TaxTMI 
TaxTMI 
2021 (4) TMI 1233
X X X X Extracts X X X X
X X X X Extracts X X X X
....Services) in Telecom Sector or Management Consulting Services) in Telecom Sector, are ineligible for the benefit under the Service Exports from India Scheme (hereinafter referred to as 'SEIS') announced by the Foreign Trade Policy 2015-20. The petition further impugns the order(s) dated 11.06.2019 and 03.06.2019, whereby the respondent no. 3 has rejected the claim of the petitioner(s) for benefit under the SEIS for the financial years 2015-16, 2016-17 and 2017-18, respectively. 3. To appreciate the dispute between the parties, few facts need to be highlighted. 3.1 The respondent no. 1, in exercise of its powers under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as the 'Act'), notified the Foreign Trade Policy, 2015-20 (hereinafter referred to as the 'FTP'). 3.2 Chapter 3 of the FTP details the "Exports from India Schemes". 3.3 Paragraph 3.01 of the FTP states that there shall be following two schemes for exports of Merchandise and Services respectively: (a) Merchandise Exports from India Scheme (MEIS); (b) Service Exports from India Scheme (SEIS) 3.4 The present set of petitio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....el for the petitioner(s) further submits that in fact, the Impugned Instructions have been issued by the respondent no. 2. He submits that the same has also been admitted in paragraph 30 of the counter affidavit filed on behalf of the respondents. He submits that under the Act, respondent no. 2 has no power to modify the FTP; respondent no. 2 is empowered only to advise the Central Government in the formulation of the FTP and is responsible for carrying out that Policy. The power of modification of the Policy rests only with the respondent no. 1. He submits that by way of the Impugned Instructions, the respondent no. 2 has modified the FTP by creating a new class of ineligible services. He submits that the respondent no. 2 cannot, by way of circulars/instructions, add new conditions or read down the benefit granted under the FTP. In support of his submissions, he places reliance on Atul Commodities Pvt. Ltd. & Ors. v. Commissioner of Customs, Cochin, (2009) 5 SCC 46; M/s Deepak Enterprises v. Union of India & Ors., 2018 SCC OnLine Del 6724; Yum Restaurants (I) Pvt. Ltd. v. Union of India, 2015 SCC OnLine Del 14548; Atlantic Shipping Private Limited v. Union of India & Ors., (Judgme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Enforcement,; Development Commissioner, MEPZ, SEZ & HEOU, Chennai v. Hospira Health Care India (P). Ltd., 2017 (356) ELT 167 (Mad.); and JSW Steel Ltd. v. Union of India, 2016 SCC OnLine Bom 54. 9. To counter the objection of the learned counsel for the respondent that the petitioner has already availed of its remedy of Appeal under Section 15 of the Act and has even a remedy under Section 16 of the Act in form of a Review before the Central Government, the learned senior counsel for the petitioner(s) submits that as the Impugned Order(s) have been passed on the basis of the Impugned Instructions dated 22.05.2019, the remedy of the petitioner would be to challenge the said instructions in form of a Writ Petition before this Court. He further submits that a decision having already been taken by the respondent no. 2 in form of the instructions dated 22.05.2019, the remedy under Section 15 of the Act would be a mere formality. As far as the remedy under Section 16 of the Act is concerned, he submits that the petitioner cannot be denied the remedy of original unbiased adjudication under law, by relegating him to only the remedy of Review under Section 16 of the Act. He submits t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tainability of the present petition, by contending that the petitioner has an alternate efficacious remedy in form of an Appeal under Section 15 of the Act and of a Review under Section 16 of the Act. She submits that the petitioner has in fact, availed of its remedy under Section 15 of the Act by filing appeals against the orders of the respondent no. 3 impugned in the present petition. The said appeals are still pending adjudication. 14. On merit, she submits that the representation of the petitioner regarding the nature of services provided by it was duly scrutinised by the competent authority and it was found that the same would not fall within the scope of CPC Code 8672 and/or 865. She submits that the services claimed to be provided by the petitioner would in fact, fall within the scope of CPC Code 752 and 754, that is, telecommunication services and telecommunication related services, respectively. She further submits that the nature of services being rendered by the petitioner, having been scrutinised by the expert body, this Court should not interfere with the same. 15. She submits that the reliance of the petitioner on the final CPC version 2.1 is ill-founded inasmu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cy by way of an instruction/circular. 22. In Deepak Enterprises (supra), this Court held that where the Foreign Trade Policy is unambiguous, the question of DGFT issuing any clarification in that regard does not arise. It was held that any circular/public notice issued by DGFT, which is inconsistent with the Foreign Trade Policy, would be liable to be set aside. 23. In Yum Restaurants (I) Pvt. Ltd. (supra), this Court reiterated that it is not upon the DGFT to introduce new conditions and criteria under the guise of interpreting the Policy, as that would amount to amending the provisions of the Foreign Trade Policy. Reference in this regard is made also to the judgment of this Court in Bright Engineering Works (supra). 24. With the above background, let us consider the FTP 2015-20, upon which the claim of the petitioner(s) is based. 25. Chapter 3 of the FTP 2015-20 provides for "Exports From India Schemes". Paragraph 3.00 provides the objective of the Scheme as under: "3.00 Objective The objective of schemes under this chapter is to provide rewards to exporters to offset infrastructural inefficiencies and associated costs involved and to provide export....
X X X X Extracts X X X X
X X X X Extracts X X X X
....means a person providing: (i) Supply of a 'service' from India to any other country; (Mode 1-Cross border trade) (ii) Supply of a 'service' from India to service consumer(s) of any other country in India; (Mode 2-Consumption abroad) (iii) Supply of a 'service' from India through commercial presence in any other country. (Mode 3-Commercial Presence) (iv) Supply of a 'service' from India through the presence of natural persons in any other country. (Mode 4- Presence of natural persons.)" 33. Appendix-3D lists out the 'notified services' and the rates of rewards. The same gives reference to the Central Product Classification (CPC) Code as a reckoner. 34. A reading of the above provisions would show that the Service Providers (as defined in Paragraph 9.51 of the FTP) providing Services as notified in Appendix-3D are entitled to SEIS benefit in form of Duty Drawback Scrips on foreign exchange remittance other than those provided in Paragraph 3.09 of the FTP. 35. As noted hereinabove, the petitioner in WP(C) 13429 of 2019 claims to be providing Notified Services as enumerated in S. No. 1(A)(e) having CPC Code 8672, being Engineering Services, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. This Court, therefore, refrains itself from considering as to whether the services claimed to be rendered by the petitioners fall within CPC Codes 8672 and 865, or CPC Codes 752 and 754. This Court confines itself to the question whether all services rendered in Telecom Sector are ineligible, as is the case of the respondents in the Impugned Instructions dated 22.05.2019. 39. The issue before this Court is the interpretation to be placed on Paragraph 3.09(2)(i) of the FTP in so far as it excludes "Service Providers in Telecom Sector" from the benefit of SEIS. 40. To appreciate the above issue, one may consider the historical evolution of SEIS vis-à-vis Service Providers in Telecom Sector. 41. Under FTP 2004-09, the similar Scheme of benefit for Service Exports was branded as "Served From India Scheme" ('SFIS'). Paragraph 3.6.4.3 of the FTP 2004-09 stated that services and service providers listed in Paragraph 3.18.1 of the Handbook of Procedures, Volume 1 (hereinafter referred to as 'HBPvl') shall not be entitled to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s grant of SFIS benefit is established and duty credit amount, so granted in excess, be recovered without imposing any penal recovery of interest. This would uphold the principle of natural justice. d. Report the progress to DGFT headquarters on a monthly basis, for each telecom sector applicant The review exercise should be completed within 6 months from the date of this Policy Circular." 44. The said Circular was challenged before the High Court of Bombay in Vodafone Essar Ltd. v. Union of India, 2011 (270) E.L.T. 492 (Bom.), wherein the Court held that the Circular, insofar as it directs the implementation of the decision taken in the meeting of Policy Interpretation Committee dated 05.07.2010, is ultra vires the Foreign Trade Policy for the years 2004-09. Paragraph 3 of the Circular, as regards the implementation of the decision at S.No. 1, 2A and 2B of the PIC meeting on 05.07.2010, was also quashed and set aside. In reaching the above conclusion, the High Court of Bombay explained the kind of scenarios where the earning in foreign exchange by the Indian service provider shall fall within the claim of SFIS benefit, as under: "15. In order to appreciate the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y, but would involve a modification, amendment or change of policy. xxxx 27......The submission of the learned ASG is that the principle of netting off must be applied because the benefits under the SFIS must be confined to the net foreign exchange that is earned by the country. The difficulty in accepting the submission of the learned ASG is that this would amount to a substantial modification and amendment to the policy. The document must be interpreted as it stands. The policy document has defined both the eligibility and the entitlement with reference to foreign exchange earned. The foreign exchange earned cannot be defined as the remittance of foreign exchange less an outflow. Where the policy intended that the concept of the net foreign exchange should be applied it has stipulated so expressly. In the absence thereof, it was wholly impermissible for the DGFT, by means of a policy circular, to direct the implementation of what constitutes clearly an amendment of the policy." 46. Though the factual dispute involved in the above case is not present in the present petitions, the above have been quoted only to highlight that the Service Providers in Telecom Se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h Telecom Service Providers. 50. Though, a similar list is not appended to FTP or HBPv1, there is no reason for a different interpretation to be placed to FTP 2015-20. Clearly, what was made ineligible for availing benefit of SEIS in terms of paragraph 3.09(2)(i) are the Telecom Service Providers and not the Service Providers who provide services to such Telecom Sector. 51. In my opinion, the Foreign Trade Policy is clear and unambiguous inasmuch as it excludes the Telecom Service Providers from the benefit of the SEIS and not the Service Providers who provide services to such Telecom Service Providers. As noted hereinabove, the ambit of the term was clearly spelled out in S.No. 2(C) of Appendix-10 to HBPv1 to FTP 2009-14. No different intention regarding the same is discernible from the FTP 2015-20. 52. In this regard, one may also take note of the provisions of the Telecom Regulatory Authority of India Act, 1997 (hereinafter referred to as the "TRAI Act"). Section 2(j) of the TRAI Act defines the term "Service Provider" as under: "(j) Service Provider" means the Government as a service provider and includes a licensee. 53. Section 2(e) of the TRAI Act defines....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... at p. 363): "Planning law, though a comprehensive code imposed in the public interest, is, of course, based on land law. Where the code is silent or ambiguous, resort to the principles of private law (especially property and contract law) may be necessary so that the courts may resolve difficulties by application of common law or equitable principles. But such cases will be exceptional. And, if the statute law covers the situation, it will be an impermissible exercise of the judicial function to go beyond the statutory provision by applying such principles merely because they may appear to achieve a fairer solution to the problem being considered. As ever in the field of statute law it is the duty of the courts to give effect to the intention of Parliament as evinced by the statute, or statutory code, considered as a whole." 12. In J.K. Steel Ltd. v. Union of India [AIR 1970 SC 1173 : (1969) 2 SCR 481] it was held that cognate and pari materia legislation should be read together as forming one system and as interpreting and enforcing each other. In Vidyacharan Shukla v. Khubchand Baghel [AIR 1964 SC 1099 : (1964) 6 SCR 129] it was held that the Code of Civil Proc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es, management and operation of network services (managed services) in Telecom Sector or Management Consulting services in Telecom Sector are ineligible for SEIS. So your case is rejected. You are requested to remove above deficiencies within a period of 30 days from the date of issue of this letter, otherwise your case will be treated as closed. Letter dated 03.06.2019 Your Application is deficient due to following reasons: 1. As per DGFT (HQ) instructions, you are providing services in Telecom Sector and telecom sector is ineligible under SEIS. Therefore all services whether engineering services (network engineering services, management and operation of network services (managed services in Telecom Sector or Management Consulting services in Telecom Sector are ineligible for SEIS. So your case is rejected. You are requested to remove above deficiencies within a period of 30 days from the date of issue of this letter, otherwise your case will be treated as closed. Letter dated 03.06.2019 Your Application is deficient due to following reasons: 1. As per DGFT (HQ) instructions, you are providing services in Telecom Secto....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es we consider that the High Court ought to have considered and pronounced upon the merits of the contentions raised by the parties and the summary dismissal of the Writ Petition was not justified. In such a situation, although we would have, ordinarily, set aside the judgment of the High Court and remitted the case to that Court for fresh disposal, we consider that in the present case it would be in the interests of both sides to have the matter finally decided by this Court at the present stage itself especially since we have had the benefit of elaborate and learned arguments addressed by the counsel appearing on both sides." 64. A Division Bench of this Court in Vistar Construction (P) Ltd. (supra) has held that where the Instructions/order are contrary to law, they are liable to be set aside and availability of alternate remedy would not bar the exercise of jurisdiction under Article 226 of the Constitution of India as otherwise such instructions/orders shall remain binding on the authorities under the Act and any appeal would be decided based thereon. It held as under: "11. It is obvious that the said instruction being contrary to the law as declared by the Supreme....