Foreign Trade Policy interpretation: dedicated bandwidth services qualified for SFIS benefits, and exclusionary circulars were quashed.
Dedicated bandwidth services supplied through undersea optic fibre cables were treated as a single telecommunications service from India to an overseas destination, not a split transaction confined to cable segments in different territories. On those facts, the service providers fell within paragraph 9.53 of the Foreign Trade Policy 2004-09 and were eligible for SFIS benefits as providers earning free foreign exchange from listed services. Administrative authorities could interpret the Policy but could not add exclusions not found in its text. The impugned circular and related decisions denying SFIS entitlement and directing recovery were therefore ultra vires and were quashed against the petitioners.
Issues: Whether the impugned circular and the Policy Interpretation Committee's decision denying SFIS benefits in relation to dedicated bandwidth services provided through undersea optic fibre cables were ultra vires the Foreign Trade Policy for 2004-09, and whether such services fell within the definition of a service provider under paragraph 9.53 of the Policy.
Analysis: The relevant SFIS provisions extended benefits to service providers earning free foreign exchange from eligible services listed in Appendix-10. Telecommunications services were included, and the petitioners' activity involved continuous point-to-point transmission of data, voice and video from India to an overseas destination through a cohesive service contract. On the facts placed and accepted, the service was not a split transaction confined to cable segments in India and abroad, but a single supply of service from India to any other country, or alternatively from India through commercial or physical presence in another territory. Administrative authorities could interpret the Policy but could not, by interpretation, alter its scope or read in exclusions not found in the Policy.
Conclusion: The petitioners were held to fall within paragraph 9.53, and the circular and the impugned decisions, insofar as they denied SFIS entitlement on the challenged basis and directed recovery, were held to be ultra vires and were quashed in relation to the petitioners.
TaxTMI 
AI Drafter ✕
TaxTMI 
TaxTMI 
