TaxTMI 
TaxTMI 
2026 (8) TMI 253
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....D. R. Singh, Mr. Jayesh Ramgini, and Mr. Harsh Choudhary, in WP/7850/2026,. For the Respondent: Mr. Anil Singh, A.S.G, a/w Mr. Aditya Thakkr, Mr. Vijay Kantharia, Mr. Adarsh Vyas, i/b Ms. Leena patil,. Nos. 1 to 4-Union of India in WP(L)/18701/2026, WP/8024/2026, and WP/7850/2026 and Respondent Nos. 1 to 3 in WP(L)/15306/2026. For the Respondent No. 4: Mr. Y. R Mishra, a/w Ms. Sangeeta Yadav, Mr. Umesh Gupta, in WP((L)/15306/2026,. For the Respondent No. 5: Ms. Shruti Vyas, a/w Mr. Abhishek Mishra, in WP/18701/2026,. JUDGMENT (PER ADVAIT M. SETHNA, J.):- 1. The judgment has been divided into the following sections to facilitate analysis: Section Contents Paragraph Nos. I Background. 3 to 5. II Factual Matrix. 6 to 16. III Rival Contentions. A Submissions on behalf of the Petitioners. 17 to 31. B Submissions on behalf of the Respondents. 32 to 50. IV Analysis. 51 to 84. V Conclusion. 85 to 91. 2. Heard learned counsel for the parties. Rule. Rule made returnable forthwith with consent of the parties. I. Background : 3. These Petitions are filed under Article 226 of the Constitution of Indi....
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....mills, taking into account their average sugar production during the preceding three sugar seasons. It prescribed the modalities governing the export of sugar, which were required to be complied with in terms thereof. 10. On 13th February 2026, another Notification was issued by the DFPD seeking willingness from the sugar mills, for the export of an additional 5 LMT of sugar during the 2025-26 sugar season. The said Notification stipulated that the allotted quota was required to be exported by 30th June 2026. It further provided that sugar mills which exported at least 70% of their allocated quantity by 30th June 2026 would be permitted to export the remaining quantity by 30th September 2026. However, if any sugar mill failed to export 70% of its allocated quantity by 30th June 2026, the unutilized portion of its export quota would lapse. Thereafter, another Notification dated 16th March 2026 was issued by the DFPD, by which, the Government allocated an additional export quota of 87,587 MT of sugar to the willing sugar mills. 11. The Petitioner's case is that it had entered into various contracts with overseas buyers between 14th April 2026 to 4th May 2026 in respect of expor....
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....e Respondents, have caused grave and irreparable prejudice to the Petitioners. 18. Mr. Rastogi has primarily submitted that the stand taken by the Respondents, as reflected in the Notifications, is nothing but a flip-flop and demonstrates a series of apparent contradictions. According to Mr. Rastogi, the Notification dated 14th November 2025, read with the subsequent Notification dated 13th February 2026 permitted the export of up to 20 LMT of sugar during the 2025-2026 sugar season. According to him, two wings/organs of the Government cannot take mutually contradictory stands in a manner that would prejudice the Petitioner. He would thus submit that by issuing the Office Memorandum dated 12th May 2026, the DFPD acted in a manner contrary to law, by prohibiting the export of sugar. 19. Mr. Rastogi is at pains to point out that, within less than 24 hours of the issuance of the said Office Memorandum dated 12th May 2026, the Respondent No. 2 i.e. the DGFT had issued the Impugned Notification dated 13th May 2026. He would submit that by the said Notification, the DGFT turned turtle by imposing a complete prohibition on the export of sugar with immediate effect until 30th Septemb....
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....ons dated 14th November 2025 and 13th February 2026, permitted the export of the allocated quota of sugar and expressly contemplated the export operations and shipment timelines extending upto 30th June 2026 and 30th September 2026. The Petitioners acted upon the same and entered into the binding commercial arrangement, received foreign remittances and operationalised export transactions. Such transactions had created a legitimate expectation in favour of the Petitioners and the Respondents ought not to have acted contrary thereto. Therefore, according to Mr. Rastogi, this is yet another ground to allow the Petition by partially setting aside the Impugned Notification dated 13th May 2026. 24. Mr. Rastogi submitted that approximately 20 containers, carrying about 540 MT of sugar, had already been exported/shipped by the Petitioners in the Writ Petition of Premium Sugars (Writ Petition (L) No. 18701 of 2026). He further submitted that, in respect of the balance quantity of approximately 1,971 MT, they were in the process of loading, transportation and shipment when abruptly, without following due process, the Respondents had halted the export of the sugar by the Petitioners pursua....
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....ly executed but are not honoured only due to subsequent change in the policy of the Government. Moreover, the Petitioners would be exposed to the risk of being subjected to arbitration proceedings at the instance of the overseas buyers. 30. Mr. Rastogi further submits that the Petitioners had made a representation dated 14th May 2026 to the Respondent authorities. However, the Respondents communicated their reply on the same vide an email/communication dated 3rd June 2026 rejecting the said representation. According to him, such communication rejecting the said representation was cryptic, non-speaking and devoid of any reasons, and did not disclose the basis on which the Petitioners' contentions and request had been rejected. 31. Mr. Rastogi would therefore pray that the Petitions be allowed, and the Rule be made absolute. B. Submissions on behalf of the Respondents: 32. Mr. Anil Singh, learned Additional Solicitor General appearing on behalf of the Respondents has vehemently argued in support of the actions of the Respondents assailed in the present proceedings. He would at the outset submit that the Government of India by issuing the Notifications from time to time in....
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.... by the Petitioners on the relaxation order dated 10th October 2022, is misplaced. This is because such order was a one-time discretionary relaxation granted in the specific circumstances prevailing during the sugar season 2023-24 and could not be treated as a binding precedent governing subsequent sugar seasons. It was submitted that each sugar season and its market condition is different and there is no compulsion for the Government to extend a relaxation granted in one particular season uniformly to all subsequent sugar seasons. 37. Mr. Singh would submit that by allocation of different quotas of sugar i.e. 15 LMT quota under the Notification dated 14th November 2025, followed by another 5 LMT under the Notification dated 13th February 2025, there is no vested rights created or accrued in favour of the Petitioners. This is more particularly, when the Respondents have decided to merely allocate quotas for allocation of sugar, keeping in mind the domestic production and indigenous requirements. In this regard, Mr. Singh has relied upon the decision of the Delhi High Court in Go-Go International and another v. Union of India and another 2004 (77) DRJ 145, to submit that the mere....
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.... a ban on sugar export with immediate effect. Thereafter, the matter was taken up with the Committee of Ministers (CoM) which, after due deliberation, decided to prohibit sugar export with immediate effect. All of this would unequivocally demonstrate that the decision to prohibit the export of sugar was taken with a view to maintain sufficient quantity of sugar for domestic consumption and to ensure price stability of sugar within the Country. 42. Mr. Singh would submit that sugar is an essential commodity and it is the priority of the Government of India to ensure sufficient quantity for domestic consumption of sugar at reasonable price, followed by diversion to ethanol production, in case of surplus availability. It is the additional surplus, if any, that can be used for the export of such sugar. It is in such circumstances that the representation submitted by the Petitioners was addressed by the Respondents. 43. Mr. Singh would urge that despite such clear and categorical Affidavit-In-Reply of the Respondent No. 3 making clear the stand of the Respondent on the export of sugar and its policy decisions in that regard, there is no Affidavit-In-Rejoinder of the Petitioners to....
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....ation is the actual permission granted by the proper officer for the clearance and loading of goods for exportation. Accordingly, in the absence of any material evidencing compliance with the requirements of Section 51, the Petitioners cannot derive any assistance from the definition of "prohibited goods" under Section 2(33) of the Customs Act. 48. Mr. Singh has emphatically urged that the representations were made by the Petitioners for relaxation, clarification and relief in respect of the Impugned Notification during the sugar season 2025-2026. Such representation has been answered by the Respondents vide communication dated 3rd June 2026. It is stated therein that export of sugar is strictly subject to conditions and specific exemption specified under the Impugned Notification. No separate relaxations are available for pre-exisiting commercial or financial obligations. Such rejection of the Petitioners' representations has not been challenged by the Petitioners in these proceedings. 49. Relying upon the decision of the Supreme Court in Ugar Sugar Works Ltd. v. Delhi Administration and Others (2001) 3 SCC 635, Mr. Singh has submitted that a policy decision of the State can....
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....gned Notification is reproduced herein below: "Government of India Ministry of Commerce & Industry Department of Commerce (Directorate General of Foreign Trade) ***** Vanijya Bhawan, Akbar Road, New Delhi - 110 011 Notification No.6/2026-27 New Delhi, 13th May, 2026 Subject: Amendment in Export Policy of Sugar - regarding. S.O. (E): The Central Government, in exercise of powers conferred by Section 3 read with Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No. 22 of 1992), as amended, read with Para 1.02 and 2.01 of the Foreign Trade Policy, 2023, hereby amends the export policy of Sugar under Chapter 17 of ITC (HS), Schedule-I as under: ITC (HS) Code Description Existing Policy Revised Policy Policy Condition 1701 14 90, 1701 99 90 Sugar (Raw Sugar, White Sugar and Refined Sugar) Restricted Prohibited Export of Sugar is prohibited with immediate effect till September 30, 2026, or till further orders, whichever is earlier. 2. This prohibition shall not apply to Sugar being exported to the EU and USA under CXL and TRQ quota, ....
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.... Advance Authorization Scheme (AAS), (iii) Government-to-Government exports, and, (iv) consignments already in physical export pipeline. This is issued with the approval of the Minister of Commerce & Industry, Government of India. (Lav Agarwal) Director General of Foreign Trade & Ex-Officio Additional Secretary to the Govt of India E-mail: [email protected]" Vide the Impugned Notification, the Government of India decided to prohibit the export of sugar which was earlier categorized/classified as a restricted item, for export. Such Notification was however, subject to certain terms and conditions as set out in the Impugned Notification. 54. Contextually, we may now refer to the Affidavit-in-Reply dated 10th June 2026 filed on behalf of Respondent Nos.1, 2 and 4 (in Writ Petition (L) No. 18701 of 2026, Premium Sugars). The Deponent has clearly stated therein that the Impugned Notification was issued in exercise of the plenary power conferred under Section 3 read with Section 5 of the FTDR Act so as to implement the decision of Committee of Ministers (CoM) dated 12th May 2026 communicated vide the Office Memorandum issued ....
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.... grievances stem from the Impugned Notification. The same is limited to the extent it prohibits their exports purportedly undertaken before the date of issuance of the Impugned Notification. This is on the basis of private contracts and remittances received from certain foreign buyers. 59. We may now address Mr. Rastogi's fundamental contention that by the said Office Memorandum, followed by the Impugned Notification, grave and irreparable injury has been caused to the Petitioners. This is inasmuch as they have already executed 6 contracts as stated in the Petition (Writ Petition (L) No. 18701 of 2026, Premium Sugars) and pursuant thereto, 540 MT of sugar has already been exported prior to the issuance of the Impugned Notification. The Petitioners claim to have received payments from their foreign buyers, pursuant to certain contracts executed prior to issuance of the Impugned Notification. However, we do not find much substance in such claim/contention of the Petitioners for reasons set out in the paragraphs below. 60. It may be true that the Petitioner, in the matter of Premium Sugars (Writ Petition (L) No. 18701 of 2026), as stated by them, may have executed about 6 privat....
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....mandated under the said para 1.05 (b) (supra). Moreover, there is no application for registration certificate by the Petitioners as required under para 1.05 (b) of the Foreign Trade Policy, 2023. This is specifically stated by the Respondent Nos.1, 2 and 4 in their Affidavit-in-Reply dated 22nd June 2026 (in Writ Petition (L) No. 18701 of 2026, Premium Sugars) in regard to which, there is no denial on record. In view thereof, Mr. Rastogi's reliance on the said Policy provision does not assist nor take the case of the Petitioners any further. 62. In regard to the above, we have come across a decision in Shriram Food Industry Ltd (supra) relied on by Mr. Rastogi, which is also annexed to one of the Petitions (Writ Petition (L) No. 18701 of 2026, Premium Sugars). On a careful perusal thereof, we find that the said decision proceeds on the premise that the Petitioners therein had Irrevocable Commercial Letters of Credit which were issued before the issuance of a similar Notification therein. This was to make out a case of part performance of their obligations under certain contracts, in the context of Para 1.05 of the Foreign Trade Policy, 2023. Such fact of holding such Irrevocable....
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....he existing policy from 'restricted' to 'prohibited', based on the bedrock of larger public interest, as discussed above. In view thereof, the reliance placed by Mr. Rastogi on the definition of 'prohibited goods' as defined under Section 2(33) of the Customs Act, 1962, would have no bearing in the given facts and circumstances, more particularly, as they have not fulfilled the pre-conditions stipulated in the Impugned Notification. 66. We, therefore, do not find substance in the contention of Mr. Rastogi which would lead us to infer that there could be an overlap between the earlier Notifications and the Impugned Notification under which the Government/Respondents cannot, according to the Petitioners, take a contradictory position. This is in as much as they are issued under different statutes and operate under different spheres, for distinct purposes. 67. We find that even under the restricted regime governing sugar exports, the export of sugar to the EU under the CXL Quota and to the USA under the Tariff Rate Quota (TRQ) was already classified as 'free' subject to the conditions contained in the Notifications dated 28th April 2015 and 17th June 2025. The Impugned Notificat....
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....d. 70. We find that the Petitioners had made a representation dated 14th May 2026 in the lead Petition (Premium Sugars) to the Respondent authorities. However, the record bears out that the said representation was duly considered and rejected by a communication/order dated 3rd June 2026, during the pendency of the Petition. On a specific query to learned counsel for the Petitioner, it is accepted that the said rejection of the Petitioner's representation is not challenged in the proceedings before this Court and therefore such rejection would hold the field. The Petitioner's case is that the communication rejecting their representations lacks reasons and is cryptic. However, as the same is not assailed in these proceedings, the window of seeking any clarification from the Respondents is also closed for the said Petitioner, in such fact situation. 71. Let us now examine Mr. Rastogi's submission that applying the prohibition under the Impugned Notification to the pre-existing contracts where payments are already received, would tantamount to giving a retrospective effect to the Impugned Notification. However, a bare perusal of the Impugned Notification itself would indicate tha....
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....grounds of irrationality, perversity and mala fides, the mere fact that it would hurt business interest of a party does not justify invalidating the policy. The Courts are not expected to express their opinions as to whether at a particular point of time or in a particular situation, such policy should have been adopted or not. It is best left to the discretion of the State. We, therefore, find ourselves in agreement with the submission of Mr. Singh, in this regard. 76. Contextually, we find merit in reliance of Mr. Singh on the judgment of Go-Go International (Supra), where the Delhi High Court was dealing with export import policy and changes in the terms and conditions thereof. The Delhi High Court has held that the Petitioner cannot claim any vested right merely on the issuance of quotas. In arriving at the above conclusion (supra), the Delhi High Court had placed reliance on the decision of the Supreme Court in PTR Exports (Madras) Private Limited and Others vs. Union of India & Others 1996 SCC 5 268. This to the effect that, when the government is satisfied that change in the policy was necessary in the public interest, it would be entitled to revise the policy and lay dow....
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....f PTR Exports (Madras) Private Limited (supra) examined the submissions on the basis of vested rights and legitimate expectation. It held that it would be open to the government to evolve new schemes. The Petitioners would get their legitimate expectations accomplished in accordance with such schemes subject to them satisfying the conditions required therein. Accordingly it was held that the High Court was right in its conclusion that the government is not barred by the promises or the legitimate expectations, from evolving new policy by the Notification. These observations and the law laid down in the said decision would, in our considered view, squarely apply to the facts of the present case. 81. We are conscious of the decision of the Supreme Court in Aravali Golf Club vs Chander Hass (2008) 1 SCC 683, wherein it has held that the Court must maintain judicial restraint and not ordinarily encroach in the domain of the executive or the legislature. Such observations were made in the context of the impugned press note and notification which were assailed therein. We find that the ratio laid down in the said decision is applicable in the given fact situations. 82. We find it p....
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....ht, more particularly in the context of a well-reasoned policy decision. The only exception, in our view, to warrant interference would be when such decision suffers from the vice of arbitrariness so as to be hit by Article 14 of the Constitution. We do not find such exception to be applicable in the cases before us. 86. We find it pertinent to note that these are cases where the legitimate expectation as pleaded by the Petitioners cannot be placed at a pedestal higher than that of the producers and consumers of sugar as far as the domestic sugar industry is concerned. Protecting the same at the relevant time appears to be the need of the hour. The Respondents being the competent authorities acting under the respective statutes are clothed with the expertise and wherewithal to take an informed decision. Having observed thus, interference by this Court, in exercise of its extra ordinary jurisdiction, would not be conducive, in the given factual complexion. 87. We have noted the projection of the Petitioners that they would be at the risk of being driven into commercial arbitration at the behest of private parties/overseas buyers. However, our judgment would always be guided by....