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2016 Supreme(Raj) 941
IN THE HIGH COURT OF RAJASTHAN
Govind Mathur and G.R. Moolchandani, JJ.
Sangam (India) Ltd. - Petitioner
Versus
Union of India - Respondent
D.B. Civil Writ Petition No. 5616 of 2006
Decided on : 05-05-2016
For the Petitioner:Dr. Manish Singhvi and Shri S.M. Toshniwal, Advocates.
For the Respondent:Shri Ravi Bhansali, Sr. Advocate assisted by Rajvendra Saraswat, Advocate.
The central legal point established in the judgment is that incentives provided in the Foreign Trade Policy cannot be withdrawn with retrospective effect through subordinate legislation.
Headnote:
Section 5 - Foreign Trade Policy - The court discussed the power of the Central Government to formulate export and import policy under Section 5 of the Foreign Trade (Development & Regulation) Act, 1992, and the entitlement towards duty credit as stipulated in Paragraph 3.7.3 of the Foreign Trade Policy for the period 2004-2009. The court emphasized that the incentive provided in Paragraph 3.7.3 could not be withdrawn with retrospective effect through subordinate legislation.
Fact of the Case:
The petitioner challenged a notification prescribing a flat rate of 5% for duty credit, superseding the earlier notification with retrospective effect from 1-4-2005, contrary to the slabs and duty rates stipulated in Paragraph 3.7.3 of the Foreign Trade Policy.
Finding of the Court:
The court allowed the petition, citing the judgment of the Apex Court in Director General of Foreign Trade and anr. v. Kanak Exports and anr., which held that the impugned notification cannot be applied retrospectively and would be effective only from the date it was issued.
Issues: The issue revolved around the retrospective application of a notification prescribing duty credit rates, conflicting with the entitlement stipulated in Paragraph 3.7.3 of the Foreign Trade Policy.
Ratio Decidendi: The court relied on the precedent set by the Apex Court, emphasizing that the incentive provided in the Foreign Trade Policy could not be withdrawn with retrospective effect through subordinate legislation.
Final Decision: The petition for writ was allowed in terms of the judgment referred to in the case.
Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 empowers the Central Government to formulate export and import policy and amend the same from time to time. In exercise of the said power, the Central Government issued Foreign Trade Policy for the period 2004-2009. Paragraph 3.7.3 therein stipulates that the entitlement towards duty credit will be contingent on the minimum percentage incremental growth of certain percentage in FOB value of exports in the current licensing year over the previous licensing year in the manner laid down therein.
2. The grievance of the petitioner is that whereas the relevant paragraph envisage slabs and duty rates for each slab by the impugned notification dated 12-6-2006, a flat rate of 5% has been prescribed superseding the earlier notification with retrospective effect, i.e., from 1-4-2005. The case of the petitioner is that the incentive provided in Paragraph 3.7.3 was in the nature of promise, which cannot be withdrawn, much less with retrospective effect with a subordinate legislation.
3. The issue in question has already been examined by the Apex Court in Director General of Foreign Trade and anr. v. Kanak Exports and anr. reported in (2016) 2 SCC 226 : 2015 (326) E.L.T. 26 (S.C.). In the case aforesaid, Hon'ble Apex Court held that the notification dated 12-6-2006 cannot be applied retrospectively and that would be effective only from the date it was issued.
4. The instant petition for writ is also allowed in terms of the judgment referred above.
Petition allowed.
