REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 3405 OF 2011   

    IN  

SPECIAL LEAVE PETITION (CIVIL) NO. 2190 OF 2008

STATE OF U.P. & ORS.                                        Appellant (s)

VERSUS

M/S. MAHINDRA & MAHINDRA LTD.                Respondent(s)   

O R D E R

1. Leave granted.

2. We have heard learned counsel appearing for the parties  

in this  appeal,  which is  filed challenging the legality of  the  

judgment and order passed by the Allahabad High Court in a  

writ petition filed by the respondent, praying for issuance of a  

writ of mandamus to read in the exemption notification, the  

words “Tractor Engine specifying  Cubic Capacity (CC) of the  

Tractor Engine not exceeding 1800 CC.  The Government of

India had issued notification on  16th April, 1985, making an  

amendment in the notification of the Government of India in  

respect of the table annexed to the notification, inserting by  

way  of  substitution  the  words  “Tractors  of  Draw-Bar  Horse  

Power  not  exceeding  25”.   Another  notification  was  

subsequently issued by the Government of India on 17th July,  

1985,  substituting  the  words  “Draw-Bar”  with  the  words  

“Power  Take-off  Horse”.   Be  it  stated  here  that  all  such  

notifications relate to the payment of excise duty.

3. The  Government  of  Uttar  Pradesh,  however,  for  the  

purpose of levy of sales tax issued a notification on          12th  

September, 1986, in which it was stated that under Section 4  

of the Uttar Pradesh Sales Tax Act, 1948,  Tractors with  Power  

Take-off Horse Power not exceeding 25 would stand exempted  

from payment of tax under the Sales Tax Act, subject, however,  

to  the  condition  that  the  said  tractors  are  exempted  from  

payment of Central Excise Duty.   

4. A show cause notice was issued to the respondent from  

the Office of the Assistant Commissioner (Assessment)-I  Sales  

Tax, Lucknow, stating therein that at the time of survey made,  

and as per the literature made available it was found that the,  

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horse  power  of  the  tractors  of  the  respondent  had  been  

disclosed  as  30  Horse  Power.   In  the  aforesaid  show  cause  

notice it was stated that in view of the facts mentioned in the  

said notice, the respondent may submit a reply as to why the  

return  filed by  the respondent  would  not  be rejected and a  

provisional assessment order for the period in question may  

not be completed under Rule 41(5) of the Rules.   

5. Pursuant  to  the  aforesaid  show  cause  notice  issued,  a  

detailed reply was filed by the respondent.  The Assessment  

Officer  considered the entire  records and, thereafter,  by his  

order dated 21st March, 1992, passed an assessment order on  

the basis of the contents of the notification dated        12th  

September,  1986,  denying exemption from payment of  sales  

tax to the tractors of the respondent.

6. After  the  aforesaid  assessment  order  was  passed,  the  

respondent  filed  a  writ  petition  before  the  Allahabad  High  

Court with the following reliefs:

“1. A Writ of certiorari or any other suitable Writ, Order  of  direction  be  issued  to  modify  or  amend,  the  notification so as to bring in conformity with the Central  Government  and  conformity  in  respect  of  measuring  strength or engine by all  manufacturer as contained in  Annexure-1 to this Writ Petition.

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2. A Writ  of  mandamus directing the Opposite  Party  No.2 to clearly state in the said notification the basis of  exemption being cubic capacity of the Tractor Engine not  exceeding 1800 CC for exemption for Sales Tax in place  of 25 P.T.O.H.P., and directing the Opposite Party No.2 to  exempt  the  petitioners,  tractor  engine  and  specify  the  C.C. (Cubic Capacity) of the Tractor engine not exceeding  1800 C.C. And bring it at Par with Circular No.89/87/CE  dated 01.03.1987 issued by Central Government to clear  the anomaly and ambiguity in both the circulars, which  creates  discrimination  among  manufacturer  of  Fuel  Efficient engines and rest ones, and refrain the Opposite  Party No.2 to desist from recovering disputed Sales Tax of  Rs.2,34,00,965.400 from April' 91 to Feb. 92 created by  Annexure  II  dated  21.03.1991,  and  stay  operation  thereof.”

7. Interestingly,  in  the  said  writ  petition  there  was  no  

challenge to the assessment order passed.  Be that as it may,  

the Division Bench of the Allahabad High Court proceeded to  

hear the aforesaid writ petition and by a detailed order passed  

held  that  since  the  Central  Government  has  by  notification  

dated 28th February, 1987, replaced the word 25 PTOHP by the  

word  1800  CC  and  thereby  exempted  the  tractor  having  

capacity  not  exceeding  1800  from  Excise  Duty,   the  same  

wordings, namely, Tractors with Power Take-off Horse Power  

not exceeding 25 should also be read as Tractors not exceeding  

1800 CC, which would stand exempted from levy of Sales Tax.  

The aforesaid findings recorded by the High Court are under  

challenge in this appeal.   

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8. The  first  contention  of  the  counsel  appearing  for  the  

appellant is that there is no power vested on the High Court to  

issue  such  a  direction  to  the  Executive  to  re-frame  the  

subordinate  legislation,  and  that  therefore  the  High  Court  

exceeded its jurisdiction by issuing such directions in a field  

where the High Court cannot and should not tread.  In support  

of  the  said  contention,  the  counsel  has  relied  upon  the  

decision of this  Court in  Supreme Court Employees'  Welfare  

Association v. Union of India and another (1989) 4 SCC 187,  

Bal Ram Bali and another v. Union of India (2007) 6 SCC 805  

and  Municipal  Committee,  Patiala  v.  Model  Town  Residents  

Association and others (2007) 8 SCC 669 as also the decision  

in  M/s. Narinder Chand Hem Raj and others v. Lt. Governor,  

Administrator, Union Territory, Himachal Pradesh and others  

(1971) 2 SCC 747.  Wherein this Hon’ble court held as follows:

“The  power  to  impose  tax  is  undoubtedly  a  legislative  power.  That  power  can  be  exercised  by  the  legislature  directly or subject to certain conditions, the legislature  may delegate that power to some other authority. But the  exercise of that power whether by the legislature or by its  delegate  is  an exercise of  a  legislative  power.  The fact  that the power was delegated to the executive does not  convert that power into an executive or  administrative  power. No court can issue a mandate to a legislature to  enact  a  particular  law.  Similarly  no court  can direct  a  subordinate legislative body to enact or not to enact a law  which it  may be competent  to enact.  [945 F-G]  Article  

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265 of  the  Constitution  lays  down that  no tax  can  be  levied and collected except by authority of law. Hence the  levy of a tax can only be done by the authority of law and  not  by  any  executive  order.  Unless  the  executive  is  specifically empowered by law to give any exemption, it  cannot say that it will not enforce the law as against a  particular  person.  No  Court  can  give  a  direction  to  a  Government to refrain from enforcing a provision of law”.

9. In  Supreme  Court  Employees'  Welfare  Association  v.  

Union of India and another (supra), in paragraph 51, this Court  

stated as follows:

“51. There can be no doubt that no court can direct a  legislature to enact a particular law.  Similarly, when an  executive authority exercises a legislative power by way  of  subordinate  legislation  pursuant  to  the  delegated  authority  of  a  legislature,  such  executive  authority  cannot  be  asked  to  enact  a  law  which  he  has  been  empowered  to  do  under  the  delegated  legislative  authority.  

10. Within our Constitution, we have specifically demarcated  

the ambit of power and the boundaries of the three organs of  

the  Society  by  laying  down  the  principles  of  separation  of  

powers, which is being adhered to for carrying  out democratic  

functioning  of  the  country.   So  far  as  the  legislation  is  

concerned,  the  exclusive  domain  is  with  the  legislature.  

Subordinate  legislations  are  framed  by  the  executive  by  

exercising the delegated power conferred by the Statue, which  

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is rule making power.  The judiciary has been vested with the  

power to interpret the aforesaid legislations and to give effect  

to them since the parameters of the jurisdiction of both the  

organs are earmarked.  Therefore, it is always appropriate for  

each  of  the  organs  to  function  within  its  domain.   It  is  

inappropriate for the courts to issue a mandate to legislate an  

Act and also to make a subordinate legislation in a particular  

manner.  In this particular case, the High Court has directed  

the  subordinate  legislation  to  substitute  wordings  in  a  

particular  manner,  thereby  assuming  to  itself  the  role  of  a  

supervisory  authority,  which  according  to  us,  not  a  power  

vested in the High Court.  It is also by now settled law that so  

far  exemption clauses  are  concerned,  there  should  be  strict  

interpretation  of  the  same  as  has  been  held  by  this  Court  

repeatedly.  Suffice will be to refer to very recent decisions of  

this  Court  in  Bhai  Jaspal  Singh  and  another  v.  Assistant  

Commissioner of Commercial Taxes and others (2011) 1 SCC  

39  and  Commissioner  of  Central  Excise,  New  Delhi  v.  Hari  

Chand Shri Gopal and others (2011) 1 SCC 236.  We would also  

extract a passage from the decision of the Supreme Court in  

Novopan   India   Ltd.   Hyderabad   Vs.  Collector  of  Central  

Excise and Customs, Hyderabad, reported at 1994 Supp (3) SCC  

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at page 606, wherein this Court has held that:

“16. ………such a notification has to be interpreted in the  light of the words employed by it and not on any other  basis.  This was so held in the context  of  the principle  that  in  a  taxing  statute,  there  is  no  room  for  any  intendment,  that  regard  must  be  had  to  the  clear  meaning  of  the  words  and  that  the  matter  should  be  governed wholly by the language of the notification i.e. by  the plain terms of the exemption.”

11. During the course of the arguments, it was also brought  

to our notice that subsequent to the order of assessment, an  

appeal was filed, which came to be dismissed, subsequent to  

which  a  second appeal  was  filed  before  the Tribunal,  which  

allowed  the  appeal  giving  effect  to  the  orders  of  the  High  

Court.   Since,  in  our  considered  opinion,  the  High  Court  

exceeded its jurisdiction in passing the aforesaid orders and in  

issuing  the  directions  for  inserting  certain  additional  words  

into  notification  of  exemption  issued  by  the  Uttar  Pradesh  

Government, we set aside the impugned judgment and order  

passed by the High Court  and also  the order  passed by the  

Tribunal.  As the Tribunal had given effect to the order of the  

High Court, the order of the Tribunal is hereby set aside.  Even  

otherwise  Courts  can  always  take  notice  of  the  subsequent  

events and developments that had taken place subsequent to  

the  filing  of  the  writ  petition  or  filing  of  the  special  leave  

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petition and it is also within the jurisdiction of this Court to  

pass  consequential  orders  to  give  effect  to  the  remedies  

available  to  the  parties.  Considering  these  facts  and  

circumstances from the aforesaid angle, we after setting aside  

the order passed by the High Court and also by the Tribunal as  

also by the First Appellate Court, remit back the matter to the  

First  Appellate Court to consider the matter  de novo taking  

into consideration the notification as existing and which was  

issued  on  12th September,  1986,  and  decided  the  matter  

without making any addition/alternation thereto.   

12. However,  counsel  appearing  for  the  respondent  has  

submitted  before  us  that  it  would  be  possible  for  the  

respondent  to  prove  and  establish  that  the  tractor  

manufactured by the respondent is below 25 PTOHP.  If certain  

exemption is available on the factual aspect, such benefit must  

be provided to an assessee but that is possible only when the  

respondent  is  able  to  prove  and  establish  with  cogent  and  

reliable  materials  that  he  is  entitled  to  the  benefit  of  the  

exemption notification.  Therefore, we allow the parties to lead  

additional evidence before the appellate authority, which shall  

be  allowed to  be  filed  within  four  weeks from their  date  of  

appearance  and,  thereafter,  the  appellate  authority  shall  

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proceed  to  decide  the  matter  de  novo in  the  light  of  the  

records  available  and  also  in  the  light  of  the  exemption  

notification.   

13. This  appeal  stands  allowed  to  the  aforesaid  extent  as  

indicated and leave the parties to bear their own costs.  The  

parties shall appear before the appellate authority on 2nd May,  

2011,  for  obtaining  further  dates  in  the  appeal.   We  also  

request  the  appellate  authority  to  take  up  the  matter  and  

dispose  of  the  same as  expeditiously  as  possible,  preferably  

within a period of three months from the date of receipt of the  

additional evidence, if produced by the parties.

   ........................................... J.    

(DR. MUKUNDAKAM SHARMA)

..............................................J.            (ANIL R. DAVE)

New Delhi; April 20, 2011.  

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