S. Muralidhar, J.

1. Does the sale of a residential building against the payment in free foreign exchange amount to `service' for the purposes of the grant of a Duty Free Credit Entitlement (DFCE) Certificate (duty free scrip) under the Served From India Scheme (`SFIS') announced as part of the Foreign Trade Policy 2004-09 (`FTP 2004-09')? This is the principal question that arises for consideration in the present writ petition, in which the communication dated 25/26th June 2008 issued by the Joint Director General of Foreign Trade (JDGFT) answering the question in negative has been challenged by the Petitioner DLF Ltd. The other questions are whether the duty free scrip is a licence within the meaning of Section 2 (g) of the Foreign Trade (Development and Regulation) Act 1992 and whether the show cause notices dated 16th July 2007 sent to the Petitioner by the JDGFT proposing cancellation of the duty free scrips on the ground of misrepresentation of facts by the Petitioner are liable to be quashed?

Factual Background

2. The Petitioner states that it is a company engaged in development and construction of residential and commercial properties in India and selling them to the customers in India and abroad. In terms of para 3.6.4 of the FTP 2004-09 and para 3.18 of the Hand Book of Procedures 2004-09, (`HBP 2004-09') the Petitioner applied for the grant of DFCE certificate (or duty free scrip) under the SFIS against the exports made during the years 2003-04 and 2004-05. Pursuant thereto, the Directorate General of Foreign Trade (`DGFT') granted the Petitioner two duty free scrips - one dated 4th February 2005 for Rs. 5,64,04,700/- and another dated 9th January 2006 for Rs. 7,62,60,848/-.

3. On 2nd November 2006, the JDGFT wrote to the Petitioner as under:

"Gentlemen,

This has reference to the Licence No. 0510150403 dt. 4/2/05 under `Served From India Scheme' issued to you under our above-mentioned file No. The audit team of the Directorate General of Audit has pointed out that the foreign exchange earned certified by the CA includes receipt of remittances of sale consideration for immovable properties located in India purchased by the customers abroad. This has been mentioned somewhere in the annual report of the company.

You are requested to furnish your comments in this respect and if the CA certificate has not been issued properly, you are required to submit the custom duty along with interest within 30 days from the issue of this letter. The licence may not be utilised any further."

4. On the receipt of the above letter, the Petitioner on 10th November 2006 wrote to the Ministry of Commerce (MoC), Government of India seeking clarification on the activities/services covered under the heading `Real estate services' mentioned in Appendix 10 at Serial No. 1(D) of the HBP 2004-09 of the Exim Policy. Serial No. 1(D) of Appendix 10 reads as under:

"D. Real estate services

a.

Involving own or leased property

b.

On a fee or contract basis."

5. On 7th December 2006, the Deputy Director of the Department of Commerce, (Trade Policy Division), MoC wrote to the Petitioner as under:

"Dear Sir,

Please refer to your letter No. nil dated 10th November, 2006 on the above subject. In this connection, I would like to clarify that Real Estate Services contained in appendix 10 of the Hand Book of Procedure of Exim Policy are as per the classifications of services adopted under the General Agreement on Trade in Services (GATS) of the WTO vide document No. W/120. Detail description of the two sub-sectors of Real Estate Services i.e. (i) Involving own or leased property; and (2) On a fee or contract basis; are contained in UNCPC 821 and 822. A copy of UNCPC 821 and 822 is enclosed for your information."

6. It may be mentioned that the reference to `UNCPC' in the above letter is to the United Nations Central Product Classification, copies of the relevant pages of which were enclosed with the said letter. Group 821 of the UNCPC deals with `Real Estate Services' and Gro