Bombay High Court
Shree Naman Hotels Pvt. Ltd vs The Union Of India Through The ... on 17 August, 2015
Bench: S.C. Dharmadhikari
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33.14.1516.15.1735.15.doc
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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33.14.1516.15.1735.15.doc
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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33.14.1516.15.1735.15.doc
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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33.14.1516.15.1735.15.doc
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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33.14.1516.15.1735.15.doc
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
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
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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.
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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
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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
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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
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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.
(c) by a service supplier of one Member, through commercial
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presence in the territory of any other Member."
(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
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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,
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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
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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
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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
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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-
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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
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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
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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
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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
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
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
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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.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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(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
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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
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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
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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
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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.
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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
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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
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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.
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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
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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
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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
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.
