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M/S. Mangalam Organics Ltd. v. Union of India

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 1338 of 2017)Decided 24 Apr 2017
Civil Appeal No. 1338 of 2017
Justice A.K. Sikri · Justice Ashok Bhushan

Background

The appellant manufactured Rosin and Turpentine using the manual "Bhatti" process, which uses power only to pump water for condensing. A Supreme Court ruling in 2011 held that even this limited use of power meant the goods were "manufactured with the aid of power," making them liable to excise duty that the appellant had not been paying. The appellant asked the High Court to direct the Central Government to issue a notification under Section 11C of the Act exempting it from this duty on the ground that a general practice of non-levy had existed; the High Court refused, holding that Section 11C gives the Government a discretionary power, not a duty, to issue such a notification.

Decision Breakdown

The Supreme Court upheld the High Court's view and dismissed the appeal. It held that Section 11C only empowers, but never obliges, the Central Government to notify relief from duty even where the stated conditions are met, so no mandamus could be issued to compel the Government to act. The Court accepted the Government's explanation that its settled policy is to issue such notifications only when a large section of trade is affected, not where (as here) only two units would benefit, and found this policy rational and non-arbitrary. It also noted that Section 11C applies to duty that was never paid, not to duty already paid and sought to be refunded, and the appellant had already paid its duty. Since the appellant itself accepted the duty was legally payable, no violation of Articles 14 or 19(1)(g) of the Constitution arose from the Government's refusal to grant relief to it alone.

Lesson Learnt

Courts cannot force the Government to exercise a purely discretionary statutory power (like granting a tax exemption notification) merely because the legal preconditions for it exist; such policy choices are for the Executive, not for judicial mandamus, unless the choice itself is shown to be arbitrary or made on irrelevant grounds.

Official source (sci.gov.in)View Judgment (PDF)

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