2026 (3) TMI 1 - HC - Customs

Retrospective withdrawal of benefits invalid; withdrawal applies only prospectively and accrued exporter claims survive.

Section 5 power does not permit retrospective amendment or withdrawal that divests vested or accrued rights; applying this principle the HC held the ... Discontinuing / withdrawing the Transport and Marketing Assistance (TMA) scheme with retrospective effect by issuing Notification dated 25.03.2022 - unable to file the claim of reimbursement of expenses incurred towards freight for exporting notified agricultural produce - aim to provide assistance for international component of freight and marketing of agricultural products - Section 5 does not permit retrospective amendments affecting accrued rights - Accrued or vested rights under a notified foreign trade scheme - HELD THAT:-We find that though the Government has power to withdraw the Scheme, however, the question which falls for deliberation before this Court is as to whether the same could have been done retrospectively or not in wake of the fact that for all these years, the Scheme was in operation and was also amended from time to time, giving rise to claims of the petitioners. The Supreme Court in the case of Union of India & Ors vs. Asian Food Industries [2006 (11) TMI 10 - SUPREME COURT] and in the case of Viraj Impex Pvt Ltd Vs. Union of India & Anr. [2026 (1) TMI 1102 - SUPREME COURT] as well as in the case of Director General of Foreign Trade and Anr. Vs. Kanak Exports & Anr. [2015 (11) TMI 80 - SUPREME COURT] by examining the provisions of Section 5 of the Act, has held that Section 5 of the Act neither permits/empowers the Government to make amendments with retrospective effect, nor it allows to close the Scheme retrospectively, thereby taking away the rights which have already accrued in favour of the exporters under the Scheme. Hence, the impugned Notification dated 25.03.2022 abolition/foreclosing the Scheme introduced vide Notification dated 09.09.2021 retrospectively is hereby quashed and set aside. The Notification dated 25.03.2022 shall become effective from the date it was issued. Accordingly, the respondents are directed to give the consequential effect of this order and process the applications filed by the petitioner in view of the Scheme. All the benefits accruing till the issuance of Notification dated 25.03.2022 shall be extended to the petitioners, including raising claims for the period prior to the issuance of impugned Notification, for which the petitioners were prevented from filing applications. The claims/applications shall be processed and the amount shall be paid within a period of 12 weeks from the date of receipt of copy of this order. Issues: Whether the Central Government could withdraw the Transport and Marketing Assistance (TMA) scheme with retrospective effect by issuing Notification dated 25.03.2022 thereby denying benefits and claims already accrued to exporters under the scheme incorporated in the Foreign Trade Policy.Analysis: The scheme was introduced by Notification dated 27.02.2019 and incorporated into the Foreign Trade Policy by Notification dated 29.03.2019 under powers exercisable by the Central Government under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. The Court examined whether Section 5 permits retrospective amendments or withdrawal of a policy that has given rise to claims and accrued/vested rights of beneficiaries. Reliance is placed on authoritative precedents establishing that amendments under Section 5 cannot be given retrospective effect so as to divest vested or accrued rights, and that delegated legislation altering or withdrawing benefits cannot retrospectively take away rights which have already accrued. Applying these principles to the impugned Notification dated 25.03.2022, which withdrew the earlier Notification dated 09.09.2021 with retrospective effect, the Court found the retrospective foreclosure inconsistent with the limits on the exercise of power under Section 5 and the settled rules against retrospective deprivation of vested/accrued rights.Conclusion: The impugned Notification dated 25.03.2022 insofar as it purports to withdraw the TMA scheme with retrospective effect is quashed and set aside; the Notification shall operate from the date of its issuance only, and the petitioners are entitled to have their claims processed and benefits extended for the period prior to 25.03.2022.