Withdrawal of exemption and firm residency depend on statutory power and real control and management under foreign exchange law.

A notification granting an exemption may be amended, varied, rescinded, or withdrawn by the issuing authority under section 21 of the General Clauses Act, 1897, and a later withdrawal is not retrospective merely because it affects existing arrangements from the date of change. The document also states that firm residency under the Foreign Exchange Regulation Act, 1973 depends on the place of real control and management, not only where trading operations occur. Where the partners were resident in India and controlled the business from India, the firm was treated as resident in India and subject to the Act.

---

---

Issues: (i) Whether the Reserve Bank and the Central Government could withdraw the earlier exemption for pre-zero foreign exchange accounts by a subsequent notification, and whether the impugned notification operated retrospectively or impermissibly nullified the earlier judgment. (ii) Whether the petitioner firm was a person resident in India so as to attract the Foreign Exchange Regulation Act, 1973.

Issue (i): Whether the Reserve Bank and the Central Government could withdraw the earlier exemption for pre-zero foreign exchange accounts by a subsequent notification, and whether the impugned notification operated retrospectively or impermissibly nullified the earlier judgment.

Analysis: The earlier exemption was granted by notification and such power necessarily carried the power to amend, vary, rescind, or withdraw it under section 21 of the General Clauses Act, 1897. The later notification did not reopen or undo the earlier judicial decision on the scope of the former notification; it merely changed the governing policy for the future. Withdrawal of an exemption does not make the later notification retrospective merely because it affects existing accounts from the date of the change.

Conclusion: The subsequent notification validly withdrew the exemption and was not retrospective; this contention failed.

Issue (ii): Whether the petitioner firm was a person resident in India so as to attract the Foreign Exchange Regulation Act, 1973.

Analysis: A firm has no separate legal personality distinct from the partners who constitute and control it. On the facts, the partners were resident in India and the business abroad was under their control and management. The decisive test was the place of real control and management, not merely the place where trading operations were carried on. On that basis, the firm was treated as resident in India and within the statutory expression used in the Act.

Conclusion: The petitioner firm was resident in India and the Foreign Exchange Regulation Act, 1973 applied to it.

Final Conclusion: The challenge to the impugned direction failed on both the validity of the later notification and the applicability of the foreign exchange law to the petitioner firm, and the writ petitions were dismissed.

Ratio Decidendi: A statutory authority empowered to issue a notification may also rescind or vary that notification under section 21 of the General Clauses Act, 1897, and a firm is resident where its real control and management are situated.

---