VENKATARAMIAH - (1.) THE majority of petitioners in these petitions filed under Art. 32 of the Constitution are certain companies, their shareholders and their employees engaged in the business of editing, printing and publishing newspapers, periodicals, magazines etc. Some of them are trust or other kinds of establishments carrying on the same kind of business. THEy consume in the course of their activity large quantities of newsprint and it is stated that 60% of the expenditure involved in the production of a newspaper is utilised for buying newsprint, a substantial part of which is imported from abroad. THEy challenge in these petitions the validity of the imposition of import. duty on newsprint imported from abroad under S. 12 of the Customs Act, 1962 (Act 52 of 1962) read with S. 2 and Heading No. 48.01/21 Subheading No. (2) in the First Schedule to the Customs Tariff Act, 1975 (Act 51 of 1975) and the levy of auxiliary duty under the Finance Act, 1981 on newsprint as modified by notifications issued under S. 25 of the Customs Act, 1962 with effect from 1/03/1981.
(2.) THE first set of writ petitions challenging the above levy was filed in May, 1981. At that time under the Customs Act, 1962 read with the Customs Tariff Act, 1975 customs duty of 40% ad valorem was payable on newsprint. Under the Finance Act, 1981 an auxiliary duty of 30% ad valorem was payable in addition to the customs duty. But by notifications issued under S. 25 of the Customs Act, 1962 the customs duty had been reduced to 10% ad valorem and auxiliary duty had been reduced to 5% ad valorem in the case of newsprint used for printing newspapers, books and periodicals. During the pendency of these petitions while the Customs Tariff Act, 1975 was amended levying 40% ad valorem plus Rs. 1,000.00 per MT as customs duty on newsprint, the auxiliary duty payable on all goods subject to customs duty was increased to 50% ad valorem. But by reason of notifications issued under S. 25 of the Customs Act, 1962 duty at a flat rate of Rs. 550.00 per MT and auxiliary duty of Rs. 275.00 per MT are now being levied on newsprint i.e. in all Rs. 825.00 per MT is now being levied. The petitioners inter alia contend that the imposition of the import duty has the direct effect of crippling the freedom of speech and expression guaranteed by the Constitution as it has led to the increase in the price of newspapers and the inevitable consequence of reduction of their circulation. It is urged by them that with the growth of population and literacy in. the country every newspaper is expected to register an automatic growth of at least 5% in its circulation every year but this growth is directly impeded by the increase in the price of newspapers. It is further urged that the method adopted by the Customs Act, 1962 and the Customs Tariff Act, 1975 in determining the rate of import duty has exposed the newspaper publishers to Executive interference. The petitioners contend that there was no need to impose customs duty on newsprint which had enjoyed total exemption from its payment till 1/03/1981, as the foreign exchange position was quite comfortable. Under the scheme in force, the State Trading Corporation of India sells newsprint to small newspapers with a circulation of less than 15,000 at a price which does not include any import duty, to medium newspapers with a circulation between 15,000 and 50,000 at a price which includes 5% ad valorem duty (now Rs. 275.00 per MT) and to big newspapers having a circulation of. over 50,000 at a price which includes the levy of 15% ad valorem duty (now Rs. 825.00 per MT). It is stated that the classification of newspapers into big, medium and small newspapers is irrational as the purchases on high seas are sometimes effected by a publisher owning many newspapers which may belong to different classes. The petitioners state that the enormous increase in the price of newsprint subsequent to 1/03/1981 and the inflationary economic, conditions which have led to higher cost of production have made it impossible for the industry to bear the duty any longer. Since the capacity to bear the duty is an essential element in determining the reasonableness of the levy, it is urged, that the continuance of the levy is violative of Art. 19(1)(a) and Art. 19(1)(g) of the Constitution. It is suggested that the imposition of the levy on large newspapers by the Executive is done with a view to stifling circulation of newspapers which are highly critical of the performance of the administration. Incidentally the petitioners have contended that the classification of newspapers into small, medium and big for purposes of levy of import duty is violative of Art. 14 of the Constitution. The petitioners have appended to their petitions a number of annexures in support of their pleas.
(3.) ON behalf of the Union Government a counter-affidavit is filed. The deponent of the counter-affidavit is R. S. Sidhu, Under Secretary to the Government of India, Ministry of Finance, Department of Revenue. In paragraph 5 of the counter-affidavit it is claimed that the Government had levied the duty in the public interest to augment the revenue of the Government. It is stated that when exemption is given from the customs duty the Executive has to satisfy itself that there is some other corresponding public interest justifying such exemption and that in the absence of any such public interest the Executive has no power to exempt and that it has to carry out the mandate of Parliament which has fixed the rate of duty by the Customs Tariff Act, 1975. It is also claimed that the classification of newspapers for purposes of granting exemption is done in the public interest having regard to the relevant considerations. It is denied that the levy suffers from any mala fides. It is pleaded that since every section of the society has to bear its due share of the economic burden of the State, levy of customs duty on newsprint cannot be considered to be violative of Art. 19(1)(a) of the Constitution. But regarding the plea of the petitioners that the burden of taxation is excessive the counter-affidavit states that the said fact is irrelevant to the levy of import duty on newsprint. In reply to the allegation of the petitioners that there was no valid reason for imposing the duty on the foreign exchange position was quite comfortable, the Union Government has stated that the fact that the foreign exchange position was comfortable was no bar to the imposition of import duty. It is further pleaded that since the duty imposed is an indirect tax which would be borne by the purchaser of newspaper, the petitioners cannot feel aggrieved by it. II A Brief History of the levy of Customs Duty on Newsprint. In order to appreciate the various contentions of the parties it is necessary to set out briefly the history of the levy of customs duty on newsprint in India.;