BENCH- Venkataramaiah E.S (J), Reddy O Chinnappa (J), Sen A.P. (J)
In 1981, the Central Government of India released a notification under The Customs Act, 1962 and Customs Tariff Act, 1975, wherein, all the newspapers were supposed to be subjected to an import duty. Furthermore, auxiliary duty was also to be levied under the Finance Act, 1981. Prior to this, the newspapers were not subjected to any tariffs or duties, and hence were exempt from any tax. This sudden tax led to the crippling of newspaper industry. Hence the publishers, editors and printers of the newspapers filed a petition against the notification from Government.
Arguments by the Petitioner
The Customs Tax on the newspapers violated freedom of speech and expression, a right guaranteed under Article 19(1)(a) of the Constitution because the duty resulted in the increase in cost of the newspapers and as a consequence, the sales were reduced. Reduction in sales curtailed the freedom of press.
The classification of newspapers into small (circulation less than 15000), medium (circulation between 15000 and 50,000) and big (Circulation of over 50,000) was claimed to be irrational and tedious for traders dealing with several of these newspapers. This was thus discriminatory and violated Article 14 of the Constitution which stands for the Equality before law.
Because of the inflation, the production cost for the newspapers went up significantly, resulting in the overburdening cost of the newspapers. The fairness of the levy was therefore unreasonable and violated Articles 19(1)(a) and Article 19(1)(g) of the Constitution.
The foreign exchange position during this tax notification was pretty good. Hence this act was considered arbitrary and violating equality before law and equal protection of law.
In addition, the Executive interference in the newspapers business is likely to be a threat to democracy, since the media is also considered as a pillar of democracy.
Arguments by the Respondent
The Government of India argued that the burden of Tax is on everyone, be it citizen, companies, organisations etc. It was not discriminatory in nature since newspapers were also a business and up until now they were not being taxed. Hence the government argued that it gave the newspaper business a level playing field for other businesses to compete with. Hence newspapers were also brought into tax ambit. It was because of the aforementioned reasons that this duty was not violative of Article 19(1)(a) of the constitution.
The government also argued that the duty levied on newspapers was also to generate revenue for the government. There was no justification for the newspapers going untaxed.
Just like any other business, the newspaper was also considered as a cash flow for public exchequer which was for the benefit of the country as a whole.
The Supreme Court held that by interfering with the sales of the newspapers, the Executive decreased the sale of newspapers as a result of the duty levied. This was a complete violation of freedom of press, which in turn was a violation of Article 19(1)(a) of the Constitution which guarantees the Freedom of speech and expression.
The Court further clarified that even though the Article 19(2) allowed a reasonable restriction on the speech and expression in the interests of sovereignty, unity, integrity of India, the restriction on freedom of speech and expression could not be imposed in the name of public interest which was a broad term and was arbitrary.
In addition, the Court held that the newspapers were the only medium of information widely available for the society, especially for those who do not have access to a television. To educate people and to keep them informed, it was imperative that the cost of the newspapers remains affordable.
Countries all over the world have a policy of non-interference with the press for the simple reason that the news remains unbiased and pristine. The sanctity of the constitution is determined on how dissent is protected. Any administrative or executive action which is detrimental to the freedom of speech and expression should be therefore be taken cognizance by the relevant courts and ensure the freedom of speech and expression remains unharmed.
On one hand, the court suggested to exclude the small newspapers (those having less than 15000 copies in circulation) from duty, but on the other hand, the Court also played a balanced approach by asking the big newspapers (having circulation more than 50000) to pay their due share to the government since the latter has to provide several services to them. Subsidizing big newspapers would be unfair to other big organisations in different product segments. Levelling the playing field was also a part of equality which was a pivotal point of argument by the petitioner in this case. The power to levy newspapers was also enshrined in Entry 92 of List I of the Seventh Schedule of the Constitution. Furthermore, Entry 83 of the same List authorises the government to levy duties on any goods being imported.
The Court explained that there has to be proper balance between tax levy and intrusion into freedom. It is ok to tax as long as there is no trespass on freedom. The determination of the reasonable limit and the thin line of difference is at the discretion of the courts.
This article is written by Rakesh Behera of Sambalpur University.