TaxTMI 
TaxTMI 
2015 (9) TMI 564
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....titions 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 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 o....
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.... 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. 10. The Petitioner therefore, applied for Duty credit entitlement under SFIS for the year 2012-13. The 4th 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 8th 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 t....
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....sfies 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 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 i....
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....rade (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 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 ....
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....ut 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 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 definit....
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....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- 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 Appe....
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....s 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 unassailabl....
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....rent 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 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 A tul Commodities Pvt. Ltd ( supra) nor in N arendra 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 d....
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....ports 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. 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 i....
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....ition 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 nontraditional destinations focusing on emerging markets in Africa, Latin America and Asia.The Foreword also emphasizes as to how Indian 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 Gov....
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....n 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 27th 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. 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 ar....
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.... Para 2.48.2 grants exemption from 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 an....
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....d 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 (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 un....
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....' That cannot be achieved by 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 individ....
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.... 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. 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 s....
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....cluded, 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 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 11th 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 th....