Case Note & Summary
The writ petition before the Bombay High Court involved a challenge by an importer of foreign wines, holding an FL-I licence, to several notifications issued by the State of Maharashtra amending excise rules. The petitioner alleged that the impugned notifications created a hostile discrimination between locally produced wines and imported wines by imposing additional authorization fees, label registration fees, and special fees on imported wines while granting a complete remission of excise duty on wine manufactured from grapes produced within Maharashtra. The petitioner contended that this differential treatment violated the principle of National Treatment enshrined in the General Agreement on Tariffs and Trade (GATT), 1947 and the World Trade Organization (WTO) agreements, to which India is a signatory. It was argued that once customs duties are paid and imported goods cross the national border, they must be treated equally with domestically produced goods. The petitioner further submitted that the State of Maharashtra, despite repeated communications and directives from the Union of India to rationalize its duty structure in conformity with the national treatment principle, persisted in levying higher rates on imported wines. This, the petitioner asserted, rendered the notifications ultra vires Article 253 of the Constitution, which empowers Parliament to implement international treaties, and also violated the fundamental rights under Articles 14 and 19(1)(g). The petitioner highlighted that in an earlier affidavit filed by the State respondents in a previous writ petition, it was admitted that the Union Government had emphasized that states must levy duties, taxes, and fees on imported spirits at rates not exceeding those on domestic products. The petitioner sought quashing of the notifications, a writ of mandamus restraining further enforcement, and a refund of the amounts already paid. The Union of India, while not opposing the petition in principle, had consistently advised the states to comply with GATT obligations. The matter was heard and reserved for judgment on 16 December 2009, and the order was pronounced on 5 January 2010. However, the judgment text does not record the final decision of the court.
Issue of Consideration
Whether the State of Maharashtra can impose additional fees and differential treatment on imported wines in violation of the principle of National Treatment under GATT, 1947 and the WTO agreements, and whether such notifications are violative of Articles 14, 19(1)(g) and 253 of the Constitution.
Law Points
- national treatment
- most favoured nation
- GATT 1947
- WTO
- non-discrimination
- excise duty exemption for domestic wine
- additional fees on imported wine
- violation of Article 14
- Article 19(1)(g)
- Article 253
- treaty obligations
- state excise notifications ultra vires
Case Details
2010 LawText (BOM) (01) 13
WRIT PETITION NO.7852 OF 2008
Smt. Ranjana Desai, A.A. Sayed
Mr. Erach Kotwal i/b Mr. Rajiv Deokar for the petitioner; Mr. D.J. Khambata, Addl. Solicitor General with Ms. S.V. Bharucha and Mr. D.A. Dube for respondent 1; Ms. S. S. Bhende, A.G.P. for respondents 2 to 4
Karan Dileep Nevatia, Proprietor of M/s. Kunal Vintners and M/s. Sundeep Vintners
The Union of India (through Commerce Secretary), The State of Maharashtra (through Secretary, Home Department), The Commissioner of State Excise, Maharashtra State, The Collector of Mumbai (City)
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Nature of Litigation
Challenge to constitutional validity of State notifications imposing differential fees on imported wines
Remedy Sought
Quashing of impugned notifications, writ of mandamus restraining further enforcement, and refund of amounts recovered
Filing Reason
Alleged hostile discrimination between locally produced wines and imported wines in violation of GATT national treatment principle and constitutional rights
Previous Decisions
Previous Writ Petition No.2060 of 2008 filed by petitioner was disposed of on 20/10/2008 granting liberty to approach respondents to explain that subsequent notification did not alleviate grievances.
Issues
Whether the impugned notifications violate the principle of 'National Treatment' under GATT, 1947 and the WTO agreements.
Whether the notifications are ultra vires Article 253 of the Constitution of India.
Whether the notifications are violative of Article 14 and Article 19(1)(g) of the Constitution.
Submissions/Arguments
The impugned notifications impose additional authorization fees, label registration fees, and special fees on imported wines, while local wines are exempted from excise duty, thereby creating a hostile discrimination.
The State of Maharashtra violated the Union of India's repeated directives to levy duties, taxes, and fees on imported spirits at rates not exceeding those on domestically produced liquor, in keeping with the national treatment principle.
The impugned notifications are in gross violation of the Union of India's trade agreements under GATT, 1947 and the SCM Agreement, and are contrary to the national treatment obligation.
The impugned notifications are ultra vires Article 253 of the Constitution and also infringe the fundamental rights under Articles 14 and 19(1)(g).
Judgment Excerpts
Two important principles of GATT, 1947 are (a) the “Most Favoured Nation” and (b) the “National Treatment”. ... once foreign goods cross the national border, they are required to be treated equally with domestically produced goods.
by these Notifications, respondent 2 has made a hostile discrimination between locally produced wines and imported wines, thereby stifling the business of the petitioner.
the impugned Notifications are in gross violation of the Union of India's trade agreements ... and particularly the principle of “National Treatment” and “Agreement On Subsidies And Countervailing Measures”
the Government of India emphasized that the principle of “National Treatment” has to be observed while imposing any levy on the imported wines and spirits ... States are free to levy duties, taxes and fees, etc. on imported spirits at the rate not exceeding the rates of such duties, taxes, fees, etc. levied on domestic liquor.
Procedural History
The petitioner previously filed Writ Petition No.2060 of 2008 challenging certain excise notifications. That petition was disposed of by the Bombay High Court on 20-10-2008, granting the petitioner liberty to approach the respondents to explain that a subsequent notification did not alleviate the grievances. Thereafter, the petitioner filed the present Writ Petition No.7852 of 2008. The court admitted the petition, issued rule, and heard the parties finally by consent. Arguments were heard and the matter was reserved for orders on 16-12-2009, with judgment pronounced on 05-01-2010.
Acts & Sections
- Bombay Prohibition Act, 1949: 3
- Constitution of India: 14, 19(1)(g), 253
