UNION OF INDIA AND ORS. versus M/S NITDIP TEXTILE PROCESSORS PVT. LTD. AND ANOTHER

Citation: [2011] 13 S.C.R. 26 · Decided: 03-11-2011 · Supreme Court of India · Bench: H.L. DATTU · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
[2011] 13 (ADDL.) S.C.R. 26 
UNION OF INDIA AND ORS. 
v. 
M/S NITDIP TEXTILE PROCESSORS PVT. LTD. AND 
ANOTHER 
(Civil Appeal No. 2960 of 2006) 
NOVEMBER 03, 2011. 
[H.L. DATTU AND CHANDRAMAULI KR. PRASAO,JJ.] 
FINANCE (NO. 2) ACT, 1998: 
ss. 87 (m) (ii)(a) and (b) - Tax arrears' - Connotation of 
- Application of Kar Vivad Samadhana Scheme, 1998 to 'tax 
arrears' in respect of the amount of excise duty, interest, fine 
or penalty determined as due or payable as on 31.3.1998, or 
D which constituted the subject matter of the demand notice or 
a show cause notice issued on or before 31.3.1998, but 
remaining unpaid as on the date of making a declaration u/s 
88 - High Court declared s. 87(m)(ii)(;;) as violative of Article 
14 of the Constitution in so far as it seeks to deny the benefit 
E of -the Scheme to those who were in arrears of duties etc. as 
on 31. 3. 1998, but to whom notices were issued after 
31.3.1998, and struck down the expression "on or before the 
31st day of March 1998" - HELD: The classification made by 
the legislature appears to be reasonable for the reason that 
F 
the legislature has grouped two categories of assesses, 
namely, the assessees whose dues are quantified but not 
paid and the assessees who are issued with the Demand and 
Show Cause Notice on or before a particular date - The 
Legislature has not extended this benefit to those persons who 
do not fall under this category or group -
The distinction so 
G made cannot be said to be arbitrary or illogical which has no 
nexus with the purpose of legislation - The findings and the 
conclusion reached by the High Court cannot be sustained 
- The impugned common judgment and order is set aside -
H 
26 
UNION OF INDIA AND ORS. v. NITDIP TEXTILE 
27 
PROCESSORS PVT. LTD. 
Central Excise Act, 1944 - s. 11 A - Constitution of India, 1950 A 
- Article 14 - Interpretation of Statutes - Legal fiction. 
CONSTITUTION OF IND/A, 1950: 
Article 14 -
Classification in taxation -
HELD: In 
taxation, there is a broader power of classification than in 8 
some other exercises of legislation' - When the wisdom of the 
legislation while making classification is questioned, the role 
of the courts is very much limited - It is not re viewable by the 
courts unless palpably arbitrary - It is not the concern of the 
courts whether the classification is the wisest or the best that C 
could be made - However, a discriminatory tax cannot be 
sustained if the classification is wholly illusory -
Discrimination resulting from fortuitous circumstances arising 
out of particular situations, in which some of the tax payers 
find themselves, is not hit by Article 14 if the legislation, as D 
such, is of general application and does not single them out 
for harsh treatment - In the instant case, keeping in view the 
Scheme, the legislation is based on a reasonable 
classification - Finance (No. 2) Act, 1998 - ss.87(m)(ii)(b) 
and 88. - Cut-off date - Kar Vivad Samadhana Scheme, 
E 
1998. 
TAXATION: 
Kar Vivad Samadhana Scheme, 1998 - Nature and 
scope of - Held: The Scheme is a step towards the settlement 
F 
of outstanding disputed tax liability - The Scheme is a 
complete Code in itself and exhaustive of the matter dealt with 
therein - It is statutory in nature and character -
While 
implementing the Scheme, liberal construction may be given 
but it cannot be extended beyond conditions prescribed in the G 
statutory scheme - Therefore, the courts must construe the 
provisions of the Scheme with reference to the7anguag~ used 
therein and ascertain what their true scope is by applying the 
normal rule of construction - Further, the object ,JJf the 
H 
28 
SUPREME COURT REPORTS [2011] 13 (ADDL:) S.C.R. 
A Scheme and its application to Customs and Central Excise 
cases involving arrears of taxes has been explained in detail 
by the Trade Notice No. 7 4198 dated 17. 8. 1998 - It is a settled 
law that the Trade Notice, even if it is issued by the Revenue 
Department of any one State, is binding on all the other 
B departments with equal force all over the country - However, 
the Trade Notice, as such, is not binding on the courts but is 
certainly binding on the assessee and can be contested by 
him - Interpretation of Statute - Finance (N0.2) Act, 1998 -
ss. 87(m) (ii) and 88 - Trade Notice No. 74198 dated 
c 17.8.1998 issued by the Commissioner of Central Excise and 
Customs, Ahmedabad-1 - Practice and Procedure: 
The respondents in C. A. No. 2960 of 2006, engaged

Excerpt shown. Read the full judgment & AI analysis in Lexace.