Retrospective amendments reducing statutory entitlements are impermissible under constitutional and administrative law principles.

JUDGMENT

The petitioners are private limited companies incorporated under the Companies Act, 1956, mainly into the business of inbound tourism, including travel and tour operator services. The challenge in this writ petition is against Exts.P5 and P7 notifications dated 31.03.2020 and 23.09.2021 respectively issued by the 2^nd respondent, reducing the benefits of the Service Exports from India Scheme (hereinafter referred to as 'SEIS'), declared under the Foreign Trade Policy ('FTP' for short) 2019-2020.

2. The learned Senior Counsel appearing for the petitioners put forth the following arguments to bolster the challenge against Exts.P5 and P7;

The Foreign Trade Policy is declared from time to time, in exercise of the power under Section 5 of the Foreign Trade (Development and Regulation) Act , 1992 (hereinafter referred to as 'the Act'). Under Chapter 3 of the FTP 2015-2020, a Promotional Scheme titled SEIS was declared. The petitioners are eligible for the benefits under the Scheme. As per Clause 3.08 of Ext.P2 FTP, Service Providers of notified services located in India are rewarded as notified in Appendix 3D, subject to the service providers satisfying the conditions in the Policy. Appendix-3D of the FTP, produced as Ext.P3, contains the List of Services eligible for the benefit under SEIS and the rates applicable to different services. In Ext.P3, the admissible rate in percentage on Net Foreign Exchange earnings, for Travel Agencies and Tour Operator Services for the period 01.04.2015 to 31.03.2016, is 5%. The same rate was applicable for the year 2016-2017 as well. For the year 2017-2018, Ext.P4 was issued, by amending Note.1 to Appendix 3D, stating that the rates of rewards will be applicable for export of services made between 01.04.2017 and 31.03.2018 only, and the list of services as well as rates will be subject to review w.e.f. 01.04.2018. Later, Ext.P4(a) notification dated 11.05.2018 was issued clarifying that the services and rates of rewards declared by Ext.P4 Public notice dated 05.12.2017 will be applicable for services export made between 01.04.2017 and 31.03.2018. It was further stated in Ext.P4(a) that the rates for services w.e.f. financial year : FY 2018-19 would be as per the rates mentioned in Column No.5 of the Annexure to Ext.P4. As per Appendix-3D to Ext.P4, the admissible rate in percentage on Net Foreign Exchange earnings was split up as 5% for the period 01.04.2017 to 30.10.2017 and 7%, for 01.11.2017 to 31.03.2018. Thereafter, by Ext.P5 notification, amendments were brought to FTP 2015- 2020, stating that the service categories eligible under the scheme and the rates of reward on such services for the period 1^st April, 2019 to 31^st March, 2020 will be notified separately in Appendix 3X and that, for the services rendered w.e.f. 1^st April, 2020, decision on continuation of the scheme will be taken and notified.

3. Accordingly, Ext.P7 notification dated 23.09.2021 was issued by inserting 3.08 (aa) to FTP 2015-2020 stating that the notified services and rates for SEIS claims in the FY 2019- 2020 are listed in Appendix 3X to the Notification. In the Appendix 3X, the admissible rate in percentage on Net Foreign Exchange earnings for the period 01.04.2019 to 31.03.2020 is 5%.

4. Learned Senior Counsel contended that in view of the declaration in Ext.P4(a), that the rates of SEIS benefits w.e.f. 2018-2019 would be 7%, the petitioners had adjusted their rates for exports during 2019-2020 in consonance with the prevalent rates. The petitioners therefore have a vested right to receive Net Foreign Exchange for exports at the rates prevailing at the time when the services were rendered. It is contended that retrospective modification/deletion of entitlements and exemptions have repeatedly been frowned upon by the Constitutio