Supreme Court Upholds Freedom of Press but Directs Reconsideration of Customs Duty on Newsprint

Landmark Judgment Balances Press Freedom Under Article 19(1)(a) with Government’s Taxation Powers; Courts Emphasize Reasonableness of Levy and Impact on Newspaper Circulation

In a significant ruling delivered on December 6, 1984, the Supreme Court of India addressed the constitutional challenge to the imposition of customs duty on newsprint imported by newspaper publishers. The case, involving prominent petitioners such as Indian Express Newspapers (Bombay) Pvt. Ltd., Bennett, Coleman and Company Ltd., The Statesman Ltd., Kasturi and Sons Ltd., and Ananda Bazar Patrika Ltd., was heard by a bench comprising Justices O. Chinnappa Reddy, A.P. Sen, and E.S. Venkataramiah.

The petitioners contested notifications issued under Section 25 of the Customs Act, 1962, which levied customs and auxiliary duties on newsprint from March 1, 1981, onwards. They argued that the imposition of these duties infringed upon their fundamental right to freedom of speech and expression under Article 19(1)(a) of the Constitution, as the increased cost of newsprint led to higher newspaper prices, consequently reducing circulation and impeding the public’s right to information.

The Court acknowledged that while the Constitution does not explicitly mention “freedom of the press,” it is an integral part of the freedom of speech and expression under Article 19(1)(a). Upholding the inviolability of press freedom as the “heart of social and political intercourse” and “the soul of democracy,” the Court emphasized the press’s role as the “public educator,” enabling informed democratic participation. The judgment extensively quoted international instruments such as the Universal Declaration of Human Rights and decisions from the U.S. Supreme Court to underscore the global recognition of press freedom.

However, the Court also recognized the inherent power of the State to levy taxes, including on the newspaper industry, under Articles 19(1)(g) and Entry 83 of List I of the Seventh Schedule. It held that newspapers, especially large establishments, enjoy characteristics akin to other industries and must contribute their fair share to public revenues. The Court clarified that while taxes on newspapers are permissible, such levies must not be so excessive as to encroach upon the essential scope of freedom of speech and expression.

In applying these principles, the Court scrutinized the history and justification of the customs duty on newsprint. It found that:

- Total exemption on customs duty for newsprint existed till March 1, 1981, following recommendations recognizing newsprint’s vital democratic role.

- The imposition of a 15% customs duty and auxiliary duties thereafter was justified by the Government as a measure to conserve foreign exchange and restrain newsprint consumption.

- The levy was classified based on newspaper circulation—small newspapers were exempt, medium newspapers paid reduced duty, and big newspapers bore full duty.

Yet, the Court expressed concern that the Government did not adequately consider relevant factors such as the industry’s capacity to bear the levy, the actual impact on circulation, or the foreign exchange position at the time of imposing the duty. The Finance Minister’s statement that the duty was imposed because some newspapers contained ‘piffles’ (nonsense) was rejected as an impermissible ground.

Importantly, the Court found that the impugned notifications under Section 25 of the Customs Act, though a form of subordinate legislation, are subject to judicial review on grounds of reasonableness and conformity with constitutional mandates. It dismissed the Government’s contention that such notifications are immune from administrative law scrutiny.

The Court upheld the classification of newspapers for duty purposes as reasonable and not violative of Article 14 (equality before the law), recognizing the objective to assist small and medium newspapers.

Given the complex statutory framework and the potential adverse impact on press freedom, the Supreme Court refrained from outright quashing the notifications. Instead, it directed the Government to reconsider the entire levy scheme on newsprint within six months, taking into account all relevant factors including the burden on the newspaper industry and the fundamental right to freedom of expression.

Meanwhile, the Court ordered that only a reduced customs duty of Rs. 550 per metric ton be collected, maintaining concessions for small and medium newspapers, until the Government completes its review. It allowed for adjustments in duty payments or refunds based on the Government’s final decision.

The judgment thus establishes a nuanced balance between the State’s fiscal powers and the constitutional protection of press freedom, reinforcing the judiciary’s role as the guardian of fundamental rights. It highlights that taxation on the press must be reasonable and not used as a covert means of censorship or suppression.

Statutory provisions

Article 19(1)(a), Article 19(1)(g), Article 19(2), Article 19(6), Article 14, Article 32, Article 142, Article 289, Section 12 of Customs Act, 1962, Section 25 of Customs Act, 1962, Section 2 of Customs Tariff Act, 1975, Finance Act, 1981, Finance Act, 1982, Finance Act, 1983

Indian Express Newspapers (Bombay) Private Ltd. v. Union of India, (SC) : Law Finder Doc Id # 90453