R.VENKATARAMAN
New Delhi
Legal eagles believe ITC can contest the presidential ordinance that has empowered the government to change excise laws with retrospective effect and recover the Rs 803-crore excise dues that have been in dispute for close to 17 years.
Last September, the Supreme Court had ruled in ITC’s favour and asked the government to refund the pre-deposit of Rs 350 crore that the company had paid before the outcome of the protracted litigation.
Legal experts said the ordinance was a “colourable exercise of powers”. The fact that the excise rules have been modified retrospectively from 15 years could be shown as “malafide”.
Based on the information from revenue intelligence, the excise department had slapped the Rs 803-crore excise tab on the ground that ITC had sold cigarettes between 1983 and 1987 at a price that was higher than the maximum retail price printed on packets.
The ordinance seeks to nullify the effect of the Supreme Court verdict by proposing that “no court shall enforce any decree or order directing the refund of any such duties levied”.
“The judgement of the Supreme Court is sought to be made ineffective and this is a clear violation of judicial functions. The executive cannot take away the judicial function and the order is vulnerable to challenge,” Supreme Court bar association president and noted corporate lawyer P. H. Parekh said. He reckoned that the ordinance could be challenged on the ground that it encroaches on judicial functions. “It is wrong and unconstitutional. The factum of retrospective effect itself shows that it is a bad law in the touchstone of the Constitution,” he added.
Another corporate lawyer, B. Deva Sekhar, who fought against the securities ordinance on behalf of several companies, said: “We have several precedents of an ordinance being challenged in courts, especially the Supreme Court, which have entertained petitions challenging the illegality and constitutionality of an ordinance”.
Sekhar said the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi) was challenged when an ordinance was first issued. In public interest, several other ordinances, like the central vigilance commission ordinance, were also challenged.
The provision that “No suit or other proceedings shall be initiated” and “No court shall enforce any decree” was “certainly unconstitutional” and no government could rule that a “constitutional court” should not entertain a question of law and Constitution, “for, that is the very function of a constitutional court, high courts and the Supreme Court,” Deva Sekhar said.
The ordinance has raised the prospect for another battle royale before the apex court between the tobacco company and the government.