Case Note & Summary
Two writ petitions were filed before the Karnataka High Court challenging the validity of Policy Circulars No. 06/2018 dated 22.05.2018 and No. 08/2018 dated 21.06.2018 issued by the Director General of Foreign Trade (DGFT) under the Service Exports from India Scheme (SEIS) of the Foreign Trade Policy 2015-2020. The petitioners, engaged in providing shipping logistic services in India, had previously been granted duty credit scrips under the SEIS for the export of services. The impugned circulars clarified that SEIS benefits are available only to actual service providers and not to service aggregators, leading to the denial of further scrips and the issuance of show cause notices by the Directorate of Revenue Intelligence (DRI) demanding return of previously granted scrips. The petitioners contended that the circulars are ultra vires the parent Act and the Foreign Trade Policy, and violative of Articles 14, 19, and 300A of the Constitution. They also challenged a customs notification and sought quashing of the show cause notices as without jurisdiction. The matters were heard together and reserved for orders on 02.02.2024, and the Court pronounced orders on 25.04.2024.
Issue of Consideration
Whether Policy Circular Nos. 06/2018 and 08/2018 are ultra vires the Foreign Trade Policy 2015-2020 and unconstitutional; Whether the Show Cause Notices are without jurisdiction
Law Points
- Ultra vires challenge to policy circulars
- statutory interpretation of SEIS eligibility under FTP 2015-2020
- constitutional validity under Articles 14
- 19
- 300A
Case Details
2024 LawText (KAR) (04) 57
W.P. No. 12068 of 2021 (T-RES) c/w W.P. No. 12044 of 2021 (T-RES)
G. Shivadass, Senior Counsel for Prashanth Sabarish Shivadass; V. Raghuraman, Senior Counsel for Raghavendra C.R.; Sarojini Muthanna, CGC; Amith Deshpande, S.V. Desai
M/S ECL Puyvast (India) Pvt Ltd; M/S Puyvast Maritime India Pvt Ltd, Shri Subramanya Rao, Shri Venkatesh Kamath S V
Union of India and Others
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Writ petition under Articles 226 and 227 challenging the validity of DGFT policy circulars and show cause notices under SEIS
Remedy Sought
Quashing of policy circulars, declaration of circulars as ultra vires and unconstitutional, quashing of show cause notices, direction to process SEIS applications and grant duty credit scrips, refund of amounts paid under protest
Filing Reason
DGFT issued circulars clarifying that only actual service providers, not aggregators, are eligible under SEIS, leading to denial of scrips and issuance of show cause notices demanding return of previously granted scrips
Issues
Whether Policy Circular Nos. 06/2018 and 08/2018 are ultra vires the Foreign Trade Policy 2015-2020 and Foreign Trade (Development and Regulation) Act, 1992
Whether the impugned circulars violate Articles 14, 19, and 300A of the Constitution
Whether Notification No.44/2011 Customs (N.T.) dated 06.07.2011 is ultra vires the Customs Act, 1962
Whether the show cause notices issued by DRI are without jurisdiction
Submissions/Arguments
Petitioners contend that the Policy Circulars are ultra vires the FTP and parent Act, and unconstitutional; Show cause notices are without jurisdiction; Denial of duty credit scrips and demand for return of previously granted scrips are illegal
Judgment Excerpts
The DGFT issued the impugned Policy Circular No.6/2018 dated 22.05.2018 inter alia clarifying the fact that the SEIS is eligible only for actual service provider and not eligible for aggregators of service providers like ports, etc.
It is contended by the petitioner in W.P.No.12044/2021 that based on the aforesaid impugned circulars, the DRI-Customs initiated investigation against the petitioner and issued the impugned show cause notice ... proposing to demand an amount equal to the duty scrips granted for the years 2015-16 and 2016-17 alleging that the petitioner is only an aggregator of services
It is contended by the petitioner in W.P.No.12068/2021 that the DGFT has denied grant of Duty credit scrips in favour of the petitioner for the year 2017-18 relying on the impugned circulars by stating that only actual service providers and not aggregate service providers i.e., Ports are eligible as beneficiaries under the SEIS scheme
Procedural History
The writ petitions were filed in 2021 challenging the policy circulars and show cause notices. They were heard together and reserved for orders on 02.02.2024, and orders were pronounced on 25.04.2024.
Acts & Sections
- Foreign Trade (Development and Regulation) Act, 1992:
- Foreign Trade Policy 2015-2020: Chapter 3, Service Exports from India Scheme
- Customs Act, 1962:
- Constitution of India: Articles 14, 19, 300A, 226, 227
