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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.33 of 2015
Shri.Naman Hotels Private Ltd }
315, Parekh Market,. }
39, JSSR Road, Opera House, }
Mumbai-400 004. } .. Petitioner
vs }
1. The Union of India through the }
Ministry of Commerce and Industry, }
having its office at Udyog Bhavan,
ig }
New Delhi-110 011. }
}
2. Director General of Foreign }
Trade, Ministry of Commerce and }
Industry, Government of India, having }
his office at Udyog Bhavan, }
New Delhi-110 011. }
}
3. Additional Director General }
of Foreign Trade }
Ministry of Commerce and }
Industry, Government of India } .. Respondents
with WRIT PETITION NO.3040 OF 2014
Juniper Hotels Pvt Ltd }
Off Western Express Highway, }
Santacruz (East) }
Mumbai-400 055. }
vs }
1. The Union of India through the }
Ministry of Commerce and Industry, }
having its office at Udyog Bhavan, }
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New Delhi-110 011. }
}
2. Director General of Foreign }
Trade, Ministry of Commerce and }
Industry, Government of India, having }
his office at Udyog Bhavan, }
New Delhi-110 011. }
3. Zonal Additional Director }
General of Foreign Trade, }
Ministry of Commerce and }
Industry, Government of India, }
having his office at CGO Office, }
New Building, SE Wing, ig }
New Marine Lines,Churchgate, }
Mumbai- 400 020 } .. Respondents
with WRIT PETITION NO.1516 OF 2015
Johnson & Johnson Pvt.Ltd }
Arena Space }
Off.J.V.Link Road,Jogeshwari (East) }
Mumbai-400 060. }
v/s }
1. The Union of India through the }
Ministry of Commerce and Industry, }
having its office at Udyog Bhavan, }
New Delhi-110 011. }
}
2. Director General of Foreign }
Trade, Ministry of Commerce and }
Industry, Government of India, having }
his office at Udyog Bhavan, }
New Delhi-110 011. }
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3. Zonal Additional Director }
General of Foreign Trade, }
Ministry of Commerce and }
Industry, Government of India, }
having his office at CGO Office, }
New Building, SE Wing, }
New Marine Lines,Churchgate, }
Mumbai- 400 020 }
4. Foreign Trade Development }
Officer, Zonal Additional }
Director General of Foreign }
Trade, Ministry of Commerce }
and Industry, Government of
ig }
India, having its office at }
CGO Office, New Building, }
SE Wing,New Marine Lines, }
Churchgate, Mumbai-400 020 } ..Respondents
with WRIT PETITION NO.1755 OF 2015
Thyssenkrupp Industrial Solutions }
(India) Private Limited }
(erstwhile known as UHDE India }
Private Limited) UHDE House, LBS }
Marg, Vikhroli (West) }
Mumbai-400 083 }
vs
1. The Union of India through the }
Ministry of Commerce and Industry, }
having its office at Udyog Bhavan, }
New Delhi-110 011. }
2. Director General of Foreign }
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Trade, Ministry of Commerce and }
Industry, Government of India, having}
his office at Udyog Bhavan, }
New Delhi-110 011. }
3. Secretary to the Government }
of India, Ministry of Commerce }
and Industry, Department of }
Commerce, having his office }
at Udyog Bhavan, New Delhi-110011. }
4. Zonal Additional Director }
General of Foreign Trade, }
Ministry of Commerce and }
Industry, Government of India,
ig }
having his office at CGO Office, }
New Building, SE Wing, }
New Marine Lines,Churchgate, }
Mumbai- 400 020 }
5. Zonal Assistant Director }
General of Foreign Trade, }
Ministry of Commerce }
and Industry, Government }
of India, having its office at CGO }
Office, New Building,SE Wing, }
New Marine Lines,Churchgate, }
Mumbai-400 020. .. } Respondents
Mr.Rafique Dada, Sr.Counsel a/w Mr.Rohan Shah,
Mr.Anay Banhatti,i/b Economic Laws Practice
Advocates for Petitioner in W.P.No.1516/2015
Mr.Rafique Dada Sr.Counsel a/w Mr.Rohan Shah
Mr.Anay Banhatti,Mr.Ranjeet Mohtani
i/b Economic Laws Practice Advocates
for Petitioner in W.P.No.1755/2015
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Mr.Rohan Shah a/w Mr.Anay Banhatti, Mr.Sushant
Murthy, Mr.Harsh Shah Advocates i/b
Economic Laws Practice
for Petitioner in W.P.No.3040/2015
Mr.PradeepS.Jetley a/w Ms.Shehnaz
V.Bharucha Advocates for Respondents
in W.P.No.1516/2015 and W.P.No.1755/2015
Mr.A.J.Rana,Sr.Counsel a/w Ms.S.V.Bharucha for
Respondent Advocates in W.P.No.33/2015
Mr.A.J.Rana Sr.Counsel a.w Ms.N.V.Masurkar
Advocates for Respondents in W.P.No.3040/2014
...
CORAM: S.C.DHARMADHIKARI & G.S.KULKARNI, JJ DATE: 17TH AUGUST, 2015 ORAL JUDGMENT (Per S.C.Dharmadhikari, J)
1. These Petitions were argued together and though there is some difference in the factual position but, essentially the controversy is identical. Common submissions were canvassed and therefore, the Petitions can be disposed of by a common judgment
2. We admit each of these Petitions and proceed to dispose them of finally, by consent of the parties, by this judgment and ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 6 33.14.1516.15.1735.15.doc order. Mr.Jetley and other Advocates waive service for respondents.
3. For the sake of convenience, we take facts in Writ Petition No.1755 of 2015. The Petitioner herein is a company incorporated under the Indian Companies Act 1956 and has its Registered office at the address mentioned in the cause title. The Petitioner claims that it was incorporated in India in December 1977 and has been recognized as a export house for the last 14 years. The petitioner is engaged in the provision of wide range of engineering, procurement, construction and management services as well as lump sum turn-key projects for various industrial plants both in India and overseas. The overseas assignments of lump sum turn-key projects and engineering, procurement and management services are undertaken from India by the Petitioners. The remittance of such services are received in convertible foreign exchange in India. These services of the Petitioner also qualify as export of services under the law governing the levy of service tax in India. The Petitioner states that it has complied with all laws, rules,regulations and enactments made by the Parliament. It has also complied with taxing statutes and other legislations.
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4. The Ministry of Commerce and Industry, Government of India is the 1st Respondent and the 3rd Respondent is the Secretary in the said Ministry.
5. The 2nd,4th, and 5th Respondents are the authorities exercising powers under Foreign Trade (Development and Regulations) 1992 (for short 'Foreign Trade Act').
6. The Petitioner impugns the order passed by the Secretary in the Department of Commerce and Industry, Government of India holding that the Petitioner is not entitled to the Duty Credit scrip under the Served From India Scheme (for short 'SFIS'). That order dated 22 nd May, 2015 is challenged in this Writ Petition.
7. It is common ground that in an earlier Writ Petition filed by this very Petitioner being Writ Petition No.2011 of 2014 after hearing both sides, this Court passed an order dated 5 th December, 2014. That is how on remand, the matter was placed before the Secretary in the Department of Commerce and Industry, Government of India.
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8. As already stated, the Petitioner relies upon SFIS scheme which is introduced in the Foreign Trade Policy 2004-2009 which granted Duty Credit Entitlement equivalent to 10% of foreign exchange earned in preceding financial year to all service providers engaged in list of specified services and having total foreign exchange earnings of at least Rs.10 lakhs in preceding or current financial year. The Petitioner relies upon the Minutes of the Policy Interpretation Committee (PIC) meeting applicable for Foreign Trade Policy 2004-09 only to state that it is an interpretation placed by this Committee on 27th December, 2011.
9. Thereafter, the Foreign Trade Policy of 2009-14 (FTP for short) came to be notified. The Petitioner submits that benefits flowing from the earlier scheme are available even in this Foreign Trade policy. It is the case of the Petitioner that from 2003 to 2012, the Petitioner had applied for and was uninterruptedly granted SFIS benefits by the respondents. The Petitioner is therefore, entitled to same benefits when SFIS is continued in 2009-14. The details of the entitlement granted in an uninterrupted manner are relied upon by the Petitioners and they are set out at pages 10 and 11 of this Petition.
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10. The Petitioner therefore, applied for Duty credit entitlement under SFIS for the year 2012-13. The 4 th Respondent to this Petition through the 5th Respondent communicated by letter dated 8th July, 2014 that the Petitioner's application seeking the benefits is deficient on account of the fact that the Petitioner is promoting 'Thyssenkrupp' brand which is not an Indian brand and that Petitioner is not an Indian service provider. This letter/communication and order contained therein dated 8 th July, 2014 relied upon the Minutes of the meeting of Policy Interpretation Committee of 27th December, 2011. According to the Respondents, the intention behind this scheme is to encourage Indian brands and the Petitioner is not promoting any Indian brand. That is how the Petitioner's application was rejected. Furthermore, the Petitioner received recovery letters dated 27th August 2014 whereunder the Respondent no. 4 sought to recover benefits granted in the past under the scheme for the year 2007, 2008, 2009 and 2012 respectively. In the opinion of the Petitioner such a communication is not capable of being challenged by filing an Appeal under section 15 of the Foreign Trade Act, 1992 and the remedy of the Appeal will not be alternate and equally efficacious. That is how the earlier Writ Petition was filed in this Court and reliance is placed upon ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 10 33.14.1516.15.1735.15.doc order dated 5th December, 2014.
11. After receipt of this order dated 5th December, 2014 passed by this Court, the Petitioner approached the Respondent no.3 and requested him to issue a clarification. The Petitioner also relied upon inter alia on the judgment and Order of the learned Single Judge of the Delhi High Court dated 27th January 2015 and in the case of "M/s Yum Restaurants (I) Pvt. Ltd & Anr Vs Union of India & Ors." in Writ Petition (Civil) No.7011 of 2012 and Writ Petition (C) No.6800 of 2013 together with other Petitions.
12. The Petitioner prayed for a personal hearing before the 3rd Respondent and awaited a favourable decision and according to it particularly when the Delhi High Court had dealt with an identical issue and judgment of that Court would bind the Government. It is based on that the Petitioner expected a favourable response. However, the Petitioner was communicated an order dated 22th May, 2015 (impugned order) and that is how this Writ Petition has been filed.
::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 1133.14.1516.15.1735.15.doc 12A. More or less identical facts are set out in other Petitions.
The core controversy is same. It may be that in some cases, the Petitioners have directly approached this Court and has not gone to the Government any further.
13. Mr.Rafique Dada learned senior counsel appearing on behalf of the Petitioners submits that the Petitioner have a strong Indian presence and base. The Petitioner is a company incorporated in India in its name and style and carrying on business in India at least from 1977. The Petitioner employs around 1100 personnel. The Petitioner has been operating in India and complying with all relevant and applicable laws. The Petitioner is registered as a Service Provider for the purpose of payment of service tax in India. It has a permanent place of business in India and even it receives service from a Foreign Service Provider. It takes upon the obligation to discharge service tax liability. In the circumstances, the Petitioner stands at par with any other Indian entity. The Petitioner satisfies the criteria as an Indian service provider.
14. Mr.Dada then submits that the 3rd Respondent while passing the impugned order has made no reference to the order passed by this Court ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 12 33.14.1516.15.1735.15.doc nor it has made any reference to the order passed by the Delhi High Court.
The order is therefore, completely unsatisfactory. It fails to take note of the fact that this Court passed an order and while passing such an order it emphasized that the issue is to be decided by the Government and a Secretary Level Officer should deal with the same and pass a reasoned order. This Court according to Mr.Dada learned senior counsel, had expected that in what manner Foreign Trade needs to be developed, regulated and established is to be decided by the authorities under the Foreign Trade Act 1992. If any policy is evolved under the Foreign Trade Act, then, it is the duty of the Government to decide the cases and like that of the Petitioner as per the terms of the policy. The Policy Interpretation Committee's decision cannot bind the Government. The Secretary had to apply his mind independently. He would not be bound by any prior decision or that of the Directorate General of Foreign Trade. That is what is stated in Paragraph 8 of the order passed by this court on 5 th December,2014, where the Court invited the attention of the Government of India to the fact that it is the Secretary in that Department who is expected to take a decision uninfluenced by any considerations and in accordance with law. Mr.Dada submits that this order has not been ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 13 33.14.1516.15.1735.15.doc complied with by the Government at all. The order of this Court and equally issues raised by the Delhi High Court are brushed aside and therefore, the impugned order dated 22 nd May, 2015 should be quashed and set aside on this ground alone.
15. In addition, Mr.Dada submits that on merits also the Petitioner has a very good case. The test is that the benefits are available to a Service Provider. That service must originate in India. The Petitioner is an Indian Service Provider and while exporting services earns foreign exchange in India and therefore the benefit of this policy should have been extended and granted to the Petitioner. Mr.Dada would submit that the term "Indian service provider" or "service having Indian brand" are both phrases which take colour from the scheme which has been framed under the powers conferred by the Foreign Trade Act, 1992. It is a scheme which is applicable to such Service Provider who by an export service from India assists India in building up its foreign exchange reserves. If utilization of the scrip or benefits have to be extended on such an understanding, then, it is evident that the impugned order fails to take note of the same. The basis on which the order proceeds is that all shareholder of the Petitioner ought ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 14 33.14.1516.15.1735.15.doc to be Indian. There is no such requirement and which can be inferred from the policy or the scheme. It is augmentation of foreign exchange reserves which is the primary objective and intent to be fulfilled.
Therefore, merely because the Petitioner has some foreign shareholder or some foreign entity has a controlling interest does not mean that the Petitioner is ineligible for the benefits. There is no requirement that a Indian Service Provider and particularly in the case of a company its Directors/Members/Shareholders should be of Indian origin. Thus, there is no requirement of nationality and which has to be read into the policy namely Foreign Trade Policy and the scheme. The impugned order fails to take note of the international ramifications of the General Agreement on Trade (GATS) in Services. This is a globally accepted and recognized agreement. It applies measures by members affecting trade in service.
Mr.Dada relies upon Article 1 falling in Part I of this General Agreement on Trade in service. Particularly clause 2 which reads thus:
2. " For the purposes of this Agreement, trade in services is defined as the supply of a service:
(a) from the territory of One Member into the territory of any other Member.
(b) in the territory of one Member to the service consumer of any other Member.
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(d) by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member.
16. Mr.Dada would submit that the term "services " have been defined in the Policy (FTP 2009-14, Chapter 9 Definitions) to include all tradable services covered under General Agreement on Trade in Services (GATS) and earning free foreign exchange. This is a wide definition for the purpose of (GATS) and if international repercussions and ramifications are ignored by the Central Government, then, the impugned order and conclusions therein cannot be sustained. Mr.Dada submits that the impugned order also fails to take note of the objections of the Petitioner that past benefits and as extended to the Petitioner cannot be recovered.
The settled rule of interpretation that matters which are concluded and closed cannot be reopened more so after a unreasonable and unexplained delay, would apply in the facts and circumstances of the present case.
17. Mr.Dada has extensively taken us through the impugned order and Handbook of Procedures for 2009-14. Mr.Dada has also taken us through the promotional clauses and paras falling in Chapter I, I-A Chapter ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 16 33.14.1516.15.1735.15.doc II and particularly para 2.3, 2.29 and 2.48 and 2.48.1 and 2.48.2.
Thereafter Mr.Dada has taken us through the Reward/Incentive scheme in the Directorate of General Foreign Trade. Mr. Dada submits that a Status Holder shall be eligible for privileges as spelt out Clauses in 3.10.4 and 3.11.1 denotes as to for why "Served from India" scheme has been promulgated. The objective is set out in clauses 3.12.1 to 3.12.2.
According to Mr.Dada it does not mean that the scheme, is inapplicable to the Petitioner. Clause 3.12.3 referring to the ineligible services does not include the Petitioner's services. Further, the Petitioner fulfills the entitlement criteria as set out in clause 3.12.4 of Chapter 3 of FTP.
Mr.Dada would heavily rely upon clauses 3.12.5 and 3.12.7 to submit that eventually the objective is to ensure that foreign exchange reserves are augmented by export of goods and services. Mr.Dada also brought to our notice certain other schemes under the Foreign Trade Policy and containing similar objectives. Our attention is also invited to the definition of the term "person" appearing in Chapter 9 of FTP 2009-14 and Mr.Dada would submit that this is a definition for the purpose of the Foreign Trade policy.
There is nothing which the context otherwise requires and therefore the definition of the term "person" includes an individual, firm, society, ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 17 33.14.1516.15.1735.15.doc company, corporation or any other legal person including the DGFT official. Paragraph 9.45, 9.52 and 9.53 would be fully applicable and attracted. Our attention is also invited to Chapter III where promotional measures are implemented. Mr.Dada emphasized the language of clause 3.6 in this Chapter and also clause 3.6.1. He would submit that use of the word "remittances" extensively throughout the scheme would indicate that the underlying object is to earn foreign exchange. Therefore, the objection that the Petitioner does not promote Indian brand or is not engaged in service which is expected to create a powerful and unique 'Served from India brand' instantly recognized and respected world over, is of no substance. In the circumstances, Mr.Dada submitted the order of the Secretary in the Department of Commerce and Industry should be set aside.
He relied on the composition of the Policy Interpretation Committee (PIC) and submits that it is a internal Committee set up by the Ministry of Commerce and Industry. The views which the Directorate holds can never override that of the Government nor can the Government be bound by the same in any manner. The Government is duty bound to undertake measures like framing a Foreign Trade Policy in the backdrop of Foreign Trade (Development and Regulation) Act 1992 independently and uninfluenced ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 18 33.14.1516.15.1735.15.doc by the Department's communications and views.
18. Mr.Dada has also relied upon the definition of the word 'company' under the Indian Companies Act 1956 particularly a " Indian Company." He also relied upon allied definitions under the Income Tax Act,1961. Mr.Dada places reliance on section 3 of the Indian Companies Act, 1956, section 2 (26) of the Income Tax Act 1961 and section 2 (u) (v) of the Foreign Exchange Management Act, 1999. He also relies upon the Foreign Trade Act, 1992 and Rules framed thereunder so also Notification No.20 dated 13th June, 2013 which is issued by the Ministry of Commerce and Industry, Government of India setting out the hierarchy of Officers in the Directorate General of Foreign Trade.. This is to emphasize that the Government is in exclusive control of the Department or the Foreign Trade Directorate. Therefore, the officials cannot question the Government's decision or interpretation of even policy measures. Mr.Dada has placed reliance upon the judgment of the Hon'ble Supreme Court of India particularly on the ambit and scope of section 5 of the Foreign Trade Act 1992. These decisions are referred in case of "Atul Commodities Pvt Ltd Vs. Commissioner of Customs Cochin, 2009 (235) ELT 385 (SC.)". The ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 19 33.14.1516.15.1735.15.doc principle on which Mr.Dada places reliance is that in the garb of interpreting the Foreign Trade Policy, the power of the Government to amend it cannot be usurped by the Officers who are in-charge of its implementation. They cannot amend any policy in the garb of implementation and interpretation of the same. Therefore, the above decisions and followed by this Court outlining these principles are heavily relied upon by Mr.Dada.
18A. Mr.Dada's arguments are supported by Mr.Rohan Shah and other counsel and they also invited our attention to certain salient features of the FTP.
19. On the other hand, Mr.Jetley appearing on behalf of the respondents in supporting the impugned order would submit that all the contentions of Mr.Dada are overlooking the fact that this Court did not in any manner direct that a particular view of the matter should be taken by the Central Government or that a decision upholding the Petitioner's contentions alone could be reached. This Court directed and particularly the Secretary in the Department to take a informed and a rational decision ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 20 33.14.1516.15.1735.15.doc without being influenced by the stand of the Director General. The Secretary has passed an order which he was fully authorized and competent to pass. He is not purporting to consider irrelevant matters much less amending any policy which was existing all the while. He has passed an order interpreting it in tune with and in consonance with the Foreign Trade Act, 1992. He has held that the whole purpose in making the scheme was to accelerate growth in export of services so as to create a powerful and unique "served from India" brand instantly recognized and respected world over. Thus, this object is in forefront and runs as a theme throughout the impugned order. There is no object as assumed by the Petitioner of augmenting foreign exchange resources of this country.
20. Mr.Jetley has placed heavy reliance on the preamble of the Foreign Trade (Development and Regulation) Act, 1992 and submits that this Act provides for development and regulation of foreign trade by facilitating imports into and augmenting exports from India, and all matters connected therewith or incidental thereto. Mr.Jetley submits that the scheme was continued from 2004 to 2014. Mr.Jetley placed heavy reliance upon clauses 3.12.1 and 3.12.2 of the Foreign Trade policy 2009-
::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 2133.14.1516.15.1735.15.doc 14 and submits originally it covered All India Service Providers and from 18th January 2011 the word 'all' was deleted. The list of service providers eligible for such benefit was set out earlier in Appendix 10 and by the Notification under Appendix 41 of HBP Volume 1. Mr.Jetley submits that the benefits of SFIS are available only in India so as to create powerful and unique 'Served From India' brand instantly recognized and respected world over. Such benefit is to the exclusion of well established foreign brands which have also set base in India and are therefore providing services out of India. This is for the simple reason that the said brands were already recognized and respected world over, before the company set base in India. In such cases there is no occasion to satisfy the requirement of para 3.12.1 of the FTP.
21. Mr.Jetley submits that including one of the Petitioner namely Johnson and Johnson Pvt. Ltd all such brands were already recognized and respected world over prior to their entry in India. Surely, the Indian Government will initiate measures,steps and frame policies in tune with the provisions of the parliamentary Act and empowers the authorities accordingly. It will frame a scheme for the benefit of service ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 22 33.14.1516.15.1735.15.doc provider who are exporting services but would never intend that the benefits should go to those brands which are already established in world over. In these circumstances, Mr.Jetley learned counsel fully supports the impugned order. He submits that if the objective of SFIS is properly understood then the benefit is given to brands promoted and developed from India. Any other interpretation would do violence to clause 3.12.1 of FTP 2009-14 of the Foreign Trade Act, 1992. Thus, heavy reliance is placed on clause 3.12.1 and it is submitted that read with other clauses, it would be apparent that the view taken or interpretation placed is neither new or inconsistent with FTP. Throughout, this was the view and this was the interpretation. In matters of interpretation of policy measures, designed and evolved for the Development and Regulation of Foreign Trade, the Government must be given more latitude and liberty. So long as the interpretation is not arbitrary and parties like the Petitioner do not have any vested right nor can claim to be possessing the same, then the Government's orders should not be interfered by this Court. Once the view taken is neither arbitrary but is consistent with the policy measures, then, in writ jurisdiction this Court cannot substitute its views with that of the Government.
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22. Mr.Jetley submits that the argument of Mr.Dada learned counsel that the nationality of share holders is the only test applied in the impugned order is erroneous and incorrect. It is coupled with other features and as noted hereinabove but additionally to support the Government's conclusions that it is held that the objective of the scheme will be fully achieved only when the share holders of the company are also Indian or Indian Nationals. That cannot be possible if an Indian Company providing service has share holders of other nationality and belonging to other country or a foreign national claims to be Indian service provider.
Therefore, no additional conditions have been imposed nor levied contrary to the SFIS scheme. He, therefore submits that the Central Government did not disrespect nor disregard the order passed by this Court and merely because the impugned order makes no reference to the view taken by the Delhi High Court does not mean that it should be set aside. Mr.Jetley does not support the order to the extent of making no reference or its failure to take note of the judgment of the Delhi High Court though cited but submits that the conclusions in the impugned order are unassailable. They can be supported by materials referred to. Mr.Jetley placed reliance upon the affidavit in reply and the written note of his submissions tendered after the ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 24 33.14.1516.15.1735.15.doc arguments. He would submit that for reasons that have been assigned in the impugned order, it should be upheld.
23. Mr.Jetley, distinguished the judgments which are relied upon by Mr.Dada, learned Senior Advocate, by urging that in this case the issue of applicability of Section 5 of the Foreign Trade Act and powers conferred thereunder on the Central Government does not arise and therefore those decisions are not at all relevant. Therefore, the judgment of this Court as also the Supreme Court cannot be of any assistance to Mr.Dada. Mr.Jetley finally submitted that each of these Petitions be therefore, dismissed.
24. With the assistance of Mr.Dada learned senior counsel and Mr.Jetley we have perused the writ petitions and all Annexures thereto.
We have perused the Foreign Trade Act, 1992 and the FTP for the period 2009-14 with all paragraphs and sub-paragraphs relied upon. We have also perused the decisions brought to our notice. We are not concerned with the policy which is currently in force and though Mr.Dada has tendered copy of the same, particularly the Foreign Trade Policy and Handbook of ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 25 33.14.1516.15.1735.15.doc Procedures, Centax Publication, 21st Edition by R.K.Jain 2015-16, we do not wish to make any reference to the same for the simple reason that it is permissible for the Government to evolve another policy or frame altogether a new one or by substituting some of the provisions of the earlier policies. We would be content in referring only to the applicable policy.
25. At the outset, we must also clear the ground in as much as Atul Commodities Pvt. Ltd (supra) is a decision on the power to amend the policy. Section 5 of the Foreign Trade (Development and Regulation) Act, 1991 empowers the Central Government to formulate and announce by a notification in the official Gazette, the Foreign Trade Policy and the Government may also amend that policy. Proviso to section 5 is also clear inasmuch as in respect of Special Economic Zones, the Government may direct that the foreign trade policy shall apply to the goods, services and technology with such exceptions, modifications and adaptations as may be specified by it by notification in the Official Gazette. The question involved in these set of petitions is different and not concerning any amendment to the FTP. The question before us is one of interpretation of certain paragraphs of the applicable FTP and which aspect arises during the ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 26 33.14.1516.15.1735.15.doc course of its implementation. Surely that is a power which is available to the authorities in-charge of implementing it.
26. We are concerned with the issue as to whether in the garb of doing the same, have the authorities purported to interpret and give the FTP meaning which is contrary to its express clauses or the words appearing in some of them or they have taken a view of a policy which is totally arbitrary and completely at variance with the object and purpose sought to be achieved. In these circumstances, neither the dictum in Atul Commodities Pvt. Ltd (supra) nor in Narendra Udeshi & Anr Vs. Union of India (2003) 156 ELT 819 (Bom) can have any applicability.
Further reliance placed on Eurotex Industries And Exports Ltd. vs. Union of India (2011) (267) ELT 13 (Bom) will not be of any assistance at all.
There the Notification under section 5 of the Foreign Trade Act 1992 in relation to FTP 2009-14 by which the Central Government for the first time imposed restrictions on exports of cotton yarn by directing that the contracts for export of cotton yarn shall be registered with the Textile Commissioner prior to shipment and clearance for export of cotton yarn consignments shall be given by customs authorities after verifying that the ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 27 33.14.1516.15.1735.15.doc contracts have been registered, was the issue. According to the Division Bench this exercise directly contravenes the mandate of section 3 and 5 of the Foreign Trade Act. In the case of TATA Communications Ltd vs Union of India (2012) (25) STR 131 (Bom) this Court considered the issue which was covered in Vodafone Essar Ltd vs Union of India 2011 (270) ELT 492 (Bom). The benefits served from India scheme were purported to be availed under Circular dated 15 th July, 2010. The Scheme was formulated in FTP for 2004-08 but, the Circular was based upon an interpretation of the Policy Interpretation Committee in its meeting held on 5th July, 2010. The decision taken in the meeting and Rule 1 (2) (b) 4 (2) and 4 (iii) were challenged and in that context the object of Foreign Trade Act and definitions thereunder was considered. In para 11 the issue was summarized and whether the Petitioner like Tata Communications and Vodafone Essar Ltd, fall within these provisions of the expression "Service Provider" in para 9.53 of the policy was dealt with. All findings and conclusions of the Division Bench and relied upon before us by Mr.Dada ought to be seen in this admitted factual backdrop. The observations and conclusions reached by the Division Bench in Tata Communications (supra) particularly in paras 11 and 13 are thus, confined ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 28 33.14.1516.15.1735.15.doc to those Petitioners and their cases. The requirement and the eligibility criteria evolved was clearly set out in the judgment which the Division Bench made a reference to. These issues were concluded but the Policy Interpretation Committee purported to amend or modify the same. That was a impermissible exercise and clearly beyond the powers of the Committee and therefore, illegal. It is in these circumstances, that reference to any further judgment becomes unnecessary. The issue before us is distinct and not falling within the parameters decided by this Court and the Supreme Court.
27. We must now refer to Foreign Trade (Development and Regulation) Act 1992. As referred in the Preamble that it is an Act to provide for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from, India and for matters connected therewith or incidental thereto. It is a Act empowering the Government to take measures for the development of and equally regulate foreign trade.
That it can do so by facilitating imports and augmenting exports from India would indicate that all the measures devised, Schemes formulated and put in place, steps taken have to meet this primary and predominant object.
::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 2933.14.1516.15.1735.15.doc The definitions in the Act are to be found in section 2. Section 2 (e) of the Foreign Trade Act, 1992 is of some assistance. That reads as under :
"2. Definitions:
(e) "import" and "export" means-
(I) in relation to goods, bringing into, or taking out of, India any goods by land, sea or air;
(II) in relation to services or technology-
(i) supplying services or technology-
(A) from the territory of another country into the territory of India ; (B) in the territory of another country to an Indian service consumer;
(C) by a service supplier of another country through commercial presence in India;
(D) by a service provider of another country, through presence of their natural persons in India ;
(ii) supplying, services or technology-
(A) from India into the territory of any other country; (B) in India to the service consumer of any other country; (C)by a service supplier of India, through commercial presence in the territory of any other country;
(D) by a service supplier of India, through presence of Indian natural persons in the territory of any other country.
Provided that "import" and "export" in relation to the goods, services and technology regarding Special Economic Zone or between two Special Economic Zones shall be governed in accordance with the provisions contained in the Special Economic Zones Act, 2005 (28 of 2005)"
28. A bare perusal would indicate as to how supplying of services or technology from India to the territory of another country in India to an Indian service consumer of any other country by a service ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 30 33.14.1516.15.1735.15.doc supplier of India, through commercial presence in the territory of any other country by a service supplier of India, through commercial presence of Indian natural persons in the territory of any other country, is understood as "import" and "export" in relation to service and technology,. The use of the word "India", "service supplier of India" "presence of Indian natural persons" in a territory of a country other than India in Section 2 (e) (II) (ii) denotes a underlying intention to promote Indian suppliers of services and Technologies.
The term "services" and "service supplier" have been defined in section 2 (j) and (k) and these clauses have been inserted in by section 2 by Act 25 of 2010 with effect from 27th August, 2010. That the term "services" have been defined so as to match or be in tune with General Agreement on Trade in Services (GATS) entered into amongst India and other countries who are party to the said Agreement and the term, "service supplier" means any person who supplies a service and who intends to take benefit under the foreign trade policy. By Chapter I the Central Government is empowered to make and announce Foreign Trade Policy. Sections 3,4,5 and 6 falling in this Chapter underline the power of the Central Government to make and amend the foreign trade policy .
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29. We are concerned in this case not with the interpretation of General Agreement on Trade in Services but with Foreign Trade policy of 2009-2014. That is contained in Foreign Trade Policy and Handbook of Procedures (with Forms, Circulars and Public Notices) by R.K.Jain's 19th Edition 2013 Volume I.
30. Both sides agree that we can refer to this Publication as the said Policy set out therein is correct. It is conceded and there are no errors or mistakes in this Publication. Hence, with the consent of the parties, we have taken this private Publication on record. It has been set out in Chapter
1. The Foreign Trade Policy provides the overarching framework for catalyzing India's exports. This Policy was announced on 27th August, 2009 in a difficult economic backdrop as the world was emerging from the shadows of a grim recessionary period and a multi-pronged strategy was adopted to arrest the fall and reverse the trend of declining exports.
Therefore, maintaining a stable policy environment Government consciously adopted a market diversification plan reaching out to non-
traditional destinations focusing on emerging markets in Africa, Latin America and Asia.The Foreword also emphasizes as to how Indian ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 32 33.14.1516.15.1735.15.doc Government and authorities were conscious of the fact that exports is not just an end in itself but means of providing gainful employment to millions of people in the country. Therefore, employment intensive sectors have received special attention of the Government and it has been administering the fiscal incentives under different schemes like Focus Market Scheme, Focus Product Scheme, Market Linked Focus Product Scheme to provide support to identified priority sectors. The challenge faced by Indian Exporters are specially referred and hence measures were taken with expectation that the same will have a catalyzing impact or boost Indian Exports.
31. The Legal Framework of the FTP 2009-2014 is contained in Chapter 1A. We are not concerned with the same particularly because, we are proceeding on the basis that incentives thereunder or incentive schemes themselves could have been framed and implemented. There is no challenge to the authority or power of the Central Government to act as above. Earlier, we sent the matter back specially to the Central Government and to speak through its Secretary because, we took note of the specific complaint of the parties like the Petitioner in Writ Petition ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 33 33.14.1516.15.1735.15.doc No.1755 of 2015. Their apprehension was that interpretation placed in the Policy Interpretation Committee meeting which comprises of the Director and Additional Directors of Foreign Trade wound bind the Government and the Government will not take any decision contrary to this interpretation and will not deviate from the same. It is for this reason that we expected the Central Government to act in terms of our directions. We have clarified by our earlier order that not only it will deal with the interpretation placed by the Policy Interpretation Committee but outcome of the directions issued by us does not mean any particular decision or interpretation of the policy be taken and be made. The Central Government was free to decide the matter independently.
32. While it is true that the Secretary should have been aware that there was an order passed by this Court with great expectation and hope. That expectation and hope is that Government Department and members of the Executive will be fully conscious of their role. Framing a Policy may be the prerogative of those elected by a specific process, however interpretation of all policies rests with the Executive. The members of the bureaucracy are therefore answerable to the people of ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 34 33.14.1516.15.1735.15.doc India. They cannot evolve parameters to interpret the policies contrary to public interest. When in employment and interpreting a policy, Rules or regulations, they ought to be aware that any decision by a Court of law has a binding effect on the Central Government. That a view taken by a Court of law especially by a High Court of a State may not bind other High Courts and in the least the Hon'ble Supreme Court but, its binding nature is something which cannot be questioned by the Central Government.
Moreso, when the Union of India was a party respondent to the Writ Petitions filed by M/s Yum Restaurants, M/s Nokia's Solutions and Networks (P)Ltd and M/s EI Dupont (India) P.Ltd. The judgment of the learned Single Judge delivered on 27 th January 2015 was in force and ought to have been referred by the Central Government in the present petitioner's case. Its binding effect cannot be diluted or whittled down by the Central Government just because the parties before it are operating from Maharashtra and the Central Government was deciding the matter pursuant to the directions of the Bombay High Court. Pertinently, the Delhi High Court view is not set aside till date.
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33. We are mindful of the criticism levelled by Mr.Dada and it has some force, but finding that as far as the judgment of the High Court of Delhi is concerned it only has a persuasive effect qua us, we are not dealing with this issue any further. Since Mr.Dada and Mr.Jetley have addressed us extensively on merits, we say nothing more. However, we disapprove and deprecate the manner in which the Secretary passed the order impugned in this writ petition. It was his duty to make a reference to the judgment and decisions cited before him particularly when he was sitting at Delhi and passing the impugned order on behalf of the Central Government at Delhi. The judgment of the Delhi High Court definitely therefore, deserved to be looked at with respect and due regard and considered in depth. We would expect this much from the Secretary in the Department of Ministry of Commerce and Industry. A copy of this order be forwarded to him and these observations being brought to his notice, we hope hereafter such mistakes and errors will not be committed by him.
34. Turning to Chapter 2 of the Foreign Trade Policy 2009-14 as to general provisions regarding imports and exports, while it is true that paragraph 2.3 states that the decision of the Directorate General of Foreign ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 36 33.14.1516.15.1735.15.doc Trade shall be final and binding on all matters relating to interpretation of policy or provision in HBP Volume-I, HBP Volume-II or classification of any item for import/export policy in the ITC (HS) and Policy Interpretation Committee (PIC) may be constituted to aid and advice DGFT. We are not required to decide the ambit and scope of this power which are essentially to aid and advice the Directorate General of Foreign Trade. We are are not concerned in this case as to whether any further appellate power was available to be exercised and to decide a challenge to the Interpretation placed on the policy of Policy Interpretation Committee.
(PIC). In other words, we are not required to go into and interpret so also consider the ambit and scope of the appellate powers conferred by section 15 of the Foreign Trade Act, 1992. Therefore, we do not make any further reference to these provisions. The expression "Free Exports" is to be found in paragraph 2.29 of the FTP which also need not detain us. That there is awareness of the "Exemption/Remission of Service Tax DTA".
That is available for all goods and services which are exported from units in DTA and units in EOU/EHTP/STP/BTP exemption/remission of service tax levied and related to exports, shall be allowed as per prescribed procedure in Chapter 4 of HBP v1. Para 2.48.2 grants exemption from ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 37 33.14.1516.15.1735.15.doc Service Tax on Services received abroad. For all goods and services exported form India, services received, rendered abroad, where ever possible shall be exempted from service tax. That is something with which we are not concerned nor is exemption an issue before us.
35. The privileges of Export and Trading House status holders are set out in para 3.10.4 and the expression " services Exports" is defined in 3.11.1. That there is a specific reference to General Agreement on Trade in Services (GATS) is also something with which we are not concerned because, we are proceeding on the assumption that this General Agreement on Trade in Services as referred in the policy will have some bearing on the same. We are only concerned with the "Served from India Scheme"
(SFIS for short). That falls under sub-heading Reward/Incentive Schemes in DGFT in paragraphs 3.12.1,3.12.2, 3.12.3, 3.12.4. 3.12.5 and 3.12.7.
They are heavily relied upon and read as under :
3.12: " Served from India Scheme (SFIS) 3.12.1: Objective Objective of SFIS is to accelerate growth in export of services so as to create a powerful and unique from India brand instantly recognized and respected world over.
3.12.2: Eligibility Indian Service Providers, of services listed in Appendix 41 of ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 38 33.14.1516.15.1735.15.doc HBPv1, who have free foreign exchange earning of at least Rs.10 lakhs in current financial year will be eligible for duty Credit Scrip, for individuals Indian Service Providers, minimum free foreign exchange earnings would be Rs.5 lakhs.
3.12.3: Ineligible Services and Service Providers Services and Service Providers as listed in Para 3.6.1 of HBPv1 shall not be entitled for benefits under the SFIS Scheme. 3.12.4: Entitlement Service providers of services listed in appendix 412 of HBPv1 would alone be eligible. Such eligible service providers will be entitled to Duty Credit Scrip equivalent ot 10% of free foreign exchange earned during current financial year (w.e.f. 1.1.2011). For services rendered prior to1.1.2011 Appendix 10 of GHBPv1 wold be applicable. 3.12.5: Eligible Remittances Free foreign exchange earned through International Credit Cards and through any instrument as permitted by RBI for rendering of services shall also be taken into account for computation of Duty Credit Scrip.
3.12.7: Non Transferability Entitlement goods (imported/procured) shall be non-transferable (except within group company and managed hotels) and be subjected to actual User condition. However, these goods can be alienated on completion of 3 years from the date of import/procurement).
36. A perusal of these paras would denote that object of SFIS is to accelerate growth in export of services so as to create a powerful and unique 'Served From India brand,' instantly recognized and respected worldwide.' We are in agreement with Mr.Jetley learned Counsel that the object which is sought to be achieved would be only by encouraging those entities and conferring benefits and giving incentives to such ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 39 33.14.1516.15.1735.15.doc companies who create an Indian brand. This is therefore, apparent. By referring to the identity of share holders and the nation they belong, the policy makers are not trivializing the issue. That reference is to highlight the object of accelerating growth in export of services so as to create a powerful and unique 'Served from India' brand instantly recognized and respected world over. One must appreciate the object properly and completely. The role that Indian Suppliers are expected to play in creating such a brand is underlined by making a reference to the persona and Nationality of shareholders and directors. The brand created should be served from India and must get recognition and respect world over. It is not the soil or piece of land which is important but the involvement of Indian suppliers, which is predominant. Their engagement and involvement is therefore primarily referred and throughout the scheme which is a duty credit entitlement. Eventually the eligibility criteria has been framed and evolved for the purpose of Indian Service Providers and who provide services listed in Appendix 41 of HBP Volume 1, who have free foreign exchange earning of at least Rs.10 lakhs in current financial year. They will be eligible for Duty Credit Scrip. For individual Indian Service Providers, the minimum criteria is free foreign exchange earning of Rs. 5 ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:01 ::: Rng 40 33.14.1516.15.1735.15.doc (five) lakhs. Such service Providers and who are Indian service providers are therefore mentioned in 3.12.2 and they will be eligible for duty credit scrip. That gives them credit from payment of duty and that is why in paragraph 3.12.3 services which are ineligible and providers of such ineligible services are listed. They will not be entitled for benefits under FSIS scheme. 'Served from India' brand is thus granting a incentive to those eligible service providers who fulfill the eligibility criteria. The Petitioner cannot claim a vested right in matters of duty credit or exemption from payment of a duty or tax. None can say that the mandate of Article 19 (1)
(g) of the Constitution of India is violated merely because at certain time and on certain occasions, the concessions and benefits were given or there is exemption from payment of duty and taxes imposed by laws of Parliament. The traders or citizens to whom the benefits and facilities are granted on fulfillment or requirement of a distinct eligibility criteria stand apart from others. Those not granted the same cannot claim any parity.
Hence, in the absence of a vested right and only on the strength of a particular treatment of such cases in the past, no plea of violation of constitutional mandate enshrined in Articles 14 and 19 (1) (g) can be accepted. and Therefore, the word 'Entitlement' as is found in paragraph ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:02 ::: Rng 41 33.14.1516.15.1735.15.doc 3.12.4 is important. That Service providers of services listed in Appendix 41 of HBP Volume 1 would alone be eligible and such eligible service providers will be entitled to Duty Credit Scrip equivalent to 10% of free foreign exchange earned during current financial year from 1 st January 2011 and for services rendered prior to 1st January, 2011, Appendix 10 of HBP Volume 1 would be applicable. SFIS benefit will be allowed on the Net Foreign Exchange earned is what is stated to be in paragraph 3.12.4 and by reference to that alone it will not be proper to hold that the object and purpose sought to be achieved is of augmenting foreign exchange reserves. That surely is not the intent while giving reward/incentive and making a scheme in that behalf to be implemented by the Directorate General of Foreign Trade. It is framed under the Foreign Trade Policy.
That scheme entitles a person earning free foreign exchange to the extent indicated therein to avail of the benefits therein. Anybody who earns free foreign exchange of at least Rs.Ten lakhs is not entitled as claimed. That will be contrary to the object and purpose of making the scheme. That as rightly urged by Mr.Jetley is to accelerate growth in export of services so as to create a powerful and unique 'Served From India brand ' instantly recognized and respected world over.' That cannot be achieved by ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:02 ::: Rng 42 33.14.1516.15.1735.15.doc permitting those who are are not creating a powerful and unique 'Served From India' brand instantly recognized and respected world over. The entity establishing a foreign brand of service and prior to entry in India therefore, will not qualify and cannot be held eligible for FSIS benefit. The brand of such a entity is already created, existing and established. It may not be unique much less served from India exclusively. That does not get instantly recognized and respected world over as Indian brand. If Indian Service Provider is the one who is to be encouraged through home exports and the growth of the same is to be achieved then, it is not possible to agree with Mr.Dada that FSIS scheme or benefits thereunder can be availed of by parties like the petitioner. We do not see how paragraph 3.12.7 or objectives in relation to other scheme particularly "foreign market scheme"
would be of any assistance. We are not considering that scheme, reward or incentives thereunder nor we are considering its basic features. We are concerned with 'Served from India scheme'. While it is true that the definition of the term "person" includes an individual, firm society, company, corporation or any other legal person including the DGFT officials, we are not here concerned with the interpretation of this definition at all. We proceed on the assumption that individuals and Corporate ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:02 ::: Rng 43 33.14.1516.15.1735.15.doc entities (international and national) fell within such a definition and are entitled to the benefits. We are also not as much concerned with the nature of services, paragraph 9.52 which defines the term "services" include all tradable services covered under General Agreement on Trade in Services (GATS) and earning free foreign exchange. Further paragraph 9.53 defines the term "Service Provider". That means a person providing :
"(i)Supply of a 'service' from India to any other country;
(ii) Supply of a 'service' from India to service consumer of any other country in India ;
(iii) Supply of a 'service' from India through commercial or physical presence in territory of any other country;
(iv) Supply of a 'service' in India relating to exports paid in free foreign exchange or in Indian Rupees which are otherwise considered as having being paid for in free foreign exchange by RBI.
37. A bare reading of the same would indicate that persons providing a service from India to any other country, from India to service consumer of any other country in India, supply of a service from India through commercial or physical presence in territory of any other country, supply of a service in India relating to exports paid in free foreign exchange or in Indian rupees as having being paid for in free foreign exchange by RBI are all referred to. It is to promote a unique 'Served from ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:02 ::: Rng 44 33.14.1516.15.1735.15.doc India brand instantly recognized and respected world over that the definition has been worded accordingly. If the main object and purpose sought to be achieved, on which emphasis is placed is noted, then, only as a corollary or analogy to the main object and to accelerate growth of exports from India, that nationality of the share holders comprising of the Petitioner company has been referred to. That is not held to be determinative for availing benefits of 'Served from India Scheme.' Rather the definition and reading thereof would indicate how it is worded so as to achieve the object.
Para 3.6. and 3.6.1. are equally important and they read as under :
3.6 "Served from India Scheme (SFIS)
(a) Policy for SFIS is given in Chapter 3 of FTP
(b) An application for grant of Duty Credit Scrip for foreign exchange earned during current financial year, shall be filed on monthly/quarterly/half-yearly/annual basis, in ANF 3B along with documents prescribed therein at the option of the applicant to be exercised along with first application for the current financial year.
This option will be filed with jurisdictional RA. The last date for filing application shall be 12 months from the end of relevant month/quarter/half-year/year.
(c)service providers shall submit a statement of imports made made under the Duty Credit Scrip to jurisdictional RA with a copy to jurisdictional Excise authorities (service tax cell) within one month of completion of imports of expiry of validity of Duty Credit Scrip, whichever is earlier.
3.6.1.: Ineligible Remittances and Services for SFIS Scheme.::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:02 ::: Rng 45
33.14.1516.15.1735.15.doc Foreign exchange remittances other than those earned for rendering of services would not be counted for entitlement. Thus other sources of foreign exchange earnings such as equity or debt participation, donations, receipt of repayment of loans etc and any other inflow of foreign exchange, unrelated to rendering of service would be ineligible. Following shall not be taken into account for calculation of entitlement:
(a) Foreign Exchange remittances:
1. related to Financial Services Sector
1. Raising of all types of foreign currency loans;
2. Export proceeds realization of clients;
3. Issuance of Foreign Equity through ADRs/GDRs or other similar instruments;
4. Issuance of foreign currency Bonds;
5. Sale of securities and other financial instruments;
6. Other receivables not connected with services rendered by financial institutions; and
1) if earned through contract/regular employment abroad (e.g.labour remittances)
(b) Payments for services received from EEFC Account;
(c)Foreign exchange turnover by Health care Institutions like equity participation donations etc (However, remittances received on account of medical treatment, surgery, testing, consultancy and health care provided by the institution shall be eligible;)
(d) Foreign exchange turnover by Educational Institutions like equity participation, donations, etc (However remittances received on account of the course fees and consultancy provided by the institution shall be eligible);
(e) Export turn over relating to services of units operating under SEZ/EOU/EHTP/STPL/BTP schemes or supplies of services made to such units;
(f) Clubbing of turnover of services rendered by SEZ/EOQ/EHTP/STPL/BTP units with turnover of DTA service ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:02 ::: Rng 46 33.14.1516.15.1735.15.doc Providers; and
(g) Exports of Goods
(h) Foreign Exchange earnings for services provided by Shipping Lines Service providers from plying from any country X to any country Y routes not touching India at all.
'Served from India Scheme' is a policy and that is set out in Chapter 3 of Foreign Trade Policy. The application for grant of Duty Credit Scrip has to be made to whom, with what details and the forms which are required to be filled in for evaluation of duty credit Scrip entitlement. Non-entitling remittances and services for SFIS scheme are set out in paragraph 3.6.1. That is how the criteria is evolved and provided for. We are of the opinion that once the object and purpose of the Foreign Trade Act, the relevant paras of the FTP are placed in the forefront and duly noted, then, a Indian Brand projecting a Unique Indian Identity and commanding respect and recognition world over is sought to be created. If that is what is held and concluded, then, that it is a imminently possible and reasonable view. Particularly, going by the language of the paras noted above. Such a view does not require our interference in Writ Jurisdiction.
38. We need not go into the list of services and enlisted in ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:02 ::: Rng 47 33.14.1516.15.1735.15.doc Appendix 41 for the simple reason that the same only sets out and clarifies the services whether professional or otherwise. We are also not required to go into the Foreign Trade (Development and Regulation) Act 1992 or its provisions any further. In this case what is relevant for our consideration is reliance on the judgment of the Delhi High Court.
39. With greatest respect to the learned Single Judge of the Delhi High Court he has construed the policy narrowly. The complete picture of the policy, its objects and purpose was not placed before him.
The controversy has been understood by the learned Single Judge.
However, what he had before him was the letter dated 11 th July, 2012 where the Petitioner-Yum Restaurants (I) Pvt.Ltd was informed that its application was rejected because the name of company represents brand not essentially identified as Indian Brand. It was therefore, not permitting an Indian brand or company as that does not contribute in creating a powerful and unique served from India brand. Hence the objective of the scheme is to accelerate growth in export of services so as to create a powerful and unique 'served from India brand' instantly recognized and respected world over. The communication may be as above but its substance is the name.
::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:02 ::: Rng 4833.14.1516.15.1735.15.doc The nature of activities of M/s Yum Restaurants (I) Pvt.Ltd are extensively referred to in paragraph 4.1. and 4.2 of the judgment. The Court then refers to cases arising in Writ Petitions of other Petitioners E.I.DuPont India Pvt.Ltd (for short DuPont), M/s Nokia Solutions and Networks India Pvt. Ltd (for short 'Nokia'). The learned Judge, with great respect, has understood the matter only as one raising the question of power of the authorities under the Foreign Trade Act. With great respect, we disagree with the learned Single Judge. The learned Single Judge also failed to note that parties like the Petitioner do not have a vested right in seeking or claiming incentives and benefits under what we call as Duty Credit Scrips.
It is only when they fulfill the criteria and the provisions of the nature carved out that they would be entitled to the benefits. It is not possible for us to agree with the view recorded in paragraphs 12 to 16 of the judgment.
The learned Judge has construed the expression "Indian Service Providers' narrowly. He has not construed it in the backdrop of the policy measures and by interpreting them in a holistic manner. The learned Judge, once again, with great respect reads the paragraphs in the policy in isolation.
We are not persuaded to agree with the views of the Delhi High Court and the challenge cannot be construed to be arising in the backdrop of section 5 ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:02 ::: Rng 49 33.14.1516.15.1735.15.doc of the Foreign Trade Act. There is no other view and which has been brought to our notice.
40. Having considered all contentions raised, before us, we are of the view that the order of the Central Government and impugned in these Petitions deserves to be upheld. It is accordingly upheld.
41. As far as the past benefits and forfeiture of fine is concerned, that is a issue which must be dealt with during adjudication proceedings by the competent authority. However, this is a 2009-14 Foreign Trade policy. The questions raised and answered are arising in the backdrop of the interpretation thereof placed in the year 2011 with which there is no agreement between two High Courts. What the Petitioner apprehends that recoveries would be effected for the past several years from 2005-06 by forfeiting prior incentives. If anything is recoverable in relation to prior policies and earlier to 2009-14 FTP that is surely something which cannot be taken away by making a adjudication order in 2015. We would therefore, hold that it will not be permissible for the authorities adjudicating the claims or issues arising therefrom to recover from the Petitioner in Writ Petition No.1755 of 2014 and all petitioners the ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:02 ::: Rng 50 33.14.1516.15.1735.15.doc SFIS benefits granted till 2007-08. They are clearly falling within earlier policy framework and to that extent all petitions succeed. They accordingly succeed.
42. Rule in each of these Petitions is made absolute in above terms without any costs. Needless to clarify that any recoveries that are proposed for the period after 2007-2008 under FTP 2009-2014 will have to be made in accordance with law by the authorities competent to do so. All contentions of parties in that behalf are kept open.
43. At this stage, Mr.Dada learned senior counsel submits that the Petitioner would like to consider this order and, if so advised, challenge the same in a higher Court. Therefore the operation and implementation of the same be stayed for a period of eight weeks and to enable the Petitioner to act accordingly. After this request was made, we inquired from Mr.Jetley learned counsel appearing for the respondent and he fairly states that the respondents will not act or implement the order passed by the Government and equally by this Court for a period of eight weeks from today. We accept this statement of Mr.Jetley as an undertaking given to ::: Uploaded on - 05/09/2015 ::: Downloaded on - 10/09/2015 20:04:02 ::: Rng 51 33.14.1516.15.1735.15.doc this Court. In the circumstances and when the respondents have made a statement themselves which is without prejudice to the rights and contentions of both sides, we do not think it necessary and proper to grant the request of Mr.Dada. It is declined.
G.S.KULKARNI, J. S.C.DHARMADHIKARI, J.
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