International Cement Traders (Pvt) Ltd vs. Prime Minister and 30 Others
INTERNATIONAL CEMENT TRADERS (PVT) LTD
vsPRIME MINISTER AND 30 OTHERS
SUPREME COURTSARATH N. SILVA, C. J.
K. SIRIPAVAN, J. ANDP. A. RATNAYAKA, J.
S.C. APPEAL NO. 62/2003C. A. NO. 801/2000MARCH 20™, 2009
Revenue Protection Act, No. 19 of1962 – Section 2 – Order made imposinga preferential rate of Import duly on cement of Indian origin – Was theorder arbitrary and ultra vires?
The Minister of Finance and Planning purporting to act under Section2 of the Revenue Protection Act No. 19 of 1962 made an order imposinga preferential rate of Import Duty of 9.5% on cement of Indian originand increased the Import Duty on cement imported from other countriesfrom 10% to 25%. The Petitioner challenged the said order on thebasis that the said order is ultra vires, arbitrary, capricious anddiscriminatory against the petitioner and grossly unreasonable,misconceived in law and is an abuse of the provisions of Section 2 of ActNo. 19 of 1962. The Petitioner moved for a Writ of Certiorari to quashthe said order made under Section 2 of the Revenue Protection Actand also sought an Order of Mandamus to a refund of the duty paid inexcess during the relevant period.
Though Acts of Parliament have sovereign force, the legislation madeunder delegated power can be valid so long as it conforms exactly tothe power granted.
In the exercise of discretionary power, the Court cannot question thepropriety of the discretionary decision of the Minister or the manner ofexercising of such discretionary decision of the Minister or the mannerof exercising of such discretionary power except in cases of mala fidesPer Sripavan, J.
Sri Lanka Law Reports
 1 SRIL.R.
“Granting a waiver or exemption of the Import Duty may be absoluteor conditional. It may be used for regulating the economy or toencourage or discourage the import of cement from certain countriesor for securing the social objectives of the State”
The impugned Revenue Protection Order which was subsequentlyapproved by Parliament is not open to attack on the ground thatit imposes an import duty on a discriminating basis amongstdifferent countries as the State has a wide discretion in selectingpersons, countries or objects it will tax.
If the petitioner has paid duty in excess of what was due, it shouldhave resorted to the provisions contained in Section 18 of theCustoms Ordinance. The petitioner, without resorting to theprovisions of Section 18 of the Customs Ordinance, cannot seek anorder of Mandamus from the Supreme Court for a refund.
Per Sripavan, J.
“It has been constantly held by this Court that mandamus is notgranted at the fancy of mankind. Since the Petitioner has failed tomake any claim for a refund as provided in Section 18 of the CustomsOrdinance, the Writ of Mandamus sought is also refused.”
Cases referred to:-
Ashwathanarayana Setty v State of Karnataka 1989 Sup. ISCC 696.
L. C. Seneviratne, P. C. with Dinal Phillips and R. Panabokke for Petitioner.
Ms. Farzana. Jameel, Deputy Solicitor General for the Respondents-
Cur. adv. vult
May 28, 2009
The Petitioner-Petitioner (hereinafter referred to as thePetitioner) is a limited liability company engaged in theimport of Portland cement into Sri Lanka in bulk fromMalaysia. The petitioner company alleges that on or about23rd June 2000, the then Minister of Finance and Planningpurported to act under Section 2 of the Revenue Protection
scInternational Cement Traders (Put) Ltd vs. Prime Minister and 30 Others
Act No. 19 of 1962, made an order imposing a preferentialrate of import duty of 9.5% on cement of Indian origin andincreased the Import duly on cement imported from othercountries from 10% to 25%. The said Order was published inthe Government Gazette (Extra Ordinary) No. 1137/36 dated23rd June 2000, marked P6, in terms of Section 2 (5) of thesaid Act.
The Petitioner challenges the said Order in so far as itrelates to the importation of cement from countries otherthan India on the following grounds:
That the said Order is ultra vires the powers conferredupon the Minister of Finance under Section 2 of theRevenue Protection Act.
That it is arbitrary, capricious and discriminatory againstthe petitioner, the foreign investors and Malaysiannationals/companies who export cement to Sri Lanka.
That it is grossly unreasonable, misconceived in Law andis an abuse of the provisions of Section 2 of Act No. 19 of1962 in that it is contrary to all notions of fair trading andfavouring Indian Manufacturers to enable them to securevirtual monopoly of the Sri Lankan market.
Thus, the petitioner sought a Writ of Certiorari to quashthe Order made by the then Minister of Finance and containedin the Customs notification (Revenue Protection Order No. 2of 2000) marked P6 in so far as it relates to cement importedfrom countries other them India. The petitioner also movedfor a Writ of Mandamus on the Director General of Customsto refund the excess Duty paid from 23rd June 200 till thedate of filing this application aggregating Rs. 8,445,996/=.
The Respondents-Respondents (hereinafter referred to asthe Respondents), in their statement of objections filed by
Sri Lanka Law Reports
 1 SRIL.R.
the Director General of Customs took upon the position thatin view of the Bi-lateral Free Trade Agreement signed withIndia, the Import duty on cement had to be phased out over aperiod of 8 years commencing with a reduction of Duty at9.5%. Thus, the Import duty on cement from India wasreduced to 9.5% and a rate of 25% Import duty was leviedin respect of import of cement from all countries includingMalaysia.
The reliefs sought by the petitioner was refused and theapplication was dismissed by the Court of Appeal on 25thMarch 2003. Special Leave to Appeal was granted by thisCourt on 11th September 2003 on the following questions ofLaw:
Whether the notification in the Government Gazettemarked P6 constitutes delegated legislation, the validitywhich would be determined by a Court of Law.
Whether the notification marked P6, was arbitrary andultra vires the provisions of Section 2 of the RevenueProtection Act, No. 19 of 1962.
Has the Court of Appeal erred in Law in failing toconsider whether the reasons given for the increasedDuty on imported cement (other than from India) to25% can be accepted in the light of the fact of this case asbeing genuine or justified.
Whether the Court of Appeal has erred in law in failingto consider that the Gazette notification markedP6 is not law, having regard to the fact that theGazette notification marked P12© annexed to Dr. P.B. Jayasundera’s affidavit deals with another RevenueOrder.
scInternational Cement Traders (Pvt) Ltd vs. Prime Minister and 30 Others
Whether the Petitioner, in Law, is entitled to a refundof the Duty paid in excess of 10% during the relevantperiod.
Though the Government has wide latitude in imposingtax provisions, the increase of import duty on cementwas without any acceptable or valid grounds and wasunreasonable, arbitrary and hence illegal.
Delegated legislation takes place when the legislaturedelegates its law making power relating to a subject matterto another body or authority. Though Acts of Parliament havesovereign force, the legislation made under delegated powercan be valid so long as it conforms exactly to the powergranted. It is therefore the duty of the Court of see that thestatutory authority keeps itself within the bounds set forth bythe Act. Though the notification in the Government Gazettemarked P6 is delegated legislation, I am unable to concludethat the Minister has transgressed the bounds so set forth bypublishing the Gazette marked P6. In the case of an exerciseof discretionary power, the Court cannot question the propri-ety of the discretionary decision of the Minister or the mannerof exercising of such discretionary power except in cases ofmala fides. In the present application, it is observed that nomalice is specifically pleaded against the Minister. Grantinga waiver or exemption of the Import duty may be absolute orconditional. It may be used for regulating the economy or toencourage or discourage the import of cement from certaincountries or for securing the social objectives of the State.
The power to select the persons or goods on whomthe import duty is to be imposed, the power to amend theschedule of exemption, the determination of the rates atwhich the imported goods are to be charged etc. are mattersthat fall within the competence of the legislature. The learned
Sri Lanka Law Reports
 1 SRI L.R.
D. S. G. submitted that the Revenue Protection Order markedP6 was approved by the Parliament by way of a resolutionmade in terms of Section 10 of the Customs Ordinance on 16thAugust 2000 and published in the Government Gazette(Extra Ordinary) No. 1156/5 dated 30th October 2000. Thus,it is observed that the Revenue Protection Order markedP6 was in fact approved by the Parliament, by a resolutionmade in terms of Section 10 of the Customs Ordinance andpublished in Gazette as provided by law. Accordingly, therelevant gazette notification which approved the decisioncontained in the Revenue Protection Order marked P6 is notthe Gazette notification marked P12©, but the Gazette (ExtraOrdinary) No. 1156/6 dated 30th October 2000 and annexedin these proceedings marked X.
If the relief of Writ of Certiorari is granted by Court assought by the petitioner, then cement could be importedfrom any country other than India without payment of anyimport duty. It may be appropriate to reproduce the followingpassage from the determination made by the Supreme Courtin S. C. Special Determination No. 17/97 (Decided on 10.6.97)which followed the judgment of Venkatachaliah J. in the caseof Ashwathanarayana Setty vs. State of Kamatake 1989Sup. 1 SCC 696:-
“Though other legislative measures dealing with economicregulations are not outside article 14, it is well recognizedthat the State enjoys the widest latitude where measures ofeconomic regulations are concerned. These measures forfiscal and economic regulations involve an evaluation ofdiverse and quite often conflicting economic criteria andadjustment and balancing of various conflicting socialand economic values and interests. It is for the Stateto decide what economic and social policy it shouldpursue and what discriminations advance those social
International Cement Traders (pvt) Ltd vs. Prime Minister and 30 Others
and economic policies. In view of the inherent complexityof these fiscal adjustments, courts give a larger discretionto the legislature in the matter of its preferences ofeconomic and social policies and effectuate the chosensystem in all possible and reasonable ways”.
In view of the foregoing, I hold that the impugnedRevenue Protection Order marked P6, which wassubsequently approved by Parliament is not open toattack on the ground that it imposes an import duty on adiscriminating basis amongst different countries as theState has a wide discretion in selecting persons, countries orobjects it will tax.
If the contention of the Petitioner Company is that it haspaid Duty in excess of what was due, then it should haveresorted to the provisions contained in Section 18 of theCustoms Ordinance which deals with the manner in whichany excess payment be refunded. The Petitioner, withoutresorting to the provisions of Section 18 of the CustomsOrdinance cannot seek an Order of Mandamus from thisCourt for a refund. It has been constantly held by this Courtthat mandamus is not granted at the fancy of mankind. Sincethe Petitioner Company has failed to make any claim for arefund as provided in Section 18 of the Customs Ordinance,the Writ of Mandamus sought is also refused. For the reasonsstated, the judgment of the Court of Appeal dated 25.03.2003is affirmed. The appeal is dismissed in all the circumstanceswithout costs.
SARATH N. SILVA C. J. – I agreeP. A. RATNAYAKE J. – I agreeAppeal dismissed.
INTERNATIONAL CEMENT TRADERS (PVT) LTD vs PRIME MINISTER AND 30 OTHERS