The Bombay High Court has held in a recent land mark judgment on the cost of imported wines that state governments are not required to comply with the understanding between nations under international treaties unless the legislature enacts a law to reflect the principles agreed under such treaties.
In the 5 January 2010 decision in Karan Dileep Nevatia vs. Union of India the petitioner was a licensed importer and distributor of foreign liquor/wines and challenged the constitutional validity of the imposition of Special Fees', 'Authorisation Fees' or Label Registration Fees’ on foreign liquor and remission of excise duty on domestically manufactured wine.
Their main contention was why domestic wines sold in Maharashtra were treated favourably over imported wines.
The High Court decided that the executive is competent to represent the state in all international matters. But the obligations arising under the agreement or Treaties are not by their own force binding upon Indian nationals, and should expressly be made into the law of the land for the citizens to follow the same. If the rights of the citizens are not affected, no legislative measures are needed to give effect to the Treaty.
The court agreed with the Government and decided that the classification of foreign wines as a distinct class for the purpose of taxation is not discriminatory as the state has a wide discretion in that behalf.
The court also upheld that if statutory acts are clear in meaning, they must be treated as the primary source of law and construed according to their meaning even though they are contrary to the understanding between nations.
It was further stated that the judiciary is not expected to interfere with the discretion of the state unless a very strong case of hostile discrimination is made out and unless the taxing statute operates unequally within the range of its selection.
Nishith Desai Associates alerted the case in its email newsletter, noting that this was a landmark judgment.
Case: Karan Dileep Nevatia vs. The Union of India (Writ Petition No.7852 of 2008)
Sector Updates: Legally India will from now on regularly publish quick updates on the latest legal developments in fields such as corporate, capital markets, intellectual property, international, tax, disputes, environmental law and more.
We are looking for more contributions from law firms and lawyers to alert us to the latest legal developments, which we hope to include in future Sector Updates.
Please also subscribe us () to your legal alert newsletters.
Comments
Btw, kudos to NDA: their real-time updates and prior insights are simply fantastic!
Even as a matter of policy ( and the argument here is not of 'what is' nature, but 'what should be' nature), I cannot agree with the view that treaties or provisions of international law should automatically be accorded the status of law in India. Treaties undergo limited scrutiny and debate in India. In fact, a number of them are not even available in public domain. At the very least, for anyone to accept treaty obligations as part of domestic law, the treaties must, at least, be ratified by the Parliament.
1 My Learned friends have very fully and carefully identified the points arising from the judgement in the preceeding paragraphs .
2 Having said that my humble understanding is that it is of crucial importance to consider whether a particular international treaty or any part of it is agreed and then ratified by the parliament( or the legislative authority as the case may be ) and if so whether the treaty or the section of it has acuried the force of the domestic law.
3 If the answer is ''yes'' then any person who may be affected by the provisions thereof could be expected to seek justice in the court of law and perhaps would be entitled to judgement and the protection of the law as if that person is seeking justice in the domestic law .
4 As many of learned friens would be aware in England there are number of laws which are simply the rules and or regulations imposed on the citizen of uk by the European Union although it is in wider sence part of the international treaty.
5 In these days of globlization the time has come when we shall have to be very careful that these so called international organisations (WTO included) do not waterdown or take away by default the soverignty of our parliament and independance of our judiciary as we are so much busy watching cricket and or bollywood that very few people will notice what is happening
Warm Regards
Bhupendra K Vyas
Solicitor
Singhania and co
London
(Views expressed herein are exclusively of the Author )
Observers have said that states would be bound by Article 51 to honour international obligations and thus DTAAs could still apply, but the present judgment just made the entire debate more perplexing.
The judiciary is actively supporting executive policies, probably in return for increasing their retirement age?