Brief Details:

• Relevant Citation: 1986 AIR 515
• Decided on: 6^th December, 1984
• Court: Supreme Court of India
• Judge Bench: Honorable Justice V.C. Daga and J.P. Devadhar

Facts of the Case:

In this case, the petitioners were companies, employees and shareholders who were engaged in the publication of newspapers. Initially, the newsprint enjoyed the benefit of not being covered under custom duty. But the Government of India, issued a notification under the Customs Act, 1962[1]with effect from 1^st March, 1981. The petitioner challenged the imposed duty applied on it under the Customs Tariff Act, 1975[2]and the auxiliary duty under the Finance Act, 1981. The petitioners argued that by imposing such duty on the newsprint, it would affect the price of the newspaper and its circulation and which infringed the freedom of speech and expression granted under Article 19(1)(a)[3]and freedom to practice any trade or occupation granted under Article 19(1)(g)[4]. It was also argued that dividing the newspaper into small, medium and large newspapers would be ultra-vires to Article 14[5]of the Indian Constitution.

The Government of India argued that the cost which was borne by the newspapers and the positions of foreign exchange reserves were not relevant considerations. The public interest involved in taxation was to increase the revenue of the government. The government also asserted that the exemption granted to newsprint was not justified and therefore could be removed by the government.

Issue Raised:

1. Whether it comes under the ambit of restrictions provided in Article 19(2)[6]?
2. Whether Article 14 was discriminatory in the classification of newspapers for levying customs duty?
3. Whether the Fundamental Rights given under Article 19(1) and (g) are different from that of the rights given by the first amendment to the American constitution?
4. Whether to strike down the notification under Section 25 of the Customs Act, 1962 as it is in conflict with the Fundamental Rights?
5. Whether the reasonable interference was justified under Article 19(2) in the name of serving the public interest?
6. Whether it was the duty of the State to encourage education of masses through the press under Article 41[7]?
7. Whether tax on knowledge, people’s right to know the imposition of tax government to be more cautious?

Judgement:

The Supreme Court observed that the government was free to impose taxes which affects the publication of newspapers as it should be treated as an industry and be subject to taxes. The newspapers can be divided into small, medium and large only if it was majorly based on the economic considerations if there is a reasonable nexus with the respect to the objective of the taxation and free from any kind of arbitrariness. The power of taxing should not contravene with the freedom of speech and expression granted under Article 19(1)(a) of the Indian Constitution and the limitation on flexibility should also be covered within the reasonable limits.

Article 19(2) of the Indian Constitution defines grounds of reasonable restrictions and public interest is one of the grounds. The Supreme Court outlined two basic rules:

1. Newspapers also have the right to be benefited from the government services as the other industries, given that they also contribute some amount of money to the Government of India through taxes.
2. The tax burden should not be excessive.

The Supreme Court observed that neither the petitioners were able to prove excessive tax burden nor the Government of India were able to counter it. The court instructed the Government of India to re-examine the taxation policy by evaluating whether it constituted an excessive burden on the newspaper. The government was of the view that such a consideration was irrelevant. Therefore, they had to revise the notification by taking this factor into consideration.

[1] https://legislative.gov.in/sites/default/files/A1962-52.pdf (Last Visited on 5th August, 2021 at 9:15 AM)

[2] https://www.cbic.gov.in/resources/htdocs-cbec/customs/cs-act/THE%20CUSTOMS%20TARIFF%20ACT%20amended%20upto%20may,%202017%20by%20Act%2018%20of%202017.pdf (Last Visited on 5th August, 2021 at 10:15 AM)

[3] https://indiankanoon.org/doc/1142233/ (Last Visited on 5th August, 2021 at 11:35 AM)

[4] https://indiankanoon.org/doc/1142233/ (Last Visited on 5th August, 2021 at 12:02 PM)

[5] https://indiankanoon.org/doc/367586/ (Last Visited on 5th August, 2021 at 12:30 PM)

[6] https://indiankanoon.org/doc/493243/ (Last Visited on 5th August, 2021 at 1:15 PM)

[7] https://indiankanoon.org/doc/1975922/ (Last Visited on 5th August, 2021 at 1:40 PM)

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