TaxTMI 
TaxTMI 
2025 (12) TMI 838
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.... treated as a representation and to be decided by the competent authority in the office of the DGFT by way of a reasoned order. The petitioner/association has also prayed for issuing an appropriate writ declaring the notification dated 25.03.2022, issued by the Government of India, Department of Commerce, Ministry of Commerce, whereby a Scheme titled "Revised Transport and Marketing Assistance (TMA) for Specified Agricultural Products" vide notification dated 09.09.2021 was foreclosed, and accordingly the notification dated 09.09.2021 was withdrawn, as ultra vires. Prayer is, thus, to set aside the notification dated 25.03.2022. -: FACTS :- 2. Vide notification dated 27.02.2019 read with notification dated 29.03.2019, the Department of Commerce, Government of India introduced TMA Scheme with the object of providing assistance for the international component of trade and marketing of agricultural products, which was likely to mitigate disadvantage of higher cost of transportation of export of specified agricultural products. The Scheme also aimed to promote brand recognition for Indian agricultural products in the specified overseas markets. Clause 4 of the notification dat....
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.... was, thus, rejected. 6. It is this order dated 19.03.2024, passed by the DGFT, which is under challenge herein apart from the challenge to the notification dated 25.03.2022, whereby the Scheme has been foreclosed by withdrawing the notification dated 09.09.2021. -: SUBMISSIONS ON BEHALF OF THE PETITIONER :- 7. It has been argued on behalf of the petitioner/association that the notification dated 25.03.2022, in fact, operates retrospectively in as much as that it forecloses the Scheme which had operated by dint of the notification dated 09.09.2021 from 01.04.2021 till 31.03.2022. 8. In this respect, it has been argued that the Scheme as notified vide notification dated 09.09.2021 is a piece of subordinate legislation which is referable in Section 3 and Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as 'FTDR Act') and since neither Section 3 nor Section 5 of the FTDR Act permits the Central Government to make any notification regarding foreign trade policy or to make any provision relating to import and export retrospectively, as such the impugned notification dated 25.03.2022, which has rescinded the policy retrospectively....
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.... under the aforesaid provisions. However, that by itself would not mean that such a provision empowers the Government to do so retrospectively. This legal position is rightly discussed by the Bombay High Court in the impugned judgment in the following words : (Kanak Exports case [Kanak Exports v. Union of India, 2005 SCC OnLine Bom 1678], SCC OnLine Bom paras 26-29) "26. We are unable to accept the submissions of the learned Additional Solicitor General. The word 'amend' does not give power to make amendment retrospectively if it is used in relation to the power to make a piece of delegated legislation. The connotation of the word 'amend' when it is used for the exercise of power by a legislature cannot be pressed to construe the word 'amend' in relation to the power to make delegated legislation. In this regard the following observations of the Supreme Court in Accountant General v. Doraiswamy [Accountant General v. S. Doraiswamy, (1981) 4 SCC 93 : 1981 SCC (L&S) 574] are pertinent : (SCC p. 99, para 7) '7. The next question is whether clause (5) of Article 148 permits the enactment of rules having retrospective operation. It is settled law that unless a statute ....
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....eneral is also of no assistance to sustain the retrospective operation of the notification. Section 21 of the General Clauses Act embodies a rule of construction, nature and extent of application of which must inevitably be governed by the relevant provisions of the statute which confers power to issue the notification. The said power must be exercised within the limits prescribed by the provisions conferring the said power. (See Gopichand v. Delhi Admn. [Gopichand v. Delhi Admn., AIR 1959 SC 609 : 1959 Cri LJ 782], Lachmi Narain v. Union of India [Lachmi Narain v. Union of India, (1976) 2 SCC 953 : 1976 SCC (Tax) 213] and State of Kerala v. K.G. Madhavan Pillai [State of Kerala v. K.G. Madhavan Pillai, (1988) 4 SCC 669] .) The ratio in H.C. Suman case [H.C. Suman v. Rehabilitation Ministry Employees' Coop. House Building Society Ltd., (1991) 4 SCC 485] also cannot be applied because in that case it was found that Section 88 of the Delhi Cooperative Societies Act, 1972 contained the power to exempt and if the provisions of Section 12 of the said Act were to be exempted the provisions which provided that bye-laws are effective from the date of registration. The notification issu....
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....d a significant limitation. The court clarified that even if a benefit is rescinded in the broader public interest, it does not necessarily legitimize a retrospective withdrawal without clear legislative backing. Diving deeper into the statutory framework, it was unequivocally stated that section 5 of the FTDR Act, 1992, lacks any provision that permits the Central Government to promulgate rules with a retrospective effect. Consequently, the scope to "amend" any policy under section 5 does not imply a carte blanche authority to make retrospective changes. This judgment is not an isolated stand; it derives its strength from the foundational legal principle that secondary or delegated legislation, by default, is prospective. Retrospective application is an exception and can only be permitted if explicitly provided by the parent statute. Supporting this line of thought, the Supreme Court, in Asian Food Industries [Union of India v. Asian Food Industries, 2006 SCC OnLine SC 1162.], reiterated that prohibitive measures encapsulated in any statutory order under the FTDR Act, 1992, read with relevant provisions of the policy decision under section 3(2) of the FTDR Act, 1992, should inhere....
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....ed 09.09.2021 with retrospective effect vide the notification dated 25.03.2022. The learned Single Judge of Calcutta High Court has further held in the said judgment that the notification dated 25.03.2022 shall operate on and from 26.03.2022 onwards but will not have any retrospective effect for exports effected till 25.03.2022 and otherwise covered by the notification dated 09.09.2021. 16. However, we may note that the judgment of the learned Single Judge of Calcutta High Court was set aside by a Division Bench of the said High Court by means of an order dated 24.02.2025 and the matter has been remitted to the learned Single Judge for decision afresh. 17. The principle of legitimate expectation has also been sought to be invoked by the learned counsel for the petitioner on the ground that during currency of the Scheme on account of notification dated 09.09.2021, a right had accrued to the chilli exporters of getting benefit of incentive under the Scheme, however, such right cannot be taken away by the impugned notification dated 25.03.2022. It has been argued in this regard that as per the notification dated 09.09.2021, the chilli exporters had changed their position dependi....
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.... administration requires public authorities to act in a predicable manner and honour the promises made or practices established unless there is a good reason not to do so. In Nadarajah [R. (Nadarajah) v. Secy. of State for the Home Deptt., 2005 EWCA Civ 1363], Laws, L.J. held that the public authority should objectively justify that there is an overriding public interest in denying a legitimate expectation. We are of the opinion that for a public authority to frustrate a claim of legitimate expectation, it must objectively demonstrate by placing relevant material before the court that its decision was in the public interest. This standard is consistent with the principles of good administration which require that State actions must be held to scrupulous standards to prevent misuse of public power and ensure fairness to citizens." "45. The underlying basis for the application of the doctrine of legitimate expectation has expanded and evolved to include the principles of good administration. Since citizens repose their trust in the State, the actions and policies of the State give rise to legitimate expectations that the State will adhere to its assurance or past practice by....
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....aldwin, [1964] A.C. 40; (iv) Associated Cement Companies v. P.N. Sharma, AIR 1965 SC 1595; 20. It is also the submission of the learned counsel for the petitioner that the impugned order and action is not liable to be sustained which suffers from the vice of manifest arbitrariness in as much as that the chilli exporters effected the exports and were entitled to the incentive under the Scheme on account of operation of the notification dated 09.09.2021, however, the said benefit has been arbitrarily denied by issuing the notification dated 25.03.2022 and arbitrariness in this regard is writ large. Reliance in this regard has been placed on behalf of the petitioner on the judgment of Hon'ble Supreme Court in Shayara Bano v. UOI, 2017 (9) SCC 1. -: SUBMISSIONS ON BEHALF OF THE RESPONDENTS :- 21. Opposing the prayers made in the writ petition vehemently, learned counsel representing the respondents has submitted that the notification dated 25.03.2022 was issued with a rationale and the reason for issuing the said notification was to revamp, redesign and refocus the Scheme for better outcomes. It has further been argued that unless any malice is established, a policy d....
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....jacketed formula. It has also been argued by the learned counsel representing the respondents that in the matters of Government policy, the scope of judicial review is limited and in such challenges the Courts do not and cannot act as appellate authorities examining the correctness or suitability or appropriateness of a policy. In this regard, the respondents have also relied upon a judgment of Hon'ble Supreme Court in Ugar Sugar Works Ltd. V. Delhi Administration &Ors., (2001) 3 SCC 635. 23. About the power of the Central Government to issue order or notification under Section 3 and 5 of the FTDR Act, it has been contended on behalf of the respondents that the Central Government is empowered to issue such a notification having retrospective application in public interest. It is also the submission on behalf of the respondents that there can be no estoppel against the Government in exercise of its legislative, sovereign or executive powers as held by Hon'ble Supreme Court in Kasinka Trading v. Union of India, (1995) 1 SCC 274. 24. It is also argued on behalf of the respondents that in view of what has been held by Hon'ble Supreme Court in Kasinka Trading (supra), the Governme....
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....been extracted above. 28. While making the aforesaid observations and clearly returning a finding that the Central Government has not been vested with any power under Section 5 of the FTDR Act to make any notification retrospectively, the Hon'ble Supreme Court has, inter alia, considered that there is no denial that the Government has a right to amend, modify or even rescind a particular Scheme and further that in complex economic matters every decision is necessarily empiric which is based on experimentation or trial and error method and therefore, its validity cannot be tested on any rigid prior considerations. The Hon'ble Supreme Court has even referred to the law laid down in Balco Employees' Union (supra) and has noticed that the executive action relating to economic activities should be viewed with greater latitude than the laws touching civil rights, such as freedom of speech and religion, etc. and further that the legislature should be allowed some play in the joints because it has to deal with complex economic problems. Noticing the said legal principle about the scope of interference by a Court in exercise of its power of judicial review in such matters, the Hon'bl....
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....cheme on 31.03.2021, a notification was issued only after a period of about six months, i.e. on 09.09.2021, whereby revised Scheme was introduced for exports effected between 01.04.2021 and 31.03.2022. As a matter of fact, the notification dated 09.09.2021 issued by the Central Government has retrospective effect. So far as the period 01.04.2021 till 08.09.2021 is concerned, we may notice with emphasis that during this period, i.e. between 01.04.2021 and 08.09.2021, the Scheme was not in vogue, rather the Scheme was made effective by means of the notification issued after this period of six months, i.e. on 09.09.2021 and it is only on account of the retrospective application of the notification dated 09.09.2021 that the Scheme was continued after 01.04.2021 that the Scheme can be said to be operative from 01.04.2021 till 08.09.2021 and thereafter, till 31.03.2022. 33. The question which needs our consideration, at this juncture, is that once we have held that the Central Government lacks any authority or power under Section 3 read with Section 5 of the FTDR Act to issue any notification or make any order having retrospective effect, so far as the applicability of the notifica....