Constitution of India 1950, Article 19(1)(a)-Freedom of speech and expres- Ion-Whether includes Freedom of press-Restrictions other than those in Article 19(2)-Whether reasonable--Interference in the name of Public Interest-Whether Justified.

Roll of Press and Newspapers-Duty of Court to held the balance even and to strike down any unconstitutional invasion of press.

Fundamental rights under Article 19(1)(a) and (g)-Whether different from right conferred by First Amendment to American Constitution.

Article 13(3)(a)-Notification under section 25 Customs Act 1962-Contrary to fundamental rights-Whether to be struck down.

Article 14-Classification of newspapers for levying customs duty-Whether discriminatory.

Article 41-Duty of State to encourage education of masses through media of press-Necessity of.

Entry 87 and 93, List 1. Seventh Schedule-Newspaper Industry Levy of tax-Competency of Parliament to enact laws-Scrutiny by Courts when arises -Tax transgressing into the field of freedom of speech and expression and stifles that freedom-Whether unconstitutional.

Article 32-Validity of tax-Duty of Court-Not to be burdensome-News- paper Industry not to be singled out-Custom Duty on newspaper-Whether tax on knowledge-People's right to know-Imposition of tax-Government to be more cautious.

Interpretation of statutes:

Constitution of India 1950, Article 19(1)(a)-Interpretation of American

cases-Whether sole guide-Help in understanding the basic principles of freedom of speech and expression.

Statutes Taxing Newsprint-Tests for determining vires of-Different from other taxing statutes-Grounds of challenge.

Customs Act, 1962, Section 25-Power to grant exemption-Whether legislative power-Whether notification a Subordinate piece of legislation Whether questionable on the ground of unreasonableness-Power of Government discretionary but not unrestricted.

Customs Act, 1962, Section 25-Notification Substitution of by another- Whether former notification would revive if the latter is held invalid.

Customs Tariff Act, 1975, Section 2 and Second Schedule Heading 48.01/21 -Sub-heading 2-Newsprint-Import duty and auxiliary levy at a flat rate- Validity of.

Under the Indian Tariff Act 1934, there was a levy of customs duty on imported paper. Exemption, however, had been granted for import of white, grey or unglazed newsprint from the levy of any kind of customs duty in excess of 1.5% ad valorem but subsequently a specific import duty of Rs. 50 per MT was levied on newsprint imports upto 1966. The Inquiry Committee on Small Newspapers examined the question of customs duty on newsprint and submitted its report in 1965 recommending total exemption of newsprint from customs duty. Pursuant to the said recommendation, the Government abolished customs duty on newsprint altogether in the year 1966. In 1971, a regulatory duty of 2-1/2% was levied on newsprint imports. This 2-1/2% regulatory duty was abolished and was converted into 5% auxiliary duty by the Finance Act of 1973. On the Customs Tariff Act 1975 coming into force, the Indian Tariff Act 1934 was repealed. Under section 2 read with Heading No. 48.01/21 of the First Schedule to the 1975 Act, a levy of basic customs duty of 40% ad valorem was imposed on newsprint. However, the 5% auxiliary duty levied from April 1, 1973 continued to be in operation which was also totally abolished in July 1977. The total exemption from customs duty on newsprint continued till March 1. 1981 when notification dated July 15, 1977 granting total exemption from customs duty superseded by the issue of a fresh notification under which publishers of newspapers had to pay 10% ad valorem customs duty on imported newsprint. By another notification issued at about the same time the auxiliary duty imposed by the Finance Act of 1981 above 5% ad valorem was exempted in the case of newsprint. The result was that a total duty of 15% ad valorem came to be imposed on newsprint for the year 1981-82, which led to the increase in the price of newspaper resulting in fall in circulation of news- papers. In the first set of writ petitions this 15% levy was challenged.

During the pendency of these writ petitions while Customs Tariff Act, 1975 was amended levying 40% ad valorem plus Rs. 1000 pet 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 notification dated February 82.

1982 issued under section 25(2) of the Customs Act 1962 the notification dated March 1, 1981 was superseded and Rs. 550 per tonne was imposed as customs duty on newsprint and auxiliary duty was fixed at Rs. 275 per tonne. In all Rs. 825 per tonne of newspaper had to be paid as duty.

Under the newsprint policy of the Government there were three sources of supply of newsprint(i) high seas sales, (ii) sales from the buffer stock built up by the State Trading Corporation which includes imported newsprint, and (iii) newsprint manufactured in India. Imported newsprint is an important component of the total quantity of newsprint utilised by any newspaper establishment.

The validity of the imposition of import duty on newsprint imported from abroad under section 12 of the Customs Act 1962 (Act 52 of 1962) read with section 2 and Heading No. 48.01/21 Sub-heading 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 section 25 of the Customs Act 1962 with effect from March 1, 1981 was challenged in the writ petitions.

In the writ petitions it was contended (1) 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 led to the increase in the price of news- papers and the inevitable consequence of reduction of their circulation; (2) 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; (3) 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; (4) that there was no need to impose customs duty on newsprint which had enjoyed total exemption from its payment till March 1, 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 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 per MT). This classification of newspapers into big, medium and small newspapers is irrational as the purchases on high seashare sometimes effected by a publisher owning many newspapers which may belong to different classes; (5) that the enormous increase in the price of newsprint subsequent to March 1, 1981 and the inflationary economic conditions which 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, the continuance of the levy is violative of Article 19(1)(a) and Article 19(1)(g) of the Constitution. 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. The classification of newspapers into small, medium and big for purposes of levy of import duty is violative of Article 14 of the Constitution; and (6) that the power of the Government to levy taxes of any kind on the newspaper establishment rings the death-knell of the freedom of press and would be totally against the spirit of the Constitution.

The Union of India contested the writ petitions alleging (1) that the Government had levied the duty in the public interest to augment the revenue of the Government. 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, there is no power to exempt but to carry out the mandate of Parliament which has fixed the rate of duty by the Customs Tariff Act, 1975; (2) that the classification of newspapers for purposes of granting exemption is done in the public interest having regard to relevant considerations, and that the levy was not mala fide. 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 Article 19(1) (a). The plea that the burden of taxation is excessive is an irrelevant factor to the levy of import duty on newsprint; (3) that the fact that the foreign exchange position was comfortable was no bar to the imposition of import duty; and (4) since the duty imposed is an indirect tax which would be borne by the purchaser of newspaper, the petitioner could not feel aggrieved by it.