TaxTMI 
TaxTMI 
2020 (2) TMI 856
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.... (a) Quash and set aside Public Notice No.PS-11/2019 dated 13th September 2019 at Annexure-F; In the alternate (b) Direct Respondent No.2 herein to streamline the procedure for Import of Poppy Seeds in India from Turkey pursuant to Public Notice No.PS-11/2019 dated 13th September 2019 so as to ensure that procedure is fair, reasonable, transparent and open to all the importers; (c) Pending the hearing and final disposal of the petition, stay implementation and operation of Public Notice No.PS-11/2019 dated 13th September 2019 and direction to not register contracts or issue permits to import of Poppy Seeds (WPS) from Turkey to India in accordance with Public Notice No.PS-11/2019 dated 13th September 2019. (d) Any other relief as may be deemed fit in the interest of justice. (e) To provide for the cost of this petition." The writ-applicant seeks to challenge the guidelines dated 13th September 2019 for the registration of the sales contract for the import of the poppy seeds from Turkey to India issued vide Public Notice No.PS-11-2019. The challenge is substantially on the following three grounds : 1. The amended policy dated 25.6.2....
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....re published on the website which ensured transparency in the process. 25.06.2019 However, to the utter shock and surprise of the petitioner, the Respondent No. 2 herein issued the public notice and introduced new policy for importing the poppy seeds from Turkey. The said policy was drastically different from the existing policy and it provided for the allotment of contract based on first come first serve basis. That vide public notice viz PS No.9/2019 dated 25.06.2019, the Respondent No.2 had notified the guidelines for "Registration of sales contract" in respect of any import of the poppy seeds from Turkey. That under the said notification, the country cap of the purpose of the import of the poppy seeds from Turkey was required to be approved by the Department of Revenue on the basis of the recommendation by the committee comprising of the Respondent No.2, one representative of the Directorate General of Foreign Trade and one representative of the Department of Revenue. The country cap will be based upon the stock and production of the poppy seeds as communicated by the Turkish Grain Board (TMO) or Turkish Embassy in India. The other terms and conditions are as under:....
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....ny other importers were facing a similar issue, a writ petition being the Writ Petition No.7469 of 2019 came to be filed before the Hon'ble High Court of Bombay. The said writ petition was rejected vide order dated 28.08.2019 and the policy dated 25.06.2019 was upheld, inter alia, on the ground that the Petitioners do not have inherent right to import. 18.07.2019 Similar petitions were filed before the Hon'ble High Court of Delhi being the Writ Petition (C) No.7676 of 2019. Even in this petition the policy dated 25.06.2019 was under challenge. On the said date, the Hon'ble High Court of Delhi observed that prima facie this Court concurs with the contention that if the registration of the TMO itself is exhausted on the basis of the country cap, then the guidelines would work on first come first serve basis, which is not the methodology under the said guidelines. 28.08.2019 That in the said petition, the Respondent No.2 herein referred to a communication of the TMO and confirmed that the Turkish Authority will remove the old contracts in the system and re-upload the sale contract for year 2019-20. However, the advocate for petitioner in that matter contended that th....
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....ted 13th September 2019, is manifestly unjust, arbitrary and one favouring big players in the business. He would submit that the changes introduced by way of a public notice dated 13th September 2019 has no nexus with the object that is sought to be achieved. In such circumstances, the changes are violative of Article 14 of the Constitution of India. Mr.Dave gave a fair idea about the old policy and the new policy as under : Old Policy New Policy Lack of Transparency The list of successful importers who were allotted quote were listed in chronology of their name featuring in draw of lots. No such list is published. Allotments are made behind the closed doors. Registration Registration required by importer Registration by importer with Respondent No.2 and by exporter before TMO Quantity enhanced Earlier a single importer can import maximum of 90 MTS (18000 MTS will be exhausted 200 applicants) Now a single importer can import maximum of 450 MTS (18000 MTS will be exhausted 40 applicants) Number of times importer can apply One time in a crop year Six times in a crop year Method of Allotment Draw of Lots First Come Fir....
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....re not narcotic substance though they are coming out of poppy plant. This position is legally accepted, as evident from definition of poppy straw as defined in Section 2(xviii). The said definition is reproduced below : "(xviii) 'poppy straw' means all parts (except the seeds) of the opium poppy after harvesting whether in their original form or cut, crushed or powdered and whether or not juice has been extracted therefrom;" 2.2 The regulation of import of poppy seeds into India comes through resolution No.1999/32 dated 28.07.1999 passed by the Economic and Social Counsel of United Nations. This resolution calls upon the member states of United Nations to fight the international trade in poppy seeds from countries where no licit cultivation of opium poppy is permitted. It stipulates that poppy seeds should be imported only from countries in which opium poppy is licitly cultivated in accordance with Single Convention on Narcotic Drugs 1961. It also encourages Governments of member countries to put in place regulation to obtain country of origin certificates of poppy seeds for the purposes of importation into their countries. 2.3 The above ....
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.... that guidelines framed by Department of Revenue to regulate import of poppy seeds into India is not backed by any statutory power, as such the guidelines cannot override import and export policy formulated by Union Government. Consequent to this decision Ministry of Commerce and Industry vide Notification No.17/2015-20 dated 29.07.2016 empowered Department of Revenue to issue guidelines which may inter-alia provide for fixing of country cap, quantitative restrictions etc. Para 3(c) of the said Notification is reproduced below: "All import contracts for this item shall compulsorily be registered with the Narcotics Commissioner, Gwalior prior to import in accordance with the guidelines issued by the Department of Revenue, which may, inter alia, include fixing of country caps, imposing quantitative restriction, if any, per importer or any other relevant provisions as deemed necessary for implementation of National Policy on Narcotic Drugs and Psychotropic Substances." 2.10 The vires of this Notification were again challenged before Hon'ble Karnataka High Court who vide their order dated 09.02.2018 in WP No. 58197-58198/2016 repelled such challenge and inter-alia uph....
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.... | | | | | <------------- Provisional Registration granted by the Narcotics Commissioner | | Advance payment of minimum 20% amount of contract value by Indian importer to Turkish exporter or opening of irrevocable L.C. in favour of exporters | | Application for converting provisional registration to Final registration | | Final Registration by the Narcotics Commissioner With above and in terms of MOU, any sales contract which is registered by the TMO is a valid contract for Narcotics Commissioner and an Indian Importer will submit application for registration of sales contract to Narcotics Commissioner which has already be registered with TMO. Any other contract which is not reg....
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....e Devki Global Pvt. Ltd. before the Hon'ble Delhi High Court has also been disposed of by the Hon'ble High Court on 11.09.2019. 4.17 Contents of paragraph no.3.6 is denied. The condition of 20% advance payment or opening of irrevocable letter of credit is provided to dissuade speculative trade and repudiation of contracts once they are provisionally approved by CBN. The guidelines issued by respondent No.1 provide for provisional registration and provision for making advance payment or opening of irrevocable letter of credit to the extent of 20% of total contract value only to convert such provisional registration into final registration. It is further submitted that till 30.09.2019 Respondent No.2 has approved 143 contracts in all of which advance payment has been made through banking channels which indicate that this provision to make advance payment is very much workable. 4.18 Contents of paragraph no.3.7 is denied. The procedure envisaged in the guidelines dated 25.06.2019 is already referred in earlier paragraphs. Therefore, the same be treated as part and parcel of the reply to this paragraph. As regards the contention that few large players have pre....
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....s from Papaver somniferum is banned in several jurisdictions for this morphine content and heroin potential: Singapore, Taiwan, China, and Saudi Arabia among other countries have complete or partial restrictions. 2. The Petitioners decry guidelines dated 25th June 2019 issued by the 2nd Respondent, the Central Bureau of Narcotics ("CBN") to regulate the import into India of poppy seeds. The proposed import in question is from Turkey. According to the Petitioners, these guidelines are an unconstitutional restriction on their right to trade and carry on business. 3. We disagree. 4. That poppy seed import into India is regulated by the CBN is undisputed. The Petitioners are registered importers. They have the necessary licenses. They agree, further, that there is annual cap or quota on poppy seed import from various points of origin. There is a cap on the quantity that may be imported for each foreign exporter country. Until recently, import permissions were by sale of lots. 5. On 25th June 2019, the 2nd Respondent issued the impugned public notice No. 9/2019, notifying guidelines for registration of sales contract in regard to poppy seed imports fr....
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....py seeds. There is no fundamental right to import anything without restrictions, or only on terms beneficial to a particular person. In mounting such a challenge, the burden on the Petitioner is to show that the notification is manifestly arbitrary, i.e. that a patent arbitrariness exists on the face of it, without requiring any convoluted argumentation. It must, alternatively, be shown to be ex facie discriminatory, and not just discriminatory, but invidiously so. If a classification is challenged, it must be shown that it bears no nexus to the object of the impugned law. The petitioners are able to do none of this. 9. What is, however, clear is that this notification has been framed pursuant to a Memorandum of Understanding dated 23rd May 2018 between India and Turkey. By a Notification dated 29th July 2016, the government of India conferred powers on the Department of Revenue to frame guidelines (fixing country caps, imposing limits on import quantities per importer or in the aggregate and so on). These were intended to give effect to the National Policy on Narcotic Drugs and Psychotropic Substances, controlled by the Narcotic Drugs & Psychotropic Substances Act, 1985 (....
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....y straw is forbidden save by the Government Opium Factory (along with morphine, codeine, thebaine and their salts), every import of a narcotic drug or a psychotropic substance requires an import certificate. Thus, the poppy seed is not itself a narcotic; but they come from the poppy plant, which has narcotic properties and from which other derivatives (poppy straw in particular) are produced. 11. The power to impose quantitative restrictions can be traced to Chapter III-A of the Foreign Trade (Development & Regulation) Act 1992. This was inserted by a 2010 amendment, and confers power on the Central Government to impose quantitative restrictions on imports. Section 9-A says that the Central Government may, after conducting a suitable enquiry, if satisfied that any goods are imported into India in large quantities and under such conditions as injure or threaten to injure domestic industry, it may impose quantitative restriction. These restrictions can continue for a maximum of four years, extendable by a like period. 12. We have noted this precisely because the source of power under both Act is not questioned by the Petitioners before us at all. Once, therefore, we....
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....tent authority of the exporting country that the opium poppy has been grown legally in that country. The third condition is that all import contracts have to be compulsorily registered with the Narcotics Commissioner, Central Bureau of Narcotics, Gwalior. We pause to note that, therefore, the multiple grounds and objections before us today regarding this registration are not new. In fact, the Petitioners themselves had to have followed them in the past. 14. The Allahabad Division Bench noted that the Import Policy casts on the CBN, a specialized body, the duty of registering contracts. This is with the stated public purpose of protecting the due implementation of the policy of the Government of India of not permitting import of poppy seeds from non-designated countries. It is in pursuance of that policy that the conditions of the notification require a certificate that the poppy seeds originate in a country where opium poppy is grown legally. The Import Policy is a statutory document enacted in pursuance of the Import and Export Control Act, 1947. Then there is a reference to the National Policy on Narcotic Drugs and Psychotropic Substances. 15. Once, therefore, w....
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....ion of India. Mr.Dave seeks to fortify this submission by placing reliance on the decision of the Supreme Court in the case of Centre for Public Interest Litigation (supra). The relevant observations are as under : "There is a fundamental flaw in the first-come-first-served policy inasmuch as it involves an element of pure chance or accident. In matters involving award of contracts or grant of licence or permission to use public property, the invocation of first-come-first-served policy has inherently dangerous implications. Any person who has access to the power corridor at the highest or the lowest level may be able to obtain information from the Government files or the files of the agency/instrumentality of the State that a particular public property or asset is likely to be disposed of or a contract is likely to be awarded or a licence or permission is likely to be given, he would immediately make an application and would become entitled to stand first in the queue at the cost of all others who may have a better claim. This Court has repeatedly held that wherever a contract is to be awarded or a licence is to be given, the public authority must adopt a transparent and ....
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....m as he belonged to 'Mallah' caste, under Rule 9A, and which preferential rights, to the complete exclusion of persons belonging to other castes, had been declared as ultra vires by the Full Bench of the Allahabad High Court. As Rule 9A came to be deleted from the statute, the renewal of the lease in favour of the petitioner was not liable to be considered. In such circumstances, the Supreme Court, while holding that the State Government could not be said to have acted arbitrarily or in violation of the statutory rule of renewal in refusing the approval for the renewal of the lease, observed thus : "9. Learned counsel for the petitioner submits that the petitioner is claiming right for renewal of lease under Rule 6-A, which provides as follows:- "6-A Application fee etc., for renewal of mining lease:(1) An application for renewal of mining lease may be made atleast six months before the date of expiry of the mining lease along with four copies of the map of lease hold area showing clearly he area applied for renewal and the provision of clause (a) and (d) of sub-rule (1) of Rule 6 shall mutatis mutandis apply. (2) The State Government may condone ....
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....anner." In Pawan Bhatia (supra), the petitioner claimed a writ of mandamus directing an inquiry into the functioning of the Department of Town and Country Planning, Haryana, whereby the licences and/or the change of land use had been granted in an arbitrary manner and for illegal consideration. A Division Bench of the Punjab and Haryana High Court, speaking through Hemant Gupta, J. (As His Lordship then was), while criticizing the grant of license on 'first-come-first-serve' basis, held as under : "26. The licences have been granted on the basis of first come first served basis. The principle of first come first served basis has been commented adversely in Centre for Public Interest Litigation and others v. Union of India and others, (2012)3 SCC 1. The Court examined inter-alia the following questions:- "(i) Whether the Government has the right to alienate, transfer or distribute natural resources/national assets otherwise than by following a fair and transparent method consistent with the fundamentals of the equality clause enshrined in the Constitution? xx x xxx xxx (ii) Whether the policy of first-come-first-served followed by DoT f....
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....nefit and have no respect for the constitutional ethos and values. In other words, while transferring or alienating the natural resources, the State is duty bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process." 28. The issue of grant of state privileges by the process of auction alone came up for answer in the Presidential Reference, since reported as Natural Resources Allocation, In re, Special Reference No. 1 of 2012, (2012) 10 SCC 1. The Constitution Bench held that action of the State, whether it relates to distribution of largesse, grant of contracts or allotment of land, is to be tested on the touchstone of Article 14 of the Constitution. The action has to be fair, reasonable, non-discriminatory, transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy competition and equitable treatment. It should conform to the norms which are rational, informed with reasons and guided by public interest, etc. The Court held :- "107. From a scrutiny of the trend of decisions it is clearly perceivable that the action of the State, whether it relates to dis....
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.... summarise in the context of the present Reference, it needs to be emphasised that this Court cannot conduct a comparative study of the various methods of distribution of natural resources and suggest the most efficacious mode, if there is one universal efficacious method in the first place. It respects the mandate and wisdom of the executive for such matters. The methodology pertaining to disposal of natural resources is clearly an economic policy. It entails intricate economic choices and the Court lacks the necessary expertise to make them. As has been repeatedly said, it cannot, and shall not, be the endeavour of this Court to evaluate the efficacy of auction vis-a-vis other methods of disposal of natural resources. The Court cannot mandate one method to be followed in all facts and circumstances. Therefore, auction, an economic choice of disposal of natural resources, is not a constitutional mandate. We may, however, hasten to add that the Court can test the legality and constitutionality of these methods. When questioned, the courts are entitled to analyse the legal validity of different means of distribution and give a constitutional answer as to which methods are ultra vire....
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....he last date. It is an open ended scheme. Any applicant can apply at any point of time. Such application would be considered if the density is available. It does not take into consideration as to whether the external developments have been completed or shall be completed by the time the constructed apartments in the Group Housing shall be offered for possession. It does not reflect the preparedness of the State for the grant of liccence. Since Gurgaon is a fast developing urban complex, there is large demand for licences, but we find it is not fair and reasonable to accept the application(s) on the basis of Draft Development Plan and grant the licence(s) on first come first served basis. 31. Though there is a provision of rejection of the application yet the action of permitting some of the applicants to make up the deficiencies, while declining such permission to the other, is an arbitrary process of grant of licence. Since, to develop a colony is a privilege; the consideration of the same has to be fair and reasonable manner. What should be transparent and fair method of grant of licence, it is for the State Government to prescribe such policy. Whether the policy is to g....