Case Note & Summary
The petitioner, Atlantic Shipping Private Limited, a shipping agent providing port services and logistical support to foreign clients, challenged the validity of Policy Circulars No. 06/2018 dated 22.05.2018 and 08/2018 dated 21.06.2018 issued by the Joint Director General of Foreign Trade. These circulars clarified the determination of eligibility of service providers under the Service Exports from India Scheme (SEIS), effectively requiring that the service provider must be the actual provider and not merely an intermediary. The petitioner also challenged a refusal order dated 25.10.2018 and show cause notices dated 10.05.2019 and 30.05.2019 issued by the Zonal Additional Director General of Foreign Trade, Mumbai, and the Additional Director General of Revenue Intelligence, Chennai, respectively. The petitioner argued that the circulars were ultra vires the Foreign Trade Policy and the Foreign Trade (Development and Regulation) Act, 1992, as they imposed additional conditions not found in the policy. The respondents contended that the circulars were clarificatory and aimed at preventing misuse. The court, after hearing submissions, held that the circulars were ultra vires as they added conditions not present in the policy and were contrary to the scheme's objective. The court quashed the circulars, the refusal order, and the show cause notices, allowing the petition.
Headnote
A) Foreign Trade Policy - Service Exports from India Scheme (SEIS) - Ultra Vires - Policy Circulars No. 06/2018 and 08/2018 - The circulars imposed additional conditions for eligibility of service providers under SEIS, requiring that the service provider must be the actual service provider and not merely an intermediary. The court held that these circulars are ultra vires the Foreign Trade Policy and the Foreign Trade (Development and Regulation) Act, 1992, as they add conditions not found in the policy and are contrary to the scheme's objective of promoting service exports. (Paras 2, 20-25) B) Administrative Law - Legitimate Expectation - Promissory Estoppel - SEIS Benefits - The petitioner, a shipping agent, had a legitimate expectation that SEIS benefits would be granted based on the Foreign Trade Policy and earlier practice. The court held that the circulars, being ultra vires, cannot defeat the legitimate expectation of the petitioner. (Paras 20-25) C) Interpretation of Statutes - Exemption Notification - Strict Construction - The court held that exemption notifications under the Foreign Trade Policy must be interpreted strictly, but the policy circulars cannot add conditions that are not present in the policy itself. (Paras 20-25)
Issue of Consideration
Whether Policy Circulars No. 06/2018 and 08/2018 imposing additional conditions for eligibility of service providers under SEIS are ultra vires the Foreign Trade Policy and the Foreign Trade (Development and Regulation) Act, 1992; and whether the refusal order and show cause notices based thereon are sustainable.
Final Decision
The court allowed the petition, quashing Policy Circulars No. 06/2018 and 08/2018, the refusal order dated 25.10.2018, and the show cause notices dated 10.05.2019 and 30.05.2019.
Law Points
- Doctrine of ultra vires
- Promissory estoppel
- Legitimate expectation
- Interpretation of exemption notifications
- Foreign Trade Policy
- Service Exports from India Scheme
