2019 (11) TMI 777 - HC - Customs

Court quashes order denying benefits to Indian healthcare company under SFIS. Order lacked reasoning, failed to consider representations.

Columbia Asia Hospitals Private Limited, Versus Union of India, The Directorate General of Foreign Trade, And Others

Columbia Asia Hospitals Private Limited, Versus Union of India, The Directorate General of Foreign Trade, And Others - 2019 (368) E.L.T. 417 (Kar.) Issues Involved:1. Eligibility of the petitioner for benefits under the Served from India Scheme (SFIS).2. Application of the principle of lifting of corporate veil by the respondents.3. Validity and sufficiency of the impugned order passed by the respondents.Detailed Analysis:1. Eligibility of the Petitioner for Benefits under the Served from India Scheme (SFIS):The petitioner, an Indian Company providing healthcare services, applied for Duty Free Credit Entitlement Certificate (DFCEC) under the SFIS as per the Foreign Trade Policy (FTP) 2004-2009. The petitioner argued that they are eligible under Para 9.53(ii) of the FTP, which includes 'Supply of a Service from India to service consumer of any other country in India.' Despite providing healthcare services to international patients in India, the respondents denied the benefits, asserting that the petitioner is a chain of hospitals based in Kuala Lumpur, Malaysia, and not promoting an Indian brand. The petitioner contested this, emphasizing their status as an Indian company duly incorporated under Indian law and fulfilling all statutory requirements.2. Application of the Principle of Lifting of Corporate Veil by the Respondents:The petitioner contended that the respondents' actions in treating them as a foreign entity amounted to an improper application of the principle of lifting the corporate veil. This principle, according to Indian law, should only be applied in cases of prima facie fraud or criminal intent, neither of which was alleged against the petitioner. The petitioner argued that their incorporation and functioning under Indian law should suffice to establish their eligibility for SFIS benefits.3. Validity and Sufficiency of the Impugned Order Passed by the Respondents:The petitioner argued that the impugned order was not a speaking order and failed to explain the legal basis for the respondents' change in stance from initially accepting the application to subsequently rejecting it. The petitioner highlighted that the policy's intent was to promote services from India, not specifically Indian brands. The respondents, however, maintained that the petitioner did not qualify as a 'Service Provider' under Para 9.53 of the FTP, as their brand was not identified as Indian. The court noted that the respondents did not adequately consider the detailed representations and documents provided by the petitioner, nor did they offer an opportunity for a hearing before passing the impugned order.Conclusion:The court found that the respondents failed to consider the petitioner's detailed representations and documents before passing the impugned order. The order lacked sufficient reasoning and did not provide the petitioner an opportunity to be heard. Consequently, the court quashed the impugned order and remanded the matter to the fourth respondent, directing them to provide a hearing and consider all material and objections before passing a reasoned order in accordance with law.