UNION OF INDIA & ORS. versus EXIDE INDUSTRIES LIMITED & ANR.

Citation: [2020] 7 S.C.R. 1 · Decided: 24-04-2020 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Appeal(s) allowed

Cited by 5 judgment(s) · cites 10 · see the full citation network in Lexace

Judgment (excerpt)

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[2020] 7 S.C.R. 1
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UNION OF INDIA & ORS.
v.
EXIDE INDUSTRIES LIMITED & ANR.
(Civil Appeal No. 3545 of 2009)
APRIL 24, 2020
[A. M. KHANWILKAR, HEMANT GUPTA AND
DINESH MAHESHWARI, JJ.]
Income Tax Act, 1961:
s. 43B(f) (as inserted by Finance Act, 2001) – Liability under
leave encashment scheme – Subjected to exception u/s. 43B by
inserting Clause (f) to s. 43B – Constitutional validity of – Held:
s.43B is not an embargo upon the autonomy of the assessee in
adopting a particular method of accounting, nor deprives the
assessee of any lawful deduction – It merely operates as an
additional condition for the availment of deduction qua the specified
head – The only effect of insertion of clause (f) is to regulate the
stated deduction by putting it in a special provision – The assessee
has neither made a case of non-existence of competence nor
demonstrated any constitutional infirmity in Clause (f) – s.43B (f)
is held to be constitutionally valid and operative for all purposes.
s.145 – Method of accounting – Is a prerogative falling in
the domain of the assessee – However, the autonomy of assessee in
adopting a system of accounting is controlled by the regulation
notified by the Central Government.
Judicial Review:
Legislative enactment – Constitutionality – Determination of
– Held: In exercise of judicial review, the Court starts with a basic
presumption in favour of constitutionality – While testing the
constitutional validity of a provision, the Court is to inspect the
existence of enacting power, and once such power is found to be
present, the next examination is to ascertain whether the enacted
provision impinges upon any right enshrined in Part III of the
Constitution – While adjudicating constitutionality of a duly enacted
provision, Court cannot venture into hypothetical spheres –
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SUPREME COURT REPORTS
[2020] 7 S.C.R.
Unfounded limitation cannot be read into the process of judicial
review – The process of testing constitutional validity is not to sneak
into the prudence or proprieties of the legislature in enacting the
impugned provision, nor to examine the culpable conduct of the
legislature as an appellate authority over the legislature – The role
of the Court is restricted to the finding of a constitutional infirmity
in the provision, as it is placed before the Court.
Fiscal statutes – Judicial review of – The approach of
Constitutional Courts ought to be different while dealing with fiscal
statutes – The general principles of exclusion and inclusion do not
apply to taxing statutes with the same vigour unless the law reeks of
constitutional infirmities – A larger discretion is given to the
legislature in taxing statutes than in other spheres.
Legislation:
A law when declared to be invalid, by Court, legislature is
free to diagnose such law and alter the invalid elements thereof –
In doing so, the legislature is not declaring the opinion of the Court
to be invalid.
Interpretation of Statutes:
Non-obstante clause – Interpretation of – Held: A non-
obstante clause assumes an over-riding character against any other
provision of general application.
Objects and reasons of the statute – As an aid to interpretation
of statute – Nature of – When the Court examines the validity of a
provision, its primary concern is literal text of the provision – This
constitutes first test of interpretation – Interpretation of statute
cannot be unrelated to the nature of the statute – Objects and reasons
of the Statute are the external aids to the interpretation and can be
looked into for a limited purpose in the process of interpretation,
especially when the Court is sitting over the interpretation of an
ambiguous provision – The Court is not bound by such external
elements – Therefore, the presence or absence of objects and reasons
have no impact upon the constitutional validity of a provision as
long as the literal features of a provision enable the Court to
comprehend its true meaning with sufficient clarity.
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Allowing the appeal, the Court
HELD: 1.1 While testing the constitutional validity of a
provision, the Court is to inspect the existence of enacting power
and once such power is found to be present, the next examination
is to ascertain whether the enacted provision impinges upon any
right enshrined in Part III of the Constitution. Broadly speaking,
the process of examining validity of a duly enacted provision, as
envisaged under Article 13 of the Constitution, is premised on
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