customs automated system, allow
an entry to be presented in any other manner: Provided
further that if the importer makes and subscribes to a
declaration before the proper officer, to the effect that he is
unable for want of full information to furnish all the particulars
of the goods required under this sub-section, the proper
officer may, pending the production of such information,
permit him, previous to the entry thereof (a) to examine the
goods in the presence of an officer of customs, or (b) to
deposit the goods in a public warehouse appointed under
section 57 without warehousing the same.
24
PART F
(2) Save as otherwise permitted by the proper officer, a bill of
entry shall include all the goods mentioned in the bill of lading
or other receipt given by the carrier to the consignor.
(3) The importer shall present the bill of entry under subsection (1) before the end of the next day following the day
(excluding holidays) on which the aircraft or vessel or vehicle
carrying the goods arrives at a customs station at which such
goods are to be cleared for home consumption or
warehousing: Provided that a bill of entry may be presented
at any time not exceeding thirty days prior to the expected
arrival of the aircraft or vessel or vehicle by which the goods
have been shipped for importation into India: Provided further
that where the bill of entry is not presented within the time so
specified and the proper officer is satisfied that there was no
sufficient cause for such delay, the importer shall pay such
charges for late presentation of the bill of entry as may be
prescribed.
(4) The importer while presenting a bill of entry shall make
and subscribe to a declaration as to the truth of the contents
of such bill of entry and shall, in support of such declaration,
produce to the proper officer the invoice, if any, [and such
other documents relating to the imported goods as may be
prescribed].
(4A) The importer who presents a bill of entry shall ensure the
following, namely:—
(a) the accuracy and completeness of the information
given therein;
(b) the authenticity and validity of any document
supporting it; and
(c) compliance with the restriction or prohibition, if any,
relating to the goods under this Act or under any other
law for the time being in force…….”
(emphasis supplied)
Sub-section (1) of Section 46 requires an importer of goods to make an entry by
presenting a bill of entry for home consumption or warehousing “electronically
on the customs automated system” to the proper officer “in such form and
manner as may be prescribed”. The word ‘electronically’ was introduced by Act
25
PART F
8 of 2011 with effect from 8 April 2011. The provision for the presentation of the
bill of entry on the customs automated system and in ‘such form and manner as
prescribed’ was introduced by the Finance Act of 2018. Under sub-section (3) of
Section 46, a bill of entry under sub-section (1) must be presented before the end
of the day following the day on which the aircraft, vessel or vehicle carrying the
goods arrives at a customs station at which the goods are to be cleared for home
consumption or warehousing (holidays being excluded). The first proviso to subsection (3) enables the presentation of a bill of entry before arrival, at a time not
exceeding thirty days prior to the expected arrival of the aircraft, vessel or vehicle
by which the goods have been shipped for importation. Under the second proviso
if the bill of entry is not presented within the specified time without sufficient
cause, the importer is required to pay the charges prescribed for late presentation
of the bill of entry.
20 Section 17 makes provisions for the assessment of duty:
“Assessment of duty.
17. Assessment of duty --(1) An importer entering any
imported goods under section 46, or an exporter entering any
export goods under section 50, shall, save as otherwise
provided in section 85, self-assess the duty, if any, leviable on
such goods.
(2) The proper officer may verify [the entries made under
section 46 or section 50 and the self-assessment of goods
referred to in sub-section (1)] and for this purpose, examine or
test any imported goods or export goods or such part thereof
as may be necessary.
Provided that the selection of cases for verification shall
primarily be on the basis of risk evaluation through appropriate
selection criteria.
(3) For the purposes of verification under sub-section (2), the
proper officer may require the importer, exporter or any other
person to produce any document or information, whereby the
duty leviable on the imported goods or export goods, as the
26
PART F
case may be, can be ascertained and thereupon, the importer,
exporter or such other person shall produce such document or
furnish such information.
(4) Where it is found on verification, examination or
testing of the goods or otherwise that the self-assessment
is not done correctly, the proper officer may, without
prejudice to any other action which may be taken under
this Act, re-assess the duty leviable on such goods…..”
(5) Where any re-assessment done under sub-section (4) is
contrary to the self-assessment done by the importer or
exporter and in cases other than those where the importer or
exporter, as the case may be, confirms his acceptance of the
said re-assessment in writing, the proper officer shall pass a
speaking order on the re-assessment, within fifteen days from
the date of re-assessment of the bill of entry or the shipping
bill, as the case may be.
Explanation.-For the removal of doubts, it is hereby declared
that in cases where an importer has entered any imported
goods under section 46 or an exporter has entered any export
goods under section 50 before the date on which the Finance
Bill, 2011 receives the assent of the President, such imported
goods or export goods shall continue to be governed by the
provisions of section 17 as it stood immediately before the
date on which such assent is received.”
(emphasis supplied)
Prior to its substitution by Amending Act 8 of 2011, Section 17 contained
requirements for (i) examination and testing of goods; and (ii) assessment.
Section 17, as it stood prior to substitution, was in the following terms:
“17. Assessment of Duty. –
(1) After an importer has entered any imported goods under
section 46 or an exporter has entered any export goods
under, section 50 the imported goods or the export goods, as
the case may be, or such part thereof as may be necessary
may, without undue delay, be examined and tested by the
proper officer.
(2) After such examination and testing, the duty, if any,
leviable on such goods shall, save as otherwise provided in
section 85, be assessed.
27
PART F
(3) For the purpose of assessing duty under sub-section (2),
the proper officer may require the importer, exporter or any
other person to produce any contract, broker's note, policy of
insurance, catalogue or other document whereby the duty
leviable on the imported goods or export goods, as the case
may be, can be ascertained, and to furnish any information
required for such ascertainment which it is in his power to
produce or furnish, and thereupon the importer, exporter or
such other person shall produce such document and furnish
such information.
(4) Notwithstanding anything contained in this section,
imported goods or export goods may, prior to the examination
or testing thereof, be permitted by the proper officer to be
assessed to duty on the basis of the statements made in the
enter relating thereto and the documents produced and the
information furnished under sub-section (3); but if it is found
subsequently on examination or testing of the goods or
otherwise that any statement in such entry or document or
any information so furnished is not true in respect of any
matter relevant to the assessment, the goods may, without
prejudice to any other action which may be taken under this
Act, be re-assessed to duty.
(5) Where any assessment done under sub-section (2) is
contrary to the claim of the importer or exporter regarding
valuation of goods, classification, exemption or concessions
of duty availed consequent to any notification therefore under
this Act, and in cases other than those where the importer or
exporter, as the case may be, confirms his acceptance of the
said assessment in writing, the proper officer shall pass a
speaking order within fifteen days from the date of
assessment of the bill of entry or the shipping bill, as the case
may be.”
The amendment of 2011 has made significant legislative changes in the
procedure and modalities for assessment of duty under Section 17. Under subsection 1 of Section 17, the importer entering imported goods under Section 46,
has to ‘self-assess’ duty (except as otherwise envisaged in the provisions of
Section 85). Under sub-section (2), the proper officer may verify the entries made
under Section 46 and the self-assessment made under sub-section (1) and may
examine or test the goods. The selection of goods for verification has to be
28
PART F
primarily on the basis of risk evaluation through appropriate selection criteria.
Under sub-section (4), where it is found on verification, examination or testing of
goods or otherwise that the self-assessment has not been done properly the
proper officer is entrusted with a power of re-assessment. Sub-section (5)
requires the passing of a speaking order upon re-assessment.
21 Section 47 provides for the clearance of goods for home consumption:
“Clearance of goods for home consumption.
(1) Where the proper officer is satisfied that any goods
entered for home consumption are not prohibited goods
and the importer has paid the import duty, if any,
assessed thereon and any charges payable under this Act in
respect of the same, the proper officer may make an order
permitting clearance of the goods for home
consumption:
Provided that such order may also be made electronically
through the customs automated system on the basis or
risk evaluation through appropriate selection criteria:
Provided further that the Central Government may, by
notification in the Official Gazette, permit certain class of
importers to make deferred payment of said duty or any
charges in such manner as may be provided by rules.
(2) The importer shall pay the import duty--
(a) on the date of presentation of the bill of entry in the
case of self assessment; or
(b) within one day (excluding holidays) from the date on which
the bill of entry is returned to him by the proper officer for
payment of duty in the case of assessment, reassessment or
provisional assessment; or
(c) in the case of deferred payment under the proviso to subsection (1), from such due date as may be specified by rules
made in this behalf,
and if he fails to pay the duty within the time so specified, he
shall pay interest on the duty not paid or short-paid till the
date of its payment, at such rate, not less than ten per cent.
but not exceeding thirty-six per cent. per annum, as may be
fixed by the Central Government, by notification in the Official
Gazette……”
(emphasis supplied)
29
PART F
Sub-section (2) of Section 47 requires the importer to pay import duty “on the
date of presentation of the bill of entry in the case of self-assessment”.
Alternatively, where the bill of entry is returned to the importer for the payment of
duty in the case of assessment, re-assessment or provisional assessment, the
import duty has to be paid within a day, after excluding holidays.
The provisions contained in Section 46 for the entry of goods on importation and
those in Section 17 for assessment form part of a composite scheme. Section 46
requires an importer of goods to make an entry in the electronic form of a bill of
entry for home consumption or, as the case may be, for warehousing, on the
customs automated system. An exception is contained in the proviso to Section
46 (1) for cases where it is not feasible to make an entry in the electronic form on
the customs automated system. The bill of entry under sub-section (1) has to be
presented not later than the day following the arrival of the goods though it can
be presented before the arrival of goods, at a time not exceeding thirty days prior
to their expected arrival. In tandem with the provisions of Section 46, Section 17
provides for the self-assessment of duty by the importer.
Section 46(1) stipulates that the bill of entry has to be presented in the form and
in the manner ‘prescribed’. The expression ‘prescribed’ is defined in Section 2(32)
to mean prescribed by regulations made under the Act. The Bill of Entry
(Electronic Integrated Declaration and Paperless Processing) Regulations 2018
have been made in pursuance of the enabling power conferred by Sections 46
and 47 and Section 157 which contains a general power to make regulations.
30
PART F
Section 157(2)(a) was amended by the Finance Act 2018 (Act 13 of 2018) to
allow for the power to frame regulations on the form and manner of delivering or
presenting inter alia a bill of entry. Regulation 2(c) of the 2018 Regulations
defines the expression bill of entry in the following terms:
“(c) “bill of entry” means electronic integrated declaration
accepted and a unique number generated and assigned to
that particular bill of entry by the Indian Customs Electronic
Data Interchange System, and includes its electronic records
or print-outs”
Regulation 2(d) defines the expression electronic integrated declaration:
“(d) “electronic integrated declaration” means particulars
relating to the imported goods that are entered in the Indian
Customs Electronic Data Interchange System”
Under Regulation 2(e), “ICEGATE” is the customs automated system of the
Central Board of Indirect Taxes and Customs. Regulation 3 requires the
authorized person (defined in Regulation 2(b)7
), which includes the importer, to
enter the electronic integrated declaration and supporting documents by affixing a
digital signature. Regulation 3 is as follows:
“3. The authorised person shall enter the electronic integrated
declaration and the supporting documents himself by affixing
his digital signature and enter them on the Customs
Automated System and he may also get the electronic
integrated declaration made on the customs automated
system along with the supporting documents by availing the
services at the service centre.”
Regulation 4 provides as follows
7 2(b) “authorised person” means an importer or a person authorised by him who has a valid licence under
the Customs Brokers Licensing Regulations, 2013 or any other regulation dealing with the similar matters
and it also includes an employee of the Customs broker who has been issued a photo identity card in Form
G under the Customs Brokers Licensing Regulations, 2013 or any other regulation dealing with the similar
matters;
31
PART F
“4. (1) The authorised person shall file the bill of entry before
the end of the next day following the day (excluding holidays)
on which the aircraft or vessel or vehicle carrying the goods
arrives at a customs station at which such goods are to be
cleared for home consumption or warehousing.
(2) The bill of entry shall be deemed to have been filed
and self-assessment completed when after entry of the
electronic integrated declaration on the customs
automated system or by way of data entry through the
service centre, a bill of entry number is generated by the
Indian Customs Electronic Data Interchange System for
the said declaration and the self-assessed copy of the
Bill of Entry may be electronically transmitted to the
authorised person or printed out at the service centre.
(3) Where the bill of entry is not filed within the time specified
in sub-regulation (1) and the proper officer of Customs is
satisfied that there was no sufficient cause for such delay, the
importer shall be liable to pay charges for late presentation of
the bill of entry at the rate of ……”
(emphasis supplied)
22 The Regulations of 2018 have made provisions for submission of a
declaration and generation of the bill of entry in an electronic form on the
automated platform provided by the Central Board of Indirect Taxes and
Customs. Sub-regulation (2) of Regulation 4 embodies a legal fiction. Regulation
4(2) stipulates that the bill of entry is deemed to have been filed and selfassessment completed when after the entry of the electronic integrated
declaration on the customs automated system (or by data entry through a service
centre) a bill of entry number is generated by the Indian Customs Electronic Data
Interchange (“EDI”) System. The self-assessed copy of the bill of entry may be
electronically transmitted to the authorized person under the deeming fiction
which is created by Regulation 4(2). Hence, the bill of entry is deemed to be filed
and the self-assessment completed when the requirements of Regulation 4(2)
are fulfilled namely by the (i) entry of the declaration on the customs automated
32
PART F
system; and (ii) generation of a bill of entry number by the EDI system. Following
this, the self-assessed copy of the bill of entry is electronically transmitted to the
authorized person.
23 In terms of the provisions of Section 15(1)(a), in the case of goods which
are entered for home consumption under Section 46, the date of presentation of
the bill of entry determines the rate of duty and tariff valuation. Under Section
47(2)(a), the importer is obliged to pay the import duty on the date of the
presentation of the bill of entry in the case of self-assessment. Regulation 4(2) of
the Regulations of 2018 categorically stipulates when the presentation of the bill
of entry is complete. Once the bill of entry is deemed to have been presented in
terms of Regulation 4(2) the rate and valuation in force stand crystalized under
Section 15(1)(a). Section 17(4) confers a power of re-assessment on the proper
officer where it is found on verification, examination or testing of the goods or
otherwise- that the self-assessment has not been done correctly. In the present
case the customs authorities sought to exercise the power of re-assessment on
the ground of the subsequent notification enhancing the rate of duty. The fact of
the matter is that self-assessment was carried out on the basis of the rate of duty
which prevailed at the time of the presentation of the bill of entry. This is not and
cannot be a matter of dispute. Notification 5/2019, which introduced a new tariff
entry – 980 60 000 - in the First schedule to the Customs Tariff Act covering all
goods originating in or exported from the Islamic Republic of Pakistan, was not in
force at the time when the self-assessment was carried out.
24 Under Section 15(1)(a) the rate of duty is the rate in force on the date of
the presentation of a bill of entry where the goods are entered for home
consumption under Section 46. The submission of the learned ASG is that the
33
PART F
expression “on the date” is adopted by the legislature in clauses (a) and (b) and
in the proviso to Section 15(1). He urged that Section 15(1) has no reference to
time but only to the date of the presentation of the bill of entry and once a
notification was issued on 16 February 2019 enhancing the rate of duty, that is
the duty ‘in force’ on the date of presentation. Section 15(1)(a) uses two
expressions (i) the rate and valuation “in force”; and (ii) “on the date” of the
presentation of the bill of entry for home consumption under Section 46. The
provisions of Section 15(1)(a) have to be read in conjunction with the provisions
of Section 46 which are referred to in the former provision. Section 46 has
incorporated a regime which encompasses the submission of the bill of entry for
home consumption or warehousing in an electronic format, on the customs
automated system in the manner which is prescribed. The Regulations of 2018
stipulate the manner in which the bill of entry has to be presented. The deeming
fiction in Regulation 4(2) specifies when presentation of the bill of entry and ‘selfassessment’ are complete. The rate of duty stands crystallized under Section
15(1)(a) once the deeming fiction under Regulation 4(2) comes into existence.
The regulations have to be read together with the statutory provisions contained
in Section 15(1)(a) and Section 46, while determining the rate of duty.
34
PART G
G Precedent
25 At this stage it is necessary to analyze the precedent on the subject. In
Bharat Surfactants (Private) Limited vs. Union of India8
(“Bharat
Surfactants”), customs duty was imposed on the import of edible oil by the
petitioners at the rate of 150 per cent on the basis that the import was made on
the date of the inward entry, which was 31 July 1981. The vessel arrived and
registered in the Port of Bombay on 11 July 1981 but since a berth was not
available, the cargo could not be unloaded. The vessel left Bombay and
proceeded to Karachi and returned towards the end of July 1981. The rate of
customs duty prevailing on 11 July 1981 was 12.5 per cent and the contention of
the importer was that but for the fact that the vessel was unable to secure a
berth, it would have delivered the cargo. Speaking for a Constitution Bench, Chief
Justice R S Pathak rejected the contention of the importer that the import of
goods must be deemed to have taken place on 11 July 1981 when the ship
originally arrived in Bombay port and registered itself. The Constitution Bench
held:
“14…The provisions of Section 15 are clear in themselves.
The date on which a Bill of Entry is presented under Section
46 is, in the case of goods entered for home consumption, the
date relevant for determining the rate of duty and tariff
valuation. Where the Bill of Entry is presented before the date
of Entry Inwards of the vessel, the Bill of Entry is deemed to
have been presented on the date of such Entry Inwards.”
8 (1989) 4 SCC 21
35
PART G
The Constitution Bench held that the date of entry inwards of the vessel in the
Customs’ register was mentioned as 31 July 1981 and the rate of import duty and
tariff valuation would be that which was in force on that day. The decision in
Bharat Surfactants was adverted to in the decision of this court in Priyanka
Overseas Pvt. Ltd. vs. Union of India9
. Justice N M Kasliwal, speaking for the
two judge Bench, observed:
“34…The rate of duty and tariff valuation on the imported
goods may be changed from time to time and as such the
legislature has clearly expressed its intention under Section 15
as to on what date the rate of duty and tariff valuation is to be
determined…
Many contingencies may happen in between the filing of bill of
entry and actual removal of the goods from the warehouse for
which sometimes the importer of goods may himself be
responsible, in some cases the responsibility may lie on the
customs authorities and there may also be contingencies
beyond the control of both the parties. In any case the
intention of the legislature being clear, rate of duty is to be
applied, as may be in force on the date of actual removal of
goods from the warehouse under Section 15(1)(b) of the
Customs Act.”
The above observations, referring to the date of the actual removal of goods from
the warehouse, were made in the context of the provisions of Section 15(1)(b). In
a subsequent decision in Dhiraj Lal H Vohra vs. Union of India10, Justice K
Ramaswamy speaking for a three judge Bench observed:
“3. It is clear from a bare reading of these relevant provisions
that the due date to calculate the rate of duty applicable to
any imported goods shall be the rate and valuation in force, in
the case of the goods entered for home consumption under
Section 46, is the date on which the bill of entry in respect of
9 1991 Supp (1) SCC 102
10 1993 Supp (3) SCC 453
36
PART G
such goods is presented under that section and in the case of
goods cleared from a warehouse under Section 68, the date
on which the goods are actually removed from the
warehouse. By operation of the proviso if a bill of entry has
been presented before the date of entry inwards the bill of
entry shall be deemed to have been presented “on the date of
such entry inwards” but would be subject to the operation of
Sections 46 and 31(1) of the Act.”
In that case the ship had arrived at the Port of Madras on 20 February 1989 and
was ready to discharge her cargo. Though the import manifest was delivered, the
cargo could not be handled as a result of a continuous strike. The bill of entry for
clearance of goods for home consumption was presented on 27 February 1989.
The ship arrived into the port and was berthed on 2 March 1989 on which date
the entry inwards was granted. From 1 March 1989, the rate of duty was
increased. The court rejected the contention that since the vessel had entered
Indian territorial waters on 20 February 1989 when she was ready to discharge
the cargo, the rate of duty must be that which prevailed on that date:
“3…The contention, therefore that the ship entered Indian
territorial waters on February 20, 1989 and was ready to
discharge the cargo is not relevant for the purpose of Section
15(1) read with Sections 46 and 31 of the Act. The prior
entries regarding presentation of the bill of entry for clearance
of the goods on February 27, 1989 and their receipt in the
appraising section on February 28, 1989 also are irrelevant.
The relevant date to fix the rate of customs duty, therefore, is
March 2, 1989. The rate which prevailed as on that date
would be the duty to which the goods imported are liable to
the impost and the goods would be cleared on its payment in
accordance with the rate of levy of customs prevailing as on
March 2, 1989.”
Another decision of a Bench comprising three learned judges of this Court in
D.C.M. vs. Union of India11 held as follows:
11 1995 Supp (3) SCC 223
37
PART G
“7…A reading of Sections 15, 46 and 68 makes it clear that
they provide an option to the importer either to file a bill of
entry for home consumption straight away (in which case he
38
PART H
has to pay the duty determined with reference to that date) or
to file a bill of entry for warehousing. In the latter case, the
goods are merely warehoused. The import duty will be levied
at the rate and on the basis of the valuation determined in
accordance with the provisions prevailing on the date of
clearance from the warehouse for which purpose the importer
has to file a fresh bill of entry for home consumption. In other
words, it is the date of filing the bill of entry for home
consumption which determines the rate of duty in clauses (a)
and (b) of Section 15. Inasmuch as the matter is left to the
option of the importer and also because a uniform principle is
adopted by the Act, as explained above, we see no room for
any legitimate grievance of discrimination. There is also no
presumption that rate of duty always goes up. It may also go
down, in which case, the importer stands to gain.”
26 The presentation of a bill of entry for home consumption under Section 46
is hence the definitive event with reference to which the customs’ duty payable
for import is determined. The duty in force on the day when the bill of entry for
home consumption is presented is the duty which is applicable under Section
15(1)(a). It is in view of this principle that the entry of the vessel into territorial
waters, before the presentation of the bill of entry, has been held not to fix the
rate of duty where the rate of duty has undergone a change.
H Interpreting ‘day’ and ‘date’
27 The expressions “day” and “date” have been construed in varying contexts
in the precedents of this Court. The underlying feature of the decisions is that the
content of those expressions is based on the context. In Raj Kumar Yadav vs.
Samir Kumar Mahaseth12, the limitation provided by Section 81 of the
Representation of the People Act 1951 expired on the 45th day from the date of
12 (2005) 3 SCC 601
39
PART H
the election. Interpreting the provision, Chief Justice R.C. Lahoti while speaking
for a three judge Bench of this Court observed :
“6…The word “day” is not defined in the Act. It shall have to
be assigned its ordinary meaning as understood in law. The
word “day” as per English calendar begins at midnight and
covers a period of 24 hours thereafter, in the absence of there
being anything to the contrary in the context.”
Hence, in that case the Election Petition could have been presented up to
midnight falling between 27 and 28 August 2003. The Court observed that the
limitation which was prescribed by the statute could not be curtailed or taken
away by the rules of the High Court, governing its procedure.
28 In New India Assurance Co. Ltd. vs. Ram Dayal13 (“Ram Dayal”), a two
judge Bench of this Court noted that the insurance policy in respect of the vehicle
was up to 31 August 1984 and could be renewed. Instead of renewing the policy,
a fresh insurance policy was taken from 28 September 1984, on which date the
accident occurred. This Court upheld the view of the Punjab and Haryana High
Court, which was supported by earlier decisions of the Madras High Court,
Punjab and Haryana High Court and the Allahabad High Court, that the insurance
cover commenced from the beginning of the day and concluded that:
“4… when a policy is taken on a particular date, its
effectiveness is from the commencement of the date and,
therefore, the High Court, in our opinion, was right in holding
that the insurer was liable in terms of the Act to meet the
liability of the owner under the award.”
13 (1990) 2 SCC 680
40
PART H
29 On the other hand, in National Insurance Company Limited vs. Geeta
Devi14, the cover note was issued on 9 June 1989 at 4:40 pm while the accident
took place at 11:30 am on the same day. A two judge Bench of this Court
distinguished the decision in Ram Dayal (supra) and held that when the cover
note mentioned the date of issue of the policy as 9 June 1989 and the time as
4:40 pm “ it necessarily means that the effective date of issue and time of issue is
as mentioned on the cover note.” Since the cover note mentioned both the date
and time, the Court held that the principle that the insurance cover would date
back to midnight of the preceding day would not cover the factual situation.
30 In Ahmadsahab Abdul Mulla (2) Dead by proposed Lrs. vs. Bibijan15
,
the issue before this Court was whether the expression “date” in Article 54 of the
Schedule to the Limitation Act (which prescribes the period of limitation for a suit
for specific performance) is suggestive of a specific date in the calendar. The
court observed:
“11. The inevitable conclusion is that the expression “date
fixed for the performance” is a crystallised notion. This is clear
from the fact that the second part “time from which period
begins to run” refers to a case where no such date is fixed. To
put it differently, when date is fixed it means that there is a
definite date fixed for doing a particular act. Even in the
second part the stress is on “when the plaintiff has notice that
performance is refused”. Here again, there is a definite point
of time, when the plaintiff notices the refusal. In that sense
both the parts refer to definite dates. So, there is no question
of finding out an intention from other circumstances.”
14 (2010) 15 SCC 670
15 (2009) 5 SCC 462
41
PART H
31 The expression ‘date’ in Article 54 was held to be suggestive of a specified
date in the calendar. In Pashupati Nath Singh vs. Harihar Prasad Singh16, a
three judge Bench construed the words “on the date fixed for scrutiny” in Section
36(2)(a) of the Representation of the People Act 1951. Interpreting those words,
the Court held that the qualification of a candidate must exist from the earliest
moment of the day of scrutiny:
“13. It seems to us that the expression “on the date fixed for
scrutiny” in Section 36(2)(a) means “on the whole of the day
on which the scrutiny of nomination has to take place”. In
other words, the qualification must exist from the earliest
moment of the day of scrutiny. It will be noticed that on this
date the Returning Officer has to decide the objections and
the objections have to be made by the other candidates after
examining the nomination papers and in the light of Section
36(2) of the Act and other provisions. On the date of the
scrutiny the other candidates should be in a position to raise
all possible objections before the scrutiny of a particular
nomination paper starts.”
32 A Special Bench of the Madras High Court in Re Court Fees17 dealt with
the interesting issue of whether the law disregards fractions of the day. A
notification was published in the Fort St. George Gazette on 5 May 1922 by
which the table of fees leviable in respect of the institution of suits under
Appendix – II of the old rules on the Original side was amended. Instead of a
fixed fee of Rs 30, it was provided that Rs 150 was to be levied in all suits where
the value of the subject matter did not exceed Rs 10,000/- and in respect of suits
of a higher value, Rs 20/- was to be levied for every Rs 5,000/- or part thereof in
excess of Rs 10,000/-. The notification stated that “the amendments do come
into force from the date of publication in the Fort St. George Gazette”. The
16 (1968) 2 SCR 812
17 ILR (1923) 46 Mad 685
42
PART H
office hours of the High Court were from 11am to 5pm. The notification reached
the High Court at about 5pm, at the close of the office hours. The issue before the
Special Bench was whether the rules imposing increased institution fees on suits
on the Original side of the High Court would apply the new scale to suits which
had already been instituted on that day. Chief Justice Schwabe, on behalf of the
majority, held “that the hour of the day at which the Gazette was actually
published is a wholly irrelevant consideration”. The Chief Justice noted that the
use of the expression ‘from’ may have one of two meanings namely on and after,
that is including the named date, or merely after, that is excluding the named
date. The Chief Justice took the view that it is necessary to look at the context
and the circumstances of each case to arrive at the true construction. Having said
this, the Chief Justice outlined the principles in the following extract on page 688:
“(1) that, if the named date is the beginning of a defined
limited period, that, where there is a terminus ad quem as
well as a terminus a quo, then prima facie the first day is
excluded; (2) that, if the named date is the beginning of an
indefinite period then prima facie the first day is included. I
say prima facie because in my view there must be
exceptions”.
In his view, the expression “from a named date” meant “on and after that day”.
Hence the date on which the notification was published in the official Gazette was
held to apply to all plaints which were filed on 5 May 1922.
Justice Coutts Trotter, arrived at the same conclusion as the Chief Justice,
following a different path, which he set out in the following observations, on page
691 :
43
PART H
“What I conceive to emerge from the decided cases is this:
that as the law in general neglects fractions of a day you must
either exclude or include the whole of the day with which a
given statute or rule or regulation deals. And the exclusion or
inclusion, I think, is clearly provided in two other rules. If you
are fixing the point of time at which a certain state of things is
to be called into existence, that state of things comes into
existence at midnight of the day preceding the day at which or
on which or from which or from and after which the new state
of things begins. In such cases the statue or rule is only
concerned in fixing the terminus a quo of a new state of law
which is enacted to continue indefinitely, in other words, until
repealed by a new enactment of the legislature where, in
short, you have a terminus a quo but no terminus ad quem.”
In his view, on page 693:
“Where a statute fixes only the terminus a quo of a state of
things, which is envisaged as to last indefinitely, the common
law rule obtains that you ought to neglect fractions of a day
and the statute or regulation or order takes effect from the
first moment of the day on which it is enacted or passed, that
is to say, from midnight of the day preceding the day on which
it is promulgated: where on the other hand, a statute delimits
a period marked both by a terminus a quo and a terminus ad
quem, the former is to be excluded and the latter to be
included in the reckoning.”
The notification, in this view, fell in the former class and was held to have come
into force on the first second of the 5 May, that is to say from midnight of 4 May.
Hence all plaints which were filed on 5 May were liable to the enhanced fee.
The tightly reasoned and eloquent dissenting opinion delivered by Justice
Kumaraswami Sastri, on the other hand, deserves close attention. The learned
Judge noted that if the case were to be decided on the principle that the law
disregards fractions of a day, it could mean any one of two things: either that a
fraction of a day is to be taken as a whole day or that it is to be excluded
44
PART H
altogether from the calculation. Consequently, “it does not help us to determine in
any particular case whether the part is to be left out or kept in”. Justice
Kumaraswami Sastri observed that there is no invariable rule that the use of the
expression ‘from’ includes the first day. Nor was there any basis in principle in the
submission of the Crown that the exclusion of the first day where the word “from”
is used is only to be in case where there are two termini. The learned Judge held
that rules of equity and good conscience are by the Civil Courts Act to govern
cases not governed by the Hindu and Mohammedan Laws. Voicing a powerful
dissent, Justice Kumaraswami Sastri observed, on page 704:
“I do not think that the principles which govern, or the devices
which are resorted to, by the Executive for the purpose of
raising money by taxation ought to have any weight with us in
determining whether the date of publication is to be included
or excluded. I do not think the High Court is part of the tax
gathering machinery of the Government or has any concern
with the consequences to the Government of their decision on
the construction of the rule. The rule, I take it, was passed by
the Judges of the High Court in the exercise of the powers
entrusted to them to control the administration of justice and
the fees were raised because in the opinion of the Judges it
was just and proper that litigants ought to pay more for the
benefits which they derive by resorting to the jurisdiction of
the High Court”.
In the view of the learned Judge, the notification having been received in the
Registry of the High Court at 5pm at the office closing hour, litigants who had
filed plaints before either or they or the office had knowledge of the publication
“did what was perfectly valid under the old rules and they presented the plaints
with Rs 30 stamp irrespective of the value of their claim”. Looking at it from the
citizens’ perspective, the learned Judge observed, on page 704:
45
PART H
“A person who files a plaint which is properly stamped and
which is in order at the time of presentation is entitled to have
his plaint admitted on presentation though as a matter of
convenience the office receives the plaints and admits them
at the end of the day or later on. There seems to me to be
very little justice or equity in directing that persons who have
done what was perfectly a legal and valid act at the time
should pay a Court-fee which is much higher simply because
a notification was received at the close of the day making the
higher fees chargeable from the date of the notification. It
may well be that if those persons had notice that instead of
Rs. 30 they had to pay at least Rs 150 and a maximum that
would range according to the value of their claim, they might
rather have compromised with the other side or might have
had resort to other proceedings like arbitration for settling
their claims. I can find nothing to justify charging people, who
filed their plaints on that day without knowledge of the
notification which only reached the High Court at 5 p.m., with
the higher fees in respect of plaints filed during the course of
the day”.
33 Mr Natraj, on behalf of the Union, submitted that Parliament has employed
the phrase “on the date” without making a reference to time. Hence, he submitted
that irrespective of the time of the publication or uploading of the notification
under the Customs Tariff Act in the e-Gazette, the legislature has by a legal
fiction, enacted that the rate of duty on imported goods will be the rate that is
prevalent on the date of the presentation of the bill of entry for home
consumption. He submitted that two different rates of duty cannot be applicable
on the same day. Hence, according to the submission, once a notification is
issued under the Customs Tariff Act, it will be a notification in force on that date
and apply with effect from the commencement of that date.
34 The decisions to which a reference has been made earlier, have construed
the expression “day” or, as the case may be, “date” in varying contexts ranging
46
PART H
from the law governing elections, insurance and limitation. A general position in
law has not been laid down that is divorced from subject, context and statute. In
interpreting the statute, the court is guided by the terms of its provisions, the
purpose underlying their adoption and the scheme which emerges from
interrelated provisions and the nature of the provision. The court in the present
case is interpreting the terms of a fiscal levy. The court here has to construe the
scheme and provisions of the Customs Act and their relationship with the
provisions of the Customs Tariff Act. The provision which falls for construction is
Section 15(1) of which both clauses (a) and (b) use the expression “on the date”.
In clause (a), the rate of duty and valuation is the rate and valuation in force on
the date on which a bill of entry is presented under Section 46 where goods are
entered for home consumption. Under Clause (b), where goods are cleared from
a warehouse under Section 68 it is the date on which a bill of entry for home
consumption is presented under that Section which is determinative of the rate
and valuation.
35 Mr Natraj is textually right when he emphasizes that Section 15 (1)
contains a reference to date and not time. But there are two responses to his line
of approaching the issue. First, the legislature does not always say everything on
the subject. When it enacts a law, every conceivable eventuality which may arise
in the future may not be present to the mind of the lawmaker. Legislative silences
create spaces for creativity. Between interstices of legislative spaces and
silences, the law is shaped by the robust application of common sense. Second,
regulatory governance is evolving in India as new technology replaces old and
47
PART H
outmoded ways of functioning. The virtual world of electronic filings was not on
the horizon when Parliament enacted the Customs Act in 1962. Yet the
Parliament has responded to the rapid changes which have been brought about
by the adoption of technology in governance. In the provisions of Section 17 and
Section 46, the impact of ICT-based governance has been recognized by the
legislature in providing for the presentation of bills of entry in the electronic form
on the customs automated EDI system. Precision, transparency and seamless
administration are key features of a system which adopts technology in pursuit of
efficiency. As we will explore in greater detail later in this judgment, technology
has enabled both administrators and citizens to know precisely when an
electronic record is uploaded. The considerations which Parliament had in its
view in providing for crucial amendments to the statutory scheme by moving from
manual to electronic forms of governance in the assessment of duties must not
be ignored. Tax administration must leave behind the culture of an age in which
the assessment of duty was wrought with delays, discretion, doubt and
sometimes, the dubious. The interpretation of the court must aid in establishing a
system which ensures certainty for citizens, ease of application and efficiency of
administration.
36 It is with these principles of interpretation in mind that we must evaluate
the submission which was urged by Mr Nataraj, on behalf of the Union, that upon
the issuance of a notification enhancing the rate of duty under Section 8A of the
Customs Tariff Act, the date on which the notification was issued will govern the
rate applicable to all bills of entry, including those which were presented before
48
PART H
the enhanced rate was notified. The submission cannot be accepted for several
reasons. For one thing, it misses the significance of the expression “in force’
which has been employed in the prefatory part of Section 15(1). A notification
under Section 8A(1) of the Customs Tariff Act, even though it has the effect of
amending the First Schedule, takes effect prospectively. Section 8A does not
confer upon the notification an operation anterior to its making. In the language of
the law, its operation is prospective. To accept the submission of the ASG would
mean that the notification under Section 8A would have effect prior to its making,
something which Parliament has not incorporated by language or intent. If, as we
hold, the notification operates for the future beginning with the point of its
adoption, it cannot operate to displace the rate of duty which is applicable when a
bill of entry is presented for home consumption under Section 46.
The submission of the Union cannot be accepted in view of the provisions
contained in Section 46 for the presentation of a bill of entry for home
consumption in an electronic form on the customs automated system. While
making that provision, specifically by means of an amendment by Act 8 of 2011
and later by the Finance Act of 2018, Parliament used the expression “in such
form and manner as may be prescribed.” Regulation 4(2) of the Regulations of
2018 provides when the bill of entry shall be deemed to have been filed and selfassessment completed. The legal fiction which has been embodied in Regulation
4(2) emanates from the enabling provisions of Section 46. The provisions of
Sections 15(1)(a), 17, 46(1) and 47(2)(a) constitute one composite scheme. As a
result of the modalities prescribed for the electronic presentation of the bill of
entry and self-assessment after the entry of the electronic declaration on the
49
PART I
customs automated system, a bill of entry number is generated by the EDI
system for the declaration. Regulation 4(2) provides for a deeming fiction in
regard to the filing of the bill of entry and the completion of self-assessment. In
the context of these specific provisions, it would do violence to the overall
scheme of the statute to interpret the language of Section 15(1)(a) in the manner
in which it is sought to be interpreted by the ASG. The submission of the ASG,
simply put, is that because notification 5/2019 was issued on 16 February 2019,
the court must regardless of the time at which it was uploaded on the e-Gazette
treat it as being in existence with effect from midnight or 0000 hours on 16
February 2019. The consequence of this interpretation would be to do violence to
the language of Section 8A(1) of the Customs Tariff Act, and to disregard the
meaning, intent and purpose underlying the adoption of provisions in the
Customs Act in regard to the electronic filing of the bill of entry and the
completion of self-assessment.
I Notification under Section 8A of the Customs Tariff Act
37 The second and alternative limb of the submissions of the ASG postulates
that a notification under Section 8A(1) of the Customs Tariff Act is a legislative
act. The rates of duty applicable to different categories of goods imported into
India are set out in the First schedule to the Customs Tariff Act. A notification
under Section 8A(1) amends the First schedule. Hence, the submission is that
the schedule being a part of the Act, any amendment made to it by a notification
is an amendment to the Act. The ASG relies upon the decisions of this Court in
50
PART I
Video Electronics (P) Ltd vs. State of Punjab18 and TN Electricity Board vs.
Status Spinning Mills Limited19 in support of the principle that subordinate
legislation validly made in pursuance of a legislative provision is to be read as if it
is a part of the enactment. Hence, for instance, an exemption granted under a
notification made in pursuance of a statutory provision must be construed as if it
is contained in the legislation.
38 In order to consider the submission, it is necessary at the outset to advert
to the provisions of the Customs Tariff Act. Under Section 8A, an emergency
power is vested in the Central Government to increase the import duties leviable
on an article included in the First schedule where it is satisfied that circumstances
rendering it necessary to take immediate action exist. Section 8A is in the
following terms:
“8A- Emergency Power of Central Government to increase
import dutiesWhere in respect of any article included in the First
Schedule, the Central Government is satisfied that the
import duty leviable thereon under section 12 of the
Customs Act, 1962 (52 of 1962) should be increased and
that circumstances exist which render it necessary to
take immediate action, it may, by notification in the
Official Gazette, direct an amendment of that Schedule to
be made so as to provide for an increase in the import
duty leviable on such article to such extent as it thinks
necessary:
Provided that the Central Government shall not issue any
notification under this subsection for substituting the rate of
import duty in respect of any article as specified by an earlier
notification issued under this sub-section by that Government
before such earlier notification has been approved with or
without modifications under sub-section (2).
18 (1990) 3 SCC 87
19 (2008) 7 SCC 353
51
PART I
(2) The provisions of sub-sections (3) and (4) of section 7
shall apply to any notification issued under sub-section
(1) as they apply in relation to any notification increasing
duty issued under sub-section (2) of section 7.”
(emphasis supplied)
While Section 8A is an emergency power, Section 11A empowers the Central
government in public interest to amend the First schedule:
“(1) Where the Central Government is satisfied that it is
necessary so to do in the public interest, it may, by notification
in the Official Gazette, amend the First Schedule:
Provided that such amendment shall not alter or affect in any
manner the rates specified in that Schedule in respect of
goods at which duties of customs shall be leviable on the
goods under the Customs Act, 1962 (52 of 1962).”
Sub-section (2) of Section 8A specifies that the provisions of sub-sections (3) and
(4) of Section 7 shall apply to a notification which has been issued under subsection (1) of Section 8A. Sub-sections (3) and (4) of Section 7 are in the
following terms:
“(3) Every notification under sub-section (2), insofar as it
relates to increase of such duty, shall be laid before each
House of Parliament if it is sitting as soon as may be
after the issue of the notification, and if it is not sitting
within seven days of its re-assembly, and the Central
Government shall seek the approval of Parliament to the
notification by a resolution moved within a period of
fifteen days beginning with the day on which the
notification is so laid before the House of the People and
if Parliament makes any modification in the notification
or directs that the notification should cease to have
effect, the notification shall thereafter have effect only in
such modified form or be of no effect, as the case may
be, but without prejudice to the validity of anything
previously done thereunder.
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PART I
(4) For the removal of doubts, it is hereby declared that any
notification issued under sub-section (2), including any such
notification approved or modified under sub-section (3), may
be rescinded by the Central Government at any time by
notification in the Official Gazette.”
(emphasis supplied)
Under sub-section (3) of Section 7, the Central government is required to seek
the approval of Parliament to a notification within a period of fifteen days of its
being laid before the House of the People. Where Parliament is in session, the
notification has to be laid before the House as soon as may be after it is issued
and, if it is not, then within seven days of the legislature re-assembling. The
approval of parliament has to be sought within the specified period. The
notification would cease to have effect or take effect with modifications, if
Parliament so directs. In the case of a notification which has been issued under
Section 11A, sub-section (2) does not require the Central government to seek the
approval of Parliament to the notification by a resolution moved within a period of
fifteen days from the date on which the notification has been laid before the
House of the People. Sub-section (2) of Section 11A merely states that the
notification shall either cease to have effect or have effect in a modified form if it
is so directed by both the Houses of Parliament.
39 A notification which is issued in terms of the provisions of Sub-section (1)
of Section 8A is akin to the exercise of a delegated legislative power. The Central
government is empowered to issue a notification enhancing the rate of duty
where it is satisfied that immediate action is necessary to increase the rate of
customs duty on an article specified in the First schedule. The effect of the
53
PART J
notification is to amend the First schedule to the Customs Tariff Act in respect of
the import duty leviable on an article under Section 12 of the Customs Act. In
issuing a notification under Sub-section (1) of Section 8A, the Central
government exercises power as a delegate of the legislature. The issue now to
be considered is whether the notification that was issued by the Central
government under Section 8A(1) at 20:46:58 hours on 16 February 2019 took
effect commencing from 0000 hours on that day. The ASG relied on the
provisions of the General Clauses Act in support of his submission that it did.
J General Clauses Act
40 Section 5(3) of the General Clauses Act 1897 provides thus:
“(3) Unless the contrary is expressed, a Central Act or
Regulation shall be construed as coming into operation
immediately on the expiration of the day preceding its
commencement.”
The above provision applies to a “Central Act” or “Regulation”. Hence, the above
provision makes it abundantly clear that it is only a ‘Central Act’ or ‘Regulation’
which comes into operation immediately on the expiration of the day preceding its
commencement. The expressions “Central Act” and “Regulation” are defined by
the statute. The expression “Central Act” is defined in Section 3(7) in the following
terms:
“(7) “Central Act” shall means an Act of Parliament, and shall
include—
(a) an Act of the Dominion Legislature or of the Indian
Legislature passed before the commencement of the
Constitution, and
54
PART J
(b) an Act made before such commencement by the Governor
General in Council or the Governor General, acting in a
legislative capacity;”
The expression “Regulation” is defined in Section 3(50) as follows:
“(50) “Regulation” shall mean a Regulation made by the
President under article 240 of the Constitution and shall
include a Regulation made by the President under article 243
thereof and a Regulation made by the Central Government
under the Government of India Act, 1870, or the Government
of India Act, 1915, or the Government of India Act, 1935;”
The expression “commencement” is defined in Section 3(13) as follows:
“(13) “Commencement” used with reference to an Act or
Regulation, shall mean the day on which the Act or
Regulation comes into force.”
The definition of the expression “commencement’ is also relatable to a
“Central Act” or “Regulation”.
41 A notification issued by the Central government under sub-section (1) of
Section 8A does not fulfill the description of a Regulation under Section 3(50) of
the General Clauses Act. The expression is confined to specific species of
Regulations. The definition does not extend to all subordinate legislation or to
notifications issued by a delegate of the legislature acting in pursuance of a
statutory authority.
42 The expression “Central Act” is defined by using the expressions “shall
mean” and “shall include”. The use of these expressions indicates that the
definition is exhaustive. Insofar as is relevant, the expression ‘Central Act’ is
55
PART J
defined to mean an Act of Parliament. A notification which has been issued under
Sub-section (1) of Section 8A of the Customs Tariff Act is not an Act of
Parliament. The notification has the effect of amending the First schedule. The
Central government as a delegate of the legislature has been entrusted with the
authority to issue such a notification. That does not make the notification an Act
of Parliament.
43 The above analysis is based on a textual reading of the two definitions –
those of a “Central Act” and “Regulation”. The precedent on the subject confirms
the analysis. This Court has held that the mere fact that a piece of delegated
legislation has been issued in exercise of a legislatively conferred power does not
bring the delegated legislation within the ambit of the phrase “Central Act” as
defined in Section 3(7) of the General Clauses Act.
44 In Kolhapur Canesugar Works Ltd. vs. Union of India (UOI)20
,
Constitution Bench of this Court had to decide, inter alia, if Rules 10 and 10-a of
the Central Excise Rules could be considered a ‘Central Act’ as defined in
Section 3(7) of the General Clauses Act. This decision of the Court, albeit
subsequently questioned for its interpretation of ‘repeal’ through omission [which
does not have a bearing on the issue at hand], was not assailed for its
interpretation of “Central Act” within the General Clauses Act. Speaking through
Justice D.P. Mohapatra, this Court answered the question of whether the
aforesaid Rules constituted a 'Central Act' in the negative, in the following terms:
“32. When the term Central Act or Regulation or Rule is used
in that Act reference has to be made to the definition of that
20 AIR 2000 SC 811.
56
PART J
term in the statute. It is not possible nor permissible to give a
meaning to any of the terms different from the definition. It is
manifest that each term has a distinct and separate meaning
attributed to it for the purpose of the Act. Therefore, when the
question to be considered is whether a particular provision of
the Act applies in a case then the clear and unambiguous
language of that provision has to be given its true meaning
and import. The Full Bench has equated a 'rule' with 'statute'.
In our considered view this is impermissible in view of the
specific provisions in the Act. When the Legislature by clear
and unambiguous language has extended the provision of
Section 6 to cases of repeal of a 'Central Act' or 'Regulation',
it is not possible to apply the provision to a case of repeal of a
'Rule'. The position will not be different even if the rule has
been framed by virtue of the power vested under an
enactment; it remains a 'rule' and takes its colour from the
definition of the term in the Act (General Clauses Act).”
45 In Securities and Exchange Board of India vs. Magnum Equity
Services Ltd21, a two judge Bench of this Court considered whether the General
Clauses Act is applicable to the interpretation of the SEBI (Stock Brokers and
Sub-Brokers) Regulations, 1992. The Court observed that the Regulations were
framed by SEBI in exercise of the powers conferred on it by Section 30 of the
SEBI Act, 1992. Section 31 requires the rules and regulations to be laid before
Parliament. Justice Vikramajit Sen concluded as follows:
“12. The main contention raised by the learned Senior
Counsel for the appellant is based on the application of the
General Clauses Act, 1897 which under Section 13(2) states
that plural includes singular. However, before we consider
Section 13, we shall have to determine whether the General
Clauses Act itself is applicable to the SEBI (Stockbrokers and
Sub-Brokers) Regulations, 1992. Section 3 of the General
Clauses Act, 1897 states that the said Act is applicable to all
Central Acts and Regulations made after the commencement
of this Act. Further, the term “Central Act” has been defined
under sub-section (7) as an Act of Parliament, which includes
(a) an Act of the Dominion Legislature or of the Indian
21 (2015) 16 SCC 721
57
PART J
Legislature passed before the commencement of the
Constitution, and (b) an Act made before such
commencement by the Governor General in Council or the
Governor General, acting in a legislative capacity. The SEBI
(Stockbrokers and Sub-Brokers) Regulations, 1992 are
issued by SEBI in exercise of the powers conferred on it
under Section 30 of the SEBI Act, 1992. Section 31 of the
SEBI Act, reproduced below for the facility of reference,
provides that the Rules and Regulations are to be laid before
Parliament:
“31. Rules and regulations to be laid before
Parliament.— Every rule and every regulation made
under this Act shall be laid, as soon as may be after it
is made, before each House of Parliament, while it is
in session, for a total period of thirty days which may
be comprised in one session or in two or more
successive sessions, and if, before the expiry of the
session immediately following the session or the
successive sessions aforesaid, both Houses agree in
making any modification in the rule or regulation or
both Houses agree that the rule or regulation should
not be made, the rule or regulation shall thereafter
have effect only in such modified form or be of no
effect, as the case may be; so, however, that any
such modification or annulment shall be without
prejudice to the validity of anything previously done
under that rule or regulation.”
13. Thus in light of the provisions of the SEBI Act, 1992 under
which the said Regulations have been issued, the latter do
not tantamount to a Central Act as defined Under Sub-section
(7) of the definition clause of The General Clauses Act, 1897.”
The Regulations framed under the SEBI Act were held not to fall within the
definition of a ‘Central Act’ contained in Section 3(7) of the General Clauses Act.
46 Notification 05/2019 was issued by the Central Government under the
delegated authority to increase emergency tariff duties under Section 8A of the
Customs Tariff Act, 1975. The notification has been issued in pursuance of a
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PART K
statutory power. The notification has the effect of enhancing the rate of duty
prescribed in the First Schedule to the Customs Tariff Act. That does not,
transform the notification which has been issued in pursuance of a statutory
authority into a ‘Central Act’.
K Information Technology Act, 2000
47 While enacting the Information Technology Act 2000, Parliament
envisioned a regime of electronic governance. The legislation recognizes that
information technology is a facilitative instrument for creating an efficient
framework for e-commerce. Providing the backdrop for Parliamentary
intervention, the Statement of Objects and Reasons underlying the enactment of
the legislation provides the rationale for the law:
“New communication systems and digital technology have
made dramatic changes in the way we live. A revolution is
occurring in the way people transact business. Businesses
and consumers are increasingly using computers to create,
transmit and store information in the electronic form instead of
traditional paper documents. Information stored in electronic
form has many advantages. It is cheaper, easier to store,
retrieve and speedier to communicate. Although people are
aware of these advantages, they are reluctant to conduct
business or conclude any transaction in the electronic form
due to lack of appropriate legal framework. The two principal
hurdles which stand in the way of facilitating electronic
commerce and electronic government are the requirements
as to writing and signature for legal recognition. At present
many legal provisions assume the existence of paper based
records and documents and records which should bear
signatures. The law of evidence is traditionally based upon
paper based records and oral testimony. Since electronic
commerce eliminates the need for paper-based transactions,
hence to facilitate e-commerce, the need for legal changes
have become an urgent necessity. International trade through
the medium of e-commerce is growing rapidly in the past few
years and many countries have switched over from traditional
paper based commerce to e-commerce.”
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PART K
48 Parliament recognized the need to bring about suitable amendments to
existing legislation to facilitate e-commerce, more so in light of India being a
signatory to the United Nations Commission on International Trade Law’s Model
Law on Electronic Commerce in 1996. It therefore proposed to provide legal
recognition of electronic records and digital signatures. This would, as the
Statement of Objects and Reasons indicate, “enable the conclusion of contracts
and the creation of rights and obligations through the electronic medium”.
Parliament envisaged the use and acceptance of electronic records and digital
signatures in governmental offices and agencies, to facilitate electronic
governance and to “make the citizens’ interaction with the governmental offices
hassle free”.
Bearing the legislative number of Act 21 of 2000, the law came into force on 17
October 2000. The long title to the legislation provides that it is:
“An Act to provide legal recognition for transactions carried
out by means of electronic data interchange and other means
of electronic communication, commonly referred to as
“electronic commerce”, which involve the use of alternatives
to paper-based methods of communication and storage of
information, to facilitate electronic filing of documents with the
Government agencies and further to amend the Indian Penal
Code, the Indian Evidence Act, 1872 , the Banker’s Book
Evidence Act, 1891 and the Reserve Bank of India Act, 1934
and for matters connected therewith or incidental thereto.”
Section 2(t) defines the expression ‘electronic record’:
“(t) ―electronic record means data, record or data generated,
image or sound stored, received or sent in an electronic form
or micro film or computer generated micro fiche”
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PART K
Chapter III is devoted specifically to electronic governance. Among its salient
provisions are those providing for:
(i) Legal recognition of electronic records (Section 4);
(ii) Legal recognition of electronic signatures (Section 5);
(iii) Use of electronic records and electronic signatures in government and
its agencies (Section 6);
(iv) Authorization by government to service providers to set-up, maintain
and upgrade computerized facilities (Section 6A); and
(v) Retention of electronic records (Section 7).
Sub-section 1 of Section 6 has a bearing on the issues raised in this case:
“6. Use of electronic records and electronic signatures in
Government and its agencies- (1) Where any law provides for
— (a) the filing of any form, application or any other document
with any office, authority, body or agency owned or controlled
by the appropriate Government in a particular manner;
(b) the issue or grant of any licence, permit, sanction or
approval by whatever name called in a particular manner;
(c) the receipt or payment of money in a particular manner,
then, notwithstanding anything contained in any other law for
the time being in force, such requirement shall be deemed to
have been satisfied if such filing, issue, grant, receipt or
payment, as the case may be, is effected by means of such
electronic form as may be prescribed by the appropriate
Government.”
Section 6A contemplates that for the “efficient delivery of services to the public
through electronic means”, government may authorize a service provider to set
up, maintain and upgrade computerized facilities and perform other services.
Section 7 provides legal support to the retention of records in the electronic form.
Where a law requires documents, information or records to be preserved, the
requirement is satisfied by preserving them in an electronic form, subject to the
fulfillment of conditions. One of the conditions stipulated by Section 7(1)(c) is that
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the details which facilitate the identification of the origin, destination, date and
time of dispatch or the receipt of the electronic record are available in the
electronic record. The date and time of receipt or of the dispatch of an electronic
record are crucial from this perspective to the maintenance of an electronic
record.
49 In exercise of its rule making power, the Central Government formulated
rules for electronic service delivery. Under these rules, called the Information
Technology (Electronic Service Delivery) Rules 2011, governmental authorities
must maintain time stamps of the creation of electronic records. Rule 5(1)
incorporates such a requirement in the following terms:
“5. Creation of repository of electronically signed electronic
records by Government Authorities.-
(1) All authorities that issue any license, permit, certificate,
sanction or approval electronically, shall create, archive
and maintain a repository of electronically signed
electronic records of such licenses, permits, certificates,
sanctions or approvals, as the case may be, online with
due timestamps of creation of these individual electronic
records.”
The Rules provide a procedure for making changes in the repository of
electronically signed electronic records, in Rule 6. Rule 6(2) indicates that the
person authorized to make a change must also electronically sign the change
and the time stamps of the original creation and modification of the electronic
record. Rule 6(2) reads thus:
“6. Procedure for making changes in a repository of
electronically signed electronic records.-
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(2) Any change effected to any record in a repository of
electronically signed electronic records and any addition or
deletion of a record from such repository shall be
electronically signed by the person who is authorized to make
such changes along with the time stamps of original creation
and modification times”
Digital signatures have contextual information including the date and time built
into them. Under the Digital Signature (End entity) Rules 2015, provisions for time
stamps for digital signatures are built into the legal regime under Rule 4(4) and, in
the context of a long term valid digital signature, in Rule 4(7).
Section 13 of the Information Technology Act 2000 contains provisions for the
time and place of the dispatch and receipt of electronic records. It reads as
follows:
“13. Time and place of dispatch and receipt of electronic
record.—
(1) Save as otherwise agreed to between the originator
and the addressee, the dispatch of an electronic record
occurs when it enters a computer resource outside the
control of the originator.
(2) Save as otherwise agreed between the originator and the
addressee, the time of receipt of an electronic record shall be
determined as follows, namely:—
(a) if the addressee has designated a computer resource for
the purpose of receiving electronic records,—
(i) receipt occurs at the time when the electronic record enters
the designated computer resource; or
(ii) if the electronic record is sent to a computer resource of
the addressee that is not the designated computer resource,
receipt occurs at the time when the electronic record is
retrieved by the addressee;
(b) if the addressee has not designated a computer resource
along with specified timings, if any, receipt occurs when the
electronic record enters the computer resource of the
addressee…..”
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(emphasis supplied)
The dispatch of a record occurs when it enters a computer resource outside the
control of the originator. The time of receipt of the electronic record is fixed by the
provisions of sub-section 2 of Section 13. When the addressee has designated a
computer resource, receipt occurs when the record enters the computer resource
so designated. Otherwise, where no computer resource is designated, the receipt
of the record is when it is retrieved by the addressee. These provisions have
been incorporated in the law to enable the dispatch and receipt of a record in the
electronic form to be defined with precision with reference to both- time and
place.
50 In the above context, it is to be noted that the rate of customs duty is
determined on the date on which the bill of entry for home consumption is
presented (Section 15). The presentation of the bill of entry has to be made
electronically (Section 46 read with the 2018 Regulations). The presentation is
required to be made on the customs automated system. The provisions in the
Customs Act for the electronic presentation of the bill of entry for home
consumption and for self-assessment have to be read in the context of Section
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13 of the Information Technology Act which recognizes “the dispatch of an
electronic record” and “the time of receipt of an electronic record”. The legal
regime envisaging the electronic presentation of records, such as the
presentation of a bill of entry, has been imparted precision as a result of the
enabling framework of the Information Technology Act under which these records
are maintained. The presentation of the bill of entry under Section 46 is made
electronically and is captured with time stamps in terms of the requirements of
the Information Technology Act read with Rule 5(1) of the Information Technology
(Electronic Service Delivery) Rules 2011.
L Effect of notifications issued in e-gazettes
51 Section 8 of the Information Technology Act, 2000 creates a legal basis for
the publication of laws through e-gazettes. It reads as follows:
“Section 8 - Publication of rule, regulation, etc., in Electronic
GazetteWhere any law provides that any rule, regulation, order, byelaw, notification or any other matter shall be published in the
Official Gazette, then, such requirement shall be deemed to
have been satisfied if such rule, regulation, order, bye-law,
notification or any other matter is published in the Official
Gazette or Electronic Gazette:
Provided that where any rule, regulation, order, by-law,
notification or any other matter is published in the Official
Gazette or Electronic Gazette, the date of publication shall be
deemed to be the date of the Gazette which was first
published in any form.”
52 On 30 September 2015, the Ministry of Urban Development issued an
Office Memorandum numbered No. O-17022/1/2015-PSP-l which discontinued
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the practice of physical printing and replaced it with the electronic gazette. The
notification, in relevant part, reads as follows:
“In compliance with the provisions of Section 8 of the
Information Technology Act, 2000, it has been decided in
consultation with Department of Legal Affairs to switch over to
exclusive e-publishing of the Government of India Gazette
Notification on its official website with effect from 01.10.2015
and to do away with the physical printing of Gazette
Notification. The date of publishing shall be the date of epublication on official website by way of electronic
gazette in respect of Gazette notification.”
(emphasis supplied)
53 Thus far, this Court has not had to confront the question as to whether the
shift from the analog to the digital for Gazette notifications has any bearing for
ascertaining when they come into force. The judgments which dealt with the
starting point for the enforceability of notifications were all concerned with
circumstances in which such publication took place in the physical gazette. We
are now required to determine if the shift to electronic gazettes has brought about
a change in this position.
54 The High Courts have begun offering guidance on this score. The Delhi
High Court in M.D. Overseas Industries vs. Union of India22, dealt with a
situation where the Director General of Foreign Trade issued two notifications
dated 25 August 2017 restricting the importation of gold, including gold coins.
Gold coins could no longer be imported freely and had to be imported in
accordance with a public notice issued in that behalf. The petitioners urged that
the restrictive regime created by these notifications was inapplicable to them
22 W.P. (C) 7838/2017 decided on 15 October 2019 (Delhi High Court)
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because the notifications, they contended, came into force only on 28 August,
2017, when they were published in the official gazette. The gold coins imported
by the petitioners, however, were dispatched on 25 August, 2017. Since the
notifications came into force three days later, they contended that these were
inapplicable to them. The notifications were electronically notified in the gazette.
55 The High Court upheld the Petitioner’s view that the notifications were
inapplicable to the petitioners after considering Section 8 of the Information
Technology Act, 2000 along with the Office Memorandum dated 30.9.2015. It
held:
“32. The endorsement on the electronic copy of the Gazette,
whereby the impugned Notification Nos. 24 and 25, dated
25th August, 2017, were notified, seen in juxtaposition with
Section 8 of the IT Act, and of the OM dated 30th September,
2015 supra, of the Ministry of Urban Development, makes it
clear that the impugned Notification Nos. 24 and 25, dated
25th August, 2017 were, in fact, electronically published in the
Official Gazette only at or after 10:47 p.m. on 28th August,
2017.
33. It has been conclusively held, by the Supreme Court, in a
catena of decisions - including Harla v. State of Rajasthan
[1952 (1) SCR 110], B.K. Srinivasan v. State of Karnataka
[AIR 1987 SC 1059] and U.O.I, v. Param Industries [(2016) 16
SCC 692] that, notifications would come into force on
their publication in the Official Gazette, i.e. in the present
case, with effect from the date and time when they were
electronically printed in the Gazette, which was at or after
10:47 p.m. on 28th August, 2017.”
(emphasis supplied)
56 Thus, the High Court regarded the time of publication as the relevant
marker for determining the enforceability of the notifications. The issue of
determining the starting point for the enforceability of a notification in the
electronic gazette was considered by the Andhra Pradesh High Court in Ruchi
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Soya Industries vs. Union of India.23 The petitioner entered into a contract with
its foreign supplier on 18 January 2008 for the import of 9,500 Metric Tons of
crude oil. The first consignment of 4000 metric tons was shipped by the supplier
on 6 February 2018 from Dubai. The petitioner filed two bills of entry for 2000
metric tons of crude oil on 1 March 2018. They were assessed that day and
levied with 30% customs duty and 10% social welfare surcharge. On the same
date, a notification raised the basic customs duty from 30 to 44%. The petitioner
filed four bills of entry for the remaining 2000 tons on 2 March 2018 and argued
that the revised rate was not applicable to it because the notification was
published in the electronic gazette only on 6 March 2018. The High Court agreed
with the petitioner and held that the revised notification would come into force
only after it was digitally signed by the competent official and uploaded and
published in the official gazette. The relevant excerpt from page 41 of the High
Court’s judgment is quoted below:
“….The notification was …published electronically on
6.3.2018. In view of the decision taken by the Government of
India in terms of Section 8 of the…Information Technology
Act, to avoid physical printing of Gazette notification to
publish the same exclusively by electronic mode, so as to
attribute knowledge to the public at large. The notification was
signed by Rakesh Sukul on 6.3.2018 at 19:15:13 + 05'30'.
When notification needs to be signed digitally and only when
the notification was uploaded and published in the Official
Gazette, the same is made available for public.”
57 The Madras High Court dealt with a similar situation in Ruchi Soya
Industries vs. Union of India24 and held that the decision of the A.P. High Court
23 W.P. No. 4533 and 4534 of 2019 decided on 28 September 2019 (Andhra Pradesh High Court)
24 W.P. No. 21207 of 2018 decided on 14 July 2020 (Madras High Court).
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noted above was applicable to the case before it. As a result, it allowed the writ
petition on the same terms and directed the Respondent to refund the enhanced
duty collected from the petitioner, along with IGST.
58 With the change in the manner of publishing gazette notifications from
analog to digital, the precise time when the gazette is published in the electronic
mode assumes significance. Notification 5/2019, which is akin to the exercise of
delegated legislative power, under the emergency power to notify and revise tariff
duty under Section 8A of the Customs Tariff Act, 1975, cannot operate
retrospectively, unless authorized by statute. In the era of the electronic
publication of gazette notifications and electronic filing of bills of entry, the revised
rate of import duty under the Notification 5/2019 applies to bills of entry presented
for home consumption after the notification was uploaded in the e-Gazette at
20:46:58 hours on 16 February 2019.
59 The impugned High Court judgement has relied on the decision of the
Karnataka High Court in Param Industries Ltd. vs. Union of India25, which was
confirmed by the decision of this Court in Union of India vs. Param Industries
Limited26 [“Param Industries”] In that case, the respondents were in the
business of importing and exporting edible oil. The respondents imported RBD
Palmolein which was cleared after payment of import duty of 85 per cent of its
value. The import duty was paid pursuant to a notification which was in existence
as on that date. A major quantity of the goods had been removed from the
warehouse after the payment of duty. The importer was, however, informed that
25 2002 (150) E.L.T. 3 (Kar)
26 (2016) 16 SCC 692
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by a notification dated 3 August 2001 (incidentally this was also the date the bill
of entry was filed and goods were cleared) the tariff value had been raised to
USD 372 per metric tonne and that the importer was liable to pay the difference
in the tariff which was paid on the basis of the earlier notification. The respondent
contested the demand on the ground that the notification raising the import duty
had not come into effect on 3 August 2001. The Division Bench of the High Court
held that the notification was not published on 3 August 2001 and must have
been Gazetted only after the following weekend namely on 6 August 2001 or
thereafter; the Gazette issued containing notification was offered for sale only
starting from 6 August 2001; and that the mere publication of the notification on
the website and the issuance of a letter to the Assistant Controller, Government
of India (Press) was not sufficient for the notification to be operational and
enforceable on 3 August 2001. This Court in appeal observed that according to
the High Court two conditions were mandatory for the notification to be brought
into force
(i) Due publication in the official Gazette; and
(ii) Offering the notification for sale on the date of its issue by the
Directorate of Publicity and Public Relations of the Board, New
Delhi.
This Court noted that, in their case, the second condition was not satisfied as the
notification was offered for sale only on 6 August 2001 as it was published in the
late evening hours of 3 August 2001 and the next two days were holidays.
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60 The decision of this Court in Param Industries was on the interpretation of
Section 14(2) of the Customs Act. However, prima facie, this decision appears to
be contrary to the principles previously elucidated by this Court in the context of
the Customs Act. In a two judge Bench decision of this Court in Pankaj Jain
Agencies vs. Union of India,27 [“Pankaj Jain”] the Court considered the
determination of the date when a notification dealing with an exemption would
come into force. The mode of publication for such notifications is prescribed
separately under Section 25 of the Customs Act. The Court held:
“17. In the present case indisputably the mode of publication
prescribed by Section 25(1) was complied with. The
notification was published in the Official Gazette on the 13-2-
1986. As to the effect of the publication in the Official Gazette,
this Court held [Srinivasan case[(1987) 1 SCC 658, 672 : AIR
1987 SC 1059, 1067] AIR at p. 1067 : SCC pp. 672-73, para
15]:
“Where the parent statute is silent, but the subordinate
legislation itself prescribes the manner of publication, such a
mode of publication may be sufficient, if reasonable. If the
subordinate legislation does not prescribe the mode of
publication or if the subordinate legislation prescribes a
plainly unreasonable mode of publication, it will take
effect only when it is published through the customarily
recognized official channel, namely, the Official Gazette
or some other reasonable mode of publication.”
18. We, therefore, see no substance in the contention that
notwithstanding the publication in the Official Gazette there
was yet a failure to make the law known and that, therefore,
the notification did not acquire the elements of operativeness
and enforceability.”
(emphasis supplied)
The principles recognized in Pankaj Jain were re-iterated and affirmed by a three
judge Bench of this Court in Union of India vs. Ganesh Das Bhojraj28 which
27 (1994) 5 SCC 198
28 (2000) 9 SCC 461.
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dealt with the enforceability of a notification under Section 25, prior to its
Amendment by Act 21 of 1998 which inserted Section 25(4) and the requirement
of ‘offering for sale’. The Court separately noted that the newly introduced
requirement of ‘offering of sale’ had prospective application. However, in the
factual scenario concerning a notification governed by the pre-amended act, it
upheld the principle that any additional requirement of publication can only be
introduced by statute and the Court is bound by the applicable statutory scheme
for determining enforceability. It noted:
“11. In our view, as noted above, in Pankaj Jain Agencies
case [(1994) 5 SCC 198] the Court directly dealt with a similar
contention and after relying upon the decision in the case
of Mayer Hans George [AIR 1965 SC 722 : (1965) 1 Cri LJ
641 : (1965) 1 SCR 123] rejected the same. That decision is
followed in I.T.C. Ltd. [(1996) 5 SCC 538] and other matters.
Hence, it is difficult to agree that the decision in Pankaj Jain
Agencies case [(1994) 5 SCC 198] was not helpful in deciding
the question dealt with by the Court. 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 the 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 notification in the
Official Gazette. For bringing the notification into
operation, the only requirement of the section is its
publication in the Official Gazette and no further
publication is contemplated. Additional requirement is that
under Section 159 such notification is required to be laid
before each House of Parliament for a period of thirty days as
prescribed therein. Hence, in our view Mayer Hans
George [AIR 1965 SC 722 : (1965) 1 Cri LJ 641 : (1965) 1
SCR 123] which is followed in Pankaj Jain Agencies
case [(1994) 5 SCC 198] represents the correct exposition
of law and the notification under Section 25 of the
Customs Act would come into operation as soon as it is
published in the Gazette of India i.e. the date of
publication of the Gazette. Apart from the prescribed
requirement under Section 25, the usual mode of
bringing into operation such notification followed since
years in this country is its publication in the Official
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Gazette and there is no reason to depart from the same
by laying down additional requirement.”
(emphasis supplied)
61 Param Industries, in as much as it imposed an additional requirement of
‘offering for sale’, outside of the prescribed statutory scheme under S.14(2) of the
Customs Act, 1962, appears to be contrary to pre-existing principles. Having said
this, we do not wish to rule on the validity of Param Industries or its consequent
impact on decisions that have relied on it. In the present judgment it is not
necessary to take recourse to the line of reasoning in Param Industries. The
situation at hand, operates on a landscape which is significantly altered by the
regulatory regime in the electronic age where, both – uploading of notifications in
the e-gazette and filing of bills of entry- are in the electronic form. As we have
previously noted, Notification 5/2019 was uploaded in the e-gazette at a specific
time and date and cannot apply to bills of entry which were presented on the
customs automated EDI system prior to it, attracting the legal fiction set out in
Regulation 4(2) of the 2018 Regulations. Therefore, Param Industries does not
have any bearing on the case at hand.
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M Retrospectivity
62 Section 8A of the Customs Tariff Act confers an emergency power upon the
Central government to increase import duties “in respect of any article included in
the first schedule”. By the notification dated 16 February 2019, the Union Ministry
of Finance in the Department of Revenue introduced a distinct tariff item – 980 60
000 - encompassing “all goods originating in or exported from the Islamic
Republic of Pakistan” for which a rate of duty of 200 per cent has been
prescribed. The exercise of the power under Section 8A is contingent on the
satisfaction of the Central government that (i) the duty on any article in the first
schedule should be increased; and (ii) that circumstances exist which render it
necessary to take immediate action. The Central government in the exercise of
this power may by a notification in the official gazette direct an amendment of the
schedule to be made “so as to provide for an increase in the import duty leviable
on such article to such extent as it thinks necessary”. Section 8A does not contain
language indicative of a legislative intent to authorize the Central government to
relate back the exercise of the power to a period prior to its exercise. The
exercise of the power under Section 8A (2) is governed by the prescriptions
contained in sub-sections (3) and (4) of Section 7. The conferment of the power
has not been made retrospective either expressly or by necessary implication.
63 Section 8A enables the Central government to increase the rate of duty on
an article in the first schedule in emergent situations. The notification dated 16
February 2019 adds a new entry altogether. Such an exercise may well be
regarded as relatable to the provisions of Section 11A. Section 11A confers a
power on the Central Government to amend the First schedule in public interest.
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Section 8A on the other hand contemplates an increase in duty on an article
contained in the First schedule. Notification 5/2019 introduces a new tariff entry to
provide for a duty of 200% on all articles originating in or exported from Pakistan.
However, this aspect of the matter need not be explored further for the reason
that neither before the High Court, nor before this Court, was the challenge to the
vires of the notification pressed during the course of the submissions. The legal
position which needs emphasis is that the entrustment of the power to issue a
notification enhancing the rate of duty under Section 8A is not accompanied by a
statutory entrustment of authority to the Central government to exercise it with
retrospective effect. An enhancement of the rate of duty pursuant to the exercise
of power under Section 8A can only be prospective.
64 Parliament and the state legislatures are entrusted with the power to enact
legislation under Articles 245 and 246 of the Constitution. Parliament and the
state legislatures possess the plenary power to enact legislation, with prospective
and retrospective effect, subject to due observance of constitutional
requirements. A notification issued by the government pursuant to the conferment
of statutory power is distinct from an act of the legislature. Administrative
notifications, even when they are issued in pursuance of an enabling statutory
framework, are subject to the statute. Delegated legislation does not lose its
character even when it has the same force and effect as if it is contained in the
statute. This is a settled position of law. In a decision which was rendered in 1961
by a Constitution Bench of this Court in Chief Inspector of Mines vs. Lala
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Karam Chand Thapar29, the principle of law was formulated in the following
terms:
“20. The true position appears to be that the rules and
regulations do not lose their character as rules and
regulations, even though they are to be of the same effect as
if contained in the Act. They continue to be rules subordinate
to the Act, and though for certain purposes, including the
purpose of construction, they are to be treated as if contained
in the Act, their true nature as subordinate rule is not lost….”
In K I Shepard vs. Union of India30, a two judge Bench of this Court held that the
power to frame a scheme under Section 45 of the Banking Regulation Act 1949
was not legislative in character but an administrative function. This Court
observed:
“9…But is the scheme-making process legislative? Power has
been conferred on the RBI in certain situations to take steps
for applying to the Central Government for an order of
moratorium and during the period of moratorium to propose
either reconstruction or amalgamation of the banking
company. A scheme for the purposes contemplated has to be
framed by RBI and placed before the Central Government for
sanction. Power has been vested in the Central Government
in terms of what is ordinarily known as a Henry VIII clause for
making orders for removal of difficulties. Section 45(11)
requires that copies of the schemes as also such orders
made by the Central Government are to be placed before
both Houses of Parliament. We do not think this requirement
makes the exercise in regard to schemes a legislative
process.”
The above decision was distinguished in New Bank of India Employees’ Union
vs. Union of India31 [“New Bank of India”] where the court held that a scheme
framed under Section 9 of the Banking Companies (Acquisition and Transfer of
29 AIR 1961 SC 838
30 (1987) 4 SCC 431
31 (1996) 8 SCC 407
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Undertakings) Act 1980 stands on a distinct footing of being a legislative and not
an administrative function. The court held that the question was not of much
relevance in view of its conclusions on the main issues presented for decision.
Yet, it considered the question and laid emphasis on the authority entrusted to
Parliament to consider, within 30 days, to agree/modify/arrive at any decision with
regards to the scheme, only thereafter was the scheme was to have effect. These
requirements, qualitatively distinguished from a requirement of mere ‘laying’
under Section 45 of the Banking Regulation Act 1949, were pivotal in the court’s
view that a scheme under the 1980 Act has a legislative character. Mr Natraj
sought to emphasize a similar argument, by placing reliance on the provisions of
sub-sections (3) and (4) of Section 7 which are made applicable by reason of
sub-section (2) of section 8A. However, in the absence of a sine qua non for
parliamentary sanction before the notification is enforceable, the decision of New
Bank of India provides little anchor. For the purpose of the present decision the
point which needs emphasis is that in empowering the Central Government to
exercise power under Section 8A of the Customs Tariff Act, Parliament has not
either expressly or by necessary implication indicated that a notification once
issued will have force and effect anterior in time. The provisions of sub-sections
(3) and (4) of Section 7 of the Customs Tariff Act bring to bear legislative
oversight and supervision over the power which is entrusted to the Central
Government under Section 8A. That however does not lead to the inference that
a notification under Section 8A has retrospective effect. Plainly, a notification
enhancing the rate of duty under Section 8A has prospective effect.
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A rule framed by the delegate of the legislature does not have retrospective effect
unless the statutory provision under which it is framed allows retrospectivity either
by the use of specific words to that effect or by necessary implication. In Hukum
Chand vs. Union of India32, a three judge Bench of this Court held that:
“8…The extent and amplitude of the rule-making power would
depend upon and be governed by the language of the
section. If a particular rule were not to fall within the ambit and
purview of the section, the Central Government in such an
event would have no power to make that rule. Likewise, if
there was nothing in the language of Section 40 to empower
the Central Government either expressly or by necessary
implication, to make a rule retroactively, the Central
Government would be acting in excess of its power if it gave
retrospective effect to any rule. The underlying principle is
that unlike Sovereign Legislature which has power to
enact laws with retrospective operation, authority vested
with the power of making subordinate legislation has to
act within the limits of its power and cannot transgress
the same. The initial difference between subordinate
legislation and the statute laws lies in the fact that a
subordinate law-making body is bound by the terms of
its delegated or derived authority and that Court of law,
as a general rule, will not give effect to the rules, thus
made, unless satisfied that all the conditions precedent
to the validity of the rules have been fulfilled.”
(emphasis supplied)
65 The distinction between the plenary power which is entrusted to Parliament
and the state legislatures to enact legislation with both prospective and
retrospective effect, and the power entrusted to a delegate of the legislature to
frame subordinate legislation has been maintained in a consistent line of
precedent of this Court. In Regional Transport Officer, Chittoor vs. Associated
Transport Madras (P)33, Justice V.R. Krishna Iyer speaking for a two judge
Bench of this Court with his characteristic eloquence observed:
32 (1972) 2 SCC 601
33 (1980) 4 SCC 597
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“4. The legislature has no doubt a plenary power in the matter
of enactment of statutes and can itself make retrospective
laws subject, of course, to the constitutional limitations. But it
is trite law that a delegate cannot exercise the same power
unless there is special conferment thereof to be spelled out
from the express words of the delegation or by compelling
implication. In the present case the power under Section 4(1)
does not indicate either alternative…...”
The Court held that the fact that the rules had been framed in pursuance of a
resolution passed by the legislature or that they have to be placed on the table of
the legislative body would not lead to an inference that the legislature had
authorized the framing of subordinate legislation with retrospective effect:
“4…The mere fact that the rules framed had to be placed on
the table of the legislature was not enough, in the absence of
a wider power in the section, to enable the State Government
to make retrospective rules. The whole purpose of laying on
the table of the legislature the rules framed by the State
Government is different and the effect of any one of the three
alternative modes of so placing the rules has been explained
by this Court in Hukam Chand v. Union of India [(1972) 2
SCC 601, 606 : (1973) 1 SCR 896, 902].”
This precisely is the principle which applies in construing whether the power
which is conferred by Section 8A of the Customs Tariff Act is retrospective. The
provisions of sub-sections (3) and (4) of Section 7, which are made applicable by
sub-section (2) of Section 8A, are to ensure Parliamentary oversight. But that
does not enable the Central Government to exercise the power under section 8A
with retrospective effect.
In Federation of Indian Minerals Industries vs. Union of India34, a three judge
Bench of this Court formulated the principles on the subject. Justice Madan B
34 (2017) 16 SCC 186
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Lokur observed that the power to frame subordinate legislation is not
retrospective unless it is authorized expressly or by necessary implication by the
parent statute. The Court observed:
“26…The relevant principles are:
(i) The Central Government or the State Government (or any
other authority) cannot make a subordinate legislation having
retrospective effect unless the parent statute, expressly or by
necessary implication, authorises it to do so. [Hukam
Chand v. Union of India [Hukam Chand v. Union of India,
(1972) 2 SCC 601] and Mahabir Vegetable Oils (P)
Ltd. v. State of Haryana [Mahabir Vegetable Oils (P)
Ltd. v. State of Haryana, (2006) 3 SCC 620] ].
(ii) Delegated legislation is ordinarily prospective in nature
and a right or a liability created for the first time cannot be
given retrospective effect. (Panchi Devi v. State of
Rajasthan [Panchi Devi v. State of Rajasthan, (2009) 2 SCC
589 : (2009) 1 SCC (L&S) 408] )
(iii) As regards a subordinate legislation concerning a fiscal
statute, it would not be proper to hold that in the absence of
an express provision a delegated authority can impose a tax
or a fee. There is no scope or any room for intendment in
respect of a compulsory exaction from a citizen. [Ahmedabad
Urban Dev. Authority v. Sharadkumar Jayantikumar
Pasawalla [Ahmedabad Urban Dev. Authority v. Sharadkumar
Jayantikumar Pasawalla, (1992) 3 SCC 285] and State of
Rajasthan v. Basant Agrotech (India) Ltd. [State of
Rajasthan v. Basant Agrotech (India) Ltd., (2013) 15 SCC 1]”
80
PART N
The judgment of Justice Dipak Misra (as he then was) speaking for a two judge
Bench decision in State of Rajasthan vs. Basant Agrotech (India) Ltd35 adopts
the same position.
N Summation
66 The imposition of a tax encompasses three stages. The locus classicus on
the subject is embodied in the dictum of Lord Dunedin in Whitney vs.
Commissioners of Inland Revenue36 which has been consistently applied in the
decisions of this court. There is, first, the declaration of liability which determines
“what persons in respect of what property are liable”. The second is the stage of
assessment. Liability, it is well settled, does not depend on assessment since exhypothesi, that has already been fixed. Assessment particularizes the exact sum
which a person is liable to pay. Third (and the last) are the methods of recovery if
a person who is taxed does not voluntarily pay. (See in this context the decisions
of the Federal Court in Chatturam v. CIT, Bihar37 and of this Court in A V
Fernandez vs. State of Kerala38 and Deputy CTO vs. Sha Sukraj Peerajee39
.
67 In the present case the twin conditions of Section 15 stood determined
prior to the issuance of Notification 5/2019 on 16 February 2019 at 20:46:58
hours. The rate of duty was determined by the presentation of the bills of entry for
home consumption in the electronic form under Section 46. Self-assessment was
on the basis of rate of duty which was in force on the date and at the time of
35 (2013) 15 SCC 1
36 (1926) AC 37 at 52.
37 (1947) FCR 116 at 126
38 1957 SCR 837 at para 39
39 (1967) 3 SCR 661 at para 5
81
PART N
presentation of the bills of entry for home consumption. This could not have been
altered in the purported exercise of the power of re-assessment under Section 17
or at the time of the clearance of the goods for home consumption under Section
47. The rate of duty which was applicable was crystallized at the time and on the
date of the presentation of the bills of entry in terms of the provisions of Section
15 read with Regulation 4(2) of the Regulations of 2018. The power of reassessment under Section 17(4) could not have been exercised since this is not
a case where there was an incorrect self-assessment of duty. The duty was
correctly assessed at the time of self-assessment in terms of the duty which was
in force on that date and at the time. The subsequent publication of the
notification bearing 5/2019 did not furnish a valid basis for re-assessment.
68 For the above reasons, we have come to the conclusion that there is no
merit in the appeals. The appeals shall stand dismissed. There shall be no order
as to costs.
69 Pending application(s), if any, stands disposed of.
…………...…...….......………………........J.
[Dr Dhananjaya Y Chandrachud]
…..…..…....…........……………….…........J.
[Indu Malhotra]
New Delhi;
September 23, 2020.
82
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2020
(@ S.L.P.(CIVIL)No. 3860 of 2020)
UNION OF INDIA AND OTHERS ... APPELLANT(S)
VERSUS
M/S. G.S. CHATHA RICE MILLS
AND ANOTHER ... RESPONDENT(S)
WITH
CONNECTED MATTERS
J U D G M E N T
K.M. JOSEPH, J.
1. Does a notification under Section 8A of the
Customs Tariff Act, 1975 increasing the import duty
published late in the evening of 16th Feb 2019, date
back to the midnight of the previous day? Does a day
include its fractions? While I agree with my esteemed
and learned brother in his erudite judgment that the
appeals be dismissed, having regard to the questions
1
involved, I have written the following separate
opinion:
2. Following the terror attack at Pulwama on
14.02.2019, the Government of India published a
Notification on 16.02.2019 (hereinafter referred to
as ‘the Notification’) purporting to be in exercise
of powers under Section 8A(1) of the Customs Tariff
Act, 1975 (hereinafter referred to as ‘the Tariff
Act’, for short). By the same, the First Schedule to
the Tariff Act, 1975 came to be amended in the
following manner:
“In the First Schedule to the Customs
Tariff Act, in Section XXI, in Chapter 98,
after tariff item 9805 90 00 and the
entries relating thereto, the following
tariff item and entries shall be inserted,
namely:-
(1) (2) (3) (4) (5
)
“9806
00 00
All goods
originatin
g in or
exported
from the
Islamic
Republic
of
- 200% -“
.
2
Pakistan.
3. It came to be published in the Gazette at
20:46:58 hrs. on 16.2.2019.
4. On the same day, i.e., on 16.02.2019, the
respondents in the Appeals, who were the Writ
Petitioners before the High Court, filed Bills of
Entry under the Customs Act, 1962 in respect of goods
imported from Pakistan. In fact, there was an
agreement between India and Pakistan, both being
SAARC Countries, under which, duty was to be levied
on the imports from Pakistan at concessional rates,
in those cases where imports were exigible to any
duty at all. The goods which were subject matter of
import, had also arrived in the Customs Station and
as noticed, during the course of the working hours on
16.02.2019 and well before the time of the
Notification hereinbefore adverted to, the Bills of
Entry came to be presented. The duty came to be selfassessed by the respondents. It is, thereafter, that
taking inspiration from the hefty increase in duty
effected under the Notification the Writ Petitioners
3
came to be faced with reassessment proceedings. It is
accordingly that they approached the High Court and
filed Writ Petitions wherein the prayer may be
noticed in Writ Petition No. 18460 of 2019 as
follows:
“a) Writ in the nature of
certiorari/mandamus or any other
appropriate writ for quashing of the
assessment order passed in the bill
of entry no. 2083178 dated 16.02.2019
(Annexure-P5) being illegal
arbitrary, against the principles of
natural justice and in violation to
the provisions of article 14 & 19 of
the Constitution of India and against
the provisions of Section 128 & 129
of the Customs Act, 1962;
b) Writ in the nature of
certiorari/mandamus quashing the
notification no. 05/2019-cus dated
16.02.2019 (Annexure-P7) being
prospective and in contravention to
the Notification no. 50/2017-cus.
dated 30.06.2017 granting benefit of
customs duty over and above NIL% as
well as section 4 & 11 of the Customs
Tariff act, 1975,
c) Writ in the nature of certiorari/
mandamus directing the Respondent
No.3 to issue detention memo in terms
of Regulation 6(1)(1) of the Customs
Act, 1962 and further directing the
Respondent No. 4 to release the goods
without demanding any ground rent.
4
d) Writ in the nature of certiorari/
mandamus restraining the respondent
no.4 for conducting auction of the
goods.
5. It is these Writ Petitions which have been
allowed by the High Court.
6. The High Court has found that in the Scheme of
the Customs Act read with the Tariff Act, the rate of
duty is to be determined with reference to two
definite indicia, viz., the date of presentation of
the Bills of Entry and the movement of goods across
the border and availability of the same within the
Customs Station. Present these two aspects, the law
enables the importer to demand that payment of the
duty be with reference to the date of presentation of
the Bills of Entry. The High Court did not consider
the challenge to the Notification on the basis of the
stand taken by the respondents and confined its
reasoning to the aforesaid aspect which I have
indicated. The Court took the view that the
Notification which came to be published late in the
evening on 16.02.2019 could not alter the destiny of
5
the Writ Petitioners cases as regards the rate of
duty.
7. We have heard Shri K.M. Nataraj, learned
Additional Solicitor General, appearing on behalf of
the appellants, Shri P.S. Narsimha, learned Senior
Counsel, appearing on behalf of the Writ Petitioners.
CONTENTIONS OF THE APPELLANTS
8. Shri K.M. Nataraj, learned Additional Solicitor
General would contend that the Notification issued
under Section 8A of the Tariff Act following the
extraordinary circumstances surrounding the Pulwama
terror attack, the rate of duty came to be increased
by Notification dated 16.02.2019. The Notification
would have effect in respect of all the Bills of
Entry which came to be filed/presented on that day.
To buttress his submissions, he also sought to draw
support from Section 5(3) of the General Clauses Act,
1897. He would point out that the Notification would,
therefore, have effect from the expiry of the
previous day. That is, it is his contention that
6
though it is issued late in the evening on
16.02.2019, since the previous day, viz., 15.02.2019
expired at midnight, the Notification must be treated
as born and alive from the first tick of time past
the midnight of 15.02.2019. He also drew our
attention to the Scheme of the Customs Act, 1962
otherwise. With the assistance of Sections 12, 15, 46
and 47, he sought to contend that the High Court fell
into error in not recognizing that the preferring of
the Bills of the Entry by the respondents, could not
detract from the applicability of the increased rate
of duty under the Notification.
9. The principal argument of the Union of India is
that these cases must be decided based on the
provision of Section 15 of the Customs Act.
Expatiating the argument of the Union of India Shri
K.M. Nataraj, learned counsel for the Union of Indiaappellant would contend that there is no challenge to
the validity of Section 15 of the Customs Act. The
said provision must be taken as it is and applied.
The result would then be inevitable that the
notification in question which no doubt was published
7
late in the evening on 16.02.2019, fixed the
increased rate of duty on all goods imported from
Pakistan and it was undoubtedly to have effect from
that day onwards. In other words, since Section 15
of the Act contemplates that the rate of duty to be
the rate in force during the day, and as the
Notification was published on 16.02.2019, the day
16.02.2019 was not to be excluded. It was, in other
words, to have operation throughout the day,
16.02.2019. It is contended that there cannot be two
rates of duty which are at loggerheads with each
other on a single day. The time of the day at which
the notification was actually published, would pale
into insignificance in answering the question as to
whether the said notification which is of the kind
involved in this case was to hold sway during the
course of the whole day. He urges us to notice that
Section 15 of the Customs Act does not allude to the
time of the day but only refers to the day. He would
further contend that by virtue of the notification,
the rate in force within the meaning of Section 15
from the mid night of 15.02.2019 was the rate fixed
8
under the notification in respect of the goods
governed by the same. Any other interpretation would
involve rewriting of Section 15 and the
amendment of the provision which is plainly
impermissible. He also no doubt points that the
authorities have rightfully embarked upon
reassessment under the Act upon noticing that the
goods were assessed with duty at a rate which was not
in force, namely, the rates which stood supplanted by
the notification issued under Section 8A on
16.02.2019. In this regard he drew inspiration from
the provisions of Section 17(4) of the Act. In
particular, he pointed out that the expression
“otherwise” is capable of encompassing the situation
existing in the facts of these cases. He would also
point out that the Court may notice that an order has
not been passed under Section 47 of the Act
permitting clearance of the goods for home
consumption. As soon as the factum of the
notification having bearing came to light,
proceedings for re-assessment were resorted to and no
case was made out for the High Court to interfere
9
with the action of the authorities in purporting to
apply the correct rate of duty within the meaning of
Section 15 of the Act.
10. Per contra, Shri P.S. Narsimha, learned Senior
Counsel for the respondent-Writ Petitioners,
countered the appellants submissions by pointing out
as follows:
Under Section 12 of the Customs Act,
imports attract customs duty as is fixed
under the Tariff Act. Section 15 of the
Customs Act, however, determines the date
with reference to which the rate of duty as
provided in the Tariff Act is to apply. Still
further and crucially, this exercise is to be
accomplished with reference to the date of
presentation of the Bills of Entry as
provided in Section 46 of the Customs Act. He
would, in fact, submit that under the Customs
Act, a perusal of Sections 15 and 16, would
show that there are four different situations
10
contemplated. Under Section 15, which deals
with rate of duty payable on imports, in a
case where the Bills of Entry is presented
for home consumption under Section 46, the
rate of duty is to apply with reference to be
date of presentation of the Bills of Entry.
In the case where the goods are cleared for
being warehoused under Section 68, again the
duty is to be paid at the rate with reference
to the presentation of the Bills of Entry for
home consumption under Section 68. The two
other circumstances pertain to exports. In
the case of goods entered for export from
India, the rate of duty is fixed with
reference to the date on which the proper
officer makes an order permitting clearance
and loading of goods for exportation under
Section 51. In any other case, which is the
fourth Category, the duty is fixed with
reference to the date of payment of duty. He
would draw our attention to the
Electronic Filing of Bills of Entry
11
Regulations, 2018. In particular, he would
draw our attention to Regulation 4 of the
said Regulations. He would point out that
Regulation 4, of the said Regulations, makes
it clear that once the Bills of Entry is
filed electronically and the event takes
place, which under law determines the point
of time with reference to which the rate of
duty is to be imposed, the position is
unalterable. He would submit that neither is
the rate of duty dependent on the date of
payment of duty nor is it based on Entry
Inward. An order is contemplated under
Section 47 of the Customs Act for clearing
the goods, which contemplates payment of duty
as a condition precedent for such an order.
This is irrelevant. He would submit that in
the present-day world of international trade,
innumerable transactions take place at
different points of time during the course of
the day. The Law Giver has not contemplated
the reopening of a transaction, which in the
12
eye of law, is a closed chapter. He would
point out that the court must bear in mind
that it is dealing with a law which visits a
person with a tax. The point of time is
transparent and declared through the Scheme
of the Customs Act read with the Tariff Act.
It would be wholly impermissible to inflict
imports which have been visited with the duty
in accordance with the law, with the rates of
duty, which was not prevalent at the relevant
time. The Notification could have only
prospective operation. In fact, Shri Kapoor,
the learned Counsel, who appeared in the High
Court for the Writ Petitioners, pointed out
that after the Notification was issued late
in the evening, the system did not accept
further electronic declaration of Bills of
Entry as it was contemplated that such Bills
of Entry would attract the higher duty.
11. Mr. P.S. Narsimha, learned Senior Counsel, points
out that Customs Act contemplates self-assessment.
13
He drew our attention to Section 17 in this regard.
It is the further case of the writ petitioners that
based on the self-assessment, the system generated
details which approved of the self-assessment. After
the matter stood concluded in terms of the Act, the
transaction could not be revisited on the strength of
the Notification issued under Section 8A, runs the
argument. It is pointed out that the Notification,
issued under Section 8A, may be akin to delegated
legislation. Even proceeding on the basis that it
is delegated legislation, it can have only
prospective operation. Section 8A of the Tariff Act,
under which the Notification was issued, did not
empower the author of the Notification to issue the
Notification with retrospective effect. In answer to
a query by the Court as to what would have been the
effect of the notification which was issued at
10.00a.m. at 16.02.2019, instead of 20:46:58 hrs., at
which time, it was in fact issued and if the Bill of
Entry is presented after 10.00 a.m., Mr. P.S.
Narsimha pointed out that it would be the
Notification which was issued on 10.00 a.m., which
14
would be the Notification in force, and therefore,
the increased duty may have been payable. Mr. P.S.
Narsimha has also, no doubt, a contention that the
Notification issued under Section 8A is illegal for
the reason that what is contemplated under Section 8A
is the increase of the rate of duty in respect of
items which are already included in the first
schedule of the Tariff Act whereas a perusal of the
Notification would show that a new entry has been
made and the rate of duty has been provided therein,
viz., the rate of duty of all goods emanating from
Islamic Republic of Pakistan was increased to 200 per
cent. But this line of argument was not pursued.
12. Both sides referred us exhaustively to case law.
ANALYSIS
13. The Customs Act is a consolidating Act. It is
intended, inter alia, to deal with the menace of
smuggling. It contains various sanctions. It also
provides for the levy of Customs duty on import and
export. It is a law which provides revenue to the
15
State. It is also an important tool in the hands of
the nation to arrange its economic affairs to make it
best suited to the welfare of the people otherwise.
Indisputably, the charging Section is Section 12.
The taxable event is import into or export of goods
from India. Ordinarily, the Tariff Act provides the
rates at which duty is imposed on imports and
exports. There is no dispute that India and Pakistan
being S.A.A.R.C. Countries they were parties to an
agreement under which the trade between the countries
was subjected only to duty on concessional rates. It
is while so, following the unfortunate incident of
Pulwama that the Government of India in exercise of
its powers under Section 8A of the Tariff Act decided
to increase the rate of import duty on all goods in
the manner done. The Notification was issued on
16.02.2019. It was published at about 20:46:58 hrs.
In the meantime, during the course of the day, the
writ petitioners before us who imported goods had
filed Bills of Entry electronically. The goods were
present in the Customs Station. To be more correct,
the Bills were presented and self-assessment was
16
undertaken. It is thereafter that late in the
evening as a bolt from the blue, as it were, the
notification came to be issued under Section 8A of
the Tariff Act. The questions which arise for the
consideration of this Court is articulated as
follows:
1. What is the nature of the Notification? Is it
a species of subordinate legislation?
2. If it is subordinate legislation, when did it
commence? What is the scheme of the Customs
Act as regards the rate of duty on imports and
the power of assessment? Was the Notification
in force on 16.02.2019 so that it would cover
all the transactions countenanced by the Bills
of Entry which were duly presented during the
office hours on 16.02.2019? What constitutes a
day under Section 15 of the Customs Act?
3. Whether the Notification is covered by Section
5(3) of the General Clauses Act?
17
4. Whether the appellants were justified in
resorting to re-assessment in these cases?
THE TARIFF ACT AND WHETHER THE NOTIFICATION IS A FORM
OF DELEGATED LEGISLATION
14. It is apposite that the working of the Tariff Act
is unravelled. The rates of duty under the Customs
Act are to be provided as per the entries in the
First and Second Schedule. Section 2 of the Tariff
Act, reads as follows:
“2. Duties specified in the Schedules to
be levied. - The rates at which duties of
customs shall be levied under the Customs
Act, 1962 (52 of 1962), are specified in
the First and Second Schedules.”
15. In other words, the rate of duty must be one
which is provided by Parliament. It may require an
amendment to the Tariff Act to increase or decrease
the rate of duty under Section 2. Section 11A
contemplates power with the Central Government to
amend the First Schedule. It cannot be, in the region
of doubt, that the exercise of power under Section
11A would amount to exercise of delegated
legislation. Section 11A(2) stipulates the procedure
18
to be adopted after the Notification is issued. It
has to be placed before each House of Parliament and
the further procedures are as provided therein, which
includes the power to modify the Notification. The
proviso, however, makes it clear that the exercise of
power under Section 11A, to amend the First Schedule,
will not involve or amount to an increase in the
rates which are specified in the First Schedule in
regard to duties of customs leviable under the
Customs Act. In other words, barring the rate of
customs duty, the contents of the First Schedule can
be amended by the Central Government under Section
11A. Resultantly, Section 11A does not confer upon
the Central Government, the power to increase the
rate of duty under the Customs Act. The rate of duty,
in other words, ordinarily falls within the province
of Parliament, and it is Parliament alone, which can
increase or decrease the rate of duty. However, an
exception has been carved out under Section 8A to
change the rate of duty under the Schedule to the
Tariff Act. It is an emergency power vested with the
Central Government. The emergency power vested with
19
the Central Government is to change the import duty
and the change is limited to an increase in the rate
of import duty. The condition requisite is, no doubt,
that circumstances exist which render it necessary to
take immediate action for providing for an increase
in the import duty. Section 8A, in fact, does not
contemplate the power to amend the First Schedule.
The power under Section 8A is confined to any article
which is already included in the First Schedule.
Undoubtedly, it is the same Authority, viz., the
Central Government, which stands clothed with the
power to amend the First Schedule under Section 11A.
The words “circumstances” exists which render it
necessary to take immediate action in Section 8A
makes it clear that the power to increase the rate of
import duty is ordinarily a power to be exercised by
the Parliament by a process of amending the First
Schedule to the Tariff Act. It is only in emergent
circumstances where the delegate of the Legislature,
viz. the Central Government, considers it necessary
to take immediate action that is the process of
amending the Act or rather the Schedule to the Act by
20
the Parliament, would take time, the same is sought
to be obviated by taking action under
Section 8A. Undoubtedly, the provisions of Sections
7(3) and 7(4) will apply in making of the
Notification.
16. On a perusal of the provisions, as noted, it is
clear that a Notification issued under Section 8A,
increasing the import duty, is a species of delegated
legislation. It must be remembered that Article 265
of the Constitution of India declares that no tax
shall be levied except by the authority of Law. An
increase in the rate of duty cannot obviously be
affected by an Executive Order. That is not to say
that when the Executive is empowered to increase the
rate of duty by way of delegated legislation, it
would not fulfill the requirement of Article 265 and
there can be no hesitation in holding that it is law
within the meaning of Article 13 of the Constitution
of India and it is a species of delegated
legislation. [See in this regard AIR 1961 SC 21 para
11]
21
THE SCHEME OF THE CUSTOMS ACT QUA RATE OF DUTY ON
IMPORTS AND ASSESSMENT TO DUTY
17. Section 12 is the charging Section. It reads as
follows:
“12. Dutiable goods.— (1) Except as
otherwise provided in this Act, or any
other law for the time being in force,
duties of customs shall be levied at such
rates as may be specified under the
Customs Tariff Act, 1975 (51 of 1975), or
any other law for the time being in force,
on goods imported into, or exported from,
India.
(2) The provisions of sub-section (1)
shall apply in respect of all goods
belonging to Government as they apply in
respect of goods not belonging to
Government.”
18. Section 15 deals with the date relevant to fix
the rate of duty. It reads as follows:
“15. Date for determination of rate of
duty and tariff valuation of imported
goods.—(1) The rate of duty and tariff
valuation, if any, applicable to any
imported goods, shall be the rate and
valuation in force,—
22
(a) in the case of goods entered for
home consumption under section
46, on the date on which a bill
of entry in respect of such goods
is presented under that section;
(b) in the case of goods cleared from
a warehouse under section 68, on
the date on which a bill of entry
for home consumption in respect
of such goods is presented under
that section;
(c) in the case of any other goods,
on the date of payment of duty:
Provided that if a bill of entry has
been presented before the date of
entry inwards of the vessel or the
arrival of the aircraft or the
vehicle by which the goods are
imported, the bill of entry shall be
deemed to have been presented on the
date of such entry inwards or the
arrival, as the case may be.
(2) The provisions of this section shall
not apply to baggage and goods imported by
post.”
19. In the matter of imports, the rate of duty, which
is the sole area of controversy, is to be determined
on the basis of the rate of duty which is in force on
the day of the presentation of the Bill of Entry. It
will be further noticed that an importer may, when
23
the goods are physically present within the Customs
Station in question, file the Bill of Entry for home
consumption. Section 46(1) also contemplates the
presentation of the Bill of Entry for the goods being
warehoused. This ordinarily would occur when the
importer may have difficulty in paying the duty on
the goods. He may also warehouse the goods when he
has not yet found a buyer for his goods or there are
any other obstacles in clearing the goods. Cases of
goods imported for the purpose of being taken out of
the country by way of transshipment or goods intended
for transit, are not covered by Section 46 (1). The
Bill of Entry under sub-Section (1) is to be
presented before the expiry of the day following the
day (excluding holidays) on which the aircraft,
vessel or vehicle carrying the goods arrives at a
Customs Station, at which the goods are to be
cleared, either for home consumption or warehousing
[See Section 46(3)]. The Second Proviso to Section
46(3) provides that if the Bill of Entry is not
presented within the time specified and there are no
sufficient reasons for such delay, the importer is to
24
pay charges for late presentation. The importer is
also to make a declaration regarding the truth of the
contents of the Bill of Entry, and in support of the
same, he is to produce the invoice and other
documents, as may be prescribed. [See Section 46 (4)]
20. The next procedure contemplated under the Customs
Act in regard to an importer entering any imported
goods under Section 46 for home consumption is for
the importer to carry out self-assessment except in a
situation covered by Section 85 [See Section 17(1)].
The proper Officer is to verify the entries in the
Bill of Entry entered under Section 46, inter alia,
and the self-assessment of the goods carried out by
the importer. He is clothed with the power to examine
or test any imported goods, inter alia, for the
purpose of such verification. The importer is to
furnish any document for verification, as may be
necessary towards the carrying out of the
verification [See Section 17(3)]. It is thereafter
that Section 17(4) empowers the Officer who carries
out the verification to re-assess the duty leviable
on such goods. The perusal of Section 17(4) would
25
reveal that such re-assessment can be done, when, on
verification, examination or testing of the goods,
the officer finds that the self-assessment is not
done correctly. Section 17(4) also employs the
expression “otherwise” after the words “verification,
examination or testing of the goods”. It is argued by
the learned Additional Solicitor General that the
word “otherwise” is attracted in the facts of this
case as it is found that the issuance of the
Notification on 16.02.2019 albeit in the late evening
determined the rate of duty in respect of all Bills
of Entry which may have been presented during the
course of the day and re-assessment was legally
permissible as it fell within the wide embrace of the
word “otherwise”. This question will be answered
after examining, considering and answering the
question as to when the Notification commenced. It
may also be noticed that Section 18(1)(a), which
provides that notwithstanding anything contained in
the Act but without prejudice to Section 46, that the
Officer may carry out provisional assessment. Under
Section 18(1)(a) such provisional assessment is
26
permitted when the importer, inter alia, is unable to
make the self-assessment under Section 17(1), and
what is more, makes a request in writing to the
proper Officer for provisional assessment.
21. There are three other circumstances enumerated in
clause (b), (c) and (d) of Section 18(1) which
entitle the Officer to pass an Order of provisional
assessment. In such a case, it is open to the Officer
to carry out the final assessment. So also, it is
open to the Officer to carry out re-assessment.
22. What is the time at which the importer who
presents a Bill of Entry under Section 46 for home
consumption is to effect payment of the import duty,
when he carries out self-assessment? This question is
answered in Section 47(2)(a) which provides that the
importer is to pay the import duty on the very day of
presentation of the Bill of Entry when the importer
carries out self-assessment as is contemplated under
Section 17(1) of the Act.
23. Section 47(1) contemplates that where the Officer
is satisfied about the goods entered for home
27
consumption, being not prohibited goods, and the
importer has paid the import duty, if any, assessed
thereon, and other charges, under the Act, he is to
pass an Order permitting clearing of goods for home
consumption. It is again to be noted that under
Section 47(2)(b), the importer is to pay the duty
within one day from the date on which the Bill of
Entry is returned to him when there is assessment,
re-assessment or provisional assessment. Section
47(1)(c) also contemplates permitting the importer to
make deferred payment which is permitted under the
Second Proviso to Section 47(1).
24. What is the effect of non-payment of the duty
within the time specified in Section 47(2)? The
answer to this also is contained in Section 47(2)
itself as the law mandates that the importer shall
pay interest on the duty not paid or short paid till
the date of its payment at the rate as provided
therein. It is to be noticed that Section 47 is
related to goods entered for home consumption. No
doubt without payment, an order for clearance of
goods would not be passed.
28
25. Section 28 of the Customs Act provides for
recovery of duties not levied, not paid, short
levied, short paid or erroneously refunded. Similar
provisions are contained in the Central Excise Act as
well. It is also noteworthy that Section 2(25)
defines the word “imported goods” as meaning the
goods brought into India from the place outside India
but it does not include the goods which have been
cleared for home consumption.
26. A perusal of Section 15(1)(a) makes it clear that
as far as goods entered for home consumption under
Section 46, the rate of duty is to be the rate of
duty in force on the date on which the Bill of Entry
in respect of such goods is presented under Section
46. It is not the date on which the goods are ordered
to be cleared under Section 47. In fact, the Scheme
of the Act, in regard to goods entered for home
consumption, is that the importer is to present the
Bill of Entry, as contemplated under Section 46, he
is to make self- assessment under Section 17(1), he
is to make the payment of the duty on the day on
which he presents the Bill of Entry under Section
29
47(2)(a). Should he fail to make the payment on the
same day in the case of self- assessment, he becomes
liable to pay interest as provided till the date of
payment. What is crucial is, however, that only that
date is relevant on which he presents the Bill of
Entry for home consumption in the form and in the
manner, which is prescribed. The word “prescribed”
has been defined in Section 2(32) to mean prescribed
by Regulations made under the Act. Regulations have
been made in regard to presentation of Bill of Entry.
Section 46(1) would reveal that the word
“electronically” came to be inserted by Act 8 of 2011
w.e.f. 08.04.2011. Immediately following the words
“electronically, the words “at the customs automated
system”, have been inserted by the Finance Act, 2018
w.e.f. 01.04.2018. The words “in such form and
manner, as may be prescribed” came to substitute the
words “in the prescribed form”, by the Finance Act,
2018. No doubt, the First Proviso to Section 46(1)
empowers the Principal Commissioner of Customs or the
Commissioner of Customs to allow the Bill of Entry to
30
be presented in any other manner, where it is not
feasible to make the entry electronically.
27. The Regulations holding the field providing for
the form and manner in which the Bill of Entry is to
be presented for home consumption under Section 46(1)
of the Customs Act are called the Bill of Entry
(Electronic Integrated Declaration and paperless
Processing) Regulations, 2018 (hereinafter referred
to as ‘the 2018 Regulations”, for short). Regulation
4(2), which is the relevant Regulation, reads as
follows:
“4(2) The bill of entry shall be deemed to
have been filed and self-assessment
completed when after entry of the
electronic integrated declaration on the
customs automated system or by way of data
entry through the service centre, a bill of
entry number is generated by the Indian
Customs Electronic Data Interchange System
for the said declaration and the selfassessed copy of the Bill of Entry may be
electronically transmitted to the
authorised person or printed out at the
service centre.”
28. A perusal of the aforesaid Regulation makes it
clear that there is not only a deemed presentation of
31
the Bill of Entry which the law calls into existence,
as provided therein but also completion of selfassessment. This deemed presentation and completed
self-assessment takes place when the bill of entry
number is generated. Once there is a deemed
presentation of the Bill of Entry, then, under
Section 15(1)(a), the rate of duty, which is in force
on such deemed date of presentation, would be the
rate which is applicable. This is, no doubt, subject
to the further requirement that the goods are
physically present in the Customs Station. This is
for the reason that under the First Proviso to
Section 46(3), an importer can present a Bill of
Entry in anticipation of the arrival of the goods
provided that the presentation of such Bill of Entry
is limited to a period not exceeding thirty days
prior to the expected arrival. However, in case,
where the Bill of Entry is presented under the First
Proviso to Section 46(3), the rate of duty will be
determined with reference to the act of presentation
of the Bill of Entry, but such presentation of the
Bill of Entry is by a deeming fiction made only from
32
the date of the entry inwards or of the arrival, as
the case may be of the goods.
29. In the facts of these cases, there is no dispute
that the imported goods were very much in the Customs
Station and the Bills of Entry were presented under
Section 46(1) on 16.2.2019. It is clear that the rate
of duty, for the purpose of the cases before the
Court, is to be determined with reference to the
presentation of the Bills of Entry. The law does not
take into consideration even the time of payment of
the duty which is self-assessed by the importer. This
is noted for the reason that the importer, who
presents a Bill of Entry under Section 46 and who
carries out self-assessment, is duty-bound to pay
such duty on the very same date. The consequence of
failure is only the liability to pay interest under
Section 47 besides disabling him from clearing the
goods. It does not postpone the point of time at
which the rate of duty is to be determined.
30. Having dwelt upon the Scheme of the Act in regard
to goods which are imported into India and which have
33
been entered under a Bill of India for home
consumption, the time is now ripe for ascertaining
the impact of the Notification which came to be
issued late in the evening on 16.02.2019. The nature
of the Notification, which is admittedly issued under
Section 8A of the Tariff Act, has been explained
earlier. It is a species of delegated legislation. As
far as law made by Parliament or the State
Legislatures, which are sovereign bodies in their own
right, subject, no doubt, to their position, under
the Constitution, as expounded by this Court, the law
comes into force immediately after the assent is
given by the President or the Governor, respectively.
A law made by Parliament has effect without any
further act on the part of the Executive. This is, no
doubt, subject to the intention expressed otherwise
in the law so made as to any other date from which it
is to have operation. It may also be a case of a
conditional legislation where the law is to be
brought into force by the Executive.
31. No doubt, there is a distinction between
conditional legislation and delegated legislation
34
(See in this regard, judgment of this court in I.T.C.
Bhadrachalam Paperboards and another v. Mandal
Revenue Officer and others40, where the earlier case
law has been exhaustively dealt with).
32. A Notification, which is made by the Executive,
must indeed be made known. Ordinarily this is made
known by being published in the Gazette. In this
regard, it is profitable to refer to what this Court
laid down in the decision reported in B.K. Srinivasan
v. State of Karnataka41:
“15. … It is, therefore, necessary that
subordinate legislation, in order to
take effect, must be published or
promulgated in some suitable manner,
whether such publication or
promulgation is prescribed by the
parent statute or not. It will then
take effect from the date of such
publication or promulgation. Where the
parent statute prescribes the mode of
publication or promulgation that mode
must be followed. Where the parent
statute is silent, but the subordinate
legislation itself prescribes the
manner of publication, such a mode of
publication may be sufficient, if
reasonable. If the subordinate
legislation does not prescribe the mode
of publication or if the subordinate
legislation prescribes a plainly
40 (1996) 6 SCC 634
41 (1987) 1 SCC 658.
35
unreasonable mode of publication, it
will take effect only when it is
published through the customarily
recognised official channel, namely,
the Official Gazette or some other
reasonable mode of publication. There
may be subordinate legislation which is
concerned with a few individuals or is
confined to small local areas. In such
cases publication or promulgation by
other means may be sufficient [Narayana
Reddy v. State of A.P., (1969) 1 Andh
WR 77].”
33. This view came to be endorsed in a case under the
Customs Act, which is reported in M/s. Pankaj Jain
Agencies v. Union of India and others42. Therefore, it
is only with the publication effected at 20:46:58
hrs. on 16.02.2019, the Notification issued under
Section 8A, increasing the rate of import duty, came
into force.
34. While on publication required in law, to make a
Notification effective, the decision of this Court,
rendered under the Central Excise Act in Collector of
Central Excise v. New Tobacco Company and others43, is
noticed. The question, which was considered, was
whether a Notification under the Central Excise Act
42 (1994) 5 SCC 198
43 (1998)144 CTR(SC) 618
36
became effective from the date on which it was
printed in the Government Gazette or from the date it
was made available to the public. This Court,
elaborately referred to the judgment of the Madras
High Court in Asia Tobacco Company Limited v. Union
of India and others44. Therein, the High Court, inter
alia, held as follows:
"8. …… “The mere printing of the
official Gazette containing the
relevant notification and without
making the same available for
circulation and putting it on sale
to the public will not amount to the
notification within the meaning of
r. 8(1) of the Rules. ……………………… It
would be a mockery of the rule to
state that it would suffice the
purpose of the notification if the
notification is merely printed in
the Official Gazette, without making
the same available for circulation
to the public or putting it on sale
to the public ...... Neither the
date of the notification nor the
date of printing, nor the date of
Gazette counts for notification
within the meaning of the rule, but
only the date when the public gets
notified in the sense, the concerned
Gazette is made available to the
44 (1985)155 ITR 568 (Mad)
37
public. The date of release of the
publication is the decisive date to
make the notification effective.
Printing of the official Gazette and
stacking them without releasing to
the public would not amount to
notification at all ......”
35. Thereafter, this Court went on to hold as
follows:
“11. We hold that a Central Excise
Notification can be said to have been
published, except when it is provided
otherwise, when it is so issued as to make
it known to the public. It would be a
proper publication if it is published in
such a manner that persons can, if they
are so interested, acquaint themselves
with its contents. If publication is
through a Gazette then mere printing of it
in the Gazette would not be enough. Unless
the Gazette containing the notification is
made available to the public, the
notification cannot be said to have been
duly published.”
36. It may be noticed that a Bench of three learned
Judges came to, however, overrule the Judgment in New
Tobacco Company (supra) in the decision reported in
Union of India and others v. Ganesh Das Bhojraj45.
Therein a Notification was issued under Section 25 of
the Customs Act on 04.02.1987, amending an earlier
45 2000 (9) SCC 461
38
Notification of the year 1976 by which exemption had
been granted and limiting the exemption to the duty
in excess of 25 per cent. The Bill of Entry was filed
on 05.02.1987. This Court took the view that under
Section 25 of the Customs Act, since the Notification
dated 04.02.1987 has been published in the Gazette,
it had come into force and constituted the rates
prevalent on 05.02.1987, when the respondent had
filed the Bill of Entry. In fact, the Court noticed
the subsequent development in Section 25 of the
Customs Act by which sub-Sections (4) and (5) were
added to Section 25, which reads as follows:
“25. Power to grant exemption from duty.—
xxx xxx xxx xxx
(4) Every notification issued under subsection (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.
39
(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.”
The view in New Tobacco Company (supra) was held
to be not good law.
37. It is to be noticed that it is in regard to a
Notification issued under Section 25 of the Customs
Act that the principles contained in sub-Section (4)
and (5) will have effect from the date on which these
provisions were brought into force. As far a
Notification issued under Section 8A, with which this
Court is concerned, it is the principle which has
been laid down in Ganesh Das Bhojraj(supra), which
will apply.
38. In other words, as far as the Notification issued
under Section 8A of the Tariff Act is concerned, the
Notification would come into force on the date on
40
which it is published in the Gazette. The question,
however, which arises in this case is, as far as this
Court is concerned, res integra, viz., whether having
regard to the time at which it was published, whether
Notification would come into force on 16.02.2019, by
including the whole of the day or will it operate
from the time of its publication, or whether the
Notification is to be enforced only after excluding
16.02.2019.
39. The question would pointedly arise whether it
was to have effect for the whole of the day, viz.,
16.02.2019, which means, since the day 16.02.2019 was
born, immediately after the midnight on 15.02.2019,
does a day mean the first moment after the midnight?
If that were the effect, what would be its impact on
the Bills of Entry which were electronically
presented under Section 46(1) of the Customs Act read
with Rule 4(2) of the 2018 Regulations, which have
already been referred to above. It is here that it
becomes necessary to notice the provisions of Section
9 of the General Clauses Act, 1897.
41
SECTION 9 OF THE GENERAL CLAUSES ACT, 1897
40. Section 9 of The General Clauses Act, 1897, reads
as follows:
“9 Commencement and termination of time.
(1) In any Central Act or Regulation made
after the commencement of this Act, it
shall be sufficient, for the purpose of
excluding the first in a series of days or
any other period of time, to use the word
from, and, for the purpose of including
the last in a series of days or any other
period of time, to use the word to.
(2) This section applies also to all
Central Acts made after the third day of
January, 1868, and to all Regulations made
on or after the fourteenth day of January,
1887.”
41. In this case, there is no dispute that
Notification under Section 8A was published in the
Gazette. It was published at 20:46:58 hrs. on
16.02.2019. It is to be noticed that we are not
dealing with a case, where a period of time, limited
by two different termini, is present. A Statute may
fix a terminus aquo. The Statute may be made to last
42
without indicating when the period is to end, which
is the terminus ad quem.
42. Section 9 of the General Clauses Act enunciates
the principle, that for, excluding the first in a
series of days or any other period of time, it
suffices to use the word “from”. It also provides,
likewise, for the devise of using the word “to”, for
the purpose of including the last in the series of
days or other period of time. It is clear from
Section 9 that it contemplates a period, or a series
of days which is marked by both terminus aquo and
terminus ad quem. Section 9 is expressly intended to
apply to a Central Act or Regulation.
43. In this case, we are concerned with the
Notification issued under the Statute, and which is a
piece of delegated legislation, under which, the rate
of import duty has been increased. The increase in
the rate of duty is not for any period. In other
words, it is not a case where the terminus ad quem or
a period of time, is fixed for the operation of the
increased import duty of goods imported from
43
Pakistan. In other words, the increased rate of
import duty under the Notification is to last
indefinitely. The word “indefinite” is intended to
mean that it is to bear life till it is increased,
reduced or completely done away with, in exercise of
powers available under the Customs Act or the Customs
Tariff Act (See in this regard Section 25 of the
Customs Act and Section 2 of the Tariff Act).
A DAY; A PERIOD OF TIME; FRACTION OF TIME
44. It now becomes necessary to refer to principles
enunciated by Courts in diverse situations under
different branches of law.
45. I would begin by referring to an off-quoted
Judgment rendered by the Master of the Rolls, Sir
William Grant in the decision reported in Lester v.
Garland46. In the said case, there was a bequest of
residual interest in favour of ‘A’ if she gave
security not to marry ‘B’, inter alia, within six
calendar months, after the death of the Testator.
46 [1808] 15 Ves. 248
44
There was a proviso to go over if ‘A’ refused to give
such security. The Testator died on the 12th of
January. Security was given by ‘A’ on the 12th of
July. The Testator died on 12th of January between 8
and 9 in the evening. Security was given by ‘A’ about
9 in the evening on 12th of July. The question, which
was considered was whether the date of the death of
the Testator was to be included within the six
months, within which, ‘A’ had to give the security,
or to be excluded. If the day of the death of the
Testator was included, the security given by ‘A’
would be beyond the period of six months and she
would stand divested of the bequest, whereas, if the
date of the death of the Testator was excluded, then,
‘A’ would be entitled to the bequest as the security
given by her would be within the period of six
months. It would be profitable to notice the relevant
part of the discussion by the learned Judge:
“It is not necessary to lay down any
general rule upon this subject: but upon
technical reasoning I rather think, it
would be more easy to maintain, that the
day of an act done, or an event happening,
ought in all cases to be excluded, than
that it should in all cases be included.
45
Our law rejects fractions of a day more
generally than the civil law does. (See
the note, 14 Ves. 554, where it is
admitted in bankrupty.) The effect is to
render the day a sort of indivisible
point; so that any act, done in the
compass of it, is no more referrible to
any one, than to any other, portion of it;
but the act and the day are co-extensive;
and therefore the act cannot properly be
said to be passed, until the day is
passed. This reasoning was adopted by
Lord Rosslyn and Lord Thurlow in the case
before mentioned of Mercer v. Ogilvie. The
ground, on which the judgment of the Court
of Session was affirmed by the House of
Lords, is correctly stated in the fourth
volume of the Dictionary of the Decisions
of the Court of Session. In the present
case the technical rule forbids us to
consider the hour of the testator's death
at the time of his death; for that would
be making a fraction of a day. The day of
the death must therefore be the time of
the death; and that time must be past,
before the six months can begin to run.
The rule, contended for on behalf of the
Plaintiffs, has the effect of throwing
back the event into a day, upon which it
did not happen; considering the testator
as dead upon the 11th, instead of the
12th, of January ; for it is said, the
whole of the 12th is to be computed as one
of the days subsequent to his death. There
seems to be no alternative but either to
take, the actual instant, or the entire
day, as the time of his death; and not to
begin the computation from the preceding
day.
But it is not necessary to lay down any
general rule. Whichever way it should be
laid down, cases would occur, the reason
of which would require exceptions to be
46
made. Here the reason of the thing
requires the exclusion of the day from the
period of six months, given to
Mrs. Pointer to deliberate upon the choice
she would make; and upon the whole my
opinion is, that she has entered into the
security before the expiration of the six
months; in sufficient time therefore to
fulfil the condition, on which her
children were to take.”
(Emphasis supplied)
46. In Re. Railways Sleepers Supply Co.
47, an
Extraordinary General Meeting of the company passed a
Special Resolution on 25.02.1885, for the reduction
of the capital of the company. On 11.03.1885, the
Resolution passed on the 25.02.1885, was confirmed.
On a petition filed, seeking sanction of the Court
for the proposed reduction of capital, the question
arose whether there was compliance with Section 51 of
the Companies Act, 1862. The said provision, inter
alia, required confirmation of the Resolution at a
subsequent General Body Meeting which was held at an
interval of not less that fourteen days and not more
than one month from the date of the meeting at which
the Resolution was first passed.
47 (1885) 29 Ch.d. 204
47
47. Chitty J., in his opinion, referred to Lester v.
Garland (supra) and held, inter alia, as follows:
“… Lord Mansfield in his well-known
judgment in Pugh v. Duke of Leeds says, “Date
does not mean the hour or the minute, but the
day of delivery, and in law there is no
fraction of a day.” The day of the death of
the testator, which is equivalent here to the
day of the first meeting, was not reckoned by
Sir William Grant in his well-known decision
in Lester v. Garland, where a bond had to be
given within six months after the testator's
decease. The 51st section states that the
subsequent or second meeting is to be held
“at an interval of not less than fourteen
days or more than a month.” The word “at”
means after the interval, or at some time
after the interval, prescribed by the other
part of the section. The word “at” refers
grammatically rather to a point of time than
a period. ……”
“… The interval “of not less than
fourteen days” was allowed to give reasonable
time for deliberation, and to prevent undue
haste or surprise, and to afford to the
shareholders who might be present at the
first meeting, and also to those who might
not think fit or might not be able to attend
it, time for reflection and consideration,
and to make arrangements to enable them to
attend the second….”
“…. An interval of not less than
fourteen days” is equivalent to saying that
fourteen days must intervene or elapse
between the two dates….”
“… That means fourteen clear days; and
as Littledale , J., said in Reg. v. Justices
of Shropshire, I do not see any distinction
48
between “fourteen days” and “at least
fourteen days.” I must come therefore to the
conclusion that the resolution is bad.
Probably no question has more exercised the
minds of Judges in former times than the
question as to the proper mode of computing
time. Lord Mansfield's judgment in Pugh v.
Duke of Leeds and Lord Wensleydale's judgment
in the case of Chambers v. Smith, to which I
have already referred, are excellent
illustrations of what I have said. ….”
48. In 1895, a case, viz., In Re. North48 arose under
the Bankruptcy Act, 1890. The question was whether an
act of bankruptcy had been committed by reason of the
fact that on an action taken by an execution
creditor, and after the seizure of goods of the
debtor and subsequent private sale, as permitted by
the Court, the Sheriff had held the goods for a
period of twenty-one days. Lord Esher M.R., after
referring to Lester v. Garland (supra), holds as
follows:
“ …., after a learned examination of the
whole subject, laid down what I conceive
to be the wholesome view that no general
rule exists. ….”
48 (1895) 2 Q.B. 264
49
“… The statute which we have to construe
for the purpose of deciding how the period
of time mentioned in it is to be computed
is a Bankruptcy Act, and enacts a new act
of bankruptcy, the commission of which is
to be determined by a computation of time.
….”
“… If we construe s. 1 of the Act of 1890
according to the ordinary English meaning
of the words, it enacts that certain
consequences are to happen if the sheriff
holds for twenty-one days goods seized by
him under an execution: an act of
bankruptcy is committed if he holds them
for that time. The ordinary meaning of the
words is that he must hold them for
twenty-one days; but we are told that
under a technical rule of construction the
section is satisfied if he holds them for
twenty days and a part of a day. Which is
right? ...”
“… Here the result may be to make a man a
bankrupt, which is not a benefit to him,
nor necessarily to the whole of his
creditors. The bankruptcy law is a law of
public social policy, and affects in a
very detrimental manner the status of
those who are brought under its operation;
in old times, indeed, to make a man a
bankrupt was to make him a criminal; …”
“… Bankruptcy is the creature of statute,
and under a long series of bankruptcy
statutes the same practice as to computing
time has been followed, though for
different purposes or results; the
practice is a perfectly well-known one,
the rule in bankruptcy being to exclude
the first day or part of a day, and to
begin the computation of time on the first
whole day. …”
50
“… Again, there is the rule of
construction that if a statute, which so
affects a man's status as to be in effect
a penal enactment, is capable of two
constructions, that one should be adopted
which is most favourable to the person
affected. Applying this rule, the mode of
calculating the twenty-one days ought to
be in favour of the debtor doing something
which would prevent his becoming a
bankrupt at all, and we ought to construe
this section as meaning that the first
day, or part of a day, is to be excluded
from the computation, which should begin
on the day after the date of the seizure.
…”
(Emphasis supplied)
49. A.L. Smith L.J. agreed with Lord Esher M.R. and
held, inter alia, as follows:
“… But it has been shewn from subsequent
cases that there is no such universal
rule, and that in the reckoning of time
each case must depend on its own
circumstances and subject-matter, and for
this I need only refer to the judgment of
Sir William Grant in Lester v. Garland ,
to that of Kelly C.B. in Isaacs v. Royal
Insurance Co., and of Chitty J. in In re
Railway Sleepers Supply Co. To say,
therefore, that a rule of law compels us
to say that to hold goods for twenty days
and a fraction of a day is the same as to
hold them for twenty-one days is to say
that which is not a fact. …”
51
50. Rigby L.J. also concurred with Lord Esher M.R.
and, in his judgment, held as follows, inter alia:
“… It was contended before us, and it
seems at one time to have been thought to
be law, that where a fact or event was
mentioned from which a given period of
time was to be reckoned, the Court was
bound to reckon the portion of the day on
which the act was done as though it were a
whole day, and to reckon it as the first
day of the period. That doctrine underwent
a thorough examination in Lester v.
Garland, at the hands of Sir W. Grant, who
considered the cases in which the first
day had been included or excluded, and
came to the conclusion (which I think was
inevitable) that there was no general rule
on the subject. …”
“… His classification of the cases shews
that where the calculation is in favour of
a person, the construction should be
adopted which is more favourable to him.
In the case of a sheriff, for instance, it
is more in his favour to include the day
on which the act is done than to exclude
it, and on that ground it is included; but
where, to take another example, something
has to be done which is necessary to
complete a title, the first day is
excluded, otherwise there would be a
cutting down of the time allowed for doing
the act. In my opinion, although Sir W.
Grant did not put the proposition in so
many words, his judgment leads us to the
conclusion that the question of whether
the day on which the act is done is to be
included or excluded must depend on
whether it is to the benefit or
disadvantage of the person primarily
interested. But whether or no the
52
proposition is to be put so high, we have
here a statute which does not say twentyone days from taking possession; and it is
only to cases where a terminus is
mentioned that any such general rule was
ever held to apply. The present is an a
fortiori case; no terminus is mentioned,
and the only question is whether the
sheriff held for twenty-one days. …”
(Emphasis supplied)
51. On 05.05.1922, by a Notification in the Fort
St. George Gazette Extraordinary, published on a
Friday, the Table of Fees under Appendix-II, the old
Rules on the Original Side of the Madras High Court,
was amended and instead of a fixed fee of Rs.30/-
levied under Serial No.1, it was provided that
Rs.150/- was to be levied in all the suits where the
value of the subject matter does not exceed
Rs.10,000/-, inter alia. The Notification further
recited that the amendments were to come into force
from the date of publication in the Fort St. George
Gazette. The Gazette Extraordinary reached the High
Court at about 05.00 p.m. on 05.05.1922. A Special
Bench was constituted to resolve the controversy as
to whether the amended Scale of Fees was to apply
53
from the 5th day of May or after excluding the 5th May.
The three learned Judges, In Re: Court Fees49
proceeded to author three separate Judgments. The
majority view is contained in the judgments of the
Chief Justice and Justice V.M. Coutts Trotter. In
their Judgments, they took the view that the amended
Scale of Fees, though as already noted, represented
an increase from an earlier Scale of Fees, was to
apply even in regard to the suits which came to be
instituted before the time of the Notification on
05.05.1922. In the Judgment of the learned Chief
Justice, the following discussion is noted:
“2. … I approach this matter
conscious of the salutary rule that, in
all statutes imposing taxation, any real
ambiguity must be decided in favour of the
subject and against the Grown. I consider
that the hour of the day at which the
Gazette was actually published is a wholly
irrelevant consideration, because on
neither view does it make any difference.
If the Gazette had been published early in
the morning, according to the view of
Kumaraswami Sastri, J., the tax will come
into operation only the next day. If it
had been published late in the night,
according to the view of Coutts-Trotter,
J., the tax would still be operative from
49 AIR 1924 Madras 257
54
the time the office opened for the receipt
of plaints on that day. I agree that we
have nothing to do with the English Common
Law except in so far as it may afford some
guide as to the proper meaning to be
attached to words in the English language.
… .
3. … Applying the general rules stated
above to this case, the named date must be
included unless there is some valid reason
why it should not be, and I can find none.
It is true that it may have the effect of
making persons pay more than they
understood they had to pay when they filed
their suits; but this seems to me a ground
for criticising the method of imposing
this tax rather than a ground for
interpreting the notice in any particular
way; and I think that this argument is
more than counterbalanced by the fact that
this was a sudden imposition of a tax
which in many cases could be avoided if
notice was given of it in time for suits
to be filed between the time of the
publication and of its actually coming
into operation. …”
(Emphasis supplied)
52. In the Judgment of V.M. Coutts Trotter J., the
learned Judge observes as follows:
“6. … What I conceive to emerge
from the decided cases is this: that as
the law in general neglects fractions of a
day you must either exclude or include the
whole of the day with which a given
statute or rule or regulation deals. And
the exclusion or inclusion, I think, is
55
clearly provided in two other rules. If
you are fixing the point of time at which
a certain state of things is to be called
into existence, that state of things comes
into existence at midnight of the day
preceding the day at which or on which or
from which or from and after which the new
state of things begins. In such cases the
statute or rule is only concerned in
fixing the terminus o quo of a new state
of law which is enacted to continue
indefinitely, in other words, until
repealed by a new enactment of the
legislature where, in short, you have a
terminus a quo but no terminus ad quem.
………………………………
…… Where a statute fixes only the terminus
a quo of a state of things which is
envisaged as to last indefinitely, the
common law rule obtains that you ought to
neglect fractions of a day and the statute
or regulation or order takes effect from
the first moment of the day on which it is
enacted or passed, that is to say, from
midnight of the day preceding the day on
which it is promulgated: where, on the
other hand, a statute delimits a period
marked both by a terminus a quo and a
terminus ad quem, the former is to be
excluded and the latter to be included in
the reckoning. This notification clearly
falls within the former class and must be
taken to have come into force on the first
second of the 5th May, that is to say,
from midnight of the 4th May. It follows
that the plaints filed on the 5th May are
liable to the enhanced fees laid down by
the Regulation.
7. A very large part of the argument
addressed to us on behalf of those who
filed plaints on the 5th May was based on
what was called a hardship suffered by
56
them if our decision should be favourable
to the Crown. Increased taxation is always
in a sense a hardship to the subject but I
cannot see any special hardship imposed
upon these particular litigants. If the
suits which they filed are not in their
opinion worth the expenditure entailed by
the increased rate of institution fees,
they would doubtless be permitted to ?
withdraw them-a suit evaluated at that
rate by the person who institutes it, is
not likely to be based on a very solid
cause of action. ….”
(Emphasis supplied)
53. However, C.V. Kumaraswami Sastri, J., dissented.
The learned Judge also referred to Lester v. Garland
(supra) and In Re. North (supra) and held as follows:
“21. Applying the law as laid down in
the previous cases to the facts of the
present case, we have to see whether the
5th of May, 1922, is to be included or
excluded. I might, in this connection,
state that I do not think that the
principles which govern, or the devices
which are resorted to, by the Executive
for the purpose of raising money by
taxation ought to have any weight with us
in determining whether the date of
publication is to be included or excluded.
I do not think the High Court is part of
the tax gathering machinery of the
Government or has any concern with the
consequences to the Government of their
decision on the construction of the rule.
57
The rule, I take it, was passed by the
Judges of the High Court in the exercise
of the powers entrusted to them to control
the administration of justice and the fees
were raised because in the opinion of the
Judges it was just and proper that
litigants ought to pay more for the
benefits which they derive by resorting to
the jurisdiction of the High Court. The
notification expressly states that it is
to have effect from the date of
publication, the object of the publication
being that the public ought to have notice
that the fees were being raised so that
they might know exactly what they were in
for when they resorted to the High Court
for justice. The notification, as I have
already said, was (as appears from a note
of the Deputy Registrar) received in the
High Court at 5 p.m., the office closing
at 5 p.m. It seems to me that the
litigants who filed plaints before they or
even the office had knowledge of the
publication of the rule did what was
perfectly valid under the old rules and
they presented the plaints with Rs. 30
stamp irrespective of the value of their
claim. A person who files a plaint which
is properly stamped and which is in order
at the time of presentation is entitled to
have his plaint admitted on presentation
though as a matter of convenience the
office receives the plaints and admits
them at the end of the day or later on.
There seems to me to be very little
justice or equity in directing that
persons who have done what was perfectly a
legal and valid act at the time should pay
a Court-fee which is much higher simply
because a notification was received at the
close of the day making the higher fees
chargeable from the date of the
notification. It may well be that if those
persons had notice that instead of Rs. 30
58
they had to pay at least Ra. 150 and a
maximum that would range according to the
value of their claim, they might rather
have compromised with the other side or
might have had resort to other proceedings
like arbitration for settling their
claims. I can find nothing to justify
charging people, who filed their plaints
on that day without knowledge of the
notification which only reached the High
Court at 5 p.m., with the higher fees in
respect of plaints filed during the course
of the day.
22. Having regard to all the facts
and circumstances of the present case, I
think that, if the law is that there is no
hard and fast rule in deciding whether the
word "from" is inclusive or exclusive of
the date of notification and that each
case must depend upon its own
circumstances subject-matter, justice and
equity demand that the date of the
notification ought to be excluded. I
would, therefore direct that all the
plaints received on the 5th of May, 1922,
be stamped with Rs. 30.”
(Emphasis supplied)
THE POSITION UNDER THE LAW RELATING TO
PREVENTIVE DETENTION
54. A Division Bench of High Court of Delhi had
occasion to consider the question again of time of
operation in the following circumstances in the
decision reported in Jasbir Singh vs. Union of
59
India50. The contentions urged by the detenu included
the contention that the detention orders stood
vitiated as in contravention of Section 3(3) of the
COFEPOSA Act, the grounds of detention was served on
the 6th day of the day of Order of detention being
served. Section 3(3), inter alia, provides for
communication to a person of the grounds of detention
as soon as may be after detention but ordinarily not
later than five days and in an exceptional case and
for reasons to be recorded in writing not later than
15 days from the date of detention. The Division
Bench, which included Chief Justice M. Jagannadha Rao
(as His Lordship then was), took note of judgment of
the Madras High Court reported in In Re: Court Fees51
under the Court Fee Act and took the view that the
word “from” is similar to the word “after”, and
therefore, the date on which the detention order was
served, has to be excluded. In this regard, the
Court took the view that the legislature has given
clear 5 days to the Government to complete many other
formalities before serving the grounds of detention.
50 (1995) ILR 2 Delhi 399
51 AIR 1924 Madras 257
60
This is besides being guided by the use of words ‘as
soon as may be’.
THE CASES UNDER CONTRACTS OF INSURANCE
55. In the decision reported in New India Assurance
Company Limited vs. Ram Dayal and Others52, the
vehicle was insured earlier upto 31st August, 1984.
Instead of obtaining renewal, a fresh insurance was
taken from 28th September, 1984. The accident took
place on the very same day, namely, 28th September,
1984. The insurer repudiated its liability as the
policy was taken after the accident. The High Court
took the view that the policy of insurance became
operative from the commencement of the date of
insurance, namely, the previous midnight. This Court
agreed with the view of the High Court that once a
policy is taken on a particular day, its
effectiveness is from the commencement of the day.
It found the insurer liable. It is necessary only to
notice paragraphs 5, 6 and 7:
“5. As pointed out in Stroud's judicial
Dictionary 'Date' means day, so that
52 (1990) 2 SCC 680
61
where a cover not providing for
temporary insurance of a motor car
expires 15 days after date of
commencement, it runs for the full 15
days after the day on which it was to
commence."
6. Similarly it has been stated in
Stroud that "a bill of exchange, or
note, is of the date expressed on its
face, not the time when it is actually
issued.”
56. The view taken by this Court in regard to the
issue of the liability of insurer with reference to
the time at which the policy of insurance is taken,
may be noticed from the recent judgment which
adverted to, not only Ram Dayal (supra) but the
Judgment rendered by three-Judge Bench, reported in
Oriental Insurance Company Limited v. Porselvi and
Another53 and another judgment reported in Oriental
Insurance Company Limited v. Sunita Rathi and
Others54. The recent judgment is reported in National
Insurance Company Limited vs. Geeta Devi and Others55
,
I may refer to paragraphs 3 and 4 which adverts to
the decisions of this Court distinguishing Ram Dayal
53 1997 (1) SCC 66
54 1998(1) SCC 365
55 2010(15) SCC 670
62
(supra). Finally, this Court took the view, there is
a cover note mentioning the time as 04:40 p.m. and it
was issued after the accident and therefore, the
insurer was not liable:
“3. The question again came up for
consideration in National Insurance Co.
Ltd. v. Jikubhai Nathuji Dabhi; (1997) 1
SCC 66. Reliance was placed on the
abovementioned judgments. However, a
three-Judge Bench of this Court noted
that the Tribunal had recorded, as a
fact, that the policy had come into
force at 4:00 P.M. whereas the accident
had taken place at 11:40 a.m. This
Court held that in view of the special
contract and in view of the fact that
the accident had occurred earlier, the
insurance coverage would not enable the
claimant to seek recovery from the
Insurance Company.
4. The question again arose in Oriental
Insurance Co. Ltd. v. Sunita Rathi;
(1998) 1 SCC 365, was relied upon. This
court distinguished Ram Dayal case;
(1990) 2 SCC 680, was relied upon. This
Court distinguished effective date and
time of the policy was after the
accident, the Insurance Company would
not be liable.”
57. After having made a reference to some of the
decisions covering different branches of law, the
63
question to be resolved comes into focus. It is
clear that the situation which is presented before
us, is not covered by the principle which is embedded
in Section 9 of General Clauses Act, 1897. In other
words, having regard to the terms of the
Notification, which is a form of delegated
legislation, by which the Central Government has
increased the rate of import duties of goods imported
from Pakistan, though the notification is gazetted on
16.02.2018 at 20:46:58 hrs., there is no period for
which it is to last as already noticed, and in that
sense, it can be argued that there would be no
occasion for exclusion of the date on which it was
issued.
WHETHER SECTION 5(3) OF THE GENERAL CLAUSES ACT
APPLIES TO THE NOTIFICATION?
58. Section 5 (3) reads as follows:
“5(3) Unless the contrary is expressed,
a Central Act or Regulation shall be
construed as coming into operation
immediately on the expiration of the day
preceding its commencement.”
64
59. The argument of learned Additional Solicitor
General is that in terms of Section 5 (3), the
notification issued under the Customs Tariff Act will
have effect from the expiry of the previous day.
That is to say, it will operate from the first tick
of time past the mid night of 15.2.2019. In order to
appreciate this argument, we must consider definition
of the word ‘Central Act’ and ‘Regulation’ in the
General Clauses Act. Section 3 (7) defines Central
Act. It reads as follows:
“(7) "Central Act" shall means an Act of
Parliament and shall include-
(a) an Act of the Dominion legislature or
of the Indian Legislature passed before
the commencement of the Constitution, and
(b) an Act made before such commencement
by the Governor General in Council or the
Governor General, acting in a legislative
capacity;”
60. Section 3 (50) defines ‘Regulation’. It reads as
follows:
“3(50) "Regulation" shall mean a
Regulation made by the President under
article 240 of the Constitution and
shall include a Regulation made by the
President under article 243 thereof and
a Regulation made by the Central
Government under the Government of India
65
Act, 1870, or the Government of India
Act, 1915, or the Government of India
Act, 1935”
61. It is quite clear that the notification which is
issued is one which is issued under Section 8A of the
Tariff Act. The notification is not one which is
made by Central Legislature, namely, the Parliament.
It therefore is not a Central Law as defined in the
Act. We have also noticed the definition of the word
‘Regulation’. The notification is not a regulation
as defined in General Clauses Act. There is no merit
in the contention of the Union of India that by
virtue of Section of 5(3) of the General Clauses Act,
the notification must be treated as effective from
the point of time immediately after mid night on
15/16 February, 2019.
THREE POSSBILE VIEWS
62. There are three possible answers to the questions
as to what is to be the meaning of the word ‘day’, in
the context of the provisions of Section 15 the
Customs Act and the Notification.
66
1.The first way to look at “the day”, would be to
take it as a fraction of day, viz., 16.02.2019,
having its beginning at 20:46:58 hrs. and ending
with the midnight on 16.02.2019.
2.The second way to look at it is, it would
operate only after the midnight of 16.02.2019,
and would impact Bills of Entries presented on
17.02.2019 onwards. In other words, it would be
an interpretation which would exclude 16th
February, 2019.
3.The third day to look at it would be as follows
– “16.02.2019, would mean the day commencing
immediately after the midnight on 15.02.2019,
and therefore, it would be the whole of the 24
hours commencing at midnight of 15.02.2019 and
would include the period of time during the day
during which the respondents had presented the
bill of entry”.
63. The question is certainly not free from
difficulty. The solution must, however, be found.
67
On one hand, we are dealing with a Notification by
which the appellant has purported to increase the
rate of duty to a hefty quantum of 200 per cent,
following the incident which took place at Pulwama.
Would it be a fair and reasonable to include the
whole, the day 16.02.2019, having regard to the
effect on the importer of the goods who would have
struck the bargain on the basis of rate of duty being
what it was prior to the Notification? Could it not
be said that based on the contracts for import, the
importer would have entered into contracts for sale
of goods in India where the price would be fixed with
reference to the position obtaining as on the date of
contract for import.
64. On the other hand, what we are called upon to
decide, is the question of time at which the
delegated legislation will take effect. It is true
that there is no equity about tax. The fact that
there is a sudden increase in the rate of tax, may
not render it vulnerable on the score that it
violates Fundamental Rights. [See in this regard, the
68
Judgment of this Court in Pankaj Jain vs. UOI
(supra)].
65. If analogy is to be drawn from the majority view
of Madras High Court in the matter relating to Court
Fees (supra), it can, indeed, be urged that the
impact of the increased duty of import cannot by
itself decide the question as to the point of time at
which the delegated legislation must operate from.
66. Yet another aspect which could not be over-looked
is while it is true that in Section 15 of the Customs
Act, what is referred to is the rate of duty enforced
on the date, the law itself entitles importer to
have the goods cleared upon payment of the duty which
is accepted as correct in the self-assessment
proceedings, following the due presentation of the
bill of entry under Section 46 read with Rule 4(2) of
the 2018 Regulations. In conjunction with the mandate
of charging section contained in Section 12 and
Section 15 of the Customs Act which fixes the date
according to the rate of duty as the date of
presentation of the bill of entries, could it
69
certainly not be said that the law would abhor the
reopening of transactions which have culminated in
proceedings which are otherwise impeccably correct
and regular. By way of re-assessment can matters
concluded in the eye of law be revisited on the basis
of a notification which comes much later in the day?
There is yet another aspect which must also be borne
in mind. The question before us, arises on the basis
of notification which is, indeed, a form of delegated
legislation which is issued under Section 8A of the
Tariff Act. Section 8A of the Tariff Act empowers
the Central Government to increase the rate of import
duty but the power to issue a notification under
Section 8A, is not conferred to increase the rate of
import duty with retrospective effect.
67. We may at once notice the counter argument. By
ensuring full play for the notification for the whole
of the day on which it was issued, the provisions of
Section 15 of the Customs Act in the view of
Additional Solicitor General, are duly honoured. It
is his argument that any other view would involve
rewriting of Section 15, as Section 15 contemplates
70
the rate of duty to be the rate of duty for the day.
There cannot be two rates of duty at a given point of
time. If the rate of duty, on a proper
interpretation of the Notification would hold the
field at all points of time during the whole of
16.02.2019 at which the respondents may have
presented the Bills of Entry in tune with the
prevailing rates of duty which would have been
applicable otherwise, it would not detract from the
power of authority to reassess on the strength of an
instrument like the Notification. What would
logically and inexorably follow, in other words, is
that the rate of duty applicable during the whole of
the day on 16.02.2019 was only the increased rate of
duty. This was, therefore, the correct rate of duty
at which the importers were to pay the duty. There
is no illegality involved in resorting to power
enabling reassessment and recovery of the correct
duty from the respondents. In other words, there is
no retrospectivity involved, runs the argument.
68. There can be no doubt that the principle which
appears to have evolved over a period of time is that
71
generally, the law frowns upon determining a day with
reference to its fractions. Undoubtedly, in the case
of Central Act or a Regulation, the principle is
statutorily incorporated in Section 5(3), that unless
a contrary intention appears, it begins its journey
in the Statute Book from the first point of time past
the stroke of the previous midnight. Section 5(3)
does not apply to the notification which is a form of
delegated legislation, as found hereinbefore.
69. If the contention of the Union of India is
accepted, though the notification is issued late in
the evening, the ‘day’ referred in Section 15 of the
Customs Act would commence from the first moment past
the midnight of 15.02.2019. The diametrically
opposite option would be to exclude the whole of the
day on which the notification was issued and the
third option is that the day would consist of the
hours remaining of the day 16.02.2019 after the time
at which the Notification was issued. In other
words, under the third option, the time of operation
of the notification was 20:46:58 hrs. and continued
till midnight of 16.02.2019. It would indeed
72
constitute a fraction or part of an ordinary day
consisting of twenty-four hours.
70. If the argument of Mr. P.S. Narsimha, learned
Senior Counsel, is accepted, then, it would have
operation from the time at which the Notification is
issued. This is because in answer to a query as to
what would be the position if the Notification had
been issued at 10.00 a.m. on 16.02.2019 and the Bills
of Entry were presented after 10.00 a.m., his
response was, the importers would have to pay the
higher rate of duty under the Notification.
Therefore, his argument appears to be that a
Notification must come into operation with reference
to the point of time of the day when the Notification
was issued.
71. The principle that fractions of the day are
eschewed from consideration, is not a universal
principle which knows no exceptions.
72. Section 48 of the Transfer of Property Act, 1882,
reads as follows:
73
“48. Priority of rights created by
transfer.—Where a person purports to
create by transfer at different times
rights in or over the same immoveable
property, and such rights cannot all exist
or be exercised to their full extent
together, each later created right shall,
in the absence of a special contract or
reservation binding the earlier
transferees, be subject to the rights
previously created.”
73. In an enquiry, as to the priority of title, the
fractions of the day, undoubtedly, will assume
relevance. In fact, the exact time at which a
document is registered, will determine the question
of priority, and consequently, of title itself, to
the property concerned and it is open to parties to
adduce evidence in this regard.
74. Section 47 of the Registration Act, 1908, reads
as follows:
“47. Time from which registered document
operates.—A registered document shall
operate from the time which it would have
commenced to operate if no registration
thereof had been required or made, and not
from the time of its registration.”
74
Here again, the time of the day may become
decisive. The recent decisions of this Court in
regard to insurance contracts appear to accept the
significance of the time of the day. (See para 56 of
this judgment).
75. Section 5(1) of General Clauses Act, 1897 reads
as follows:-
“5. Coming into operation of enactments.—
(1) Where any Central Act is not expressed
to come into operation on a particular
day, then it shall come into operation on
the day on which it receives the assent,—
(a) in the case of a Central Act made
before the commencement of the
Constitution, of the Governor-General, and
(b) in the case of an Act of Parliament,
of the President.”
It must be noticed that law which is made by the
legislature is to be treated differently from
delegated legislation. A law if made by Parliament
including a change in the rate of duty in the
Customs-Tariff Act would involve a process which is
attended by a certain level of publicity. In this
75
regard, the words of Bailhache, J. in Johnson v.
Sargant & Sons56 ; 1917 1 K.B. 101, come to mind:-
“While I agree that the rule is that a
statute takes effect on the earliest
moment of the day on which it is passed
or on which it is declared to come into
operation, there is about statutes a
publicity even before they come into
operation which is absent in the case of
many Orders such as that with which we
are now dealing ; indeed, if certain
Orders are to be effective at all, it is
essential that they should not be known
until they are actually published.”
There is a process and time involved in
Parliament which is unlike what happens in the case
of a delegated legislation of the sort in particular,
projected in these cases, namely, a notification
issued by the executive under Section 8A. It is on
this basis that the law made by the legislature is
taken as known to the public and mere assent of the
President would suffice and the need to make any
delegated legislation known by publication before it
becomes effective is insisted upon. Publication in
the case of delegated legislation is based on a
rationale. On this rationale even the principle
56 1917 1 K.B. 101
76
embedded in Section 5 in regard to the law made by
the legislature cannot be applied to a notification
issued under Section 8A of the Tariff Act.
76. The view taken by Justice Kumaraswami Sastri, in
Re: Court Fees (supra), in the context of the
increase in the Court Fee, effected under a
Notification, which came to the High Court only at
about 05.00 p.m., which was around the time when
Court closed down, was to exclude the operation of
the increased Court Fee qua the suits which were
filed during the course of the day.
77. At the time, when the Madras High Court
considered the question, it may be noticed that the
Constitution of India was not in force. The matter
has not been approached on an analysis as to the
nature of subordinate legislation and the point of
time when a subordinate legislation comes into force.
The concept of State action, satisfying the
requirement of it being fair, as is the mandate of
Article 14, could not have been possibly considered
by the learned Judges of the Madras High Court. Under
77
the Customs Act read with the Tariff Act, as noticed,
the Scheme provides for an importer, wishing to enter
goods for home consumption, to file Bills of Entry,
do self-assessment and pay the duty on the same day.
If all goes well, which means that the selfassessment is in accordance with the existing law,
and the rate of tax is calculated with reference to
the rate of duty as stipulated and the amount of duty
is paid, and if there is any other amount to be paid,
the same is also paid, Section 47 of the Act would
oblige the Officer, unless, of course, the goods are
prohibited goods, to issue an Order permitting
clearing the goods. Though, there is no Order for
clearing the goods in these cases under Section 47,
the said Order is the culmination of the steps to be
undergone by an importer for clearing the goods. Once
the self-assessment is correct and the other
conditions in Section 47 do not militate against the
importer, the goods can be physically cleared, and
having regard to the definition of the “imported
goods”, they cease to be imported goods.
78
78. In the context of the Customs Act, and having
regard to the Scheme, which, in the case of import
duty, consists of filing of Bill of Entry for home
consumption, self-assessment and payment of duty on
the basis of the same and the rate being clearly
fixed with reference to the particular point of time
when the Bill of Entry is presented and there is a
deemed presentation and even a deemed assessment,
which is otherwise in order, and bearing in mind the
principle that Section 8A does not provide power for
increase of rate of duty with retrospective effect,
the Notification must be treated as having coming
into force not before its publication which is at
20:46:58 hrs. on 16.02.2019. This would necessarily
mean that the Notification cannot be used to alter
the rate of duty on the basis of which, in fact,
there was presentation of Bill of Entry several hours
ago, the self-assessment was done and what is more,
the self-assessment was completed under Regulation
4(2) of the 2018 Regulations. There cannot be reassessment. The interpretation based on time of
79
publication is in harmony with a view that accords
respect for vested rights.
TWO INCONSISTENT RATES AT THE SAME POINT OF TIME
79. There is no merit in the submission of the
appellants in this regard. Once it is found that the
notification upon publication would take effect from
the time of its publication then in regard to the
bills of entries which stand presented within the
meaning of Section 46 of the Customs Act read with
4(2) of the 2018 Regulations, earlier to such
publication, the rate of duty in regard to the same
would be only the rate of duty which prevailed at the
time of the deemed presentation under Regulation 4(2)
of the 2018 Regulations.
EFFECT OF THE WORD “OTHERWISE” IN SECTION 17(4) OF
THE CUSTOMS ACT, 1962
80. The expression “otherwise” in Section 17(4), will
not come to the rescue of the appellants, in the
facts of the instant case. While the word “otherwise”
may be capable of taking care of situations which are
not covered by the preceding expressions, viz.,
80
verification, examination, attesting of the goods, it
cannot mean that it will empower the Officer to alter
the rate of duty which is prevalent at the time of
the self-assessment following the due presentation of
the Bill of Entry. If it is otherwise, it will be
open to the Department to reopen cases of concluded
assessments by virtue of the deemed completion of
assessment under Regulation 4(2) without any legal
justification. That would be plainly impermissible
being illegal. This is not a case where the
assessment is assailed on any other ground except by
insisting on a rate of duty which is in applicable.
WHETHER THE CASE LAW RELIED UPON BY THE APPELLANTS
MILITATE AGAINST THE AFORESAID VIEW
81. The question which arose before the Constitution
Bench of this court in M/s. Bharat Surfactnts (P)
Ltd. v. Union of India57 may not assist the
appellants. The case involved a
challenge to Section 15(1)(a) of the customs Act.
This court repelled the challenge. More importantly,
that was a case where the vessel in which the goods
were carried belonging to the petitioners arrived on
57 1989 (4) SCC 21
81
11th July 1981. Berth was not available. By reason of
the same it could not discharge its cargo at Bombay.
This court took the view that what is relevant is the
date on which the Bill of Entry is presented.
Therefore, it cannot be treated as authority for the
proposition canvassed by the appellants. The
decision of this Court in Priyanka Overseas (P) Ltd.
v. Union of India58 also will not assist the
appellant in persuading this Court to answer the
question in favour of the appellant. No doubt, the
court has reiterated the principle in Section 15 of
the Customs Act and the question actually fell for
decision under Section 15 (1)(b) of the Act as it
stood prior to its amendment. Section 15 (1)(b) as
it stood then contemplated the rate of duty
applicable in the case of goods cleared from a
warehouse under Section 68 to be rate on the date on
which the goods were actually removed from the
warehouse. Quite apart from the fact that the said
provision has been amended, we are in this case
concerned with Section 15(1)(a) and what is more
58 1991 Suppl.(1) SCC 102
82
important, the actual question is the impact of the
notification issued under Section 8A and what is the
significance of the word “the date”. In the decision
of this Court in Dhiraj Lal H. Vohra v. Union of
India59, the ship arrived at the port on 2.3.1989 and
inward entry was also given on the same day. The
contention taken by the appellant that the ship had
entered the Indian territorial waters on 20.2.1989
and was ready to discharge the cargo was found
irrelevant for purposes of Section 15(1) read with
Sections 46 and 31 of the Customs Act. This decision
also does not assist the Court in deciding the
question which squarely falls for decision. The
decision of this Court in D.C.M.Ltd. and Another V.
Union of India60 involved a challenge to the validity
of Section 15(1)(b) of the Customs Act. Following
the filing of “Bill of Entry for warehousing” on
24.2.1982, the imported goods were warehoused. The
goods were cleared from the warehouse on 3.3.1982 and
15.4.1982. On the basis of Section 15(1)(b) taking
note of the dates of clearance from the warehouse,
59 1993 Supl. (3) SCC 453
60 1995 suppl. (3)SCC 223
83
the duty was levied. The Court noted that Section
12, the charging section was subject to Section 15
among other sections. An option was given to the
importer to either file a Bill of entry for home
consumption straight away in which case he has to pay
the duty based on the filing of the bill of entry.
In the case of bill of entry for warehousing, the
date of clearance of the goods determined the rate
under section 15(1)(b) as it stood. It does not have
any effect qua the facts of the case before this
Court except that what determines the date of the
rate will be found from Section 15 of the Customs
Act.
82. Coming to the decision of this Court in Raj
Kumar Yadav v. Samir Kumar Mahaseth61, the facts of
the case was that an election petition was presented
on 27.8.2003 after the designated judge had retired
to his chamber at 4.15 p.m.. The last date of
limitation was 27.8.2003. The court inter alia held
as follows:
61 2005 (3) SCC 601
84
“6. The limitation provided by Section
81 of the Act expires on the 45th day
from the date of election. The word
“day” is not defined in the Act. It
shall have to be assigned its ordinary
meaning as understood in law. The word
“day” as per English calendar begins at
midnight and covers a period of 24
hours thereafter, in the absence of
there being anything to the contrary in
the context. (See Ramkisan Onkarmal
Agrawal v. State of Maharashtra [AIR
1994 Bom 87 : 1994 Mah LJ 369] , AIR at
p. 94, Municipal Council of
Cuddalore v. S. Subrahmania Aiyar [16
MLJ 101 : ILR (1906) 29 Mad 326] and P.
Ramanatha Aiyar, The Law Lexicon, pp.
470, 471.) Thus, the election petition
could have been presented up to the
midnight falling between 27-8-2003 and
28-8-2003.”
This Court also found that the High Court should
not have allowed the period of limitation to be
abridged by the rules. This is besides also finding
that the rules were not properly appreciated. It is
to be noted that question involved was the period of
limitation to file the election petition. The last
day was therefore understood in the manner done. The
decision of this Court in Ahmadsahab Abdul Mulla(2)
(Dead) By Proposed LRs. vs. Bibijan and others62 dealt
with the effect of the use of the expression ’date’
62 2009 (5) SCC 462
85
in Article 54 of the schedule to the Limitation Act,
1963. This Court inter alia held as follows:
“9. According to Advanced Law
Lexicon by P. Ramanatha Aiyar, 3rd
Edn., 2005, the word “date” means as
follows:
“Date.—(As a noun) The point of time at
which a transaction or event takes
place; time given or specified; time in
some way ascertained and fixed; in a
deed, that part of the deed or writing
which expresses the day of the month
and year in which it was made, (2 Bl.
Commn. 304; Tomlin). In Bement &
Dougherty v. Trenton Locomotive, etc.,
Co. [32 NJ Law 513] (NJ Law at p. 515)
it is said: ‘The primary signification
of the word date, is not time in the
abstract, nor time taken absolutely
but, as its derivation plainly
indicates, time given or specified time
in some way ascertained and fixed; this
is the sense in which the word is
commonly used. When we speak of the
date of a deed, we do not mean the time
when it was actually executed but the
time of its execution, as given or
stated in the deed itself.’
‘Where a deed bears no date, or an
impossible date, and in the deed
reference is made to the “date”, that
word must be construed “delivery”; but
if the deed bears a sensible date, the
word “date”, occurring in the deed,
means the day of the date, and not that
of the delivery’ (Elph. 123,
citing Styles v. Wardle [(1825) 4 B & C
908 : 107 ER 1297] ; …).
86
‘Date’, though sometimes used as the
shortened form of ‘day of the date’, is
not its synonym; but means the
particular time on which an instrument
is given, executed, or delivered
(Howard case [2 Salkeld 625: 91 ER 528:
1 Ld Raym 480: 91 ER
1219] ; Armitt v. Breame [(1704) 2 Ld
Raym 1076: 92 ER 213]
and Pewtress v. Annan [(1841) 9 Dowl
828] , Dowl at pp. 834-35). …
‘The word “date” is much more commonly
descriptive of a day than of any
smaller division of time’ (per
Stormonth Darling,
L.O., Simpson v. Marshall [37 Sc LR
316]
Date means day, so that where a cover
note providing for temporary insurance
of a motor car expires ‘15 days after
date of commencement’ it runs for the
full 15 days after the day on which it
was to commence
(Cartwright v. MacCormack [(1963) 1 WLR
18 : (1963) 1 All ER 11 (CA)] ).”
XXX XXX XXX XXX
11. The inevitable conclusion is that
the expression “date fixed for the
performance” is a crystallised notion.
This is clear from the fact that the
second part “time from which period
begins to run” refers to a case where
no such date is fixed. To put it
differently, when date is fixed it
means that there is a definite date
fixed for doing a particular act. Even
in the second part the stress is on
“when the plaintiff has notice that
performance is refused”. Here again,
there is a definite point of time, when
87
the plaintiff notices the refusal. In
that sense both the parts refer to
definite dates. So, there is no
question of finding out an intention
from other circumstances.
12. Whether the date was fixed or not
the plaintiff had notice that
performance is
refused and the date thereof are to be
established with reference to materials
and evidence to be brought on record.
The expression “date” used in Article
54 of the Schedule to the Act
definitely is suggestive of a specified
date in the calendar. We answer the
reference accordingly. The matter shall
now be placed before the Division Bench
for deciding the issue on merits.”
The decision may not assist the appellants in
the nature of the question which falls for decision
in the appeals before this Court.
83. The decision of this Court reported in Pashupati
Nath Singh vs. Harihar Prasad Singh;63 relied upon by
the appellant arose under the Representation of
People Act, 1951. The petitioner therein was a
candidate for the election to the Bihar Legislative
Assembly. He filed his nomination paper on
16.1.1967. His nomination paper was rejected.
Petitioner challenged the election of the returned
63 AIR 1968 SC 1064
88
candidate, on the ground of illegal rejection of his
nomination paper. Section 36 of the Act provides for
scrutiny of nomination paper. The objection taken
which resulted in the nomination of the petitioner
being rejected was that he had not made and
subscribed the requisite oath or affirmation in the
form which is prescribed. Section 36
uses the words ‘the date fixed for scrutiny’ It is
interpreting the said words in Section 36 (2) (a)
that the Court held as follows:
“13. It seems to us that the expression
“on the date fixed for scrutiny” in
Section 36(2)(a) means “on the whole of
the day on which the scrutiny of
nomination has to take place”. In other
words, the qualification must exist
from the earliest moment of the day of
scrutiny. It will be noticed that on
this date the Returning Officer has to
decide the objections and the
objections have to be made by the other
candidates after examining the
nomination papers and in the light of
Section 36(2) of the Act and other
provisions. On the date of the scrutiny
the other candidates should be in a
position to raise all possible
objections before the scrutiny of a
particular nomination paper starts. In
a particular case, an objection may be
taken to the form of the oath; the form
of the oath may have been modified or
the oath may not have been sworn before
89
the person authorised in this behalf by
the Election Commission. It is not
necessary under Article 173 that the
person authorised by the Election
Commission should be the Returning
Officer.
14. In Paynter v. James [(1866-67) LR 2
CP 348] , Bovil, C.J., quoted, with
approval, the passage from the judgment
of Tindal, C.J.,
in Regy v. Humphery [10 Ad & E 335] ,
in which the following occurs:
“… we hold it therefore to be
unnecessary to refer to instances of
the legal meaning of the word ‘upon’
which, in different cases, may
undoubtedly either mean before the act
done to which it relates,
or simultaneously with the act done,
or after the act done, according as
reason and good sense require the
interpretation, with reference to the
context and the subject-matter of the
enactment.”
15. Bovill, C.J., observed that “that
is a very clear statement of the
various meaning of the word ‘on’ or
‘upon’.”
16. In this connection it must also be
borne in mind that law disregards, as
far as possible, fractions of the day.
It would lead to great confusion if it
were held that a candidate would be
entitled to qualify for being chosen to
fill a seat till the very end of the
date fixed for scrutiny of nominations.
If the learned Counsel for the
petitioner is right, the candidate
could ask the Returning Officer to wait
till 11.55p.m. on the date fixed for
90
the scrutiny to enable him to take the
oath.”
Clearly the context and the purpose of the
statute guided the court in holding that the law
disregards fractions and it must be noted that even
then in the said case it was laid down that the
fractions of the day are to be disregarded as far as
possible.
84. The decision of this Court on Vikram Singh alias
Vicky and Another v. Union of India and Others64 is
relied upon to contend that the presumption runs that
the legislature is well aware of the circumstances
and the effect of the words that have been employed
by it. In other words, the contention appears to be
that since the word ‘the date’ is used in Section 15,
it must be given full effect. As far as the judgment
of this Court in The Government of Andhra Pradesh and
Anotheer v. Hindustan Machine Tools Ltd.65 is
concerned, and the purpose for which it is relied
upon, the decision appears to be inapposite in the
facts. The contention taken is that it is competent
64 2015 (9) SCC 502
65 1975 (2) SCC 274
91
for the legislature to make law retrospectively and
as the rate of duty is to be determined as the rate
in force on the day
Section 15 is determinative. It is one thing to say
that the legislature may have the power to make a law
with retrospective effect subject to limitations
imposed by the Constitution and quite another to
contend that delegated legislation would carry
retrospective effect irrespective of power to make
such a law conferred by the parent enactment on the
delegate. More importantly the scheme of the Customs
Act and the Tariff Act and the Regulation 4(2) of the
2018 Regulations rule out the tenability of applying
the notification in the manner sought by the
appellants.
85. Reliance placed on the judgments Video
Electronics Pvt. Ltds and Another vs. State of Punjab
and Another;66
, Tamil Nadu Electricity Board and
Another v. Status Spinning Mills Limited and
Another;67 of this Court, taking the view that the
Schedule to an act is a part of the act and therefore
66 1990(3)SCC 87
67 2008(7) SCC 353
92
an amendment to the Schedule by virtue of such a
notification is an amendment to the Act itself and
therefore, the notification issued under Section 8A
of the Tariff Act partakes the character of
legislation, is clearly untenable, if it is intended
to convey that the notification issued under Section
8A of the Tariff Act is made by the legislature
itself. By its very nature, delegated legislation is
legislative in character but if it is to be a Central
Act within the meaning of Section 5 of General
Clauses Act, it must be made by the legislature.
Delegated legislation which is called administrative
legislation in England, is exercise of legislative
power by the executive. It is to be further noticed
the fact that the notification issued under Section
8A is in the exercise of its legislative power or
that it may have to be read in the same manner as if
it is a part of the Act, will not detract the Court
from ascertaining as to who is the author of the
exercise of the legislative power, namely, whether it
is an exercise of power by the legislature or by its
delegate. Upon answer to the question, namely, that
93
the author of the legislative effort is the
executive, the question would necessarily arise as to
whether there is publication. In the scheme of the
Customs Act, the Tariff Act and the 2018 Regulations,
the time at which the notification under Section 8A
is published would indeed have relevance as already
found.
86. In this view of the matter, the Appeals are found
to be without merit and the same will stand
dismissed.
…………………………………J.
[K. M. JOSEPH]
NEW DELHI:
DATED; SEPTEMBER 23, 2020
94
