ORDER
1. The petitioner seeks the quashing of the order of second respondent as affirmed by respondents 2 and 3 and seeks further a writ of mandamus directing them to grant refund sought by the petitioner earlier from them.
2. The petitioner carries on business of manufacturing and sale of Poly Vinyl Chloride Footwear having the manufacturing unit at Rajajinagar, Bangalore. For this purpose the petitioner requires poly vinyl chloride resin. The petitioner used to import the same from foreign countries such as Singapore, Korea and U.S.A.
3. By a Notification dated 15th March, 1979 the Government of India exempted the whole of the basic duty on the import of this material. This Notification was in force upto 31st August, 1979. By another Notification of the said date the exemption was extended upto 31st March, 1980, which was again extended upto 31st March, 1981. Thus, according to the petitioner the whole of the import duty on the goods in question was exempted upto 31st March, 1981. During this period the petitioner entered into a contract with an American Company on 9th July, 1980 as well as on 16th July, 1980 for supply of the said goods to the petitioner, for which purpose the petitioner opened letter of credit through State Bank of India, Rajajinagar, Bangalore. The goods arrived in India during November and December, 1980. The Customs Department demanded duty thereon purporting to relied upon a Notification dated 16th October, 1980 (Annexure D). As per this Notification the earlier Notifications were superseded, on the Central Government being satisfied that it was necessary in the public interest so to do and exempted the goods in question when imported into India from so much of the duty of customs as in excess of 40% ad valorem. The result is the import duty payable was 60% of the prescribed rate. The petitioner paid the same under protest and cleared the goods. Thereafter, the petitioner applied for refund of the two sums of Rs. 92,617.31 and Rs. 99,570.32. The refund applications were rejected and have thus become the subject-matter of this Writ Petition.
4. The contention of the petitioner is that the petitioner entered into the contract with the foreign Company at a time when the exemption Notifications were in force and the petitioner entered into such a agreement in view of the representation held out that the duties were exempted under those Notifications and therefore according to the petitioner the respondents were estopped from levying any duty even though the goods actually reached India after those Notifications were superseded. According to the petitioner, the earlier three Notifications exempting import duty governed the importation of the goods in question because the petitioner had acted upon the said Notifications while entering into the contract with the foreign seller. The doctrine of promissory estoppel is thus sought to be extended to the importation in question and the levy of duty thereon.
5. The learned Senior Standing Counsel for Central Government raised a preliminary objection about the maintainability of the Writ Petition before this Court. It was pointed out by the learned Counsel that the importation of the goods and the levy of the duty in question were at Bombay and the petitioner filed the applications for refund at Bombay and the entire cause of action for the Writ Petition arose outside Karnataka and therefore this Court's writ jurisdiction cannot be invoked. The learned Counsel also submitted, on merits of the case and contended that the power of exemption traced to [SECTION] of the [ACT] is not an executive power, but a legislative power and therefore the doctrine of estoppel was not applicable; there cannot be any estoppel against the exercise of a legislative power.
6. Two questions therefore arise for consideration :
(1) Whether this Court has jurisdiction to entertain this Writ Petition ?
(2) Whether the petitioner is entitled to the refund of the import duty paid and whether the doctrine of promissory estoppel could be invoked by the petitioner in support of the claim ?
Regarding Point No. 1 :
7. Petitioner is carrying on its business in Karnataka. The goods were imported at Bombay. Customs duty was levied at Bombay; petitioner questioned it by seeking its refund by approaching the authority at Bombay, the statutory appeals resorted to by the petitioner were also outside Karnataka. In these circumstances, the question to be considered is, whether any part of the cause of action of file the Writ Petition arose in Karnataka.
8. "Cause of action" means every fact which, if traversed, it would be necessary for the petitioner to prove in order to support its claim for the relief; it is a bundle of essential facts and any one of the essential facts, if located within the State, High Court's jurisdiction may be invoked. But, the existence of the petitioner as a legal person and that the petitioner is carrying on its activity within the State, by themselves, are not part of this bundle of facts.
9. [SECTION] of the [ACT] is clarificatory in nature. Even though the respondents seat of power or residence is outside the State, still a High Court may issue the writs against such a respondent, if any part of the cause of action arises within the said High Court's territorial jurisdiction. This clarification was necessitated by the decision of Supreme Court in [PRECEDENT] , wherein it was held that seat of Election Commissioner being outside Madras State, Madras High Court could not issue any writ to the Election Commissioner, even though, the cause for the action arose in Madras State.
10. [SECTION] in no way enlarges the High Court's jurisdiction to issue the writs to the Central Government and its departments, solely because, the Central Government's presence can be traced throughout India. The inaction or the action complained of against the Central Government and its departments should have a reasonable nexus, within the High Court's territorial jurisdiction, to the cause pleaded by the petitioner, to entitle the petitioner to move the particular High Court.
11. A few decisions would highlight the principle.
In [PRECEDENT], petitioner's premises were searched and certain seizures effected at Bombay. Petitioner challenged this, along with the vires of [SECTION] of the [ACT] before the Delhi High Court. The Division Bench of Delhi High Court held that the writ petition was not maintainable before it, even though, Central Government was a party to the Writ Petition and its seat is in Delhi.
The facts in [PRECEDENT] are quite relevant to the instant case. Certain "goods handling contracts" were the cause for the writ petitions filed in Gujarat High Court. One of the contracts was referred as Bharatpur contract, which was in respect of an area outside the State of Gujarat; the contract was awarded by the offices at Bombay and contract was to be performed in Bharatpur within Rajasthan State. Petitioners contended that their offices were in Gujarat, from where tenders could have been submitted, and therefore the writ petitions pertaining to the contract can be filed in Gujarat High Court. This plea was rejected by Justice [ENTITY] at page 101 :
"Merely because the petitioners have their offices within the State of Gujarat wherefrom they could have submitted tenders if the Railway Administration had resorted to the open tender system, it cannot be validly contended that that part of the cause of action has arisen within the State of Gujarat. In the present case the contract was entered into at Bombay, its execution i.e. performance was to take place at Bharatpur, all payments in respect of the said contract were to be made either at Bombay or Bharatpur, that is to say, no part of the cause of action arose within the jurisdiction of this Court and hence this Court has no jurisdiction to entertain and dispose of the petitions in so far as they relate to the Bharatpur contract."
In the matter of : Bharat Sugar Mills Ltd. and Another is also instructive. The Central Government fixed the prices of levy sugar in respect of Sugar Mills. Petitioner's Sugar Mills were in Bihar State; the office of the petitioner Company was in Calcutta. Challenging the fixation of sugar price, writ petition was filed in Calcutta, which was dismissed as not maintainable. The petitioner's contention is found at page 103 which reads :
"It has been submitted by Mr. [ENTITY], learned Advocate for the petitioner that this order was published in the Gazette of India which also appeared in the State of West Bengal and the office of this Sugar Mill is situated at R. N. Mukherjee Road within the territorial jurisdiction of this Court and the petitioner has got a licence to sell sugar under the Sugar Licensing and Control Order. It has also been submitted that this Mill has a godown within the State of West Bengal wherefrom the Mill sells sugar to the various retailers. It has been further submitted that some of the shareholders of this Mill are residents within the State and if sugar is allowed to be sold at the price as determined by the impugned order, it will cause a substantial financial loss not only to the Sugar Mills but also to the shareholders as the price of the shares will be greatly affected. On these allegations it has been submitted by Mr. [ENTITY] that part of the cause of action arises within the territorial limits of this Court and as such this Court has got jurisdiction to issue appropriate Writs, Orders or Directions in accordance with the provisions of [SECTION] of the [ACT]."
This was repelled by holding at page 104 :
"The order has been made by the Central Government at New Delhi, the Sugar Mill is situated in the State of Bihar and the levy sugar at the price determined by the impugned order has to be sold and delivered to the agencies or the Food Corporation of India as per direction given by the Central Government by the petitioner Sugar Mill at the gate of the Mill premises in the Sate of Bihar. It is not disputed nor doubted that so far as the levy sugar is concerned the Sugar Mill has got no power to sell it to any agency other than those agencies which are directed by the Central Government to be sold. The Mill can only dispose of sugar which is levy free and for which undoubtedly there is no price fixation. Therefore sale of such sugar in the open market is not in the least affected by the impugned order fixing the price of levy sugar. The submission that the Company will sustain loss or the shareholders will sustain loss is in no way comprised of the part of the cause of action which needs to be proved in order to succeed in this application that the impugned order is bad, arbitrary, unreasonable and illegal being not in accordance with the norms laid down in sub-section (3C), Section 3, [ACT]. Therefore, considering all these aspects I am unable to hold that any part of the cause of action arises within the territorial limits of the jurisdiction of this Court."
The Supreme Court in [PRECEDENT] had an occasion to consider another aspect of the same question. Acquisition notice was served on the petitioner in West Bengal, though lands were in Rajasthan. The petitioner challenged the acquisition by the State of Rajasthan in Calcutta High Court on the ground a part of the cause of action arose in West Bengal by the service of notice. This connection which seem to have been accepted by Calcutta High Court was reversed by the Supreme Court. Mere service of notice to acquire the land was held as not part of the cause of actions entitling to invoke the writ jurisdiction at Calcutta.
12. The fact that the petitioner Company is located within this State has no relevancy at all to constitute a 'cause of action' to challenged the levy of customs duty at Bombay. The 'cause of action' arose entirely outside Karnataka. The preliminary objection raised by the learned Counsel for the Central Government has to be accepted.
Since, arguments were addressed on the merits of the case, I consider it proper to express myself on the said question also.
Regarding Point No. 2 :
13. In [PRECEDENT] Supreme Court did not express a definite opinion as to whether the power to exempt under [SECTION] is a legislative power or a simple executive power. The decision commencing at page 541 (para 71 of the AIR) shows that the Supreme Court assumed the power to be a legislative power and then proceeded to apply the principles governing the validity of exercise of such a power. The Supreme Court held :
"We shall assume for purposes of these cases that the power to grant exemption under [SECTION] of the [ACT] is a legislative power and a notification issued by the Government thereunder amounts to a piece of subordinate legislation. Even then the notification is liable to be questioned on the ground that it is an unreasonable one."
Again at page 542 (para 73) :
"A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed a competent legislature. Subordinate legislation may be question on any of the grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. In England, the Judges would say "Parliament never intended authority to make such rules. They are unreasonable and ultra vires."
However, some of the principles governing the validity of the exercise of administrative power are not attracted, such as principles of natural justice.
At page 543 the Supreme Court emphasised that :
"The power to grant exemption should, however, be exercised in a reasonable way."
Nowhere the Supreme Court held that doctrine of promissory estoppel would apply against the exercise of a legislative power to withdraw the Notification issued under [SECTION] of the Act. The ultimate decision in the said case was based on the principle :
"In view of the intimate connection of newsprint with the freedom of the press, the tests for determining the vires of a statute taxing newsprint have, therefore, be different from the tests usually adopted for testing the vires of other taxing statutes. In the case of ordinary taxing statutes, the laws may be questioned only if they are either openly confiscatory or a colourable device to confiscate. On the other hand, in the case of a tax on newsprint, it may be sufficient to show a distinct and noticeable burdensomeness, clearly and directly attributable to the tax" (words highlighted here).
This idea a permeates the subsequent discussions also. If the exercise of the power under [SECTION] is a legislative power - be that as a delegatee or in any other capacity - then, the said power cannot be curtailed by the doctrine of promissory estoppel. Estoppel cannot operate against statute; this principle governs all kinds or flavours of estoppel.
In [PRECEDENT] the principle is stated thus :
"Of course we must make it clear and that is also laid down in [PRECEDENT]) (supra), that there can be no promissory estoppel against the legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires, if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the Court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it. This aspect has been dealt with fully in Motilal Sugar Mills case (supra) and we find ourselves wholly in agreement with what has been said in that decision on this point."
In [PRECEDENT]. the Court had no occasion to consider the withdrawal of the exemption Notification. Exemption Notification continued to operate, but the procedure to grant exemption and certain conditions were altered; this, the Supreme Court held as impermissible under the doctrine of promissory estoppel.
The [PRECEDENT] was also a case where Export Promotion Scheme was issued by the Government, but, benefit thereunder was refused on the ground that the Scheme was under administrative power not binding on the ground; doctrine of promissory estoppel was applied to hold that the Government was precluded from denying the benefit held out by it under the Scheme; there was no question of withdrawal of the Scheme promulgated earlier; the defence of the Government was based on executive necessity, which was repelled by the Supreme Court; the Court held :
"We are unable to acceded to the contention that the executive necessity releases the Government from honouring its solemn promises relying on which citizens have acted to their detriment. Under our constitutional set-up, no person may be deprived of his right or liberty except in due course of and by authority of law; if a member of the executive seeks to deprive a citizen of his right or liberty otherwise then in exercise of power derived from the law - common or statute - the Courts will be competent to, and indeed would be bound to, protect the rights of the aggrieved citizen."
In view of the enforceability of the terms of the Scheme, relief was granted to the claimant, of the benefit under the scheme.
In [PRECEDENT] the petitioner invoked the doctrine of promissory estoppel, on the basis of the alleged representation made by the Municipal Council to the petitioner. The matter, on merits, was not decided by the Supreme Court.
[PRECEDENT] , again, is similar to Dharmendra Trading Company's case . The industrial undertakings set up during the period when the exemption order was in force, were held to be entitled to the benefit; the Supreme Court had no occasion to consider the validity of the withdrawal of the order by a subsequent Notification. At page 593, it is observed :
"It is not disputed that the first order namely, the one dated 11-4-1979 gave more of tax exemption than the second one. The second notification withdrew the exemption relating to purchase tax and confined the exemption from sales tax to the limit specified in the proviso of the Notification. All parties before us who in response to the Order of April 11, 1979 set up their industries prior to 21-10-1980 within the State of Kerala would thus be entitled to the exemption extended and/or promised under that Order. Such exemption would continue for the full period of five years from the date they started production. New industries set up after 21-10-1980 obviously would not be entitled to that benefit as they had notice of the curtailment in the exemption before they came to set up their industries".
The above principle certainly would have been applied to grant the relief to the petitioner in the instant case, if the importation of the goods in question had taken place before the cancellation of the exemption Notification.
The earlier decision of the Supreme Court in [PRECEDENT] , again, is distinguishable; the appellant therein had established its factory when the exemption was in force; the appellant was told of the exemption specifically, at the time it established the factory (vide page 649 at para 32).
It is unnecessary to multiply the citations.
14. The short question, therefore, is whether, an importer is entitled to the benefit of the exemption from the levy of customs duty, only because, he entered into an agreement to purchase and import the goods during the period of the exemption Notification. By the time goods crossed the customs barrier, if the exemption Notification is withdrawn, can he still claim the benefit of the exemption, pleading bar of promissory estoppel against the revenue from resiling from the exemption Notification ?
15. The Notification operates only on the levy of customs duty. It is now well-settled that, subject to certain procedural conditions, such as [SECTION], the duty leviable is with reference to the date when the goods cross the customs barrier. The charging provision is [SECTION], which enables the levy of customs duty on "goods imported into" India.
16. The levy of customs duty and exemption therefrom depend upon exigencies of public revenue and the public interest. The concept of public interest is incapable of precise definition. Customs duty has a bearing on the international trade and commerce and in levying duty on import of any particular goods, the Parliament (including the Government) may consider the international situation, foreign market conditions, trade agreements with foreign Countries, requirements of this Country and many such other factors. Similar factors would influence the exercise of power under [SECTION] also. Every imported and exporter is aware of fact changing situations in international trade. The risk of fluctuating prices and other elements affecting an import-trade is known to all importers.
17. In the very nature of things, the Government cannot keep alive the benefit of an exemption Notification to govern the purchase agreements entered into during the existence of the Notification, issued under [SECTION]; if the Government were to be compelled to grant such a benefit, situations would develop wherein for years together, the exemption may have to be kept alive. It will be inequitable to compel the Government to keep alive an exemption Notification, indefinitely to enable a person to complete the importation of goods for which he entered into an agreement earlier.
18. Writ Petition is accordingly dismissed without any order as to costs.