ORIENT WEAVING MILLS (P) LTD. versus THE UNION OF INDIA

Citation: [1962] SUPP. 3 S.C.R. 481 · Decided: 28-02-1962 · Supreme Court of India · Bench: BHUVNESHWAR PRASAD SINHA · Disposal: Dismissed

Judgment (excerpt)

3 S.C.R. 
SUPREME COURT REPORTS 
481 
conveying the property when a mere loan was inten-
ded on the security of the property. It is unfor-
tunate, having regard to the provision of s. 58(c) of 
the Transfer of Property Act, that the plaintiff is 
debarred from proving that the transaction was 
in the nature of a mortgage. In the circumstances 
we direct that there will be no order as to costs 
throughout. 
Appe,al allowed. 
ORIENT WEAVING MILLd (P) LTD. 
v. 
THE UNION OF INDIA 
(B. P. SINHA, c. J., J. L. KAPUR, M. HIDAYATULLAH, 
J. c. SHAH and J. R. MUDHOLKAR, JJ.) 
Central Excise-Power of Central Government to grant 
exemption-Rule-Notification granting exemption to co-operah'.ve 
society-Constitutional mlidity-Central Excises and Salt Act, 
1944 (1of1944), ss. 37(2), cl. (xvii)-Central Excise Rules, 
1944, r. 8(1)-Constitution of India, Arts, 14, 19(1)(/) and 
(g), 43. 
By r. 8 (1) of the Central Excise Rules, 1944, framed by 
the Central Government in exercise of its Power under s. 37(2) 
cl. xvii of the Central Excises and Salt Act, 1944, "the 
Central Government may from time to time, by notification 
in the Official Gazette, exempt subject to such conditions as 
may be specified in the notification any excisable goods for 
the whole or any part of the duty leviable on such go'.>ds." 
By two notifications issued under the said rule the Central 
Government exempted cotton· fabrics 
produced on po,ver 
looms owned Dy co-operative societies ti'om the duty leviable 
thereon subject to certain conditions. 
Under s 38 of the Act · 
the said rule and notifications on publication in the Official 
Gazette had effect as if enacted in the Act. The petitioners, 
apprehending loss of business in competition with the fifth 
respondent, a co-operative society, chal1enged the rule and the 
notifications on the grounds( I) that the power of exemption 
conferred on the Union Government violated Arts. 14, 19(l)(fl 
and (g} of the Constitution and (2) that assuming that it did 
196! 
K. Simrathmull 
'. 
S. Nanjalingioh 
Gowder 
Shah J. 
1962 
Ftb~uary 38. 
llMI 
Orittil W talting 
Mills (P) Lld. 
y, 
1 lu Union of lndi4 
482 SUPREME COURT REPoRTs (1962] SUPP· 
not do so, the exemption granted by the notifications \Vas in 
excess of the power granted by r. 8(1). 
field, that the contentions were \Vithout substance a1.d 
must fail. 
Rule 8 of the Rules was as much a part of the Act as 
s. 3712) cl. (xvii~ and it was always open to the State to tax 
certain classes 
of goods and not to tax others. 
It wa5 the 
function of the State to .determine what hind of taxes should 
be levied and in what manner. 
R•gard being had to the 
directive principles contained in Art. 43 of the Constitution, 
there was no doubt that the State in differentiating between 
goods produced in big establishments and similar gocds pro· 
duccd by small power·loom weavers iu a co-oprrative societ', 
had made a classification 
that was constitutiona!Jy valid. 
There could, therefore, be no excessive dr.kgation of the power 
to grant exemption. 
It \\•as fallacious to contend that exemption, if at all, 
had to be granted in respect of any particular specified variety 
of 'cotton fabrics', an<l not with reference to persons producing 
them. 
The tax was on the production of the goods but was 
payable by pcnons producing them. 
The exemption granted 
was, therefore, \vithin the ternls of the notifications. 
ORIGINAL JuruSDlCTION : Petition Ko. llO of 
of 1961. 
Petition under Art. 32 of the Constitution of 
India. for enforcement of Fundamonta.I Rights. 
A. V. Viswanatha Sastri and R. Gopalakrishnan, 
for the Petitioners. 
K. N. Rajagopal SaBtri,P. K. Ghatterje.e and P. D. 
Menan, for the respondents. 
1962. February 28. 
The Judgment of the 
Court wa.s delivered by 
SINHA, C. J.- By this petition, under Art. 32 
of the Constitution, tho petitioners cha.Henge the 
constitutionality of certain provisions of the Cen-
tral Excises and Sa.It Act (l of 1944) which will be 
referred in the course of this judgment as the Act, 
read with r.8 of the Central Excise Rules, 1944 
( 1!}60) and the notifioations thereunder, to be here-
inafter set out. The first petitioner is the Orient 
3 s.c.R. SUPREME COURT REPORTS 
48:! 
Weaving Mills Private Ltd. (which will be termed 
hereinafter as the Company), and the second peti-
tioner is a director of the Company. The respon-
dents .to the petition are (1) Union of India, through 
the Secretary to Government of India, Ministry 
of Fina

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