Section 11C of Central Excise Act, 1944: Judicial Murder of Benevolent Provision
Excise and Customs Reporter, Vol. 196, pp. 43SF-54SF, April 2013
13 Pages Posted: 10 Apr 2013
Date Written: April 1, 2013
That 'taxes' are compulsory impositions and that there is no equity in taxation are propositions well acknowledged and beyond doubt. Once the taxable event occurs as a natural corollary, therefore, befalls the visitation of the levy. Under the constitutional precincts, in India taxes can be imposed only by the force of a law. Further, such taxing law is required to provide for a 'taxable event' upon the occurrence of which the 'subject-matter' of taxation is obliged to defray the tax imposed to the government coffers. In such event, the only legally available escape-route to avoid the scourge of taxation is to challenge the levy itself or to invoke the benefit of an 'exemption' in terms of which the otherwise taxable subject-matter is exonerated from the liability to pay the tax. The exemption may flow from the parent statute itself or may be in terms of a delegated legislation, the law-makers having taken a policy decision to such effect.
One such instance of delegated legislation conferring the power upon the Government to exempt payment of tax is Section 11C of the Central Excise Act, 1944. Under this provision the Central Government is empowered to exempt levy of Central Excise duty to legitimize practices of non-payment or short-payment of the duty in the industry. Concomitant to this power is the stipulation that such exemption overrides all other provisions of the said Act of 1944. This provision, inserted in the 1944 Act in 1978, has been the source of relief to various industries and assessees who have been proceeded with under the 1944 Act but its rigours have been diluted in terms of the notifications issued under Section 11C. However the traditional understanding and interpretation attributed to Section 11C has turned turtle after the decision of the Supreme Court in Connaught Plaza case wherein the ambit of this provision has been significantly curtailed, in the view of the author, leading to oblivion. This article revisits the legal position under Section 11C of the Central Excise Act in the wake of this recent Supreme Court decision to conclude that this benevolent provision has been judicially murdered.
Keywords: Exemption, Judicial Construction, Central Excise Act, India
JEL Classification: H22, H23, H25, H29, K34
Suggested Citation: Suggested Citation