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2015 (10) TMI 2331 - BOMBAY HIGH COURT

2015 (10) TMI 2331 - BOMBAY HIGH COURT - TMI - Recovery of duty credit granted under Served From India Scheme - brand 'Four Seasons' is not an Indian brand - Foreign Exchange Earnings - Petitioner contends that Revenue denied benefits implicitly secured by them under FTP 2009-14 and seek to amend eligibility criteria under SFIS - Power to amend FTP 2009-14 lies only with Central Government and as such SFIS and PIC minutes are contrary to FTP 2009-14 - Held That:- Challenge to impugned SCN as wel .....

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ner : Mr. Jitendra Motwani For the Respondent : Mr. A. J. Rana, Senior Counsel a/w Mr. Pradeep S. Jetly, Mr H. V. Mehta JUDGMENT [ Per B P Colabawalla, J ] 1. Rule. Respondents waive service. By consent of parties, Rule is made returnable forthwith and heard finally. 2. By this Petition under Article 226 of the Constitution of India, the Petitioner, being a Private Limited Company, seeks to challenge the Demand-cum-Show Cause Notice dated 29th October, 2014 (for short, the 'impugned SCN' .....

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nged the minutes of the meeting dated 27th December, 2011 of the Policy Interpretation Committee (for short, 'PIC') chaired by Respondent No.2 (DGFT). 3. It is the case of the Petitioner that the Respondents, by issuing the impugned SCN, are denying the benefits implicitly secured by the Petitioner under the said FTP 2009-14 and seek to amend the eligibility criteria under the SFIS. The impugned SCN and the PIC minutes illegally withdraw the benefits granted under the FTP 2009-14 to genu .....

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rvice provider under a brand name 'Four Seasons' engaged in the operation of a hotel in Mumbai and holds a certificate of recognition as a 'Star Export House' issued by the Ministry of Commerce and Industry dated 23rd June, 2010. The Petitioner entered into an arrangement for use of the brand name 'Four Seasons' only with the objective of getting the latest technical and marketing guidance so that the hotel is operated as per international standards. It is the case of the .....

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s, the Petitioner, as an Indian Company, has been paying taxes and undertaking compliances under these various legislations. 6. In respect of foreign exchange earnings for the Financial Year 2008-09 to 2011-12, the Petitioner applied for and was granted SFIS benefits (scrips) by the Respondents which entitle the Petitioner to a duty credit entitlement in terms of the FTP 2009-14. The details of the entitlement granted are set out at Exhibit-G to the Petition. 7. In these facts, it is the Petitio .....

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P 2009-14 which is impermissible as per the provisions of the Act, is the submission. The power to amend the FTP 2009-14 lies only with the Central Government, and therefore, the said SFIS and PIC minutes are contrary to the FTP 2009-14 and apply new and arbitrary conditions in respect of the eligibility criteria under the SFIS. According to the Petitioner, therefore, the said SCN and the PIC minutes dated 27th December, 2011 cannot be sustained and ought to be set aside by us, in our extraordin .....

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e are squarely covered by a Division Bench decision of this Court to which one of us (S. C. Dharmadhikari, J.) was a party, in the case of Shri Naman Hotels Private Ltd v/s The Union of India and Others. Writ Petition No.33 of 2015 and other connected Writ Petitions decided on 17th August, 2015 . On perusing the aforesaid decision as well as the contentions raised in the present Writ Petition, we find that the same arguments that have been canvassed before us, were also put forth by the parties .....

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ecognized and respected worldwide. We are in agreement with Mr.Jetley learned Counsel that the object which is sought to be achieved would be only by encouraging those entities and conferring benefits and giving incentives to such companies who create an Indian brand. This is therefore, apparent. By referring to the identity of share holders and the nation they belong, the policy makers are not trivializing the issue. That reference is to highlight the object of accelerating growth in export of .....

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mportant but the involvement of Indian suppliers, which is predominant. Their engagement and involvement is therefore primarily referred and throughout the scheme which is a duty credit entitlement. Eventually the eligibility criteria has been framed and evolved for the purpose of Indian Service Providers and who provide services listed in Appendix 41 of HBP Volume 1, who have free foreign exchange earning of at least ₹ 10 lakhs in current financial year. They will be eligible for Duty Cre .....

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39;Served from India' brand is thus granting a incentive to those eligible service providers who fulfill the eligibility criteria. The Petitioner cannot claim a vested right in matters of duty credit or exemption from payment of a duty or tax. None can say that the mandate of Article 19 (1) (g) of the Constitution of India is violated merely because at certain time and on certain occasions, the concessions and benefits were given or there is exemption from payment of duty and taxes imposed b .....

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39; as is found in paragraph 3.12.4 is important. That Service providers of services listed in Appendix 41 of HBP Volume 1 would alone be eligible and such eligible service providers will be entitled to Duty Credit Scrip equivalent to 10% of free foreign exchange earned during current financial year from 1st January 2011 and for services rendered prior to 1st January, 2011, Appendix 10 of HBP Volume 1 would be applicable. SFIS benefit will be allowed on the Net Foreign Exchange earned is what is .....

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benefits therein. Anybody who earns free foreign exchange of at least Rs.Ten lakhs is not entitled as claimed. That will be contrary to the object and purpose of making the scheme. That as rightly urged by Mr.Jetley is to accelerate growth in export of services so as to create a powerful and unique 'Served From India brand ' instantly recognized and respected world over.' That cannot be achieved by permitting those who are are not creating a powerful and unique 'Served From India .....

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me exports and the growth of the same is to be achieved then, it is not possible to agree with Mr.Dada that FSIS scheme or benefits thereunder can be availed of by parties like the petitioner. We do not see how paragraph 3.12.7 or objectives in relation to other scheme particularly 'foreign market scheme' would be of any assistance. We are not considering that scheme, reward or incentives thereunder nor we are considering its basic features. We are concerned with 'Served from India s .....

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raph 9.52 which defines the term 'services' include all tradable services covered under General Agreement on Trade in Services (GATS) and earning free foreign exchange. Further paragraph 9.53 defines the term 'Service Provider'. That means a person providing: "(i) Supply of a 'service' from India to any other country; (ii) Supply of a 'service' from India to service consumer of any other country in India ; (iii) Supply of a 'service' from India throug .....

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hysical presence in territory of any other country, supply of a service in India relating to exports paid in free foreign exchange or in Indian rupees as having being paid for in free foreign exchange by RBI are all referred to. It is to promote a unique 'Served from India brand instantly recognized and respected world over that the definition has been worded accordingly. If the main object and purpose sought to be achieved, on which emphasis is placed is noted, then, only as a corollary or .....

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IS is given in Chapter 3 of FTP (b) An application for grant of Duty Credit Scrip for foreign exchange earned during current financial year, shall be filed on monthly/quarterly/half-]yearly/annual basis, in ANF 3B along with documents prescribed therein at the option of the applicant to be exercised along with first application for the current financial year. This option will be filed with jurisdictional RA. The last date for filing application shall be 12 months from the end of relevant month/q .....

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other sources of foreign exchange earnings such as equity or debt participation, donations, receipt of repayment of loans etc and any other inflow of foreign exchange, unrelated to rendering of service would be ineligible. Following shall not be taken into account for calculation of entitlement: (a) Foreign Exchange remittances: 1. related to Financial Services Sector 1. Raising of all types of foreign currency loans; 2. Export proceeds realization of clients; 3. Issuance of Foreign Equity thro .....

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t of medical treatment, surgery, testing, consultancy and health care provided by the institution shall be eligible;) (d) Foreign exchange turnover by Educational Institutions like equity participation, donations, etc (However remittances received on account of the course fees and consultancy provided by the institution shall be eligible); (e) Export turn over relating to services of units operating under SEZ/EOU/EHTP/STPL/BTP schemes or supplies of services made to such units; (f) Clubbing of t .....

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ms which are required to be filled in for evaluation of duty credit Scrip entitlement. Non-entitling remittances and services for SFIS scheme are set out in paragraph 3.6.1. That is how the criteria is evolved and provided for. We are of the opinion that once the object and purpose of the Foreign Trade Act, the relevant paras of the FTP are placed in the forefront and duly noted, then, a Indian Brand projecting a Unique Indian Identity and commanding respect and recognition world over is sought .....

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