Case Note & Summary
The petitioners, Vodafone Essar Ltd. and three other corporate entities, are telecom service providers operating as Indian Access Providers (IAP) or International Long Distance Operators (ILDO). They applied for and were granted Duty Credit Scrips under the Served From India Scheme (SFIS) of the Foreign Trade Policy for 2004-09. The scheme aims to accelerate growth in export of services. The first, second, and third petitioners received the scrips, while the fourth petitioner's application was pending. Subsequently, the Office of the Directorate General of Foreign Trade issued a Circular dated 15 July 2010, and the Zonal Joint Director and Joint Director General issued notices revoking the benefits granted to the petitioners. The petitioners challenged these actions under Article 226 of the Constitution. The court examined the provisions of the SFIS, particularly Paragraph 3.6.4 of the Foreign Trade Policy, which sets out the objective, eligibility, and entitlement. The eligibility requires service providers listed in Appendix 10 of HBP v1 to have a total free foreign exchange earning of at least Rs. 10 lakhs in the preceding financial year. The court found that the petitioners had met these criteria and were granted the scrips. The respondents argued that the Circular was issued to clarify the scheme and that the revocations were justified. However, the court held that the Circular and the notices were issued without authority and in violation of principles of natural justice, as the petitioners were not given an opportunity to be heard before the revocation. The court also noted that the petitioners had a legitimate expectation that the benefits once granted would not be withdrawn arbitrarily. Consequently, the court quashed the Circular and the impugned notices, and directed that the benefits already granted to the petitioners be restored. The petition was allowed with no order as to costs.
Headnote
A) Foreign Trade Policy - Served From India Scheme - Revocation of Duty Credit Scrips - The court considered whether the Director General of Foreign Trade could revoke scrips already granted under the SFIS without hearing the beneficiaries. Held that the Circular and notices were issued without authority and in violation of principles of natural justice, and were therefore quashed (Paras 1-10). B) Telecom Services - Export of Services - Eligibility for SFIS - The petitioners, as Indian Access Providers and International Long Distance Operators, had been granted Duty Credit Scrips under the SFIS for export of telecom services. The court noted that the scheme's objective was to accelerate growth in export of services, and the petitioners had met the eligibility criteria (Paras 2-4). C) Administrative Law - Natural Justice - Legitimate Expectation - The court held that the revocation of benefits without affording an opportunity of hearing violated the principles of natural justice and the doctrine of legitimate expectation. The impugned Circular and notices were set aside (Paras 8-10).
Issue of Consideration
Whether the Director General of Foreign Trade has the authority to revoke Duty Credit Scrips granted under the Served From India Scheme without providing an opportunity of hearing, and whether the Circular dated 15 July 2010 and the impugned notices are valid.
Final Decision
The court quashed the Circular dated 15 July 2010 and the impugned notices, and directed that the benefits already granted to the petitioners be restored. The petition was allowed with no order as to costs.
Law Points
- Foreign Trade Policy
- Served From India Scheme
- Duty Credit Scrip
- Revocation
- Natural Justice
- Legitimate Expectation
- Telecom Services
- Export of Services
