Sukumar Mukhopadhyay: Policy making is govt's job

EXPERT EYE

In a recent judgment, the Kerala High Court held that the service tax was not violative of the two articles and in any case the extent of tax and whom to tax was for the legislature to decide and not for the courts to interfere.

In the Zodiac Advertisers vs Union of India case, 2004 (166) ELT 25 (Ker), the advertising agency had challenged the constitutionality of the service tax on the ground that the right to carry on profession and occupation guaranteed under the Article 10(1)G of the Constitution was compromised. The agency had also alleged discrimination and violation of Article 14.

The economic policy cannot be justiceable ordinarily but only when a violation of the fundamental right is proved.

The court also held that such interference by the court on the ground of violation of the fundamental right should be very rare. So the court again upheld the legislature's sole right to deal with the economic policy.

The principle that the economic policy is an aspect where the courts should not interfere has long been upheld by the high courts and the Supreme Court.

The Gujarat High Court in the Navjivan Mills vs Union of India case, 1982(10) ELT 155 (Guj), the Calcutta High Court in the Black Diamond Beverages vs Union of India case, 1988(36) ELT 225 (Cal), and the Madras High Court in the Sulochana Enterprises vs Union of India case, 1991(56) ELT 22(Mad), held that taxation policy could not be pronounced upon by the courts unless there was a violation of the Constitution.

A clear decision came in the Indian Express Newspapers vs Union of India case, AIR 1986SC 515.

In this case, the Supreme Court interfered to strike down excessive tax on newsprint because it came to the conclusion that the imposition or exemption was violative of the Fundamental Right of Freedom of Speech guaranteed under the Article 19(1)G. On a mere ground of unreasonableness, an imposition of tax could not be challenged, it said.

In the Balco Employees Union vs Union of India case, in which privatisation of the public sector undertaking had been challenged, the Supreme Court reiterated the principle that the courts should not enter into the merits of the economic policies, which should best be left to Parliament.

"In the sphere of economic policy or reform the court is not the appropriate forum. Courts are not intended to and nor should they conduct the administration of the country. Courts should interfere only if there is a clear violation of the Constitution or statutory provisions," the court said.

The court made some pertinent remarks about how economic policy should be treated if somebody approached the court.

"In a democracy, it is the prerogative of each individual government to follow its own policy. It is not for the courts to consider relative merits of different economic policies and consider whether a wiser or better one can be evolved. For testing the correctness of a policy, the appropriate forum is Parliament and not courts," the apex court said.

Thus if it is a mere economic policy, then the courts cannot interfere. But if it involves a constitutional issue, the courts can interfere but it should do so only rarely as held in the case of the State of UP vs Kamla Palace case, (2000) 1 SCC 557, and the Government of Madras vs P R Siramulu case, (1996) 1 SCC 345.

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