# ORIENT PAPER MILLS LTD v. UNION OF INDIA

- **Citation:** [1969] 1 S.C.R. 245
- **Court:** Supreme Court of India
- **Decided:** 1968-05-03
- **Bench:** J. M. Shelat, K. S. Hegde
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/orient-paper-mills-ltd-v-union-of-india-4390
- **Pages:** 9

## Headnote

Quasi-Judicial
Power-exercise of-necessity
for deciding
matters
independently of dir.ections given by others.
Appeals and
Revisions1nanner in which quasi-judicial power to be exercised.
Upto February, 1961 certain "printing and-writing paper" and "packing and wrapping paper" produced by the appellant Company were subject to exercise duty 'at the rate of 22 nP. per kilogram though the former
was chargeable under Item 17(3) and the latter under Item 17(4) of the
First Scheduie to the Central Excises and Salt Act, 1944. The Finance
Act of 1961 raised the1 excise duty payable under Item 17(4) to 35 nP.
per kilogram with effect from March 1, 1968 and though for some months
the Excise Officer continued to levy duty on certain "machine glazed
paper" popularly known as "M.G. Poster paper" under Item 17(3) i.e. by
regarding it as "printing and writing paper", subsequently the excise authorities began to treat this paper as "packing and wrapping paper" and
insisted on the appellant paying duty thereon under Item 17 ( 4).
The
appellant paid the duty at the rate claimed under protest and thereafter
appfod for refund of the excess on the ground that the duty on that
paper should have been levied under Item 17(3). The Assistant Collectdr
rejected the claim.
An appeal to the Cullector and a revision to the
Central Government were also rejected.
It was clear from the order of
the Collector as well as from the counter affidavit filed on behalf of the
Government that the appeal and the revision were, rejected on the ground
that the question was covered by a di'rection issued by the Central Board
of Revenue to tho effect that the paper in question was to be treated a&
"packing and wrapping paper".
On appeal, to this Court
HELD :The direction given by the Board was invalid and had vitiated
the proceedings before the Collector as well as the Government.
The
appeals must therefore be allowed and the orders of the Central Govern~
ment as \vell as the Collector set aside, and the proceedings- remitted to
the Collector for deciding the question whether "M.G. Poster paper''
should be as·sessed as "printing and writing paper" or "packing or wrap~
ping paper" afresh. [253 A-CJ
The question whether "M.G. Poster paper" is "printing and writing
paper" or "packing and wrapping paper" is essentially a question of fact.
That had to be docided by the authorities under the Act.
The power
exercised by the Collector and the Central Government was a quasi-judi~
cial power- that could not be controlled by the directions issued by the
Board.
No authority however high placed can control the decision of a
judicial or a quasi-judicial authority.
There is no provision in the Act
empowering the Board to issue
directions to the as5""....ssing authorities or
the appellate authorities in the matter of deciding disputes between the
persons who a're called upon to pay duty and the department. Although
the assessing authorities as well as the appellate authorities are judges in
their own cause, when they are called upon to decide disputes arising
under the Act they must act independently and impartially. They cannot
246
SUPREME COURT REPORTS
[1969] I S.C.R.
h~ said to act independently if their judgm~nt is controlled by the dirccuons given by others. [249 R-C, F-HJ
Aluniiniu1n C:orporation of India Ltd. v. Union of India, C.1\. 635 of
1964, decided on September 22, 1965; Malzatlayal PremclziJ11tlra v. Com1nercia/ Tax Of]ict·r, c:a/cuua, l 19~9} S.('.R. 551 anJ B. Rajagopal Naidu
v. State Transport Appellate Tribunal, [1964), S.C.R. I; referred to.

## Text

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ORIENT PAPER MILLS LTD.
v.
UNION OF INDIA
May 3, 1968
[J. M. SHELAT AND K. S. HEGDE, JJ.]
Quasi-Judicial
Power-exercise of-necessity
for deciding
matters
independently of dir.ections given by others.
Appeals and
Revisions1nanner in which quasi-judicial power to be exercised.
Upto February, 1961 certain "printing and-writing paper" and "packing and wrapping paper" produced by the appellant Company were subject to exercise duty 'at the rate of 22 nP. per kilogram though the former
was chargeable under Item 17(3) and the latter under Item 17(4) of the
First Scheduie to the Central Excises and Salt Act, 1944. The Finance
Act of 1961 raised the1 excise duty payable under Item 17(4) to 35 nP.
per kilogram with effect from March 1, 1968 and though for some months
the Excise Officer continued to levy duty on certain "machine glazed
paper" popularly known as "M.G. Poster paper" under Item 17(3) i.e. by
regarding it as "printing and writing paper", subsequently the excise authorities began to treat this paper as "packing and wrapping paper" and
insisted on the appellant paying duty thereon under Item 17 ( 4).
The
appellant paid the duty at the rate claimed under protest and thereafter
appfod for refund of the excess on the ground that the duty on that
paper should have been levied under Item 17(3). The Assistant Collectdr
rejected the claim.
An appeal to the Cullector and a revision to the
Central Government were also rejected.
It was clear from the order of
the Collector as well as from the counter affidavit filed on behalf of the
Government that the appeal and the revision were, rejected on the ground
that the question was covered by a di'rection issued by the Central Board
of Revenue to tho effect that the paper in question was to be treated a&
"packing and wrapping paper".
On appeal, to this Court
HELD :The direction given by the Board was invalid and had vitiated
the proceedings before the Collector as well as the Government.
The
appeals must therefore be allowed and the orders of the Central Govern~
ment as \vell as the Collector set aside, and the proceedings- remitted to
the Collector for deciding the question whether "M.G. Poster paper''
should be as·sessed as "printing and writing paper" or "packing or wrap~
ping paper" afresh. [253 A-CJ
The question whether "M.G. Poster paper" is "printing and writing
paper" or "packing and wrapping paper" is essentially a question of fact.
That had to be docided by the authorities under the Act.
The power
exercised by the Collector and the Central Government was a quasi-judi~
cial power- that could not be controlled by the directions issued by the
Board.
No authority however high placed can control the decision of a
judicial or a quasi-judicial authority.
There is no provision in the Act
empowering the Board to issue
directions to the as5""....ssing authorities or
the appellate authorities in the matter of deciding disputes between the
persons who a're called upon to pay duty and the department. Although
the assessing authorities as well as the appellate authorities are judges in
their own cause, when they are called upon to decide disputes arising
under the Act they must act independently and impartially. They cannot
246
SUPREME COURT REPORTS
[1969] I S.C.R.
h~ said to act independently if their judgm~nt is controlled by the dirccuons given by others. [249 R-C, F-HJ
Aluniiniu1n C:orporation of India Ltd. v. Union of India, C.1\. 635 of
1964, decided on September 22, 1965; Malzatlayal PremclziJ11tlra v. Com1nercia/ Tax Of]ict·r, c:a/cuua, l 19~9} S.('.R. 551 anJ B. Rajagopal Naidu
v. State Transport Appellate Tribunal, [1964), S.C.R. I; referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos 659 to
664 of 1965.
Appeals by special !caw from the judgment and order dated
October 5, 1963 of the Government of India, Ministry of Finance,
Department of Revenue, New Delhi in Central Excise Revision.\
Applications Nos. 720 to 725 of 1963.
S. Ray. R. K. Chaudhury, A. N. Parikh and /J. P. Maheshivari, for the appellant.
Seiyed Mohammad and S. P .. l\'ayyar, for the respondent.
The Judgment of the Court was delivered hy
Hegde, J.
These appeals by special leave arise from the
orders made hy the Government of India, Ministry of Finance,
Department of Revenue, New Delhi on October 5.
1963. in
Central Excise Revision Applications !\as. 720 to 725 of 1963.
Herein a common question or law arises for decision and that is
whether '"M.G. Poster paper" manufactured by
the
appellantco1npany
is
a
"printing and \\'riling paper" chargeable under
item 17 ( 3) of the First Schedule to the Central Excises and Salt
Act, 1944 (No. I of 1944), hereinafter referred to as the Act or
whether it is "packing and wrappinj! paper" chargeable
under
item 17 ( 4) of the aforementioned Schedule.
The appellant is a public limited company incorporated under
the Indian Companies Act, 1913. and an
"existing company"
within the meaning of the Indian Companies Act, 1956.
It is
carrying on business, imer alia, of manufacturing and sale of
various kinds of paper at its factory at Birjrajnagar in the district
of Sambalpur in the State of Orissa.
In particular, it manufactures "packing and wrapping paper", "printing and writing paper"
and "machine glazed paper", popularly known as "M.G. Poster
paper".
Upto February 28, 1961, the date on which the Finance
Bill of that year was introduced in
Parliament, "prirrtiog
and
writing paper" and "packing and wrappini! paper" were subject
to excise duty at the rate of 22 nP per kilogram. though the former
was chargeable under item 17 (3) and the ia'tter under item 17 ( 4)
of the First Schedule to the Act.
The Finance Act of 1961
raised the excise duty payable under item 17 ( 4) to 35 nP per
kilogram with effect from March 1, 1961.
From March 1, 1961.
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ORIENT PAPER MILLS V. UNION (Hegde, J.)
247
to August 1, 1961, the excise officers levied duty on "M.G.
Poster paper" under item 17 (3) i.e. at the rate of
22 nP per
kilogram.
In other words, during that period the excise authorities treated "M. G. Poster paper" as "printing and writing paper".
Subsequently, the excise authorities began to treat this paper as
"packing and wrapping paper" and insisted on the appellant paying duty thereon under item 17 ( 4). The appellant paid duty at
that rate under protest and thereafter applied to the Assistant
Collector for refund on the ground that the duty on that paper
should have been levied under item 17 ( 3) and consequently the
duty collected was in excess of that le viable under law.
The
Assistant Collector rejected that claim. Consequently, the appellant went up in appeal to the Collector of Central Excise, who
rejected its appeal.
Then the matter was •taken up in revision to
the Government of India.
The Government declined to interfere
with the orders of the Collector.
The orders made by the Collector in the various appeals and
those made by the Government in the revisional applications are
similar in all the cases.
Therefore it would be sufficient if we
refer only to those made in one of the cases, viz., in C.A. 659 of
1965.
The contention of the appellant before the Assistant Collector,
the Collector as well as the Central Government was that "M.G.
Poster paper" is a, "printing and writing paper"
and it was
considered as such, by the Indian Tariff Board, in the Tariff
Commission Report published in 1959 and in the specifications
published by the Indian Standards Institution.
Further it was
dealt as
"printing and writing paper" in the annual rate
contracts entered into between the appellant and the Government
of India for supply of papers and paper-boards to the Government.
This contention does not appear to have been examined either by
the Collector or by the Central Government.
The Collector rejected the appeals of the appellant with these observations :-
"The crucial point in appeal is whether the paper
declared as 'M.G. Poster paper' should be assessed as
'packing and wrapping paper, other sorts' under tariff
item No. 17 ( 4) or as 'printing and writing paper, other
sorts' under tariff item 17(3).
The Central Board of Revenue have already made
it clear that all types of poster paper of whatever colour
including white should not be treated as 'printing and
writing paper' but as 'packing and wrapping paper'.
As such, the Poster paper has not been wrongly
assessed.
248
SUPREME COURT REPORTS
[1969] J S.CR.
I have carefully gone through the available records
of the case.
Considering all
the facts and
circums·tanccs, I do not find any reason to interfere with the
order passed by the A.C. appealed against His order
is therefore confirmed."
It is seen from his order that the only ground on which the Collector rejected the appeals of the appcliant was that the question
was covered by the direction issued by the Central
Board
of
Revenue-hereinafter referred to as the Board.
During the pendency of !he revision applications filed before
the Central Government, the Collector, in response to the notice
served on him. filed his objections in writing.
In those objections
he pleaded primarily two grounds in opposition to the appellant\
claim.
They are: (i) that on chemical examination it was found
that "M.G. Poster paper .. was "packing and wrapping paper" and
(ii) ·the direction issued by the Board was binding on him.
As
per its order of October 5, 1963, the Government rejected the
revision applications in question with these observations :-
"The Government of India have carefully considered all the points raised hy the petitioners, but they regret
that they do not find any justification for interfering
with the order in appeal.
The Revision Applica!ion is
accordingly rejected."
The order in question is by no means a speaking order; it is not
possible to spell out from that order the reasons that persuade<)
the Government to reject the revision applications.
The
bcs1
that can be said in favour of the Government is that it thought
that the direction issued by -the Board referred to
earlier was
decisive of the mauer. That was what was stated in the counteraffidavit filed on behalf of the Governmem of India
in
these
appeals.
The only other reason that could have influenced the
decision of the Government was the statement of the Collector
tha~ on chemical examination it was found that
"M.G. Poster
paper" was "packing and wrapping paper". If the Government
had taken into consideration any other facts in deciding the revision applications they had clearly contravened the principles of
natural justice as the appellant had not been given any opportunity to rebut those facts.
Now it is conceded that "M.G. Poster paper" wa< never chemically examined and the Collector's statemem to the
co~trary
was incorrect.
It is not possible to detern1me whether the meorrect statement made by the Collector had or had not influenced
the Government. It mav be mentioned at this stage that the
appellant had specifically. complained to the Government ~hat it
had not been supplied with the copy of any report rclatmg
to
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ORIENT PAPER MILLS V. UNION (Hegde, J.)
249
chemical examination of "M.G. Poster paper", nor was it given
any opportunity to contest 1he correctness of the facts mentioned
in that report.
Undoubtedly during the hearing of the revision
applications the appellant was not informed •that the statement
made by the Collector regarding the alleged chemical examination
was incorrect, and that statement would not be taken into consideration in deciding the revision-applications.
This leaves us with the question of the directions issued by
the Board.
The question whether "M.G. Poster paper" is "printing and writing paper" or "packing and wrapping paper" is
essentially a question of fact.
That had to be decided by the
authorities under the Act. It was not denied before us that the
Collector and the Central Government while deciding the appeals
and the revision applications respectively functioned
as
quasi
judicial authorities.
So far as the nll!ture of power exercised by
the Central Government under s.
36 of the Act (revisional
powers) is concerned, the matter is concluded by the decision of
this Court in Aluminium Corporation of India Ltd. v. Union of
India(').
Therein this Court held that the said power is a quasi
judicial power. There is hardly any doubt that the power exercised by the appellate authority, i.e. the Collector, under s. 35 is
also a quasi judil;:ial power.
He is designated as an appellate
authority; before him there was a /is between the appellant which
had paid the duty and the Revenue; and his order is subject 10
revision by the Central Government.
Therefore, it is obvious
that the power exercised by him is a quasi judicial power.
Dr.
Syed Mohammed, appearing for the respondent, did not
contend-and we think rightly-that the power exercised by the
Collector was not a quasi judicial power.
If the power exercised by the Collector was a quasi judicial
power-as we hold it to be-that power cannot be controlled by
the directions issued by the Board. No authority however high
placed can control the decision of a judicial or a quasi judicial
authority.
That is the essence of our judicial system.
There is
no provision in the Act empowering the Board to issue directions
·to the assessing authorities or the appellate authorities in the matter
of deciding disputes between the persons who are called upon to
pay duty and the department.
It is true that the assessing authorities as well as the appellate authorities are judges in their own
cause; yet when they are called upon to decide disputes arising
under the Act they must act independently and impartially. They
cannot be said to act independen1ly if their judgment is controlled
by the directions given by others. Then it is a misnomer to call
their orders as their judgments; they would essentially be the
judgments of the authority that gave the directions and which
authority had given those judgments without hearing the aggrieved
(I) C.A. 635 of 1964, decided on September 22, 1965.
250
SUPREME COURT REPORTS
[1969] t S.C.R.
party. The only provision under which the Board can issue
directions is r. 233 of the Rules framed under the Act.
That rule
says that the Board and the Collectors may issue written instructions providing for any supplemental matters arising out ot these
Rules.
Under this rule the only instruction that the Board can
issue is that relating to administrative matters; otherwise that rule
will have to be considered as ultra vires s. 35 of the Act.
In Mahadayal Premchandra
v.
Commercial Tax Officer,
Calcutta( 1 ), this Court held that the Commercial Ofiicer
while
assessing certain transactions should not have solicited
instruc·
tions from the Assistant Commissioner, nor should he have acted
on the basis. of those instructions.
It was further held that the
instructions given by the Assistant Commissioner had vitiated the
entire proceedings as "the procedure adopted was, to say the least,
unfair and was calculated to undermine !he confidence of the public in the impartial and fair administration
of the sales
tax
department."
In B. Rajagopal Naidu v. State Transport Appellate Tribunal('), this Court was called upon to consider the validity of
Madras Government Order No. 1298 dated April 28, 1956 issued
under s. 43-A of the Motor Vehicles Act, 1939, whercunder certain directions were given to the Transport Authorities
in
the
· discharge of their quasi iudicial functions.
The G.O. in question
was struck down hy this Court. In the course of the judgment.
Gaiendragadkar C:.J., speaking for the Court, observed thus :-
"In reaching this conclusion, we have been influenced by certain other considerations
which
are
both
relevant
and
material.
In interpreting s. 43-A, we
think, it would be le~itimatc to assume that the legislature intended to respect the basic and elementary
postula1c of the rule of law, that in exercising
their
authority and in discharging their quasi judicial func·
tion, the tribunals constituted
under the Act must be
left absolute!\' free to deal with the matter according to
their best judgment.
It is of the essence of fair and
objective administration of law that the decision of the
Judae or the Tribunal mt1'1 be absolutely unfettered by
any "extraneous guidance by the execu.tive or adl!1inist.rative wing of the State.
If the exercise
of d1scrctton
conferred on a quasi judicial tribunal is controll~d by
any such direction, that forges fetters on the exercise of
quasi judicial authority. and the presence ?f such fetters
would make the exercise of such authonty completely
inconsistent with the well-accepted notion of judic.ial
process.
Tt is true that law can regulate the exercise
(!) [19591 S.C.R. 551.
12) fJQf4) 7 S.C.R. I.
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ORIENT PAPER MILLS v. UNION (Hegde, J.)
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of judicial powers. It may indicate by specific provision on what matters the tnbunals constltuted by it
should adjudicate.
lt may by specific provisions lay
down the principles which have to be followed by the
tribunals in dealing with the said matters.
The scope
of the jurisdiction of 1he tribunals constituted by statute
can well be regulated by the statute and principles. tor
cruidance of the said tribunals may also be prescribed
~ubject of course to the inevitable requirement that these
provisions do not contravene the fundamental nghts
guaranteed by the Constitution. But what law and ~e
provisions of law may legitinlately do cannot be penrutted to be done by administrative or executive orders.
Tliis position is so well established 1hat we are reluctant to hold that in enacting s. 43-A the Madras Legislature intended to confer power on the State Governmerrt to invade the domain of the exercise of judicial
power. In fact, if such had been the intention of the
Madras Legislature and had been the true effect of the
provisions of s. 43-A, s. 43-A itself would amount to
an unreasonable contravention of fundamerrtal rights of
citizens and may have to be struck down as unconstitutional.
That is why the Madras High Court in dealing
with the validity of s. 43-A had expressly observed that
what s. 43-A purported to do was to clothe the Goverrunent with authority to issue directions of an administrative character and nothing more. It is somewhat
unfortunate that though judicial decisions have always
emphasised this aspect of the matter, occasion did not
arise so long to consider the validity of the Government order which on the construction suggested by the
respondent would clearly invade the domain of quasi
judicial administration."
The rule laid down in the above decisions is fully applicable
to the facts of this case. It is obvious as well as admitted that
both the Collector and the Central Goverrunent proceded on the
basis that the direction given by the Board was decisive of the
matter.
The revision applications filed before the Government
were heard and decided by one of the members of the Board.
He
appears to have proceeded on the basis that in view of the directions given by the Board nothing more need be said as to the
point in dispute. It is regrettable that when administra1ive officers are entrusted with quasi judicial functions, often times they
are unable to keep aside administrative considerations while di'-
charging quasi-judicial functions. This Court as well as the High
Courts have repeatedly tried to Jmpress upon them that their two
functions are separate; while functioning as quasi judicial officers
they should not allow their judgment to be influenced by admi-
252
SUPREME COURT REPORTS
[1969] I S.C.R.
nistrative considerations or by the instructions or directions given
by theiv superiors.
In this case both the Collector as well "'
the Central Government have ignored the line that demarcate'
their administrative duties and their judicial functions.
Dr. Syed Mohammed did not try to justify the direction given
by the Board nor did he contend that that direction has any force
of law.
On the other hand, his main contention was that the
grounds urged before this Court were not at all taken before the
Collector and the Central Government and therefore the appellant should not be permitted to take those grounds in this Court.
We do not think that Dr. Syed Mohanuncd is right in his contention.
Before the Central Government the appellant had definitely
contended that no copy of the report relating to chemical examination of "M.G. Poster paper" had been given to the appellant
and therefore the same could not have been taken into consideration.
At that stage the appellant could not have known that the
statement of the Collector relating to chemical examination of
"M. G. Poster paper" was incorrect.
As regards the validity of
the direction given by the Board, it is clear from
the notes of
argument maintained by the member of the Boa.rd who heard the
revision applications that that contention had been taken before
him, though not in the form in which it was presented before this
Court. . This what we get from the notes maintained by him :-
"The matter (as to whether 'M.G. Poster paper' is
'printing and writing paper' or 'packing and wrapping
paper') was re-examined in detail, in consultation with
all the concerned authorities, viz., the Ministry of Commerce and Industries, the Indian Standards Institution
and the Chief Chemist.
'rhe views of Collectors of
Central Excise as well as those of Collectors were also
invited.
Ultimately it was re-affirmed vide the Board's
Jetter :-lo. F. No. 21/36/61/CXIV dated November 6,
1961, that poster paper was correctly
assessable
as
'packing and wrapping paper' and should continue to
be assessed as such.
F.M.'s approval was also secured
before confirming this position.
This therefore should
settle the main issue regarding the classification of the
poster paper."
From these notes ii is clear that at any rate the correctness of the
direction issued by the Board was put in issue during the hearing
of the revision applications.
That apart, we. arc clearly. of !he
opinion that even if the question of the lcgali1y of the dircc!1~>n
issued by the Board had not been taken before the authonttcs
under the Act, as ihat direction completely vitiates the p~ocecd
ings and makes a mocke"". of the judicial process. we thmk we
oaght to consider the legality of that dtrcchon.
For the reasons
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ORIENT PAPER MILLS V. UNION (Hegde, J.)
253
already mentioned, we hold that •that direction was invalid and
the same has vitiated the proceedings before the Collector as well
as the Government.
Both the appellant as well as the Revenue invited us to decide
the case on the basis of the material on record.
Ordinarily this
Court does not go into questions of fact. That is 1he duty of the
authorities under the Act.
We see no exceptional circumstances
in this case requiring us to deviate from 1he ordinary rule.
For the reasons mentioned above, these appeals are allowed
and the orders of the Central Government as well as that of the
Collector are set aside, and •the proceedings remitted to the Collector for deciding the question whether "M.G. Poster paper" should
be assessed as "printing arid writing paper" or as "packing and
wrapping paper" afresh.
The respondents shall pay the costs of
the appellant in all these appeals; hearing fee one set.
R.K.P.S.
Appeals allowed.
12Sup. C. L/68-2